EXECUTION VERSION
_________________________________________________________
AGREEMENT AND PLAN OF MERGER
among
XXXXX GROUP LTD.,
XXXXX ACQUISITION CORP.
and
BAYCORP HOLDINGS, LTD.
Dated as of September 13, 2005
_________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER
SECTION 1.01 The Offer 2
SECTION 1.02 Company Action 3
SECTION 1.03 Other Actions 4
ARTICLE II
THE MERGER
SECTION 2.01 The Merger 5
SECTION 2.02 Effective Time 5
SECTION 2.03 Effect of the Merger 5
SECTION 2.04 Certificate of Incorporation; By-laws 5
SECTION 2.05 Directors and Officers 5
SECTION 2.06 Conversion of Securities 6
SECTION 2.07 Treatment of Options 6
SECTION 2.08 Dissenting Shares 7
SECTION 2.09 Surrender of Shares; Stock Transfer Books 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01 Organization and Qualification; Subsidiaries 9
SECTION 3.02 Certificate of Incorporation and By-laws 9
SECTION 3.03 Capitalization. 9
SECTION 3.04 Authority Relative to the Transactions 10
SECTION 3.05 No Conflict; Required Filings and Consents 11
SECTION 3.06 Permits; Compliance 12
SECTION 3.07 SEC Filings; Financial Statements 12
SECTION 3.08 Absence of Certain Changes or Events 14
SECTION 3.09 Absence of Litigation 15
SECTION 3.10 Employee Benefit Plans 15
SECTION 3.11 Labor and Employment Matters 17
SECTION 3.12 Real Property; Title to Assets 19
SECTION 3.13 Intellectual Property 20
SECTION 3.14 Taxes 21
SECTION 3.15 Environmental Matters 22
SECTION 3.16 Material Contracts 23
SECTION 3.17 Insurance 24
SECTION 3.18 Certain Business Practices 25
SECTION 3.19 Interested Party Transactions 25
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SECTION 3.20 Offer Documents; Schedule 14D-9. 26
SECTION 3.21 Opinion of Financial Advisor 26
SECTION 3.22 Brokers 26
SECTION 3.23 Section 203 of the DGCL Not Applicable; Other Statutes 26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 4.01 Corporate Organization 27
SECTION 4.02 Authority Relative to the Transactions 27
SECTION 4.03 No Conflict; Required Filings and Consents 27
SECTION 4.04 Financing 28
SECTION 4.05 Offer Documents; Proxy Statement 28
SECTION 4.06 Brokers 28
SECTION 4.07 Ownership of Company Common Stock 28
SECTION 4.08 No Prior Operations 28
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the Merger 29
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Stockholders' Meeting 32
SECTION 6.02 Proxy Statement 32
SECTION 6.03 Company Board Representation;Section 14(f) 33
SECTION 6.04 Access to Information; Confidentiality 34
SECTION 6.05 No Solicitation of Transactions 34
SECTION 6.06 Employee Benefits Matters 36
SECTION 6.07 Directors' and Officers' Indemnification and Insurance 37
SECTION 6.08 Notification of Certain Matters 38
SECTION 6.09 Further Action; Reasonable Best Efforts 38
SECTION 6.10 Subsequent Financial Statements 38
SECTION 6.11 Public Announcements 39
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Merger 39
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination 39
SECTION 8.02 Effect of Termination 41
SECTION 8.03 Fees and Expenses 41
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SECTION 8.04 Amendment 42
SECTION 8.05 Waiver 43
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties
and Agreements 43
SECTION 9.02 Notices 43
SECTION 9.03 Certain Definitions 44
SECTION 9.04 Severability 49
SECTION 9.05 Entire Agreement; Assignment 49
SECTION 9.06 Parties in Interest 49
SECTION 9.07 Specific Performance 50
SECTION 9.08 Governing Law 50
SECTION 9.09 Waiver of Jury Trial 50
SECTION 9.10 Headings 50
SECTION 9.11 Counterparts 50
SECTION 9.12 Company Disclosure Schedule 50
ANNEX A Conditions to the Offer
ANNEX B Surviving Corporation Employment Agreement - Xxxxxx
ANNEX C Surviving Corporation Employment Agreement - Callendrello
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of
September 13, 2005 (this "Agreement"), is by and among XXXXX
GROUP LTD., a Bahamas corporation ("Parent"), XXXXX ACQUISITION
CORP., a
Delaware corporation and a wholly owned subsidiary of
Parent ("Purchaser"), and BAYCORP HOLDINGS, LTD., a
Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Purchaser
and the Company have each determined that it is in the best
interests of their respective stockholders for Parent to acquire
the Company upon the terms and subject to the conditions set
forth herein (the "Acquisition");
WHEREAS, in furtherance of such Acquisition, it is
proposed that Purchaser shall, and Parent shall cause Purchaser
to, make a cash tender offer (the "Offer") to acquire all the
issued and outstanding shares of Company common stock, par value
$0.01 per share ("Shares") for $14.19 per Share (such amount, or
any greater amount per Share paid pursuant to the Offer, being
the "Per Share Amount"), net to the seller in cash, upon the
terms and subject to the conditions of this Agreement and the
Offer;
WHEREAS, the Company's Board of Directors (the "Company
Board") has established a special committee of independent
directors (the "Special Committee") to consider the Acquisition,
and the Special Committee has engaged a financial advisor to
assist the Special Committee;
WHEREAS, based on the recommendations of its Special
Committee, the Company Board has unanimously approved the Offer
and resolved to recommend that holders of Shares tender their
Shares pursuant to the Offer;
WHEREAS, also in furtherance of such acquisition, the
Boards of Directors of Parent, Purchaser and the Company have
each approved this Agreement and declared that it is fair and in
the best interests of their respective stockholders and approved
the Offer and the merger (the "Merger") of Purchaser with and
into the Company in accordance with the General Corporation Law
of the State of
Delaware (the "DGCL"), following the consummation
of the Offer and upon the terms and subject to the conditions set
forth herein; and
WHEREAS, in order to induce Parent and Purchaser to
enter into this Agreement, certain stockholders of the Company
(the "Stockholders") have entered into Stockholder Support
Agreements, dated as of the date hereof (the "Stockholder Support
Agreements"), providing that, among other things, the
Stockholders will (i) tender their Shares into the Offer and (ii)
vote the Shares owned of record and beneficially by them in favor
of the Merger, if applicable, and the other transactions
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements herein contained, and
intending to be legally bound hereby, Parent, Purchaser and the
Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer
(a) Subject to the conditions of this Agreement and
provided that this Agreement shall not have been terminated in
accordance with its terms pursuant to Article VIII and none of
the events set forth in paragraphs (a) through (k) of Annex A
hereto shall have occurred or be existing, Purchaser shall, and
Parent shall cause Purchaser to, (i) "commence" (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) the Offer as promptly as
reasonably practicable after the date hereof, but in no event
later than 10 business days after initial public announcement of
the execution of this Agreement and (ii) cause the Offer to
remain open until the twentieth business day after such
commencement of the Offer (the "Initial Expiration Date").
Purchaser shall be obligated, and Parent shall cause Purchaser,
to accept for payment and pay for Shares validly tendered and not
properly withdrawn pursuant to the Offer, subject only to the
satisfaction of each of the conditions set forth in Annex A
hereto (the "Offer Conditions"). At the Company's request,
Purchaser will, and Parent shall cause Purchaser to, extend the
Offer after the Initial Expiration Date for one or more periods
not to exceed an aggregate of 15 business days if the Minimum
Condition (as such term is defined in Annex A hereto) has not
been satisfied at the Initial Expiration Date. Subject to the
prior satisfaction of the Offer Conditions, Purchaser shall, and
Parent shall cause Purchaser to, consummate the Offer in
accordance with its terms and accept for payment all Shares
validly tendered and not properly withdrawn by 9:00 A.M. Eastern
Time on the next business day after the expiration of the Offer.
Purchaser expressly reserves the right to waive any Offer
Condition, or increase the Per Share Amount payable in the Offer
and to make any other changes in the terms and conditions of the
Offer; provided, however, that, without the consent of the
Company, Purchaser shall not, and Parent shall not permit
Purchaser to, (i) decrease the Per Share Amount or change the
form of consideration payable in the Offer, (ii) reduce the
number of Shares subject to the Offer, (iii) impose conditions to
the Offer in addition to the Offer Conditions, (iv) reduce or
waive the Minimum Condition, or (v) change the Offer in a manner
adverse to the holders of the Shares. Notwithstanding the
foregoing, Purchaser may, without the consent of the Company, (i)
extend the Offer for one or more periods of not more than 5
business days each beyond the Initial Expiration Date, if, at any
scheduled expiration of the Offer, any of the Offer Conditions
shall not be satisfied or waived or (ii) extend the Offer for any
period required by any rule, regulation or interpretation of the
Securities and Exchange Commission (the "SEC") or the staff
thereof, applicable to the Offer (provided that Purchaser shall
keep the Company reasonably informed of Purchaser's or Parent's
contact with the SEC or the staff thereof with respect to the
Offer). The Per Share Amount shall, subject to applicable
withholding of taxes, be net to the seller in cash, upon the
terms and subject to the conditions of the Offer. Purchaser
shall, and Parent shall cause Purchaser to, pay for all Shares
validly tendered and not properly withdrawn promptly following
the acceptance of Shares for payment pursuant to the Offer.
Notwithstanding the immediately preceding sentence and subject to
the applicable rules of the SEC and the terms and conditions of
the Offer, Purchaser expressly reserves the right to delay
payment for Shares in order to comply in whole or in part with
applicable Laws. Any such delay shall be effected in compliance
with SEC Rule 14e-1(c) under the Exchange Act. Purchaser may
extend the Offer after the acceptance of Shares thereunder for a
further period of time by means of a subsequent offering period
under SEC Rule 14d-11 under the Exchange Act of not more than 20
business days to meet the objective that there be validly
tendered, in accordance with the terms of the Offer, prior to the
expiration of the Offer (as so extended), and not withdrawn, a
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number of Shares which, together with Shares then beneficially
owned by Parent and Purchaser and their direct and indirect
subsidiaries, represents at least 90% of the then outstanding
Shares on a Fully Diluted Basis. If the payment equal to the Per
Share Amount in cash (the "Merger Consideration") is to be made
to a person other than the person in whose name the surrendered
certificate formerly evidencing Shares is registered on the stock
transfer books of the Company, it shall be a condition of payment
that the certificate so surrendered shall be endorsed properly
with signature guaranteed and otherwise be in proper form for
transfer, and that the person requesting such payment shall have
paid all transfer and other Taxes required by reason of the
payment of the Merger Consideration to a person other than the
registered holder of the certificate surrendered, or shall have
established to the satisfaction of Purchaser that such Taxes
either have been paid or are not applicable.
(b) On the date of commencement of the Offer,
Purchaser and Parent shall file with the SEC a Tender Offer
Statement on Schedule TO (together with all exhibits, amendments
and supplements thereto, the "Schedule TO") with respect to the
Offer. The Schedule TO and the Schedule 13E-3 (as defined in
Section 1.03 below) shall comply in all material respects with
the provisions of the Exchange Act, the rules and regulations
promulgated thereunder and all other applicable Laws, and shall
contain or shall incorporate by reference an offer to purchase
relating to the Offer (the "Offer to Purchase") and forms of the
related letter of transmittal and any related summary
advertisement (the Schedule TO, the Offer to Purchase and such
other documents, together with all exhibits, supplements and
amendments thereto, being referred to herein collectively as the
"Offer Documents"). Each of Parent, Purchaser and the Company
agrees to correct promptly any information provided by it for use
in the Offer Documents and any Schedule 13E-3 that shall have
become false or misleading in any material respect, and Parent
and Purchaser further agree to take all steps necessary to cause
the Schedule TO and any Schedule 13E-3, as so corrected, to be
filed timely with the SEC, and the other Offer Documents, as so
corrected, to be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities
laws. Parent and Purchaser shall give the Company and its counsel
a reasonable opportunity to review and comment on the Offer
Documents and any Schedule 13E-3 prior to such documents being
filed with the SEC or disseminated to holders of Shares. Parent
and Purchaser shall provide the Company and its counsel with any
comments that Parent, Purchaser or their counsel may receive from
the SEC or its staff with respect to the Offer Documents and any
Schedule 13E-3 promptly after the receipt of such comments and
shall provide the Company and its counsel with a reasonable
opportunity to participate in the response of the Parent and
Purchaser to such comments.
SECTION 1.02 Company Action
(a) Subject to Section 6.05(c), the Company (i) hereby
consents to the inclusion in the Offer Documents of the
recommendation of the Company Board described in Section 3.04 and
(ii) shall not withdraw or modify such recommendation in any
manner adverse to Purchaser or Parent. The Company has been
advised by its directors and executive officers that they intend
to tender all Shares beneficially owned by them to Purchaser
pursuant to the Offer and, if applicable, their respective
Stockholder Support Agreements.
(b) On the date of commencement of the Offer, the
Company shall file with the SEC a Solicitation/Recommendation
3
Statement on Schedule 14D-9 (together with all amendments and
supplements thereto, the "Schedule 14D-9"), which shall (i)
comply in all material respects with the provisions of the
Exchange Act, the rules and regulations thereunder and all other
applicable Laws and (ii) contain the Fairness Opinion and, except
as provided in Section 6.05(c), the recommendation of the Company
Board described in Section 3.04. The Company shall disseminate
the Schedule 14D-9 to the extent required by Rule 14d-9
promulgated under the Exchange Act, and any other applicable
federal securities laws. Each of the Company, Parent and
Purchaser agrees to correct promptly any information provided by
it for use in the Schedule 14D-9 that shall have become false or
misleading in any material respect, and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9,
as so corrected, to be filed timely with the SEC and disseminated
to holders of Shares, in each case as and to the extent required
by applicable federal securities laws. The Company shall give
Parent and its counsel a reasonable opportunity to review and
comment on the Schedule 14D-9 prior to such document being filed
with the SEC or disseminated to holders of Shares. The Company
shall provide Parent and its counsel with any comments that the
Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such
comments and shall provide Parent and its counsel with a
reasonable opportunity to participate in the response of the
Company to such comments.
(c) The Company shall promptly furnish, or cause its
transfer agent to furnish, Parent and Purchaser with mailing
labels containing the names and addresses of all record holders
of Shares and with security position listings of Shares held in
stock depositories, each as of a recent date, together with all
other reasonably available listings and computer files containing
names, addresses and security position listings of record holders
and beneficial owners of Shares. The Company shall promptly
furnish, or cause its transfer agent to furnish, Parent and
Purchaser with such additional information, including, without
limitation, updated listings and computer files of stockholders,
mailing labels and security position listings, and such other
assistance in disseminating the Offer Documents and any Schedule
13E-3 to holders of Shares as Parent or Purchaser may reasonably
request. Subject to the requirements of applicable Law, and
except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the
Offer or the Merger, Parent and Purchaser shall hold in
confidence the information contained in such labels, listings and
files, shall use such information only in connection with the
Transactions, and, if this Agreement shall be terminated in
accordance with Section 8.01, shall deliver to the Company all
copies of such information then in their possession.
SECTION 1.03 Other Actions
The Company, Purchaser and Parent, and any other person
required by SEC Rule 13e-3, shall each timely file a Rule 13e-3
Transaction Statement on Schedule 13E-3 (together with all
amendments and supplements thereto, a "Schedule 13E-3") with the
SEC.
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ARTICLE II
THE MERGER
SECTION 2.01 The Merger.
Upon the terms and subject to the conditions set forth
in Article VII, and in accordance with the DGCL, at the Effective
Time (as defined below), Purchaser shall be merged with and into
the Company. As a result of the Merger, the separate corporate
existence of Purchaser shall cease and the Company shall continue
as the surviving corporation of the Merger (the "Surviving
Corporation").
SECTION 2.02 Effective Time
As promptly as practicable after the satisfaction or,
if permissible, waiver of the conditions set forth in Article
VII, the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger or certificate of ownership and
merger (in either case, the "Certificate of Merger") with the
Secretary of State of the State of
Delaware, in such form as is
required by, and executed in accordance with, the relevant
provisions of the DGCL (the date and time of such filing of the
Certificate of Merger (or such later time as may be agreed by
each of the parties hereto and specified in the Certificate of
Merger) being the "Effective Time").
SECTION 2.03 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 Purchaser shall vest in the
Surviving Corporation, and all debts, liabilities, obligations,
restrictions, disabilities and duties of each of the Company and
Purchaser shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving
Corporation.
SECTION 2.04 Certificate of Incorporation; By-laws
(a) At the Effective Time, the Certificate of
Incorporation of the Company shall be amended in the Merger to be
identical to the Certificate of Incorporation of Purchaser as in
effect immediately prior to the Effective Time (except that such
Certificate of Incorporation shall be amended to provide the name
of the Surviving Corporation shall be the name of the Company),
and shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by Law and such
Certificate of Incorporation.
(b) Unless otherwise determined by Parent prior to the
Effective Time, subject to Section 6.07, at the Effective Time,
the By-laws of Purchaser, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation
until thereafter amended as provided by Law, the Certificate of
Incorporation of the Surviving Corporation and such By-laws.
SECTION 2.05 Directors and Officers
The directors of Purchaser immediately prior to the
Effective Time, together with Xxxxx Xxxxxx, shall be the initial
directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and By-laws of
the Surviving Corporation, and the officers of the Company
immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their
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respective successors are duly elected or appointed and qualified
or until their earlier death, resignation or removal.
SECTION 2.06 Conversion of Securities
At the Effective Time, by virtue of the Merger and
without any action on the part of Purchaser, the Company or the
holders of any of the following securities:
(a) each Share issued and outstanding immediately
prior to the Effective Time (other than any Shares to be canceled
pursuant to Section 2.06(b) and any Dissenting Shares (as defined
below)) shall be canceled and shall be converted automatically
into the right to receive an amount equal to the Merger
Consideration payable, without interest, to the holder of such
Share, upon surrender, in the manner provided in Section 2.09, of
the certificate that formerly evidenced such Share;
(b) each Share held in the treasury of the Company and
each Share owned by Purchaser, Parent or any direct or indirect
subsidiary of Parent or of the Company immediately prior to the
Effective Time shall be canceled and retired without any
conversion thereof and no payment or distribution shall be made
with respect thereto; and
(c) each share of common stock, $.01 par value per
share, of Purchaser issued and outstanding immediately prior to
the Effective Time shall be converted into and exchanged for one
validly issued, fully paid and nonassessable share of common
stock, $.01 par value per share, of the Surviving Corporation
("Surviving Corporation Shares").
SECTION 2.07 Treatment of Options
(a) Between the date of this Agreement and the
Effective Time, the Company shall take all necessary action
(which action shall be effective as of the Effective Time) to
(i) terminate the Company's 1996 Stock Option Plan, 2001 Non-
Statutory Stock Option Plan and each stock option agreement
granted otherwise than under such plans which shall themselves
constitute separate plans, each as amended through the date of
this Agreement (collectively, the "Company Stock Option Plans")
and (ii) cancel, as of the Effective Time, each outstanding
option to purchase shares of Company Common Stock granted under
the Company Stock Option Plans (each, a "Company Stock Option")
that is outstanding and unexercised, whether or not vested or
exercisable, as of such date (in each case, without the creation
of additional liability to the Company or any Subsidiary).
(b) As of the Effective Time, each holder of a Company
Stock Option immediately prior to the Effective Time shall be
entitled to receive an amount of cash, without interest, equal to
the product of (i) the total number of shares of Company Common
Stock subject to such Company Stock Option multiplied by (ii) the
excess, if any, of the Merger Consideration over the exercise
price per share of such Company Stock Option (with the aggregate
amount of such payment to the holder to be rounded to the nearest
cent), less applicable withholding taxes, if any, required to be
withheld with respect to such payment. No holder of a Company
Stock Option that has an exercise price per Share that is equal
to or greater than the Merger Consideration shall be entitled to
any payment with respect to such cancelled Company Stock Option
before or after the Effective Time.
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SECTION 2.08 Dissenting Shares
(a) Notwithstanding any provision of this Agreement to
the contrary and to the extent available under the DGCL, Shares
that are outstanding immediately prior to the Effective Time and
that are held by stockholders who shall have neither voted in
favor of the Merger nor consented thereto in writing and who
shall have demanded properly, in writing, appraisal for such
Shares and otherwise perfected their rights of dissent and
appraisal in accordance with Section 262 of the DGCL
(collectively, the "Dissenting Shares") shall not be converted
into, or represent the right to receive, the Merger
Consideration. Such stockholders shall be entitled to receive
payment of the appraised value of such Shares held by them in
accordance with the provisions of such Section 262, except that
all Dissenting Shares held by stockholders who shall have failed
to perfect or who effectively shall have withdrawn or lost their
rights to appraisal of such Shares under such Section 262 shall
thereupon be deemed to have been converted into, and to have
become exchangeable for, as of the Effective Time, the right to
receive the Merger Consideration, without any interest thereon,
upon surrender, in the manner provided in Section 2.09, of the
certificate or certificates that formerly evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of
any demands for appraisal received by the Company, withdrawals of
such demands, and any other instruments served pursuant to the
DGCL and received by the Company and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands
for appraisal under the DGCL. The Company shall not, except with
the prior written consent of Parent, make any payment with
respect to any demands for appraisal or offer to settle or settle
any such demands.
SECTION 2.09 Surrender of Shares; Stock
Transfer Books
(a) Promptly following the Effective Time, Parent
shall make available to the Surviving Corporation for deposit
with a bank or trust company designated by Parent before the date
of acceptance of Shares for payment pursuant to the Offer and
reasonably acceptable to the Company (the "Paying Agent"), a cash
amount equal to the aggregate Merger Consideration to which
holders of Shares shall be entitled upon consummation of the
Merger, to be held for the benefit of and distributed to such
holders in accordance with this Section. The Paying Agent shall
hold such funds (the "Payment Fund") for delivery as contemplated
by this Section and upon such additional terms as may be agreed
upon by the Paying Agent, the Company and Parent. If for any
reason (including losses) the Payment Fund is inadequate to pay
the cash amounts to which holders of Shares shall be entitled
under the terms of this Agreement, Parent shall in any event
remain liable, and shall make available to the Surviving
Corporation additional funds, for the payment thereof. The
Payment Fund shall not be used for any purpose except as
expressly provided in this Agreement. Earnings on the Payment
Fund, if any, shall belong solely to the Surviving Corporation
and holders of Shares shall have no right to such earnings.
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each person who was, at
the Effective Time, a holder of record of Shares entitled to
receive the Merger Consideration pursuant to Section 2.06(a) a
form of letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon
proper delivery of the Certificates to the Paying Agent) and
instructions for use in effecting the surrender of the
Certificates pursuant to such letter of transmittal. Upon
surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed
in accordance with the instructions thereto, and such other
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documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration for each Share
formerly evidenced by such Certificate, and such Certificate
shall then be canceled. No interest shall accrue or be paid on
the Merger Consideration payable upon the surrender of any
Certificate for the benefit of the holder of such Certificate.
If the payment equal to the Merger Consideration is to be made to
a person other than the person in whose name the surrendered
certificate formerly evidencing Shares is registered on the stock
transfer books of the Company, it shall be a condition of payment
that the certificate so surrendered shall be endorsed properly or
otherwise be in proper form for transfer and that the person
requesting such payment shall have paid all transfer and other
taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the
certificate surrendered, or shall have established to the
satisfaction of Purchaser that such taxes either have been paid
or are not applicable. If any holder of Shares is unable to
surrender such holder's Certificates because such Certificates
have been lost, stolen, mutilated or destroyed, such holder may
deliver in lieu thereof an affidavit and indemnity bond in form
and substance and with surety reasonably satisfactory to the
Surviving Corporation. Each of Parent, Purchaser, the Surviving
Corporation and the Paying Agent shall be entitled to deduct and
withhold from any amounts otherwise payable pursuant to this
Agreement in respect of Shares such amount as it is required to
deduct and withhold with respect to the making of such payment
under the Code or any applicable Tax Law. To the extent that
amounts are so withheld, such withheld amounts shall be treated
for purposes of this Agreement as having been paid to the holder
of the Shares in respect of which such deduction and withholding
was made.
(c) At any time following the ninth month after the
Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds which had
been made available to the Paying Agent and not disbursed to
holders of Shares (including, without limitation, the remainder
of the Payment Fund and all interest and other income received by
the Paying Agent in respect of all funds made available to it),
and, thereafter, such holders shall be entitled to look solely to
the Surviving Corporation (subject to abandoned property, escheat
and other similar Laws) only as general creditors thereof with
respect to any Merger Consideration that may be payable upon due
surrender of the Certificates held by them. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Paying Agent
shall be liable to any holder of a Share for any Merger
Consideration delivered in respect of such Share to a public
official pursuant to any abandoned property, escheat or other
similar Law.
(d) At the close of business on the day of the
Effective Time, the stock transfer books of the Company shall be
closed and thereafter there shall be no further registration of
transfers of Shares on the records of the Company. From and
after the Effective Time, the holders of Shares outstanding
immediately prior to the Effective Time shall cease to have any
rights with respect to such Shares except as otherwise provided
herein or by applicable Law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Parent and Purchaser to enter into
this Agreement, the Company hereby represents and warrants to
Parent and Purchaser that:
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SECTION 3.01 Organization and Qualification;
Subsidiaries
(a) Each of the Company and each subsidiary of the
Company (each a "Subsidiary") is a corporation, limited liability
company or other entity duly formed, validly existing and in good
standing under the laws of the jurisdiction of its formation and
has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted. Each
of the Company and each Subsidiary is duly qualified or licensed
as a foreign corporation or limited liability company to do
business, 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 for such failures to be so qualified or
licensed and in good standing that would not have a Company
Material Adverse Effect.
(b) A true and complete list of all the Subsidiaries,
together with the jurisdiction of formation of each Subsidiary
and the percentage of the outstanding equity interests of each
Subsidiary owned by the Company, each other Subsidiary and each
other holder of equity, is set forth in Section 3.01(b) of the
Company Disclosure Schedule (the "Company Disclosure Schedule"),
which has been prepared by the Company and delivered by the
Company to Parent and Purchaser prior to the execution and
delivery of this Agreement. Except as disclosed in
Section 3.01(b) of the Company Disclosure Schedule, the Company
does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business
association or entity.
SECTION 3.02 Certificate of Incorporation
and By-laws
The Company has heretofore furnished to Parent a
complete and correct copy of the Certificate of Incorporation and
the By-laws or equivalent organizational documents, each as
amended to date, of the Company and each Subsidiary. Such
Certificates of Incorporation, By-laws or equivalent
organizational documents are in full force and effect. Neither
the Company nor any Subsidiary is in violation of any of the
provisions of its Certificate of Incorporation, By-laws or
equivalent organizational documents.
SECTION 3.03 Capitalization
(a) The authorized capital stock of the Company
consists of (i) 4,000,000 shares of common stock, par value $0.01
per share ("Company Common Stock") and (ii) 1,000,000 shares of
preferred stock, par value $0.01 per share ("Company Preferred
Stock"). As of September 12, 2005, (i) 571,364 Shares are issued
and outstanding, all of which are validly issued, fully paid and
nonassessable. 528,641 Shares are reserved for future issuance
pursuant to outstanding Company Stock Options (the "Company Stock
Awards") granted pursuant to the Company Stock Option Plans. As
of the date of this Agreement, no shares of Company Preferred
Stock or restricted shares of the Company's capital stock are
issued and outstanding. Except as set forth in Section 3.03(a)
of the Company Disclosure Schedule, there are no options,
warrants or other rights, agreements, arrangements or commitments
of any character that are binding on the Company or any
Subsidiary and that relate to the issued or unissued capital
stock of the Company or any Subsidiary or that obligate the
Company or any Subsidiary to issue or sell any shares of capital
stock of, or other equity interests in, the Company or any
Subsidiary. Section 3.03(a) of the Company Disclosure Schedule
sets forth the following information with respect to each Company
Stock Award outstanding as of the date of this Agreement: (i) the
9
name of the Company Stock Award recipient; (ii) the particular
plan pursuant to which such Company Stock Award was granted;
(iii) the number of Shares subject to such Company Stock Award;
(iv) the exercise or purchase price of such Company Stock Award;
(v) the date on which such Company Stock Award was granted;
(vi) the applicable vesting schedule; (vii) the date on which
such Company Stock Award expires; and (viii) whether the
exercisability of or right to repurchase of such Company Stock
Award will be accelerated in any way by the transactions
contemplated by this Agreement, and indicates the extent of
acceleration. The Company has made available to Parent accurate
and complete copies of all Company Stock Option Plans pursuant to
which the Company has granted the Company Stock Awards that are
currently outstanding and the forms of all stock award agreements
evidencing such Company Stock Awards. The Company does not
presently have and has not previously maintained an employee
stock purchase plan. All Shares 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. There
are no outstanding contractual obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any Shares
or any capital stock of any Subsidiary or to provide funds to, or
make any investment (in the form of a loan, capital contribution
or otherwise) in, any Subsidiary or any other person. Except as
set forth in Section 3.03(a) of the Company Disclosure Schedule,
there are no commitments or agreements of any character to which
the Company is bound obligating the Company to accelerate the
vesting of any Company Stock Award as a result of the Offer or
the Merger. All outstanding Shares, all outstanding Company
Stock Awards, and all outstanding shares of capital stock of each
Subsidiary have been issued and granted in compliance in all
material respects with (i) all applicable securities laws and
other applicable Laws and (ii) all requirements set forth in
applicable contracts.
(b) Each outstanding share of capital stock or equity
interest of each Subsidiary is duly authorized, validly issued,
fully paid and nonassessable, and, except as set forth in Section
3.03(b) to the Company Disclosure Schedule, each share that is
owned directly or indirectly by the Company is owned by the
Company or another Subsidiary free and clear of all security
interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on the Company's or any
Subsidiary's voting rights, charges and other encumbrances of any
nature whatsoever.
SECTION 3.04 Authority Relative to the
Transactions
The Company has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the Transactions. The
execution and delivery by the Company of this Agreement and the
consummation by the Company of the Transactions have been duly
and validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a
majority of the then outstanding shares of Company Common Stock,
if and to the extent required by applicable Law, and the filing
and recordation of appropriate merger documents as required by
the DGCL). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization,
execution and delivery by the other parties thereto, constitutes
the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency
10
(including, without limitation, all Laws relating to fraudulent
transfers), reorganization, moratorium or similar Laws affecting
creditors' rights generally and subject to the effect of general
principles of equity (regardless of whether considered in a
proceeding at law or in equity). The Company Board, at a meeting
duly called and held, and upon the recommendation of the Special
Committee comprised solely of independent directors, has
unanimously (i) determined that this Agreement and the
transactions contemplated hereby, including each of the Offer and
the Merger (collectively, the "Transactions"), are fair to, and
in the best interests of, the holders of Shares, (ii) approved,
adopted and declared advisable this Agreement and the
Transactions (such approval and adoption having been made in
accordance with the DGCL, including, without limitation, Section
203 thereof) and (iii) resolved, subject to Section 6.05(c), to
recommend that the holders of Shares accept the Offer and tender
their Shares pursuant to the Offer, and, if required, approve and
adopt this Agreement and the Transactions. To the knowledge of
the Company, no state takeover statute (other than Section 203(a)
of the DGCL and New Hampshire RSA 421-A) is applicable to the
Merger or the other Transactions.
SECTION 3.05 No Conflict; Required Filings
and Consents
(a) The execution and delivery by the Company of this
Agreement do not, and the performance by the Company of this
Agreement will not, (i) conflict with or violate the Certificate
of Incorporation or By-laws or any equivalent organizational
documents of the Company or any Subsidiary, (ii) assuming that
all consents, approvals, authorizations and other actions
described in Section 3.05(b) have been obtained or taken and all
filings and obligations described in Section 3.05(b) have been
made or fulfilled, conflict with or violate any statute, law,
ordinance, regulation, rule, code, executive order, injunction,
judgment, decree or other order, including those promulgated,
interpreted or enforced by a Governmental Authority ("Law")
applicable to the Company or any Subsidiary or by which any
property or asset of the Company or any Subsidiary is bound or
affected, or (iii) except as set forth in Section 3.05(a) of the
Company Disclosure Schedule, 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, or 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 the Company or any Subsidiary pursuant
to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or
obligation, except, with respect to clause (iii), for any such
conflicts, violations, breaches, defaults or other occurrences
which would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(b) Except as set forth in Section 3.05(b) of the
Company Disclosure Schedule, the execution and delivery by the
Company of this Agreement do not, and the performance by the
Company of this Agreement will not, require any consent,
approval, authorization or permit of, or filing with or
notification to, any United States federal, state, county or
local or non-United States government, governmental, regulatory
or administrative authority, agency, instrumentality or
commission or any court, tribunal, or judicial or arbitral body,
including without limitation, the Federal Trade Commission, the
United States Department of Justice, the IRS, the SEC, the
American Stock Exchange, the National Association of Securities
Dealers, Inc., the Federal Energy Regulatory Commission and all
state regulatory agencies having jurisdiction over the Company
and its Subsidiaries, (a "Governmental Authority"), except for
(i) any applicable requirements of the Exchange Act, the rules of
11
the American Stock Exchange and state takeover laws, (ii) the
filing and recordation of appropriate merger documents as
required by the DGCL and (iii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the
aggregate have a Company Material Adverse Effect.
SECTION 3.06 Permits; Compliance
(a) Each of the Company and the Subsidiaries is in
possession of all material franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Authority,
necessary for each of the Company or the Subsidiaries to own,
lease and operate its properties or to carry on its business as
it is now being conducted or presently contemplated to be
conducted (the "Company Permits") and Section 3.06(a) of the
Company Disclosure Schedule lists each of the Company Permits.
No suspension or cancellation of any of the Company Permits is
pending or, to the knowledge of the Company, threatened.
(b) Each of the Company and its Subsidiaries is in
substantial compliance with (i) all Laws applicable to the
Company or each such Subsidiary or by which any property or asset
of the Company or each such Subsidiary is bound or affected, or
(ii) all notes, bonds, mortgages, indentures, contracts,
agreements, leases, licenses, Company Permits, franchises or
other instruments or obligations to which the Company or each
such Subsidiary is a party or by which the Company or each such
Subsidiary or any property or asset of the Company or each such
Subsidiary is bound. Except as set forth in Section 3.06(b) of
the Company Disclosure Schedule, there are no proceedings pending
before any Governmental Authority or, to the Company's knowledge,
any pending or threatened inquiries or investigations or
threatened proceeding by any Governmental Authority, with respect
to the Company or any of its Subsidiaries.
SECTION 3.07 SEC Filings; Financial Statements
(a) The Company has filed or furnished, as the case
may be, all forms, reports and documents required to be filed or
furnished by it with the SEC since January 1, 2002, and has
heretofore made available to Parent (i) its Annual Reports on
Form 10-K, as amended, for the fiscal years ended December 31,
2002, 2003 and 2004, respectively, (ii) its Quarterly Reports on
Form 10-Q for the periods ended March 31, 2005 and June 30, 2005,
(iii) all proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since January 1,
2002 and (iv) all other forms, reports and other registration
statements (other than Quarterly Reports on Form 10-Q not
referred to in clause (ii) above) filed by the Company with the
SEC since January 1, 2002 (the forms, reports and other documents
referred to in clauses (i), (ii), (iii) and (iv) above being,
collectively, the "Company SEC Reports"). The Company SEC
Reports (i) were prepared in accordance with either the
requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, as the case may be, and
the rules and regulations promulgated thereunder and (ii) did
not, at the time they were filed, or, if amended or supplemented,
as of the date of such amendment or supplement, contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the circumstances
under which they were made, not misleading. No Subsidiary is
required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the
12
Company SEC Reports was prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods indicated (except as may
be indicated in the notes thereto or, in the case of unaudited
interim statements, the omission of footnotes and otherwise as
permitted by Form 10-Q of the SEC) and each fairly presents, in
all material respects, the consolidated financial position,
results of operations and cash flows of the Company and its
consolidated Subsidiaries as at the respective dates thereof and
for the respective periods indicated therein, except as otherwise
noted therein.
(c) Neither the Company nor any Subsidiary has any
liability or obligation of any nature (whether accrued, absolute,
contingent or otherwise) which would be required to be reflected,
reserved for or disclosed in a consolidated balance sheet of the
Company and its consolidated Subsidiaries, including the notes
thereto, prepared as of the date of this Agreement in accordance
with GAAP and consistent with the consolidated balance sheet of
the Company and the consolidated Subsidiaries as at December 31,
2004, including the notes thereto (the "2004 Balance Sheet"),
except for (i) liabilities and obligations that are reflected,
reserved for or disclosed in the 2004 Balance Sheet or in the
consolidated balance sheet of the Company and the consolidated
Subsidiaries as at June 30, 2005, including the notes thereto,
(ii) liabilities and obligations that are incurred in the
ordinary course of business consistent with past practice since
June 30, 2005, or (iii) as set forth in Section 3.07(c) of the
Company Disclosure Schedule.
(d) The Company has heretofore furnished to Parent
complete and correct copies of all amendments and modifications
that have not been filed by the Company with the SEC to all
agreements, documents and other instruments that previously had
been filed by the Company with the SEC and are currently in
effect.
(e) The Company has heretofore furnished to Parent all
comment letters received by the Company from the SEC or the staff
thereof and all responses to such comment letters filed by or on
behalf of the Company and all written correspondence with the
American Stock Exchange, in each case, since January 1, 2002, and
all filings or written communications related to the Company's
2003 tender offer for Shares with the SEC, the American Stock
Exchange and the Company's Stockholders.
(f) To the Company's knowledge, except as disclosed in
the Company SEC Reports or as disclosed in Section 3.07(f) of the
Company Disclosure Schedule, each director and executive officer
of the Company has filed with the SEC on a timely basis all
statements required by Section 16(a) of the Exchange Act and the
rules and regulations promulgated thereunder since January 1,
2002.
(g) The Company has timely filed and made available to
Parent all certifications and statements required by (x) Rule 13a-
14 or Rule 15d-14 under the Exchange Act or (y) 18 U.S.C. Section
1350 (Section 906 of the Xxxxxxxx-Xxxxx Act of 2002) with respect
to any Company SEC Report. The Company maintains disclosure
controls and procedures required by Rule 13a-15 or Rule 15d-15
under the Exchange Act; such controls and procedures are
effective to provide reasonable assurance that all material
information concerning the Company and its Subsidiaries is made
known on a timely basis to the individuals responsible for the
preparation of the Company's SEC filings and other public
disclosure documents. The Company has made available to Parent,
complete and correct copies of, all written descriptions of, and
all policies, manuals and other documents promulgating, such
disclosure controls and procedures. As used in this Section
13
3.07, the term (i) "file" shall be broadly construed to include
any manner in which a document or information is furnished,
supplied or otherwise made available to the SEC and (ii)
documents filed with the SEC by the Company and publicly
available via the SEC's XXXXX system shall be considered to have
been made available by the Company to the Parent.
(h) The Company maintains and will continue to
maintain a system of accounting in accordance with GAAP. The
Company and its Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization
and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. The Company has
made available to Parent complete and correct copies of, all
written descriptions of, and all policies, manuals and other
documents promulgating, such internal accounting controls.
(i) Since January 1, 2002, neither the Company nor
any Subsidiary nor, to the Company's knowledge, any
Representative of the Company or any Subsidiary, has received or
otherwise had or obtained knowledge of any complaint, allegation,
assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or
methods of the Company or any Subsidiary or their respective
internal accounting controls, including any complaint,
allegation, assertion or claim that the Company or any Subsidiary
has engaged in questionable accounting or auditing practices. No
attorney representing the Company or any Subsidiary, whether or
not employed by the Company or any Subsidiary, has reported
evidence of a material violation of securities laws, breach of
fiduciary duty or similar violation by the Company or any of its
officers, directors, employees or agents to the Company Board or
any committee thereof or to any director or officer of the
Company. Except as set forth in Section 3.07(i) of the Company
Disclosure Schedule, since January 1, 2002, there have been no
internal investigations regarding accounting or revenue
recognition discussed with, reviewed by or initiated at the
direction of the chief executive officer, chief financial
officer, general counsel, the Company Board or any committee
thereof.
(j) To the knowledge of the Company, no employee of
the Company or any Subsidiary has provided or is providing
information to any law enforcement agency regarding the
commission or possible commission of any crime or the violation
or possible violation of any applicable Law. Neither the Company
nor any Subsidiary nor any officer or, to the Company's
knowledge, any employee, contractor, subcontractor or agent of
the Company or any such Subsidiary has been discharged, demoted,
suspended, threatened, harassed or in any other manner
discriminated against an employee of the Company or any
Subsidiary in the terms and conditions of employment because of
any act of such employee described in 18 U.S.C. 1514A(a).
SECTION 3.08 Absence of Certain Changes or Events
Since December 31, 2004, except as disclosed in the
Company SEC Reports filed prior to the execution of this
Agreement, and except as set forth in Section 3.08 of the Company
Disclosure Schedule, or as expressly contemplated by this
Agreement, (a) the Company and the Subsidiaries have conducted
their businesses only in the ordinary course and in a manner
14
consistent with past practice, (b) there has not been any Company
Material Adverse Effect and (c) none of the Company or any
Subsidiary has taken any action that, if taken after the date of
this Agreement, would constitute a breach of any of the covenants
set forth in Section 5.01.
SECTION 3.09 Absence of Litigation
Except as set forth in the Company SEC Reports or in
Section 3.09 of the Company Disclosure Schedule, there is no
litigation, suit, claim, action, proceeding or investigation
(which investigation has been communicated to the Company or of
which the Company has knowledge) (an "Action") pending or, to the
knowledge of the Company, threatened against the Company or any
Subsidiary, or any property or asset of the Company or any
Subsidiary, before any Governmental Authority, except for Actions
that, if determined adversely to the Company or any Subsidiary
would not result in losses and expenses (including reasonable
expenses of counsel) in excess of $50,000 or otherwise be
material to the Company. Except as set forth in Section 3.09 of
the Company Disclosure Schedule, neither the Company nor any
Subsidiary nor any property or asset of the Company or any
Subsidiary is subject to any continuing order of, consent decree,
settlement agreement or other similar written agreement with, or,
to the knowledge of the Company, continuing investigation by, any
Governmental Authority, or any order, writ, judgment, injunction,
decree, determination or award of any Governmental Authority.
SECTION 3.10 Employee Benefit Plans
(a) Section 3.10(a) of the Company Disclosure Schedule
lists all employee benefit plans (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and all bonus, stock option, stock purchase,
restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance or
other benefit plans, programs or arrangements, and all
employment, retention, termination, severance or other contracts
or agreements, to which the Company or any Subsidiary is a party,
with respect to which the Company or any Subsidiary has any
obligation or which are maintained, contributed to or sponsored
by the Company or any Subsidiary for the benefit of any current
or former employee, officer or director of the Company or any
Subsidiary (collectively, the "Plans"). For each Plan, the
Company has furnished or made available to Parent a true and
complete copy of each Plan document and where such Plan is
unwritten, a written description of the material terms thereof,
and has delivered or made available to Parent a true and complete
copy of the following: (i) each trust or other funding
arrangement prepared in connection with a Plan, (ii) each summary
plan description and summary of material modifications (or a
description of any material oral communications) provided by the
Company or any Subsidiary to any current or former employees,
officers, directors, or other beneficiaries or their dependents
or spouses of the Company or any Subsidiary concerning the extent
of the benefits provided under each Plan, (iii) the most recently
filed Internal Revenue Service ("IRS") Form 5500 for each Plan
required to file such report, (iv) the most recently received IRS
determination letter or IRS prototype opinion letter for each
Plan that has received such IRS determination letter or IRS
prototype opinion letter and (v) the most recently prepared
actuarial report or financial statement in connection with each
Plan required to prepare or distribute such actuarial report or
financial statement. Except as disclosed in Section 3.10(a) of
the Company Disclosure Schedule, neither the Company nor any
Subsidiary has any express or implied commitment (i) to create,
incur liability with respect to or cause to exist any other
employee benefit plan, program or arrangement, (ii) to enter into
any contract or agreement to provide compensation or benefits to
15
any individual, or (iii) to modify, change or terminate any Plan,
other than with respect to a modification, change or termination
required by this Agreement, the Transactions or ERISA, the Code
or to otherwise comply with applicable law.
(b) Except as disclosed in Section 3.10(b) of the
Company Disclosure Schedule, neither the Company nor any
Subsidiary (including any entity that during the past six years
was a Subsidiary) has now or at any time contributed to,
sponsored, or maintained (i) a pension plan (within the meaning
of Section 3(2) of ERISA) subject to Section 412 of the Code or
Title IV of ERISA, (ii) a multiemployer plan (within the meaning
of Section 3(37) or 4001(a)(3) of ERISA) (a "Multiemployer
Plan"), or (iii) a single employer pension plan (within the
meaning of Section 4001(a)(15) of ERISA) for which the Company or
any Subsidiary could incur liability under Section 4063 or 4064
of ERISA (a "Multiple Employer Plan"). Except as disclosed in
Section 3.10(b) of the Company Disclosure Schedule, no Plan
exists that (A) provides for the payment of separation,
severance, termination or similar-type benefits to any person,
(B) obligates the Company or any Subsidiary to pay separation,
severance, termination or similar-type benefits solely or
partially as a result of any transaction contemplated by this
Agreement, or (C) could result in the payment to any present or
former employee, director or consultant of the Company or any
Subsidiary of any money or other property or accelerate or
provide any other rights or benefits to any current or former
employee of the Company or any Subsidiary as a result of the
consummation of the Transactions (whether alone or in connection
with any subsequent event). There is no contract, plan or
arrangement (written or otherwise) covering any current or
former employee of the Company or any Subsidiary that,
individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to the terms of
Section 280G of the Code. Except to the extent required under
ERISA Section 601 et. seq. and Code Section 4980B, none of the
Plans provides for or promises retiree medical, retiree
disability or retiree life insurance benefits to any current or
former employee, officer or director of the Company or any
Subsidiary. Each of the Plans is subject only to the Laws of the
United States or a political subdivision thereof.
(c) Except as disclosed in Section 3.10(c) of the
Company Disclosure Schedule, each Plan is now and always has been
operated in all material respects in accordance with its terms
and the requirements of all applicable Laws including, without
limitation, ERISA and the Code. Except as disclosed in Section
3.10(c) of the Company Disclosure Schedule, the Company and the
Subsidiaries have performed all obligations required to be
performed by them under, are not in any respect in default under
or in violation of, and have no knowledge of any default or
violation by any party to, any Plan. No Action is pending or, to
the knowledge of the Company, threatened with respect to any Plan
(other than routine claims for benefits in the ordinary course)
and except as disclosed in Section 3.10(c) of the Company
Disclosure Schedule, no fact or event exists, to the Company's
knowledge, that could reasonably be expected to give rise to any
such Action. Except as disclosed in Section 3.10(c) of the
Company Disclosure Schedule, no operational or plan failure
(within the meaning of Rev. Proc. 2003-44) exists or has existed
with respect to any Plan that is intended to be qualified under
Section 401(a) of the Code.
(d) Except as disclosed in Section 3.10(d) of the
Company Disclosure Schedule, each Plan that is intended to be
qualified under Section 401(a) of the Code has timely received a
favorable determination letter or prototype opinion letter from
the IRS covering all of the provisions applicable to the Plan for
which determination letters or prototype opinion letters are
currently available that the Plan is so qualified and each trust
16
established in connection with any Plan which is intended to be
exempt from federal income taxation under Section 501(a) of the
Code is so exempt, and no fact or event exists that could
reasonably be expected to result in the revocation of such
exemption.
(e) There has not been any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of
the Code) with respect to any Plan. Except as disclosed in
Section 3.10(e) of the Company Disclosure Schedule, neither the
Company nor any Subsidiary has incurred any liability under,
arising out of or by operation of Title IV of ERISA (other than
liability for premiums to the Pension Benefit Guaranty
Corporation arising in the ordinary course), including, without
limitation, any liability in connection with (i) the termination
or reorganization of any employee benefit plan subject to Title
IV of ERISA, or (ii) the withdrawal from any Multiemployer Plan
or Multiple Employer Plan, and no fact or event exists which
could reasonably be expected to give rise to any such liability.
(f) All contributions, premiums or payments required
to be made with respect to any Plan have been made on or before
their due dates. All such contributions have been fully deducted
for income tax purposes and no such deduction has been challenged
or disallowed by any Governmental Authority and no fact or event
exists which could reasonably be expected to give rise to any
such challenge or disallowance.
(g) Except as disclosed in Section 3.10(g) of the
Company Disclosure Schedule, all directors, officers, management
employees, and technical and professional employees of the
Company and the Subsidiaries are under written obligation to the
Company and the Subsidiaries to maintain in confidence all
confidential or proprietary information acquired by them in the
course of their employment and to assign to the Company and the
Subsidiaries all inventions made by them within the scope of
their employment during such employment and for a reasonable
period thereafter, and none of the Transactions shall adversely
affect the Company's rights thereunder.
(h) Except as disclosed in Section 3.10(h) of the
Company Disclosure Schedule, the Company and the Subsidiaries are
in compliance with the requirements of the Workers Adjustment and
Retraining Notification Act and any similar state or local law
("WARN") and have no liabilities pursuant to WARN determined
without regard to any terminations of employment that occur on or
after the Effective Time.
(i) Prior to or in connection with the execution of
this Agreement, the Company confirms (i) that certain retention
and incentive agreement, dated as of December 3, 2001, by and
between the Company and Xxxxx X. Xxxxxx Xx., and (ii) that
certain retention and incentive agreement, dated as of November
30, 2001, by and between the Company and Xxxxxxx X. Xxxxxxxxxxxx
(together, the "Retention and Incentive Agreements"), have each
been terminated and no further amount are or will become due and
payable in connection therewith.
SECTION 3.11 Labor and Employment Matters
(a) Section 3.11(a) of the Company Disclosure Schedule
lists all employees of the Company and the Subsidiaries and
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designates each employee by the correct employer and business
division for which the employee primarily performs services.
(b) Except as disclosed in Section 3.11(b) of the
Company Disclosure Schedule, neither the Company nor any
Subsidiary is a party to any collective bargaining agreement or
other labor union contract applicable to persons employed by the
Company or any Subsidiary, nor, to the knowledge of the Company,
are there any activities or proceedings of any labor union to
organize any such employees. Except as disclosed in Section
3.11(b) of the Company Disclosure Schedule, as of the date
hereof, there are no unfair labor practice complaints pending
against the Company or any Subsidiary before the National Labor
Relations Board or any other Governmental Authority or any
current union representation questions involving employees of the
Company or any Subsidiary. As of the date hereof, there is no
strike, controversy, slowdown, work stoppage or lockout
occurring, or, to the knowledge of the Company, any threat
thereof in writing, by or with respect to any employees of the
Company or any Subsidiary.
(c) The Company and its Subsidiaries are in compliance
in all material respects with all applicable Laws relating to the
employment of labor, including those related to wages, hours,
immigration and naturalization, collective bargaining and the
payment and withholding of taxes and other sums as required by
the appropriate Governmental Authority and have withheld and paid
to the appropriate Governmental Authority or are holding for
payment not yet due to such Governmental Authority all amounts
required to be withheld from employees of the Company or any
Subsidiary and are not liable for any arrears of wages, taxes,
penalties or other sums for failure to comply with any of the
foregoing. The Company and its Subsidiaries have paid in full to
all employees or adequately accrued for in accordance with GAAP
consistently applied all wages, salaries, commissions, bonuses,
benefits and other compensation due to or on behalf of such
employees and there is no claim with respect to payment of wages,
salary or overtime pay that has been asserted or is now pending
or threatened before any Governmental Authority with respect to
any persons currently or formerly employed by the Company or any
Subsidiary. Neither the Company nor any Subsidiary is a party
to, or otherwise bound by, any consent decree with, or citation
by, any Governmental Authority relating to employees or
employment practices. Except as disclosed in Section 3.11(c) of
the Company Disclosure Schedule, there is no charge or proceeding
with respect to a violation of any occupational safety or health
standards that has been asserted or is now pending or, to the
knowledge of the Company, threatened with respect to the Company.
Except as disclosed in Section 3.11(c) of the Company Disclosure
Schedule, there is no charge of discrimination in employment or
employment practices, for any reason, including, without
limitation, age, gender, race, religion or other legally
protected category, which has been asserted or is now pending or
threatened before the United States Equal Employment Opportunity
Commission, or any other Governmental Authority in any
jurisdiction in which the Company or any Subsidiary has employed
or employ any person.
(d) The Company has entered into employment agreements
with each of Xxxxx X. Xxxxxx Xx. and Xxxxxxx X. Xxxxxxxxxxxx, in
substantially the forms attached hereto as Annex B and Annex C
(the "Surviving Corporation Employment Agreements"), with such
Surviving Corporation Employment Agreements to become effective
at the Effective Time, provided however, that the effectiveness
of such Surviving Corporation Employment Agreements shall be
conditioned upon the acceptance of the Shares pursuant to the
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Offer and the completion of the Merger. Upon the effectiveness
of the Surviving Corporation Employment Agreements, any other
employment agreements between the Company or any of its
Subsidiaries and Messrs. Xxxxxx or Callendrello shall be deemed
terminated.
SECTION 3.12 Real Property; Title to Assets;
Liens, etc
(a) Section 3.12(a) of the Company Disclosure Schedule
lists each parcel of real property owned by the Company or any
Subsidiary. Except as set forth in Section 3.12(a) of the
Company Disclosure Schedule, each parcel of real property owned
by the Company or any Subsidiary (i) is owned free and clear of
all mortgages, pledges, liens, security interests, conditional
and installment sale agreements, encumbrances, charges or other
claims of third parties of any kind, including, without
limitation, any easement, right of way or other encumbrance to
title, or any option, right of first refusal, or right of first
offer or adverse interest (collectively, "Liens"), other than
(A) Liens for current Taxes and assessments not yet past due and
payable or being contested in good faith, (B) inchoate mechanics'
and materialmen's Liens for construction in progress,
(C) workmen's, repairmen's, warehousemen's and carriers' Liens
arising in the ordinary course of business of the Company or such
Subsidiary consistent with past practice and (D) all matters of
record, Liens and other imperfections of title and encumbrances
that would not, individually or in the aggregate, have a Company
Material Adverse Effect (collectively, "Permitted Liens") and
(ii) is neither subject to any governmental decree or order to be
sold nor is being condemned, expropriated or otherwise taken by
any public authority with or without payment of compensation
therefor, nor, to the knowledge of the Company, has any such
condemnation, expropriation or taking been proposed.
(b) Section 3.12(b) of the Company Disclosure Schedule
lists (i) each parcel of real property currently leased,
subleased or licensed by the Company or any Subsidiary and
(ii) each parcel of real property currently owned by the Company
or any Subsidiary that is subject, in whole or in part, to any
lease or license in favor of any third party or any Affiliate of
the Company, together, in each case, with the name of the lessor,
the lessee and the date of the lease, sublease, license,
assignment of the lease, any guaranty given or leasing
commissions payable by the Company or any Subsidiary in
connection therewith and each material amendment to any of the
foregoing (collectively, the "Lease Documents"). True, correct
and complete copies of all Lease Documents have been delivered to
Parent. All such current leases, subleases and licenses are in
full force and effect, are valid and effective in accordance with
their respective terms, and there is not, under any of such
leases, any existing material default or event of default (or
event which, with notice or lapse of time, or both, would
constitute a material default) by the Company or any Subsidiary
or, to the Company's knowledge, by the other party to such lease,
sublease or license.
(c) There are no contractual or legal restrictions or
other arrangements that preclude or restrict the ability of the
Company or any Subsidiary to use all or any portion of any real
property owned or leased by the Company or any Subsidiary for the
purposes for which it is currently being used by the Company or
such Subsidiary. There are no material adverse physical
conditions or, to the Company's knowledge, material latent
defects, affecting the real property, and improvements thereon,
owned or leased by the Company or any Subsidiary.
(d) Except for Liens in favor of Purchaser or Parent
and as disclosed in Section 3.13(d) of the Company Disclosure
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Schedule, each of the Company and the Subsidiaries has good and
valid title to, or, in the case of leased properties and assets,
valid leasehold or subleasehold interests in, all of its
properties and assets (including interests in the Subsidiaries),
tangible and intangible, real, personal and mixed, used or held
for use in its business, free and clear of any Liens, except for
Permitted Liens.
(e) Section 3.12(e) of the Company Disclosure Schedule
sets forth a true and complete list of all seismic surveys,
geophysical surveys and similar data and information compiled by
or on behalf of the Company.
SECTION 3.13 Intellectual Property
(a) Section 3.13(a) of the Company Disclosure Schedule
sets forth a true and complete list of all (i) patents and patent
applications, (ii) registrations and applications for
registration of trademarks and service marks, (iii) registrations
and applications for registration of copyrights, (iv) domain name
registrations, (v) invention or technology disclosures (other
than those subject to issued patents or pending patent
applications) and (vi) Software that the Company or a Subsidiary
licenses to third parties in the operation of their business, in
each case, included in the Owned Intellectual Property.
(b) Except as set forth in Section 3.13(b)(i) of the
Company Disclosure Schedule, the Company or a Subsidiary is the
exclusive owner of the entire and unencumbered right, title and
interest in and to the Owned Intellectual Property, and the
Company or a Subsidiary has a valid right to use the Licensed
Intellectual Property in the ordinary course of their business as
presently conducted or as contemplated to be conducted. Except
as set forth in Section 3.13(b)(ii) of the Company Disclosure
Schedule, the Owned Intellectual Property and, to knowledge of
the Company, the Licensed Intellectual Property, are subsisting,
valid and enforceable, and have not been adjudged invalid or
unenforceable in whole or in part.
(c) The conduct by the Company and the Subsidiaries of
their business as currently conducted or as contemplated to be
conducted, and the use of the Owned Intellectual Property and
Licensed Intellectual Property in connection therewith, do not
conflict with, infringe, misappropriate or otherwise violate the
Intellectual Property or other proprietary rights of any third
party. Except as disclosed in Section 3.13(c) of the Company
Disclosure Schedule, no Actions have been asserted or are pending
or threatened against the Company or any Subsidiary (i) based
upon or challenging or seeking to deny or restrict the use by the
Company or any Subsidiary of any of the Owned Intellectual
Property or Licensed Intellectual Property, (ii) alleging that
any services provided by, processes used by, or products
manufactured or sold by the Company or any Subsidiary infringe,
misappropriate or otherwise violate the Intellectual Property
right or other proprietary right of any third party, or (iii)
alleging that the Licensed Intellectual Property is being
licensed or sublicensed in conflict with the terms of any license
or other agreement. Except as disclosed in Section 3.13(c) of
the Company Disclosure Schedule, no Owned Intellectual Property
or Licensed Intellectual Property is subject to any outstanding
decree, order, injunction, judgment or ruling restricting the use
of such Intellectual Property or that would impair the validity
or enforceability of such Intellectual Property. Except as
disclosed in Section 3.13(c) of the Company Disclosure Schedule
and to the knowledge of the Company, no person is engaging in any
activity that infringes the Owned Intellectual Property or
Licensed Intellectual Property.
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(d) The Owned Intellectual Property and the Licensed
Intellectual Property constitutes all of the Intellectual
Property used or held for use or intended to be used in conduct
of the Company and the Subsidiaries as presently conducted or
contemplated to be conducted, and there are no other items of
Intellectual Property that are material to the conduct of the
Company and the Subsidiaries as presently conducted or
contemplated to be conducted. The consummation of the
transactions contemplated by this Agreement will not result in
the termination or impairment of any of the Owned Intellectual
Property or the Licensed Intellectual Property or require the
payment of additional royalties or fees to third parties.
(e) The Company and the Subsidiaries have taken
reasonable steps in accordance with normal industry practice to
maintain the confidentiality of the trade secrets and other
confidential Intellectual Property used or held for use or
intended to be used by the Company or the Subsidiaries.
(f) The consummation of the transactions contemplated
in this Agreement will not materially impair or interrupt the
Company and the Subsidiaries' access and use of, or its right to
access and use, the Company IT Systems. The Company has taken
all reasonable steps in accordance with normal industry practice
to secure the Company IT Systems from unauthorized access or use
thereof by any person, and to provide for the continued,
uninterrupted and error-free operation of the Company IT Systems,
including employing security, maintenance, disaster recovery,
redundancy, backup, archiving and virus or malicious device
scanning/protection measures.
SECTION 3.14 Taxes
(a) The Company and the Subsidiaries have filed all
Tax Returns that they were required to file, and all such Tax
Returns were correct and complete in all material respects. All
Taxes due and owing by the Company or any Subsidiary (whether or
not shown on any Tax Return) have been paid. Neither the Company
nor any Subsidiary currently is the beneficiary of any extension
of time within which to file any Tax Return. There are no liens
for Taxes (other than Taxes not yet due and payable) upon any of
the assets of the Company or any Subsidiary.
(b) Except as set forth in Section 3.14(b) of the
Company Disclosure Schedule, there is no dispute or claim pending
or, to the knowledge of the Company, threatened concerning any
Tax liability of the Company or any Subsidiary.
(c) Except as set forth in Section 3.14(c) of the
Company Disclosure Schedule, neither the Company nor any
Subsidiary 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.
(d) Except as set forth in Section 3.14(d) of the
Company Disclosure Schedule, neither the Company nor any
Subsidiary (i) has filed a consent under Section 341(f) of the
Code concerning collapsible corporations; (ii) is a party to any
agreement, contract, arrangement or plan that has resulted or
would result, separately or in the aggregate, in any payment that
would not be deductible pursuant to Code section 162(m) or any
"excess parachute payment" within the meaning of Code section
280G (or any corresponding provision of state, local or foreign
Tax law); (iii) has been a United States real property holding
corporation within the meaning of Code section 897(c)(2) during
the applicable period specified in Code section 897(c)(1)(A)(ii);
(iv) is a party to or bound by any tax allocation or sharing
agreement; (v) has been a member of an affiliated group filing a
21
consolidated federal income Tax Return (other than a group the
common parent of which was the Company) or has any liability for
the Taxes of any person other than the Company or any of its
Subsidiaries under Reg. 1.1502-6 (or any similar provision of
state, local or foreign law), as a transferee or successor, by
contract, or otherwise; (vi) has distributed stock of another
corporation or has had its stock distributed in a transaction
that was purported or intended to be governed in whole or in part
by Code section 355 or Code section 361; or (vii) has
participated in any reportable transaction within the meaning of
Code section 6707A(c)(1).
(e) Except as set forth in Section 3.14(e) of the
Company Disclosure Schedule, neither the Company nor any
Subsidiary will be required to include any item of income in, or
exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Effective
Time as a result of any (i) change in method of accounting for a
taxable period ending on or prior to the Effective Time;
(ii) closing agreement as described in Code section 7121 (or any
corresponding or similar provision of state, local or foreign Tax
law) executed on or prior to the Effective Time;
(iii) intercompany transactions or any excess loss account
described in Treasury regulations under Code section 1502 (or any
corresponding or similar provision of state, local or foreign Tax
law); (iv) installment sale or open transaction disposition made
on or prior to the Effective Time; or (v) prepaid amount received
on or prior to the Effective Time.
(f) The accruals and reserves for Taxes reflected in
the 2004 Balance Sheet are adequate to satisfy all Taxes
accruable through such date in accordance with GAAP.
SECTION 3.15 Environmental Matters
Except as described in Section 3.15 of the Company
Disclosure Schedule, (a) none of the Company, any of the
Subsidiaries or any predecessor of any of the foregoing has
violated or is in violation of any Environmental Law except for
any such violations existing prior to the Company's ownership of
its assets and properties, of which the Company is aware of none
(other than as disclosed in Section 3.15 of the Company
Disclosure Schedule), that have been resolved, are no longer
outstanding and for which the Company and the Subsidiaries have
no further liability; (b) none of the properties currently or
formerly owned, leased or operated by the Company, any Subsidiary
or any predecessor of any of the foregoing (including, without
limitation, soils and surface and ground waters) are contaminated
with any Hazardous Substance in a manner that would reasonably be
expected to give rise to an obligation of the Company or any of
the Subsidiaries to conduct any investigation, assessment, study,
remediation, removal, closure or clean up or to notify or report
any such contamination to any Governmental Authority under any
Environmental Law; (c) none of the Company, any of the
Subsidiaries or any predecessor of any of the foregoing has
received any written notice that it is actually, potentially or
allegedly liable under any Environmental Law for any off-site
contamination by Hazardous Substances; (d) each of the Company
and each Subsidiary has all permits, licenses and other
authorizations required for their current operations under any
Environmental Law ("Environmental Permits"); (e) each of the
Company and each Subsidiary is in compliance with all such
Environmental Permits; and (f) neither the execution of this
Agreement nor the consummation of the Transactions will require
any investigation, remediation or other action with respect to
Hazardous Substances, or any notice to or consent of Governmental
Authorities or third parties, pursuant to any applicable
Environmental Law or Environmental Permit. This Section 3.15
contains the sole and exclusive representations and warranties of
22
the Company with respect to environmental matters, including
without limitation all matters relating to Environmental Laws and
Environmental Permits.
SECTION 3.16 Material Contracts
(a) Subsections (i) through (xviii) of Section 3.16(a)
of the Company Disclosure Schedule list the following types of
contracts and agreements to which the Company or any Subsidiary
is a party (such contracts and agreements as are required to be
set forth in Section 3.16(a) of the Company Disclosure Schedule
being the "Material Contracts"):
(i) each "material contract" (as such term is defined
in Item 601(b)(10) of Regulation S-K of the SEC)
with respect to the Company and its Subsidiaries;
(ii) each contract and agreement, whether or not made in
the ordinary course of business, that contemplates
an exchange of consideration with a value of more
than $100,000, in the aggregate, over the term of
such contract or agreement;
(iii) all material supply agreements;
(iv) all joint venture, partnership, strategic alliance
and business acquisition or divestiture agreements
(and all letters of intent, term sheets and draft
agreements relating to any such pending
transactions);
(v) all contracts and agreements relating to issuances
of securities of the Company or any Subsidiary (and
all letters of intent, term sheets and draft
agreements relating to any such pending
transactions);
(vi) all broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion,
market research, marketing consulting and
advertising contracts and agreements;
(vii) all management contracts and agreements (excluding
contracts for employment) and contracts and
agreements with other consultants, including any
contracts or agreements involving the payment of
royalties or other amounts calculated based upon
the revenues or income of the Company or any
Subsidiary or income or revenues related to any
product of the Company or any Subsidiary to which
the Company or any Subsidiary is a party;
(viii) all contracts and agreements evidencing
indebtedness for borrowed money;
(ix) all contracts and agreements with any Governmental
Authority, other than those contracts and
agreements for the sale of goods or services in the
ordinary course of business;
(x) all contracts and agreements that limit, or purport
to limit, the ability of the Company or any
Subsidiary to compete in any line of business or
with any person or entity or in any geographic area
or during any period of time;
(xi) all contracts and agreements providing for benefits
under any Plan;
23
(xii) all material contracts or arrangements that result
in any person or entity holding a material power of
attorney from the Company or any Subsidiary that
relates to the Company, any Subsidiary or their
respective businesses other than limited powers of
attorney granted in the ordinary course of
business;
(xiii) all contracts and agreements for employment
required to be listed in Section 3.10(a) of the
Company Disclosure Schedule;
(xiv) all Lease Documents;
(xv) all contracts and agreements relating in whole or
in part to Intellectual Property pursuant to which
the Company or any Subsidiary obtains from any
third party any material Intellectual Property
rights;
(xvi) all contracts and agreements related to
professional services rendered to the Company or
any Subsidiary in connection with the Offer, the
Merger and this Agreement;
(xvii) all contracts and agreements that would obligate
the Company or any Subsidiary to make any payment
based on the consummation of the Transactions; and
(xviii) all other contracts and agreements, whether or not
made in the ordinary course of business, which are
material to the Company, any Subsidiary or the
conduct of its and their respective businesses, or
the absence of which would, individually or in the
aggregate, have a Company Material Adverse Effect.
(b) (i) Each Material Contract is a legal, valid and
binding agreement of the Company or the applicable Subsidiary, as
the case may be, and, to the Company's knowledge, of the other
party(ies) thereto; (ii) neither the Company nor any Subsidiary
is in material breach or violation of, or material default under,
any Material Contract; (iii) to the Company's knowledge, no other
party is in material breach or violation of, or material default
under, any Material Contract; (iv) the Company and the
Subsidiaries have not received any notice of default under any
Material Contract which remains uncured or any notice of another
party's intent to cancel or otherwise terminate a Material
Contract; and (v) except as set forth in Section 3.16(b) of the
Company Disclosure Schedule, neither the execution of this
Agreement nor the consummation of any Transaction shall
constitute a default under, give rise to cancellation rights
under, or otherwise adversely affect any of the rights of the
Company or any Subsidiary under any Material Contract. The
Company has furnished or made available to Parent true and
complete copies of all Material Contracts, including any
amendments thereto.
SECTION 3.17 Insurance
(a) Section 3.17(a) of the Company Disclosure Schedule
sets forth, with respect to each insurance policy under which the
Company or any Subsidiary has been an insured, a named insured or
otherwise the principal beneficiary of coverage at any time
within the past three years, (i) the names of the insurer, the
principal insured and each named insured, (ii) the policy number,
(iii) a brief summary of the period, scope and amount of coverage
and (iv) the premium charged. The types and amounts of coverage
provided therein are usual and customary in the context of the
businesses and operations in which the Company and the
Subsidiaries are engaged.
24
(b) With respect to each such insurance policy: (i)
the policy is legal, valid, binding and enforceable in accordance
with its terms and, except for policies that have expired under
their terms in the ordinary course, is in full force and effect;
(ii) neither the Company nor any Subsidiary is in material breach
or default (including any such breach or default with respect to
the payment of premiums or the giving of notice), and no event
has occurred which, with notice or the lapse of time, would
constitute such a breach or default, or permit termination or
modification, under the policy; and (iii) to the knowledge of the
Company, no insurer on the policy has been declared insolvent or
placed in receivership, conservatorship or liquidation.
(c) At no time subsequent to March 31, 2002 has the
Company or any Subsidiary (i) been denied any insurance or
indemnity bond coverage which it has requested, (ii) made any
material reduction in the scope or amount of its insurance
coverage, or (iii) received notice from any of its insurance
carriers that any insurance premiums will be subject to increase
in an amount materially disproportionate to the amount of the
increases with respect thereto (or with respect to similar
insurance) in prior years or that any insurance coverage listed
in Section 3.17(a) of the Company Disclosure Schedule will not be
available in the future substantially on the same terms as are
now in effect.
SECTION 3.18 Certain Business Practices
None of the Company, any Subsidiary or, to the
Company's knowledge, any directors or officers, agents or
employees of the Company or any Subsidiary, has (i) used any
funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to political activity; (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; (iii) made any payment in the
nature of criminal bribery; (iv) made any payment or received any
payment for the purposes of inducing purchases/sales in violation
of the Social Security Act Section 1128 (b)(3), the "Federal Anti-
kickback Statute", or any similar state or local statute; or (v)
participated in providing financial or reimbursement information
to customers that was reported to government reimbursement
agencies and that was untrue or misleading in violation of any
Federal "False Claims Act" or any state or local law that is the
equivalent thereto.
SECTION 3.19 Interested Party Transactions
Except as disclosed in the Company SEC Reports, no
director, officer or other affiliate of the Company or any
Subsidiary has or has had, directly or indirectly, (i) an
economic interest in any person that has furnished or sold, or
furnishes or sells, services or products that the Company or any
Subsidiary furnishes or sells, or proposes to furnish or sell;
(ii) an economic interest in any person that purchases from or
sells or furnishes to, the Company or any Subsidiary, any goods
or services; (iii) a beneficial interest in any contract or
agreement disclosed in Section 3.12 or 3.16 of the Company
Disclosure Schedule; or (iv) any contractual or other arrangement
with the Company or any Subsidiary; provided, however, that
ownership of no more than one percent (1%) of the outstanding
voting stock of a publicly traded corporation shall not be deemed
an "economic interest in any person" for purposes of this
Section 3.19. Since the effectiveness of the Xxxxxxxx-Xxxxx Act
of 2002 ("SOX"), neither the Company nor any Subsidiary has
arranged any outstanding "extensions of credit" to directors or
executive officers within the meaning of Section 402 of SOX.
25
SECTION 3.20 Offer Documents; Schedules 13E-3
and 14D-9.
None of the Schedule 14D-9, the Schedule 13E-3 nor any
information supplied by the Company for inclusion in the Offer
Documents or any Schedule 13E-3 shall, at the times the Schedule
13E-3, Schedule 14D-9, the Offer Documents or any amendments or
supplements thereto are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the
case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. At the
respective times when they are filed with the SEC or are first
published, sent or given to stockholders, the Schedule 14D-9 and
the Schedule 13E-3 will comply as to form in all material
respects with the applicable requirements of the Exchange Act,
and the rules and regulations thereunder. Neither the proxy
statement to be sent to the stockholders of the Company in
connection with the Stockholders' Meeting nor the information
statement to be sent to such stockholders, as appropriate (such
proxy statement or information statement, as amended or
supplemented, being referred to herein as the "Proxy Statement"),
shall, at the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of the
Company, at the time of the Stockholders' Meeting and at the
Effective Time, contain any statement that, at the time and in
light of the circumstances under which it was made, is false or
misleading with respect to any material fact, or omit to state
any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any
statement in any earlier communication with respect to the
solicitation of proxies for the Stockholders' Meeting which shall
have become false or misleading. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to
any information supplied in writing by Parent, Purchaser or any
of Parent's or Purchaser's Representatives for inclusion in the
foregoing documents. The Schedule 14D-9 shall comply in all
material respects as to form with the requirements of the
Exchange Act and the rules and regulations promulgated
thereunder.
SECTION 3.21 Opinion of Financial Advisor
The Company has received the written opinion (the
"Fairness Opinion") of Xxxxxxxxx & Company, Inc., dated the date
of this Agreement, to the effect that, as of the date of this
Agreement, the Merger Consideration is fair, from a financial
point of view, to the Company's stockholders.
SECTION 3.22 Brokers
No broker, finder or investment banker (other than
Xxxxxxxxx & Company, Inc.) is entitled to any brokerage, finder's
or other fee or commission in connection with the Transactions
based upon arrangements made by or on behalf of the Company. The
Company has heretofore furnished to Parent a complete and correct
copy of all agreements between the Company and Xxxxxxxxx &
Company, Inc. pursuant to which such firm would be entitled to
any payment relating to the Transactions.
SECTION 3.23 Section 203 of the DGCL Not Applicable; Other
Statutes
The Company has taken all necessary actions, if any, so
that the provisions of Section 203 of the DGCL and New Hampshire
RSA 421-A will not, before the termination of this Agreement,
apply to this Agreement, the Offer, the Merger or the other
transactions contemplated hereby. No "fair price", "merger
moratorium", "control share acquisition", or other anti-takeover
or similar statute or regulation applies or purports to apply to
this Agreement, the Offer, the Merger or the other transactions
contemplated hereby.
26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
As an inducement to the Company to enter into this
Agreement, Parent and Purchaser hereby, jointly and severally,
represent and warrant to the Company that:
SECTION 4.01 Corporate Organization
Each of Parent and Purchaser is a corporation or
similar legal entity duly formed, validly existing and in good
standing under the laws of the jurisdiction of its incorporation
or organization and has the requisite corporate power and
authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as it is
now being conducted.
SECTION 4.02 Authority Relative to the Transactions
Each of Parent and Purchaser has all necessary
corporate power and authority to execute and deliver this
Agreement, to perform its respective obligations hereunder and to
consummate the Transactions. The execution and delivery by
Parent and Purchaser of this Agreement and the consummation by
Parent and Purchaser of the Transactions have been duly and
validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of Parent or Purchaser
are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the filing
and recordation of appropriate merger documents as required by
the DGCL). This Agreement has been duly and validly executed and
delivered by Parent and Purchaser and, assuming due
authorization, execution and delivery by the Company, constitutes
the legal, valid and binding obligation of each of Parent and
Purchaser, enforceable against each of Parent and Purchaser in
accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting creditors' rights generally
and subject to the effect of general principles of equity
(regardless of whether considered in a proceeding at law or in
equity).
SECTION 4.03 No Conflict; Required Filings and
Consents
(a) The execution and delivery by Parent and Purchaser
of this Agreement do not, and the performance by Parent and
Purchaser of this Agreement will not, (i) conflict with or
violate the Certificate of Incorporation or By-laws of either
Parent or Purchaser, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 4.03(b)
have been obtained or taken and all filings and obligations
described in Section 4.03(b) have been made or fulfilled,
conflict with or violate any Law applicable to Parent or
Purchaser or by which any property or asset of either of them 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, or give to others
any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Parent or Purchaser
pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument
or obligation to which Parent or Purchaser is a party or by which
Parent or Purchaser or any property or asset of either of them is
bound or affected, except, with respect to clause (iii), for any
such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate,
have a Parent Material Adverse Effect.
27
(b) The execution and delivery by Parent and Purchaser
of this Agreement do not, and the performance by Parent and
Purchaser of this Agreement will not, require any consent,
approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, except (i) for
applicable requirements, if any, of the Exchange Act, and filing
and recordation of appropriate merger documents as required by
the DGCL and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not, individually or in the aggregate, have
a Parent Material Adverse Effect.
SECTION 4.04 Financing
Purchaser has, or shall have, sufficient funds to
permit Purchaser to consummate all the Transactions, including,
without limitation, acquiring all the outstanding Shares in the
Offer and the Merger.
SECTION 4.05 Offer Documents; Proxy Statement
The Offer Documents shall not, at the time the Offer
Documents are filed with the SEC or are first published, sent or
given to stockholders of the Company, as the case may be, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order
to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The
information supplied by Parent for inclusion in the Proxy
Statement shall not, at the date the Proxy Statement (or any
amendment or supplement thereto) is first mailed to stockholders
of the Company, at the time of the Stockholders' Meeting or at
the Effective Time, contain any untrue statement of a material
fact, or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not false
or misleading, or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies
for the Stockholders' Meeting which shall have become false or
misleading. Notwithstanding the foregoing, Parent and Purchaser
make no representation or warranty with respect to any
information supplied by the Company or any of its Representatives
for inclusion in any of the foregoing documents or the Offer
Documents. The Offer Documents shall comply in all material
respects as to form with the requirements of the Exchange Act and
the rules and regulations promulgated thereunder.
SECTION 4.06 Brokers
No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on
behalf of Parent or Purchaser.
SECTION 4.07 Ownership of Company Common Stock
Neither Parent nor Purchaser nor any of their
respective subsidiaries or other affiliates currently owns, or
has owned during the six month period preceding the date of this
Agreement, 5% or more of the outstanding shares of Company Common
Stock.
SECTION 4.08 No Prior Operations. Purchaser is a
wholly owned subsidiary of Parent and was organized in connection
with transactions contemplated by this Agreement and has not
conducted any operations other than in connection with this
Agreement and the transactions contemplated hereby.
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ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company
Pending the Merger
The Company agrees that, between the date of this
Agreement and the Effective Time, except as expressly
contemplated by any other provision of this Agreement or as set
forth in Section 5.01 of the Company Disclosure Schedule, unless
Parent shall otherwise consent in writing:
(i) the businesses of the Company and its Subsidiaries
shall be conducted only in, and the Company and its
Subsidiaries shall not take any action except in, the
ordinary course of business and in a manner consistent with
past practice; and
(ii) the Company shall use all reasonable efforts to
preserve substantially intact the business organization of
the Company and the Subsidiaries, to keep available the
services of the current officers, employees and consultants
of the Company and the Subsidiaries and to preserve the
current relationships of the Company and the Subsidiaries
with customers, suppliers and other persons with which the
Company or any Subsidiary has significant business
relations.
From the date of this Agreement until the earlier of
(i) the Effective Time and (ii) the termination of the Agreement,
neither the Company nor any Subsidiary shall, directly or
indirectly, do, or propose to do, any of the following without
the prior written consent of Parent and except as otherwise
expressly contemplated herein:
(a) amend or otherwise change its Certificate of
Incorporation or By-laws or equivalent organizational
documents;
(b) issue, sell, pledge, dispose of, grant or
encumber, or otherwise subject to any Lien, or authorize
such issuance, sale, pledge, disposition, grant or
encumbrance of, or subjection to, any such Lien, (i) any
shares of any class of capital stock of the Company or any
Subsidiary, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including,
without limitation, any phantom interest), of the Company or
any Subsidiary (except for the issuance of Shares issuable
pursuant to employee stock options outstanding on the date
of this Agreement and granted under Company Stock Option
Plans in effect on the date of this Agreement) or (ii) any
assets of the Company or any Subsidiary, except in the
ordinary course of business and in a manner consistent with
past practice;
(c) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock, except
for the declaration and payment of dividends by a wholly
owned Subsidiary solely to its parent corporation;
(d) reclassify, combine, split, subdivide or redeem,
or purchase or otherwise acquire, directly or indirectly,
any of its capital stock;
29
(e) (i) acquire (including, without limitation, by
merger, consolidation, or acquisition of stock or assets or
any other business combination) any corporation,
partnership, other business organization or any division
thereof or any significant amount of assets; (ii) incur any
indebtedness, whether secured or unsecured and whether under
a new or existing credit facility (except borrowings from
Parent or Purchaser) or issue any debt securities or assume,
guarantee or endorse, or otherwise become responsible for,
the obligations of any person, or make any loans or
advances; (iii) enter into any contract or agreement other
than in the ordinary course of business and consistent with
past practice; (iv) authorize, or make any commitment with
respect to, any capital expenditure which is not
specifically referred to in the capital expenditure budget
attached hereto as Section 5.01(e) of the Company Disclosure
Schedule (the "Company Capital Budget") or, to the extent
not included in the Company Capital Budget, any single
capital expenditure in excess of $10,000 or capital
expenditures in the aggregate in excess of $100,000; or
(v) enter into or amend any contract, agreement, commitment
or arrangement with respect to any matter set forth in this
Section 5.01(e);
(f) (i) hire any additional employees except to fill
current vacancies or vacancies arising after the date of
this Agreement, (ii) make any offers to any employee of an
employment position other than the employment position he or
she currently holds, except for offers of an employment
position made in the ordinary course of business and
consistent with past practice in connection with the
promotion or demotion of any employee of the Company or any
of its Subsidiaries who is not a director or officer of the
Company, (iii) increase the compensation payable or to
become payable or the benefits provided to its directors,
officers or employees, except for increases in the ordinary
course of business and consistent with past practice in
salaries or wages of employees of the Company or any of its
Subsidiaries who are not directors or officers of the
Company, (iv) grant any new or additional retention,
severance or termination pay to, or enter into any new or
additional employment, bonus, change of control or severance
agreement with, any director, officer or other employee of
the Company or of any of its Subsidiaries, (v) establish,
adopt, enter into, terminate or amend any Plan or establish,
adopt or enter into any plan, agreement, program, policy,
trust, fund or other arrangement that would be a Plan if it
were in existence as of the date of this Agreement for the
benefit of any director, officer or employee except as
required by this Agreement or the Transactions contemplated
hereby, or as required by ERISA, the Code or to otherwise
comply with applicable Law, (vi) loan or advance money or
other property to any current or former director, officer or
employee of the Company or any of its Subsidiaries, (vii)
grant any equity or equity based awards (provided that
equity awards may be transferred in accordance with the
applicable plan document or agreement) or (viii) hire or
engage any consultant to perform services for a rate of
compensation which would be in excess of $25,000 on an
annual basis or which is not terminable upon notice of 30
days or less;
(g) effectuate a "plant closing" or "mass layoff," as
those terms are defined in WARN (determined without regard
to terminations of employment occurring on or after the
Effective Time);
(h) take any action, other than reasonable and usual
actions in the ordinary course of business and consistent
30
with past practice and other than actions required to be
taken in response to changes in GAAP or in Law, with respect
to accounting policies or procedures;
(i) make, revoke or change any material Tax election
or material method of Tax accounting, file any amended Tax
Return (unless required by Law), enter into any closing
agreement relating to a material amount of Taxes, settle or
compromise any material liability with respect to Taxes or
consent to any material claim or assessment relating to
Taxes or any waiver of the statute of limitations for any
such claim or assessment; provided, that in the case of the
filing of any amended Tax Return, the Company or the
relevant Subsidiary shall deliver a copy of such amended Tax
Return to Parent at least 30 days prior to filing for
Parent's review and consent;
(j) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than in the ordinary course
of business and consistent with past practice, unless such
payment, discharge or satisfaction is made in accordance
with the terms of such claim, liability or obligation as
such terms exist on the date of this Agreement;
(k) pay accounts payable, utilize cash, draw down on
lines of credit, delay or accelerate capital expenditures,
incur expenditures on research and development, other than
in the ordinary course of business and consistent with past
practice;
(l) amend or modify in any material respect, or
consent to the termination of, any Material Contract, or
amend, waive or modify in any material respect, or consent
to the termination of, the Company's or any Subsidiary's
rights thereunder;
(m) commence or settle any Action, other than the
settlement of Actions involving payments by the Company or
its Subsidiaries not to exceed $100,000 with respect to any
individual Action or $250,000 in aggregate settlements;
(n) (i) abandon, sell, assign, or grant any security
interest in or to any item of the Owned Intellectual
Property, Licensed Intellectual Property or IP Agreements,
(ii) grant to any third party any license, sublicense or
covenant not to xxx with respect to any Owned Intellectual
Property or Licensed Intellectual Property, other than in
the ordinary course of business consistent with past
practice, (iii) develop, create or invent any Intellectual
Property jointly with any third party (other than such joint
development, creation or invention with a third party that
is in progress as of the date hereof), (iv) disclose, or
allow to be disclosed, any confidential Owned Intellectual
Property, unless such Owned Intellectual Property is subject
to a confidentiality or non-disclosure covenant protecting
against disclosure thereof, or (v) fail to perform or cause
to be performed all applicable filings, recordings and other
acts, and pay or caused to be paid all required fees and
taxes, to maintain and protect its interest in each and
every item of the Owned Intellectual Property and the
Licensed Intellectual Property;
(o) fail to make in a timely manner any filings with
the SEC required under the Securities Act or the Exchange
Act or the rules and regulations promulgated thereunder;
31
(p) enter into any contract or agreement with any
director or officer of the Company or any Subsidiary or any
of their respective affiliates (including any immediate
family member of such person) or any other affiliate of the
Company or any Subsidiary; or
(q) announce an intention, enter into any formal or
informal agreement or otherwise make a commitment, to do any
of the foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Stockholders' Meeting
(a) If required by applicable Law in order to
consummate the Merger, the Company, acting through the Company
Board, shall (i) in accordance with applicable Law and the
Company's Certificate of Incorporation and By-laws, duly call,
give notice of, convene and hold an annual or special meeting of
its stockholders as promptly as practicable following
consummation of the Offer for the purpose of considering and
taking action on this Agreement and the Merger (the
"Stockholders' Meeting") and (ii) (A) include in the Proxy
Statement, and, subject to Section 6.05(c) hereof, not
subsequently withdraw or modify in any manner adverse to
Purchaser or Parent, the unanimous recommendation of the Company
Board that the stockholders of the Company approve and adopt this
Agreement and the Merger and (B) cooperate with Purchaser and
Parent, and use its reasonable best efforts to obtain such
approval and adoption. At the Stockholders' Meeting, Parent and
Purchaser shall cause all Shares then beneficially owned by them
and their subsidiaries to be voted in favor of the approval and
adoption of this Agreement and the Merger.
(b) Notwithstanding the foregoing, in the event that
Purchaser shall acquire at least 90% of the then outstanding
Shares, the parties shall take all necessary and appropriate
action to cause the Merger to become effective, in accordance
with Section 253 of the DGCL, as promptly as reasonably
practicable after such acquisition, without a meeting of the
stockholders of the Company.
SECTION 6.02 Proxy Statement
If approval of the Company's stockholders is required
by applicable Law to consummate the Merger, promptly following
consummation of the Offer, the Company shall file the Proxy
Statement with the SEC under the Exchange Act, and shall use its
best efforts to have the Proxy Statement cleared by the SEC as
promptly as practicable. Parent, Purchaser and the Company shall
cooperate with each other in the preparation of the Proxy
Statement and in responding to any comments of the SEC with
respect to the Proxy Statement or any requests by the SEC for any
amendment or supplement thereto or for additional information.
Each of Purchaser, Parent and the Company and its respective
counsel shall have a reasonable opportunity to review and comment
on (i) the Proxy Statement, including all amendments and
supplements thereto, prior to such documents being filed with the
SEC or disseminated to holders of Shares and (ii) all responses
to requests for additional information and replies to comments
from the SEC or the staff thereof prior to their being filed
with, or sent to, the SEC. Each of the Company, Parent and
Purchaser agrees to use its reasonable best efforts, after
consultation with the other parties hereto, to respond promptly
to all such comments of and requests by the SEC and to cause the
Proxy Statement and all required amendments and supplements
32
thereto to be mailed to the holders of Shares entitled to vote at
the Stockholders' Meeting at the earliest practicable time.
SECTION 6.03 Company Board Representation; Section
14(f)
(a) Promptly upon the purchase by Purchaser of Shares
pursuant to the Offer and from time to time thereafter, Purchaser
shall be entitled to designate up to such number of directors,
rounded up to the next whole number, on the Company Board as
shall give Purchaser representation on the Company Board equal to
the product of the total number of directors on the Company Board
(giving effect to the directors elected pursuant to this
sentence) multiplied by the percentage that the aggregate number
of Shares beneficially owned by Purchaser or any affiliate of
Purchaser following such purchase bears to the total number of
Shares then outstanding, and the Company shall, at such time,
promptly take all actions necessary to cause Purchaser's
designees to be elected or appointed as directors of the Company,
including increasing the size of the Company Board or securing
the resignations of incumbent directors, or both. At such times,
the Company shall use its best efforts to cause persons
designated by Purchaser to constitute the same percentage as
persons designated by Purchaser shall constitute of the Company
Board of (i) each committee of the Company Board, (ii) each board
of directors of each Subsidiary and (iii) each committee of each
such board, in each case only to the extent permitted by
applicable Law and the rules of the American Stock Exchange.
Notwithstanding the foregoing, until the Effective Time, the
Company shall use its best efforts to ensure that at least three
members of the Company Board and each committee of the Company
Board, as of the date hereof, who are not employees of the
Company shall remain members of the Company Board and of such
committees.
(b) The Company shall promptly take all actions
required pursuant to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder to fulfill its obligations under
this Section 6.03, and shall include in the Schedule 14D-9 such
information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to
fulfill such obligations. Parent or Purchaser shall supply to
the Company, and be solely responsible for, any information with
respect to either of them and their nominees, officers, directors
and affiliates required by such Section 14(f) and Rule 14f-1.
(c) Following the election of designees of Purchaser
pursuant to this Section 6.03, prior to the Effective Time, any
(i) amendment of this Agreement or the Certificate of
Incorporation or By-laws of the Company or any Subsidiary, (ii)
termination of this Agreement by the Company, (iii) extension by
the Company of the time for the performance of any of the
obligations or other acts of Parent or Purchaser, (iv)
recommendation to the Company stockholders or any modification or
withdrawal of any such recommendation in connection with this
Agreement or the Transactions or (v) waiver of any of the
Company's rights hereunder, in each case, shall require the
concurrence of a majority of the directors of the Company then in
office who neither were designated by Purchaser nor are employees
of the Company or any Subsidiary. In the event that the
independent directors of the Company Board deem it advisable in
connection with the Transactions to retain outside legal counsel,
such directors shall be entitled to retain such counsel (not to
exceed two outside law firms) at the reasonable expense of the
Company.
33
SECTION 6.04 Access to Information; Confidentiality
(a) Subject to applicable Law and confidentiality
agreements, including that certain Nondisclosure and No-Trading
Agreement between Parent and the Company (the "Confidentiality
Agreement"), from the date of this Agreement until the Effective
Time, the Company shall (and shall cause its Subsidiaries to):
(i) provide to Parent and Parent's Representatives access, during
normal business hours and upon reasonable notice by Parent, to
the officers, employees, agents, properties, offices and other
facilities of the Company and its Subsidiaries and to the books
and records thereof, but only to the extent that such access does
not unreasonably interfere with the business and operations of
the Company and its Subsidiaries, (ii) furnish to Parent all
monthly and quarterly statements of revenue and expense,
earnings, sales, trial balances and such other similar statements
as are regularly and customarily provided to senior management of
the Company promptly following delivery to such senior management
and (iii) furnish promptly to Parent such information concerning
the business, properties, contracts, assets, liabilities,
personnel and other aspects of such party and its Subsidiaries as
Parent or its Representatives may reasonably request.
(b) Each party shall, and shall cause its affiliates
and Representatives to, (i) comply with the Confidentiality
Agreement as if a party thereto and (ii) hold in strict
confidence as Evaluation Material (as defined in the
Confidentiality Agreement) all nonpublic documents and
information furnished or made available by one party to the
other(s) and their respective affiliates and Representatives.
(c) No investigation pursuant to this Section 6.04
shall affect any representation or warranty in this Agreement of
any party hereto or any condition to the obligations of the
parties hereto or any condition to the Offer.
SECTION 6.05 No Solicitation of Transactions
(a) The Company agrees that neither it nor any
Subsidiary nor any Representative of it or any Subsidiary will,
directly or indirectly, (i) solicit, initiate or encourage
(including by way of furnishing nonpublic information), or take
any other action for the purpose of facilitating, any inquiries
or the making of any proposal or offer (including, without
limitation, any proposal or offer to its stockholders) that
constitutes, or may reasonably be expected to lead to, any
Competing Transaction (as defined below), or (ii) enter into or
maintain or continue discussions or negotiations with any person
or entity for the purpose of facilitating such inquiries or to
obtain a proposal or offer for a Competing Transaction, or (iii)
agree to, approve, endorse or recommend any Competing Transaction
or enter into any letter of intent or other contract, agreement
or commitment providing for or otherwise relating to any
Competing Transaction, or (iv) authorize or permit any
Representative of the Company or any of its Subsidiaries to take
any such action. The Company shall notify Parent as promptly as
practicable (and in any event within twenty-four (24) hours)
after the Company receives any oral or written proposal or offer
or any inquiry or contact with any person regarding a potential
proposal or offer regarding a Competing Transaction, specifying
the material terms and conditions thereof and the identity of the
party making such proposal or offer (including material
amendments or proposed material amendments). The Company
immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore
with respect to a Competing Transaction. The Company shall not
release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which it is a party.
34
(b) Notwithstanding anything to the contrary in this
Section 6.05, the Company Board may furnish information to, and
enter into discussions with, a person who has made an
unsolicited, written, bona fide proposal or offer regarding a
Competing Transaction, and the Company Board has (i) determined,
in its good faith judgment (after consulting with its financial
advisor), that such proposal or offer constitutes or could lead
to a Superior Proposal (as defined below), (ii) determined, in
its good faith judgment after consulting with its outside legal
counsel (who may be the Company's regularly engaged outside legal
counsel), that, in light of such proposal or offer, the failure
to furnish such information or enter into discussions would be
inconsistent with its fiduciary duties under applicable Law,
(iii) provided written notice to Parent of its intent to furnish
information or enter into discussions with such person prior to
taking any such action and (iv) obtained from such person an
executed confidentiality agreement on terms no less favorable to
the Company than those contained in the Confidentiality Agreement
(it being understood that such confidentiality agreement and any
related agreements shall not include any provision calling for
any exclusive right to negotiate with such party or having the
effect of prohibiting the Company from satisfying its obligations
under this Agreement).
(c) Except as set forth in this Section 6.05(c),
neither the Company Board nor any committee thereof shall
withdraw or modify, or propose publicly to withdraw or modify, in
a manner adverse to Parent or Purchaser, the approval or
recommendation by the Company Board or any such committee of this
Agreement, the Offer, the Merger or any other Transaction (a
"Change in the Company Recommendation") or approve or recommend,
or cause or permit the Company to enter into any letter of
intent, agreement or obligation with respect to, any Competing
Transaction (except for a confidentiality agreement as provided
in Section 6.05(b) above). Notwithstanding the foregoing, if the
Company Board determines, in its good faith judgment prior to the
time of the acceptance for payment of Shares pursuant to the
Offer and after consulting with outside legal counsel (who may be
the Company's regularly engaged outside legal counsel), that the
failure to make a Change in the Company Recommendation would be
inconsistent with its fiduciary duties under applicable Law, the
Company Board may make a Change in the Company Recommendation
and/or recommend a Superior Proposal, but only (i) after
providing written notice to Parent (a "Notice of Superior
Proposal") advising Parent that the Company Board has received a
Superior Proposal, specifying the material terms and conditions
of such Superior Proposal and identifying the person making such
Superior Proposal and indicating that the Company Board intends
to effect a Change in the Company Recommendation and (ii) if
Parent does not prior to the earlier of (A) three (3) business
days after Parent's receipt of the Notice of Superior Proposal or
(B) if the Offer, as it may be extended, does not remain open for
at least three (3) business days after Parent's receipt of the
Notice of Superior Proposal, then such time period as does exist
prior to the expiration of the Offer and before any acceptance
for payment of any Shares, make an offer that the Company Board
determines, in its good faith judgment (after consulting with its
financial advisor) to be at least as favorable to the Company's
stockholders as such Superior Proposal. Any disclosure that the
Company Board may be compelled to make with respect to the
receipt of a proposal or offer for a Competing Transaction or
otherwise in order to comply with its fiduciary duties under
applicable Law or Rule 14d-9 or 14e-2 will not constitute a
violation of this Agreement.
(d) A "Competing Transaction" means any of the
following (other than the Transactions): (i) any merger,
consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or other similar
transaction involving the Company or any Subsidiary; (ii) any
35
sale, lease, exchange, transfer or other disposition of all or
substantially all of the assets of the Company or of any
Subsidiary; (iii) any sale, exchange, transfer or other
disposition in which the Company or any Subsidiary participates
(including taking any action to comply with Section 203 of the
DGCL, but excluding typical stock transfer functions) and which
results in any person beneficially owning more than 25% of the
outstanding securities of any class of equity securities of the
Company or of any Subsidiary; or (iv) any tender offer or
exchange offer that, if consummated, would result in any person
beneficially owning more than 25% of the outstanding securities
of any class of equity securities of the Company or of any
Subsidiary.
(e) A "Superior Proposal" means an unsolicited written
bona fide offer made by a third party with respect to a Competing
Transaction (with all percentages contained in the definition of
"Competing Transaction" increased to 50% for purposes of this
definition), in each case on terms that the Company Board
determines, in its good faith judgment (after consulting with its
financial advisor) and taking into account all legal, financial,
regulatory and other aspects of the offer that it deems relevant
(including whether the person proposing such Competing
Transaction is reasonably able to finance the transaction), to be
more favorable to the Company stockholders than the Offer and
Merger.
SECTION 6.06 Employee Benefits Matters
(a) From and after the Effective Time and until
December 31 of the calendar year in which the Effective Time
occurs, employees of the Company and its Subsidiaries shall be
offered participation in employee benefit plans, programs,
policies and arrangements that are no less favorable in the
aggregate to those provided under the applicable employee benefit
plans (as defined in Section 3(3) of ERISA (excluding plans
exempt under Section 201(2) of ERISA)), programs, policies and
arrangements of the Company and its Subsidiaries in effect at the
Effective Time (collectively, "Current Plans"); provided,
however, that nothing contained in this Section 6.06(a) shall (i)
obligate or commit Parent or its subsidiaries to continue any
particular Current Plan after the Effective Time or to maintain
in effect any particular Current Plan or any level or type of
benefits, (ii) obligate or commit Parent or its subsidiaries to
provide any employee of the Company or any Subsidiary with any
equity compensation pursuant to any equity compensation plans,
programs or arrangements sponsored or provided by Parent or any
of its subsidiaries or affiliates for the benefit of its
employees, or (iii) prohibit Parent or its subsidiaries from
making any changes to any Current Plans.
(b) Parent will, or will cause the Company and the
Subsidiaries to, credit each employee of the Company and the
Subsidiaries as of the Effective Time with such number of unused
vacation days and other paid time off accrued by each employee
with the Company and the Subsidiaries prior to the Effective Time
in accordance with the Company's personnel policies applicable to
such employees on the date hereof, copies of which have been made
available to Parent; provided that Parent may, in its sole
discretion and to the extent permitted by applicable Law, require
that such vacation and other paid time off be taken by the
employee prior to December 31, 2006.
(c) Employees of the Company and its Subsidiaries
shall receive credit for purposes of eligibility to participate
and vesting (but not for benefit accruals under any defined
36
benefit pension plan) under any employee benefit plan, program or
arrangement established or maintained by the Surviving
Corporation for service accrued prior to the Effective Time with
the Company or any Subsidiary under which each employee may be
eligible to participate on or after the Effective Time to the
same extent recognized by the Company or any Subsidiary under
comparable plans immediately prior to the Effective Time;
provided, however, that such crediting of service shall not
operate to duplicate any benefit or the funding of any such
benefit.
(d) With respect to the welfare benefit plans,
programs and arrangements maintained, sponsored or contributed to
by Parent or its subsidiaries immediately prior to the Effective
Time ("Parent Welfare Benefit Plans") in which an employee of the
Company and the Subsidiaries may be eligible to participate on or
after the Effective Time, Parent shall waive, or cause its
insurance carrier to waive, any limitations on benefits relating
to pre-existing conditions (if any) with respect to participation
and coverage requirements applicable to employees of the Company
and its Subsidiaries under Parent Welfare Benefit Plans to the
same extent such limitations are waived under any comparable plan
of Parent or its subsidiaries in effect immediately prior to the
Effective Time and shall recognize, for purposes of annual
deductible and out-of-pocket limits under its medical and dental
plans, deductible and out-of-pocket expenses paid by employees of
the Company and its Subsidiaries in the calendar year in which
the Effective Time occurs.
SECTION 6.07 Directors' and Officers' Indemnification
and Insurance
(a) The Certificate of Incorporation of the Surviving
Corporation shall contain provisions no less favorable with
respect to indemnification than are set forth in Article Ninth of
the Company's Certificate of Incorporation as in effect on June
30, 2005, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective
Time in any manner that would affect adversely the rights
thereunder of individuals who, at or prior to the Effective Time,
were directors, officers, employees, fiduciaries or agents of the
Company, unless such modification shall be required by law.
(b) Prior to the Effective Time, the Company will
purchase and pay for a directors' and officers' liability
insurance policy, or tail coverage under the Company's existing
directors' and officers' liability insurance policy, providing
coverage of not less than six years, subject to substantially the
same limits, terms and conditions as the policy in force
immediately prior to the Effective Time, with respect to matters
occurring prior to the Effective Time. The total cost of the
directors' and officers' liability coverage described in the
preceding sentence shall not exceed 225% of the last annual
premium payable prior to the date of this Agreement which was
$55,000. The Company and Parent shall cooperate to seek and
obtain the insurance coverage contemplated by this Section
6.07(b) at the lowest cost for a carrier of recognized financial
standing (which shall include the Company's current carrier). If
the cost of providing and maintaining the insurance coverage in
accordance with this Section 6.07(b) would exceed the amount
permitted by this Section 6.07(b), (i) the Company shall notify
the covered officers and directors and Parent of the amount of
such excess and give the covered officers and directors the
opportunity to reimburse the Company the amount of such excess,
and if and for so long as such reimbursement is made the Company,
Parent and the Surviving Corporation shall continue to provide
and maintain insurance in accordance with this Section 6.07(b);
and (ii) if and to the extent the covered officers and directors
do not reimburse the Company in accordance with the immediately
preceding clause (i), then the Company shall provide (at no cost
37
to the covered officers and directors) the greatest amount of
substantially equivalent insurance obtainable at a total cost of
225% of the last annual premium payable prior to the date of this
Agreement which was $55,000.
(c) In the event Parent or the Surviving Corporation
or any of their respective 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 Parent or the Surviving Corporation, as the case
may be, shall assume the obligations set forth in this
Section 6.07.
SECTION 6.08 Notification of Certain Matters
The Company shall give prompt notice to Parent, and
Parent shall give prompt notice to the Company, of (a) the
occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which could reasonably be expected to cause
any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect and (b) any failure
of the Company, Parent or Purchaser, as the case may be, to
comply in any material respect with or satisfy in any material
respect any covenant or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 6.08 shall not limit or
otherwise affect the remedies available hereunder to the party
giving or receiving such notice.
SECTION 6.09 Further Action; Reasonable Best Efforts
Upon the terms and subject to the conditions of this
Agreement, each of the parties hereto shall (a) make promptly its
respective filings, and thereafter make any other required
submissions, under applicable foreign, federal or state
antitrust, competition or fair trade Laws with respect to the
Transactions and (b) use its reasonable best efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to
be done, all things necessary, proper or advisable under
applicable Laws or otherwise to consummate and make effective the
Transactions, including, without limitation, using its reasonable
best efforts to obtain all Permits, consents, approvals,
authorizations, qualifications and orders of Governmental
Authorities and parties to contracts with the Company and the
Subsidiaries as are necessary for the consummation of the
Transactions and to fulfill the conditions to the Offer and the
Merger; provided that neither Purchaser nor Parent will be
required by this Section 6.09 to take any action, including
entering into any consent decree, hold separate orders or other
arrangements, that (i) requires the divestiture of any assets of
any of Purchaser, Parent, the Company or any of their respective
subsidiaries or (ii) limits Parent's freedom of action with
respect to, or its ability to retain, the Company and the
Subsidiaries or any portion thereof or any of Parent's or its
affiliates' other assets or businesses. In case, at any time
after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall use
their reasonable best efforts to take all such action.
SECTION 6.10 Subsequent Financial Statements
The Company shall, if practicable, provide Parent (a)
its financial results for any period after the date of this
Agreement prior to making any such financial results publicly
available and (b) any report or document (other than reports
under Section 16 of the Exchange Act) to be filed with the SEC
after the date of this Agreement prior to any such filing, it
being understood that, in either case, Parent shall have no
liability by reason of being provided with any such documents.
38
SECTION 6.11 Public Announcements
The initial press release relating to this Agreement
shall be a joint press release the text of which has been agreed
to by each of Parent and the Company. Thereafter, unless
otherwise required by applicable Law or the requirements of the
American Stock Exchange, each of Parent and the Company shall
each use its reasonable best efforts to consult with each other
before issuing any press release or otherwise making any public
statements with respect to this Agreement, the Offer, the Merger
or any of the other Transactions.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Merger
The obligations of the Company, Parent and Purchaser to
consummate the Merger shall be subject to the satisfaction or
waiver (where permissible), at or prior to the Effective Time, of
the following conditions:
(a) Company Stockholder Approval. If required, this
Agreement and the Merger shall have been approved and
adopted by the requisite affirmative vote of the
stockholders of the Company in accordance with, and to the
extent required by, the DGCL and the Company's Certificate
of Incorporation.
(b) No Order. No Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any law,
rule, regulation, judgment, decree, executive order or award
(an "Order") which is then in effect and has the effect of
making the Merger illegal or otherwise restricting,
preventing or prohibiting consummation of the Merger.
(c) Offer. Purchaser or its permitted assignee shall
have purchased all Shares validly tendered and not withdrawn
pursuant to the Offer, provided, however, that this
condition shall not be applicable to the obligations of
Parent or Purchaser if, in breach of this Agreement or the
terms of the Offer, Purchaser fails to purchase any Shares
that were validly tendered and not withdrawn pursuant to the
Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination
This Agreement may be terminated and the Offer and the
Merger may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this
Agreement by the stockholders of the Company, as follows:
(a) if no Shares have been accepted for payment
pursuant to the Offer, by mutual written consent of Parent
and the Company duly authorized by the Boards of Directors
of Parent and the Company; or
39
(b) if no Shares have been accepted for payment
pursuant to the Offer, by either Parent or the Company on or
after November 15, 2005; provided, however, that the right
to terminate this Agreement under this Section 8.01(b) shall
not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or
resulted in, the failure of the Shares to have been accepted
for payment on or before such date; or
(c) by either Parent or the Company if any
Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any permanent injunction,
order, decree or ruling which is then in effect and has the
effect of making consummation of the Merger illegal or
otherwise preventing or prohibiting consummation of the
Merger and such injunction, order, decree or ruling shall
have become final and non-appealable; or
(d) if no Shares have been accepted for payment
pursuant to the Offer, by Parent if a Company Triggering
Event (as defined below) shall have occurred; or
(e) if no Shares have been accepted for payment
pursuant to the Offer, by the Company if it enters into a
definitive agreement with respect to a Superior Proposal
(other than a confidentiality agreement as permitted by
Section 6.05(b)); provided, however, that the Company shall
have first complied with the provisions of Section 6.05
hereof, including, without limitation, the provisions of
Section 6.05(c), and simultaneously with the termination
under this Section 8.01(e), the Company shall pay Parent the
aggregate amount due pursuant to Section 8.03(b); or
(f) by Parent if due to a failure to satisfy any Offer
Condition, Purchaser shall have (i) failed to commence the
Offer within 10 business days following the date public
announcement of this Agreement, (ii) terminated the Offer
without having accepted any Shares for payment thereunder or
(iii) failed to accept Shares for payment pursuant to the
Offer within 90 days following the commencement of the
Offer, unless such action or inaction under (i), (ii) or
(iii) shall have been caused by or resulted from the failure
of Parent or Purchaser to perform, in any material respect,
any of their material covenants or agreements contained in
this Agreement, or the material breach by Parent or
Purchaser of any of their material representations or
warranties contained in this Agreement; or
(g) by the Company, upon approval of the Company
Board, if Purchaser shall have (i) failed to commence the
Offer within 10 business days following the date of public
announcement of this Agreement, (ii) terminated the Offer
without having accepted any Shares for payment thereunder or
(iii) failed to accept Shares for payment pursuant to the
Offer within 90 days following the commencement of the
Offer, unless such action or inaction under (i), (ii) or
(iii) shall have been caused by or resulted from the failure
of the Company to perform, in any material respect, any of
its material covenants or agreements contained in this
Agreement or the material breach by the Company of any of
its material representations or warranties contained in this
Agreement.
For purposes of this Agreement, a "Company Triggering Event"
shall be deemed to have occurred if: (i) a Change in Company
Recommendation shall have occurred or the Company Board shall
40
have resolved to make a Change in Company Recommendation;
(ii) the Company Board shall have recommended to the stockholders
of the Company a Competing Transaction or shall have publicly
announced it intends to do so or shall have entered into any
letter of intent or similar document or any agreement, contract
or commitment accepting any Competing Transaction; (iii) the
Company shall have failed to include in the Schedule 14D-9 the
recommendation of the Company Board in favor of holders of Shares
accepting the Offer and tendering their Shares in the Offer; (iv)
the Company Board fails to reaffirm its recommendation in favor
of holders of Shares accepting the Offer and tendering their
Shares in the Offer within five business days after Parent
requests in writing that such recommendation be reaffirmed; (v)
the Company shall have willfully breached its obligations under
Section 6.05; or (vi) a tender offer or exchange offer for 25% or
more of the outstanding shares of capital stock of the Company is
commenced, and the Company Board fails to recommend against
acceptance of such tender offer or exchange offer by its
stockholders (including by taking no position with respect to the
acceptance of such tender offer or exchange offer by its
stockholders).
SECTION 8.02 Effect of Termination
In the event of the termination of this Agreement
pursuant to Section 8.01, this Agreement shall forthwith become
void, and there shall be no liability under this Agreement on the
part of any party hereto, except (a) as set forth in Section 8.03
and (b) nothing herein shall relieve any party from liability for
any willful breach of any of its representations, warranties,
covenants or agreements set forth in this Agreement prior to such
termination; provided, however, that the terms of Sections
6.04(b) and (c) shall survive any termination of this Agreement.
SECTION 8.03 Fees and Expenses
(a) Except as set forth in this Section 8.03, all
Expenses (as defined below) incurred in connection with this
Agreement, the Offer and the Merger shall be paid by the party
incurring such expenses, whether or not the Offer, the Merger or
any other transaction is consummated. "Expenses", as used in
this Agreement, shall include all reasonable out-of-pocket
expenses (including, without limitation, all reasonable fees and
expenses of counsel, accountants, auditors, investment bankers,
experts and consultants to a party hereto and its affiliates)
incurred by a party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution
and performance of this Agreement, the preparation, printing,
filing and mailing of the Offer Documents, the Schedule 14D-9 and
the Proxy Statement, the solicitation of stockholder tenders and
all other matters related to consummation of the Offer, the
Merger and the other transactions contemplated by this Agreement.
(b) The Company agrees that:
(i) if Parent shall terminate this Agreement pursuant
to Section 8.01(d); or
(ii) if (A)(1) Parent or the Company shall terminate
this Agreement pursuant to Section 8.01(b), (2) Parent shall
terminate this Agreement pursuant to Section 8.01(f), or (3)
the Company shall terminate this Agreement pursuant to
Section 8.01(g), (B) prior to any such termination, a
Competing Transaction shall have been publicly announced
with respect to the Company and such Competing Transaction
shall not have been publicly withdrawn at the time of such
41
termination or an understanding, including without
limitation in the form of a letter of intent, term sheet or
otherwise, has been reached in principle (whether or not
legally binding) for a Competing Transaction (an
"Understanding"), and (C) within 12 months after such
termination, the Company enters into an agreement or
Understanding with respect to a Competing Transaction or a
Competing Transaction is consummated; or
(iii) if any person (including, without limitation,
the Company or any affiliate thereof), other than Parent or
any affiliate of Parent, shall after the date hereof have
become the beneficial owner of more than 25% of the then-
outstanding Shares, and this Agreement shall have been
terminated pursuant to Section 8.01(b), 8.01(f) or 8.01(g);
or
(iv) if the Company shall terminate this Agreement
pursuant to Section 8.01(e); or
(v) if the Company enters into an agreement or
Understanding with respect to a Competing Transaction, or a
Competing Transaction is consummated, in each case within 12
months after the termination of this Agreement pursuant to
Section 8.01, and the Company shall not theretofore have
been required to pay to Parent an amount equal to the amount
of Parent's Expenses pursuant to Section 8.03(b)(i),
8.03(b)(ii), 8.03(b)(iii) or 8.03(b)(iv);
then the Company shall pay to Parent promptly (but in any event
no later than one business day after the first of such events
shall have occurred) an amount equal to the amount of Parent's
Expenses; provided that the Company shall not be liable for any
amount of Parent's Expenses in excess of $675,000 in the
aggregate.
(c) The Company agrees that if Parent shall terminate
this Agreement pursuant to Section 8.01(f) as a result of the
failure to satisfy the conditions set forth in paragraph (h) or
(i) of Annex A hereto, then the Company shall, whether or not any
payment is made pursuant to Section 8.03(b), reimburse Parent for
all of its Expenses (such payment to be made not later than one
business day after submission of statements therefor).
(d) The Company acknowledges that the agreements
contained in this Section 8.03 are an integral part of the
transactions contemplated by this Agreement. In the event that
the Company shall fail to pay the Fee or any Expenses when due,
the term "Expenses" shall be deemed to include the costs and
expenses actually incurred or accrued by Parent, to the extent
such accrued expenses are, in fact, paid (including, without
limitation, reasonable fees and expenses of counsel) in
connection with the collection under and enforcement of this
Section 8.03. Payment of the fees and expenses described in this
Section 8.03 shall not be in lieu of any damages incurred in the
event of willful breach of this Agreement.
SECTION 8.04 Amendment
Subject to Section 6.03, this Agreement may be amended
by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective
Time whether prior to or after the approval and adoption of this
Agreement and the Transactions by the stockholders of the
Company, but after such approval and adoption only to the extent
permitted by applicable law. This Agreement may not be amended
except by an instrument in writing signed by each of the parties
hereto.
42
SECTION 8.05 Waiver
Subject to Section 6.03, at any time prior to the
Effective Time, any party hereto may (a) extend the time for the
performance of any obligation or other act of any other party
hereto, (b) waive any inaccuracy in the representations and
warranties of any other party contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any
agreement of any other party or any condition to its own
obligations contained herein. Any such extension or waiver shall
be valid if set forth in an instrument in writing signed by the
party or parties entitled to grant such extension or waiver.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations,
Warranties and Agreements
The representations, warranties and agreements in this
Agreement and in any certificate delivered pursuant hereto shall
terminate at the Effective Time or upon the termination of this
Agreement pursuant to Section 8.01, as the case may be, except
that the agreements set forth in Articles I and II and Sections
3.22, 4.06, 6.04(b), 6.06, 6.07 and 8.03 and this Article IX
shall survive the Effective Time.
SECTION 9.02 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 telecopy 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 9.01):
if to Parent or Purchaser:
Xxxxx Group Ltd.
X.X. Xxxxxx Xxxxx
X.X. Xxx X0000
Xxxxxx Xxx, Xxx Xxxxxxxxxx, Bahamas
Facsimile No: 000-000-0000
Attention: Xxxxxxx Xxxxxxx
with a copy to:
Xxxxxx & Bird, LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Facsimile No: (000) 000-0000
Attention: Xxxxx Xxxxxx and Xxxxx X. XxxXxxxxx
III
if to the Company:
BayCorp Holdings, Ltd.
Xxx Xxx Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000
Facsimile No: (000) 000-0000
Attention: Xxxxx Xxxxxx
43
with a copy to:
McLane, Graf, Xxxxxxxxx and Xxxxxxxxx, P.A.
000 Xxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, XX 00000-0000 (overnight zip code
03101)
Facsimile No: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx
and:
Milbank, Tweed, Xxxxxx & XxXxxx, LLP
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Attention: Xxxx X. X'Xxxxxx, Esq.
SECTION 9.03 Certain Definitions
(a) For purposes of this Agreement:
"affiliate" of a specified person means a person who,
directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with,
such specified person.
"beneficial owner", with respect to any Shares, has the
meaning ascribed to such term under Rule 13d-3(a) of the
Exchange Act.
"business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept
filings, or, in the case of determining a date when any
payment is due, any day on which banks are not required or
authorized to close in The City of New York.
"Code" means the United States Internal Revenue Code of
1986, as amended.
"Company IT Systems" means computer systems, networks,
hardware, software, databases, Internet web sites and
equipment used to process, store, maintain and operate data,
information and functions used in connection with the
operation of the Company and its Subsidiaries.
"Company Material Adverse Effect" means any event,
circumstance, change or effect that, individually or in the
aggregate with all other events, circumstances, changes and
effects, is or is reasonably likely (a) to be materially
adverse to (i) the business, condition (financial or
otherwise), assets, liabilities, or results of operations of
the Company and the Subsidiaries taken as a whole or (ii)
44
the ability of the Company to consummate the transactions
contemplated by this Agreement; provided, however, that the
foregoing shall not include any event, circumstance, change
or effect resulting from (A) changes in general economic
conditions that do not have a materially disproportionate
effect (relative to other industry participants) on the
Company or its Subsidiaries, (B) general changes in the
industries or in the prices of commodities in which the
Company and the Subsidiaries operate, except those events,
circumstances, changes or effects that adversely affect the
Company and its Subsidiaries to a greater extent than they
affect other entities operating in such industries, (C)
changes in the trading price of the Shares between the date
hereof and the Effective Time (it being understood that any
fact or development giving rise to or contributing to such
change in the trading price of the Shares may be the cause
of a Company Material Adverse Effect), or (D) changes in Law
or GAAP, or (b) to prevent or materially delay consummation
of any of the Transactions or otherwise prevent or
materially delay the Company from performing its obligations
under this Agreement.
"Company Restricted Stock Award" means each Share
outstanding immediately prior to the Effective Time that is
subject to a repurchase option, risk of forfeiture or other
condition under the Company Stock Option Plans or any
applicable restricted stock purchase agreement or other
agreement with the Company.
"control" (including the terms "controlled by" and
"under common control with") means the possession, directly
or indirectly, or as trustee or executor, of the power to
direct or cause the direction of the management and policies
of a person, whether through the ownership of voting
securities, as trustee or executor, by contract or credit
arrangement or otherwise.
"Enterprise Licenses" means all agreements between the
Company or a Subsidiary and a third party under which
affiliates of the Company take the benefit of rights to or
licenses of Software, portions of Company IT Systems or
services relating to any of the foregoing.
"Environmental Laws" means any United States federal,
state or local laws, regulations and enforceable
governmental orders relating to pollution or protection of
the environment, human health and safety (as relating to
exposure to Hazardous Substances), or natural resources,
including, without limitation the Comprehensive
Environmental Response Compensation and Liability Act, 42
U.S.C. 9601 et seq. ("CERCLA"), and the Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et seq.
("RCRA").
"Fully Diluted Basis" means, with respect to
determining a number of outstanding shares, taking into
account all issued and outstanding shares of Company Common
Stock and the number of shares that would be outstanding
assuming the exercise, conversion or exchange of all
options, warrants, convertible or exchangeable securities
and similar rights to acquire shares and the issuance of all
shares of Company Common Stock that the Company is obligated
to issue thereunder.
"Hazardous Substances" means those hazardous or toxic
substances, chemicals, wastes and pollutants defined in or
regulated under any Environmental Law, including, without
limitation, RCRA hazardous wastes and CERCLA hazardous
substances.
45
"Intellectual Property" means (i) patents, patent
applications and statutory invention registrations, (ii)
Trademarks, (iii) copyrights, including registrations and
applications for registration thereof, (iv) Software and (v)
confidential and proprietary information, including trade
secrets, know-how, technology, processes, products and
methods.
"IP Agreements" means all agreements to which the
Company or a Subsidiary is a party governing (i) licenses of
Intellectual Property by third parties to the Company or a
Subsidiary, (ii) licenses of Intellectual Property by the
Company or Subsidiary to third parties, (iii) the rights
between the Company or a Subsidiary and third parties
relating to the development, ownership or use of
Intellectual Property and (iv) or the right to manufacture,
sell or distribute any product or process of the Company or
a Subsidiary or a third party.
"knowledge of the Company" and the "Company's
knowledge" and words of similar import mean the actual
knowledge, after due inquiry, of any executive officer of
the Company, including due inquiry of the appropriate
employees of its Subsidiaries.
"Licensed Intellectual Property" means all Intellectual
Property licensed to the Company or a Subsidiary pursuant to
the IP Agreements.
"Owned Intellectual Property" means all Intellectual
Property owned by the Company and its Subsidiaries.
"Parent Material Adverse Effect" means any event,
circumstance, change or effect that, individually or in the
aggregate with all other events, circumstances, changes and
effects, is or is reasonably likely (a) to be materially
adverse to (i) the business, condition (financial or
otherwise), assets, liabilities, or results of operations of
Parent and its subsidiaries taken as a whole or (ii) the
ability of Parent to consummate the transactions
contemplated by this Agreement; provided, however, that the
foregoing shall not include any event, circumstance, change
or effect resulting from (x) changes in general economic
conditions that do not have a materially disproportionate
effect (relative to other industry participants) on Parent
or its subsidiaries, or (y) general changes in the
industries or in the prices of commodities in which Parent
and its subsidiaries operate, except those events,
circumstances, changes or effects that adversely affect
Parent and its subsidiaries to a greater extent than they
affect other entities operating in such industries or (b) to
prevent or materially delay consummation of any of the
Transactions or otherwise prevent or materially delay the
Company from performing its obligations under this
Agreement.
"person" means an individual, corporation, partnership,
limited partnership, limited liability company, syndicate,
person (including, without limitation, a "person" as defined
in Section 13(d)(3) of the Exchange Act), trust, association
or entity or government, political subdivision, agency or
instrumentality of a government.
"Representative" means, with respect to any person,
such person's officers, directors, employees, accountants,
auditors, attorneys, consultants, legal counsel, agents,
investment banker, financial advisor and other
representatives.
46
"Software" means computer software and programs in any
form, including source code, object code, encryption keys
and other security features, all versions, conversions,
updates, patches, corrections, enhancements and
modifications thereof and all related documentation,
developer notes, comments and annotations thereto.
"subsidiary" or "subsidiaries" of the Company, the
Surviving Corporation, Parent or any other person means an
affiliate controlled by such person, directly or indirectly,
through one or more intermediaries.
"Tax Returns" means any return, declaration, report,
election, claim for refund or information return or other
statement, form or disclosure relating to, filed or required
to be filed with any Governmental Authority or taxing
authority, including any schedule or attachment thereto, and
including any amendment thereof.
"Tax" or "Taxes" means any federal, state, local or
foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of
any kind whatsoever, including any interest, penalty or
addition thereto, whether disputed or not and including any
obligations to indemnify or otherwise assume or succeed to
the Tax liability of any other person.
"Trademarks" means trademarks, service marks, domain
name registrations, trade dress, logos, and other source
identifiers, including registrations and applications for
registration thereof.
(b) The following terms have the meaning set forth in the
Sections set forth below:
Defined Term Location of
Definition
Action 3.09
Agreement Preamble
Certificate of Merger 2.02
Certificates 2.11(b)
Change in the Company Recommendation 6.05(c)
Company Preamble
Company Board Recitals
Company Capital Budget 5.01(e)
Company Common Stock 3.03(a)
Company Disclosure Schedule 3.01(b)
Company Permits 3.06(a)
Company Preferred Stock 3.03(a)
Company Rights Agreement Recitals
Company SEC Reports 3.07(a)
Company Stock Awards 3.03(a)
47
Defined Term Location of
Definition
Company Stock Option 2.07(a)
Company Stock Option Plans 2.07(a)
Company Triggering Event 8.01
Competing Transaction 6.05(d)
Confidentiality Agreement 6.04(a)
Current Plans 6.06(a)
DGCL Recitals
Dissenting Shares 2.09(a)
Effective Time 2.02
Environmental Permits 3.15
ERISA 3.10(a)
ESPP 2.08
ESPP Date 2.08
Exchange Act 1.01(a)
Expenses 8.03(a)
Fairness Opinion 3.25
Fee 8.03(b)
GAAP 3.07(b)
Governmental Authority 3.05(b)
HSR Act 1.01(a)
Initial Expiration Date 1.01(a)
IRS 3.10(a)
Law 3.05(a)
Lease Documents 3.12(b)
Liens 3.12(a)
Material Contracts 3.17(a)
Merger Recitals
Merger Consideration 1.01(a)
Minimum Condition Annex A
Multiemployer Plan 3.10(b)
Multiple Employer Plan 3.10(b)
Non-U.S. Benefit Plan 3.10(i)
Notice of Superior Proposal 6.05(c)
Offer Recitals
Offer Conditions 1.01(a)
Offer Documents 1.01(b)
Offer to Purchase 1.01(b)
Order 7.01(b)
Parent Preamble
Parent Welfare Benefit Plans 6.06(d)
Paying Agent 2.11(a)
Payment Fund 2.11(a)
Permitted Liens 3.12(a)
Per Share Amount Recitals
Plans 3.10(a)
48
Defined Term Location of
Definition
Proxy Statement 3.24
Purchaser Preamble
Rights Preamble
Schedule TO 1.01(b)
Schedule 13E-3 1.03
Schedule 14D-9 1.02(b)
SEC 1.01(a)
Securities Act 3.07(a)
Shares Recitals
Stock Unit 2.07(d)
Stockholder Support Agreements Recitals
Stockholders Recitals
Stockholders' Meeting 6.01(a)
Subsidiary 3.01(a)
Superior Proposal 6.05(e)
Surviving Corporation 2.01
Surviving Corporation Shares 2.06(c)
Transactions 3.04
WARN 3.10(h)
Warrant 2.10
2004 Balance Sheet 3.07(c)
SECTION 9.04 Severability
If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the Transactions is
not affected in any manner materially adverse to any party. Upon
such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the Transactions be
consummated as originally contemplated to the fullest extent
possible.
SECTION 9.05 Entire Agreement; Assignment
This Agreement and the Confidentiality Agreement
constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof. This Agreement
shall not be assigned (whether pursuant to a merger, by operation
of law or otherwise), except that Parent and Purchaser may assign
all or any of their rights and obligations hereunder to any
affiliate of Parent; provided that no such assignment shall
relieve the assigning party of its obligations hereunder if such
assignee does not perform such obligations.
SECTION 9.06 Parties in Interest
This Agreement shall be binding upon and inure solely
to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer
upon any other person any right,
49
benefit or remedy of any nature whatsoever under or by reason of
this Agreement, other than Section 6.07 (which is intended to be
for the benefit of the persons covered thereby and may be
enforced by such persons).
SECTION 9.07 Specific Performance
The parties hereto agree that irreparable damage would occur in
the event any provision of this Agreement were not performed in
accordance
with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any
other remedy at law or equity.
SECTION 9.08 Governing Law
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of
Delaware applicable to
contracts executed in and to be performed in that State. All
actions and proceedings arising out of or relating to this
Agreement shall be heard and determined exclusively in the
Chancery Court of the State of
Delaware (or other appropriate
state court in the State of
Delaware or any federal court sitting
in the State of
Delaware. The parties hereto hereby (a) submit
to the exclusive jurisdiction of any such state or federal court
sitting in the State of
Delaware for the purpose of any Action
arising out of or relating to this Agreement brought by any party
hereto and (b) irrevocably waive, and agree not to assert by way
of motion, defense, or otherwise, in any such Action, any claim
that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from
attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or
that this Agreement or the Transactions may not be enforced in or
by any of the above-named courts.
SECTION 9.09 Waiver of Jury Trial
Each of the parties hereto hereby waives to the fullest
extent permitted by applicable Law any right it may have to a
trial by jury with respect to any litigation directly or
indirectly arising out of, under or in connection with this
Agreement or the Transactions. Each of the parties hereto (a)
certifies that no Representative of any other party has
represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce that foregoing
waiver and (b) acknowledges that it and the other hereto have
been induced to enter into this Agreement and the Transactions,
as applicable, by, among other things, the mutual waivers and
certifications in this Section 9.09.
SECTION 9.10 Headings, etc
The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this
Agreement. As used herein, any reference in the singular shall
include the plural and vice versa, and any reference to a gender
shall include all genders. The terms "include" and "including"
and derivatives of such terms shall mean "including without
limitation" whether by enumeration or otherwise.
SECTION 9.11 Counterparts
This Agreement may be executed and delivered (including
by facsimile transmission) in one or more counterparts, and by
the different parties hereto in separate counterparts, each of
which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.
SECTION 9.12 Company Disclosure Schedule
The Company has or may have set forth information in
the Company Disclosure Schedule in a Section thereof that
corresponds to the Section of this Agreement to which it relates.
A matter set forth in one Section of the Company Disclosure
50
Schedule need not be set forth in any other Section of the
Company Disclosure Schedule so long as its relevance to the
latter Section of the Company Disclosure Schedule or Section of
the Agreement is readily apparent on the face of the information
disclosed in the Company Disclosure Schedule to the person to
which such disclosure is being made. The fact that any item of
information is disclosed in the Company Disclosure Schedule shall
not be construed to mean that such information is required to be
disclosed by this Agreement. The inclusion of any item in any
Section of the Company Disclosure Schedule (i) does not represent
a determination by the Company that such item is "material" and
(ii) does not represent a determination by the Company that such
item did not arise in the ordinary course of business.
51
IN WITNESS WHEREOF, Parent, Purchaser and the Company
have caused this Agreement to be executed as of the date first
written above by their respective officers thereunto duly
authorized.
XXXXX GROUP LTD.
By /s/ Xxxxxxxxx X. Xxxx
_________________________
Name: Xxxxxxxxx X. Xxxx
Title: Vice President
XXXXX ACQUISITION CORP.
By /s/ Xxxxxxxxx X. Xxxx
_________________________
Name: Xxxxxxxxx X. Xxxx
Title: President
BAYCORP HOLDINGS, LTD.
By /s/ Xxxxx X. Xxxxxx Xx.
_________________________
Name: Xxxxx X. Xxxxxx Xx.
Title: President
ANNEX A
Conditions to the Offer
Notwithstanding any other provision of the Offer,
Purchaser shall not be required to accept for payment any Shares
tendered pursuant to the Offer, and may extend, terminate or
amend the Offer, subject to the terms of the Agreement and any
applicable rules and regulations of the SEC, including Rule 14e-
1(c) under the Exchange Act, if (i) immediately prior to the
expiration of the Offer, there shall not have been validly
tendered and not withdrawn a number of Shares that when added to
Shares, if any, already beneficially owned by Parent and its
direct and indirect subsidiaries constitutes sixty-six and two-
thirds percent (66 2/3%) of the then outstanding Shares on a
Fully Diluted Basis (the "Minimum Condition"), or (ii) at any
time on or after the date of this Agreement and prior to the
expiration of the Offer, any of the following conditions shall
exist and be continuing as of such date:
(a) there shall have been instituted or be pending any
Action before any Governmental Authority (i) challenging or
seeking to make illegal, materially delay, or otherwise, directly
or indirectly, restrain or prohibit or make materially more
costly, the making of the Offer, the acceptance for payment of
any Shares by Parent, Purchaser or any other affiliate of Parent,
or the consummation of any other Transaction, or seeking to
obtain material damages in connection with any Transaction, (ii)
seeking to prohibit or limit the ownership or operation by the
Company, Parent or any of their subsidiaries of all or any of the
business or assets of the Company, Parent or any of their
subsidiaries that is material to either Parent and its
subsidiaries or the Company and the Subsidiaries, in either case,
taken as a whole, or to compel the Company, Parent or any of
their subsidiaries, as a result of the Transactions, to dispose
of or to hold separate all or any portion of the business or
assets of the Company, Parent or any of their subsidiaries that
is material to either Parent and its subsidiaries or the Company
and the Subsidiaries, in each case, taken as a whole, (iii)
seeking to impose or confirm any material limitation on the
ability of Parent, Purchaser or any other affiliate of Parent to
exercise effectively full rights of ownership of any Shares,
including, without limitation, the right to vote any Shares
acquired by Purchaser pursuant to the Offer or otherwise on all
matters properly presented to the Company's stockholders,
including, without limitation, the approval and adoption of this
Agreement and the Transactions, (iv) seeking to require
divestiture by Parent, Purchaser or any other affiliate of Parent
of any Shares, or (v) which otherwise would prevent or materially
delay consummation of the Offer or the Merger or otherwise
prevent or materially delay the Company from performing its
obligations under this Agreement or would have a Company Material
Adverse Effect;
(b) any Governmental Authority or court of competent
jurisdiction shall have issued an order, decree, injunction or
ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting or materially delaying or
preventing the Transactions and such order, decree, injunction,
ruling or other action shall have become final and non-
appealable;
(c) there shall have been any statute, rule,
regulation, legislation or interpretation enacted, promulgated,
amended, issued or deemed applicable by a Governmental Authority
to (i) Parent, the Company or any subsidiary or affiliate of
Parent or the Company or (ii) any Transaction, by
any United States or non-United States legislative body or
Governmental Authority with appropriate jurisdiction, that is
reasonably likely to result, directly or indirectly, in any of
the consequences referred to in clauses (i) through (v) of
paragraph (a) above;
(d) any Company Material Adverse Effect shall have
occurred;
(e) there shall have occurred (i) a declaration of a
banking moratorium or any suspension of payments in respect of
banks in the United States or Bahamas, (ii) any limitation
(whether or not mandatory) by any government or Governmental
Authority, on the extension of credit by banks or other lending
institutions in the United States or Bahamas, (iii) a declaration
of war by the United States Congress;
(f) (i) it shall have been publicly disclosed, or
Purchaser shall have otherwise learned, that beneficial ownership
(determined for the purposes of this paragraph as set forth in
Rule 13d-3 promulgated under the Exchange Act) of 25% or more of
the then-outstanding Shares has been acquired after the date
hereof by any person, other than Parent or any of its affiliates,
or (ii)(A) the Company Board, or any committee thereof, shall
have withdrawn or modified, in a manner adverse to Parent or
Purchaser, the approval or recommendation of the Offer, the
Merger, or the Agreement, or approved or recommended any
Competing Transaction or any other acquisition of Shares other
than the Offer and the Merger or (B) the Company Board, or any
committee thereof, shall have resolved to do any of the
foregoing;
(g) Xxxxx X. Xxxxxx Xx. or Xxxxxxx X. Xxxxxxxxxxxx
shall cease to be an employee of the Company or its Subsidiaries
or the Company or either of Messrs. Xxxxxx or Callendrello shall
fail to have executed the Surviving Corporation Employment
Agreements as contemplated by Section 3.11(d) of the Agreement;
(h) the representations and warranties of the Company
in the Agreement shall not be true and correct as of the date of
such determination (except for representations and warranties
that relate to a specific date or time, which need only be true
and correct as of such date or time), unless the inaccuracies
under the representations and warranties (without giving effect
to any Company Material Adverse Effect or materiality qualifiers
or standards contained in the representations and warranties)
taken together in their entirety would not result in a Company
Material Adverse Effect;
(i) the Company shall have failed to perform in any
material respect any obligation or to comply in any material
respect with any material agreement or material covenant of the
Company required to be performed or complied with by it under the
Agreement prior to such determination;
(j) the Agreement shall have been terminated in
accordance with its terms; or
(k) Purchaser and the Company shall have agreed that
Purchaser shall terminate the Offer or postpone the acceptance
for payment of Shares thereunder.
The foregoing conditions are for the sole benefit of Purchaser
and Parent and may be asserted by Purchaser or Parent regardless
of the circumstances giving rise to any such condition or may be
waived by Purchaser or Parent in whole or in part at any time and
from time to time in their sole discretion. The failure by
Parent or Purchaser at any time to exercise any of the foregoing
2
rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts, events and
other circumstances shall not be deemed a waiver with respect to
any other facts, events and circumstances; and each such right
shall be deemed an ongoing right that may be asserted at any time
and from time to time.
The capitalized terms used in this Annex A shall have the
meanings ascribed to them in the Agreement to which it is
annexed.
3
ANNEX B
ANNEX C
