Exhibit 99-2
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
among
INTERMAGNETICS GENERAL CORPORATION,
MAGIC SUBSIDIARY CORPORATION
and
INVIVO CORPORATION
Dated as of December 17, 2003
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TABLE OF CONTENTS
Page
Article I
DEFINITIONS
SECTION 1.01 Definitions............................................................................1
Article II
THE OFFER
SECTION 2.01 The Offer..............................................................................6
SECTION 2.02 Company Action.........................................................................8
Article III
THE MERGER
SECTION 3.01 The Merger.............................................................................9
SECTION 3.02 Effective Time; Closing................................................................9
SECTION 3.03 Effect of the Merger...................................................................9
SECTION 3.04 Certificate of Incorporation; By-laws..................................................9
SECTION 3.05 Directors and Officers................................................................10
SECTION 3.06 Conversion of Securities..............................................................10
SECTION 3.07 Employee Stock Options................................................................10
SECTION 3.08 Dissenting Shares.....................................................................11
SECTION 3.09 Surrender of Shares; Stock Transfer Books.............................................11
SECTION 3.10 Withholding Rights....................................................................12
Article IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01 Organization and Qualification; Subsidiaries..........................................13
SECTION 4.02 Certificate of Incorporation and By-laws..............................................13
SECTION 4.03 Capitalization........................................................................13
SECTION 4.04 Authority Relative to This Agreement..................................................14
SECTION 4.05 No Conflict; Required Filings and Consents............................................15
SECTION 4.06 Permits; Compliance...................................................................15
SECTION 4.07 SEC Filings; Financial Statements.....................................................16
SECTION 4.08 Absence of Certain Changes or Events..................................................18
SECTION 4.09 Absence of Litigation.................................................................19
SECTION 4.10 Employee Benefit Plans................................................................19
SECTION 4.11 Labor and Employment Matters..........................................................21
SECTION 4.12 Offer Documents; Schedule 14D-9; Proxy Statement......................................21
SECTION 4.13 Real Property; Title to Assets........................................................22
SECTION 4.14 Intellectual Property.................................................................23
SECTION 4.15 Taxes.................................................................................25
SECTION 4.16 Environmental Matters.................................................................26
SECTION 4.17 No Rights Agreement...................................................................26
SECTION 4.18 Material Contracts....................................................................26
SECTION 4.19 Customers and Suppliers...............................................................28
SECTION 4.20 Inventory.............................................................................28
SECTION 4.21 Company Products and Services.........................................................29
SECTION 4.22 Insurance.............................................................................29
SECTION 4.23 Certain Business Practices............................................................29
SECTION 4.24 Government Regulation.................................................................29
SECTION 4.25 Brokers...............................................................................30
TABLE OF CONTENTS
Page
Article V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 5.01 Corporate Organization................................................................30
SECTION 5.02 Authority Relative to This Agreement..................................................30
SECTION 5.03 No Conflict; Required Filings and Consents............................................31
SECTION 5.04 Financing.............................................................................31
SECTION 5.05 Offer Documents; Proxy Statement......................................................31
SECTION 5.06 Absence of Litigation.................................................................32
SECTION 5.07 Brokers...............................................................................32
Article VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01 Conduct of Business by the Company Pending the Merger.................................32
Article VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Stockholders' Meeting.................................................................35
SECTION 7.02 Proxy Statement.......................................................................35
SECTION 7.03 Company Board Representation; Section 14(f)...........................................35
SECTION 7.04 Access to Information; Confidentiality................................................36
SECTION 7.05 No Solicitation of Transactions.......................................................37
SECTION 7.06 Directors' and Officers' Indemnification and Insurance................................38
SECTION 7.07 Notification of Certain Matters.......................................................39
SECTION 7.08 Further Action; Reasonable Best Efforts...............................................39
SECTION 7.09 Subsequent Financial Statements.......................................................40
SECTION 7.10 Public Announcements..................................................................40
SECTION 7.11 Tax Certificate.......................................................................40
SECTION 7.12 Confidentiality Agreement.............................................................40
SECTION 7.13 Employee Benefit Matters..............................................................40
Article VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Merger..............................................................41
Article IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination...........................................................................41
SECTION 9.02 Effect of Termination.................................................................42
SECTION 9.03 Fees..................................................................................42
SECTION 9.04 Amendment.............................................................................43
SECTION 9.05 Waiver................................................................................43
Article X
GENERAL PROVISIONS
SECTION 10.01 Notices...............................................................................43
SECTION 10.02 Severability..........................................................................44
SECTION 10.03 Entire Agreement; Assignment..........................................................45
SECTION 10.04 Parties in Interest...................................................................45
SECTION 10.05 Specific Performance..................................................................45
SECTION 10.06 Governing Law.........................................................................45
SECTION 10.07 Waiver of Jury Trial..................................................................45
SECTION 10.08 Headings..............................................................................46
SECTION 10.09 Counterparts..........................................................................46
ANNEX A Conditions to the Offer
AGREEMENT AND PLAN OF MERGER, dated as of December 17, 2003
(this "Agreement"), among Intermagnetics General Corporation, a New York
corporation ("Parent"), Magic Subsidiary Corporation, a Delaware corporation and
a wholly owned subsidiary of Parent ("Purchaser"), and Invivo Corporation, 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;
WHEREAS, in furtherance of such acquisition, it is proposed
that Purchaser shall make a cash tender offer to acquire all the issued and
outstanding shares of common stock, par value $0.01 per share, of the Company
("Shares") for $22.00 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 (such cash
tender offer, as it may be amended from time to time in accordance with this
Agreement, the "Offer");
WHEREAS, the Board of Directors of the Company (the "Board")
has unanimously approved the making of the Offer and resolved to recommend that
holders of Shares tender their Shares pursuant to the Offer; and
WHEREAS, also in furtherance of such acquisition, the Boards
of Directors of Parent, Purchaser and the Company have each approved this
Agreement and declared its advisability and approved 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;
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
DEFINITIONS
SECTION 1.01 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 (other than a Saturday or Sunday) on which
banks are not required or authorized to close in the City of New York.
"Company IT Systems" means all IT Systems used in, intended to be used
in, or held for use in connection with the business of the Company or any
Subsidiary.
"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 sale, lease,
exchange, transfer or other disposition of all or a substantial part of the
assets of the Company or of any Subsidiary; (iii) any sale, exchange, transfer
or other disposition of any class of equity securities of the Company or of any
Subsidiary that results in any person (other than the Company in the case of a
Subsidiary) acquiring 20% or more of any class of equity securities of the
Company or of any Subsidiary; (iv) any tender offer or exchange offer that, if
consummated, would result in any person beneficially owning 15% or more of any
class of equity securities of the Company or of any Subsidiary; or (v) any other
transaction the consummation of which would reasonably be expected to impede,
interfere with, prevent or materially delay any of the Transactions.
"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;
"Environmental Laws" means any United States federal, state, local or
non-United States laws, statutes, ordinances, regulations, rules, codes, orders,
other requirements of law and common law relating to (i) releases or threatened
releases of Hazardous Substances or materials containing Hazardous Substances;
(ii) exposure or alleged exposure to Hazardous Substances; (iii) the
manufacture, handling, transport, recycling, reclamation, use, treatment,
storage or disposal of Hazardous Substances or materials containing Hazardous
Substances; or (iv) pollution, natural resource damages or protection of the
environment, health or safety.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company or any Subsidiary and which,
together with the Company or any Subsidiary, is treated as a single employer
within the meaning of Section 414(b), (c), (m) or (o) of the Code.
"Fully Diluted Basis" means after taking into account all Shares and
assuming the exercise, conversion or exchange of all options, warrants,
convertible or exchangeable securities and similar rights and the issuance of
all shares of Company common stock that the Company is obligated to issue
thereunder.
"Hazardous Substances" means (i) those substances defined in or
regulated under the following United States federal statutes and their state and
local counterparts, as each may be amended from time to time, and all
regulations thereunder: the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide
Act and the Clean Air Act; (ii) petroleum and petroleum products, including
crude oil and any fractions thereof; (iii) natural gas, synthetic gas, and any
mixtures thereof; (iv) polychlorinated biphenyls, asbestos, mold and radon; and
(v) any other contaminant, substance, material or waste regulated by any
Governmental Authority pursuant to any Environmental Law.
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"Healthcare Law" means the following laws or regulations relating to
the regulation of the healthcare industry (as such laws are currently enforced
or as interpreted at the Effective Time by existing, publicly available judicial
and administrative decisions and regulations): (i) Sections 1877, 1128, 1128A or
1128B of the Social Security Act (the "SSA"); (ii) the licensure, certification
or registration requirements of healthcare facilities, services or equipment;
(iii) any state certificate of need or similar law governing the establishment
of healthcare facilities or services or the making of healthcare capital
expenditures; (iv) any state law relating to fee-splitting or the corporate
practice of medicine; (v) any state physician self-referral prohibition or state
anti-kickback law; (vi) any criminal offense relating to the delivery of, or
claim for payment for, a healthcare item or service under any federal or state
healthcare program; and (vii) any federal or state law relating to the
interference with or obstruction of any investigation into any criminal offense.
"Intellectual Property" means (i) patents, patent applications, and
statutory invention registrations, (ii) trademarks, service marks, domain names,
trade dress, logos, trade names, corporate names, and other identifiers of
source or goodwill, including registrations and applications for registration
thereof, (iii) mask works and copyrights, including copyrights in Software, and
registrations and applications for registration thereof, and (iv) trade secrets,
know-how, invention rights, and other confidential or proprietary technical,
business and other information, including manufacturing and production processes
and techniques, research and development information, technology, drawings,
specifications, designs, plans, proposals, technical data, financial, marketing
and business data, pricing and cost information, business and marketing plans,
customer and supplier lists and information, and all rights in any jurisdiction
to limit the use or disclosure thereof.
"IT Systems" means computer systems, networks, hardware and Software,
used to process, store, maintain and operate data, information and functions.
"knowledge of the Company" means the actual knowledge of any director
or executive officer of the Company and such knowledge that any such individual
would obtain after the exercise of reasonable investigation.
"Licensed Intellectual Property" means Intellectual Property licensed
to the Company or any Subsidiary pursuant to the Licenses.
"Licenses" means (i) licenses of Intellectual Property or IT Systems by
the Company or any Subsidiary to any third party, (ii) licenses of Intellectual
Property or IT Systems by any third party to the Company or any Subsidiary,
(iii) agreements between the Company or any Subsidiary and any third party
relating to the development or use of Intellectual Property or IT Systems, the
development or transmission of data, or the use, modification, framing, linking,
advertisement, or other practices with respect to Internet web sites, and (iv)
consents, settlements, decrees, orders, injunctions, judgments or rulings
governing the use, validity or enforceability of Owned Intellectual Property or
any other Intellectual Property used in or held for use in connection with its
business by the Company or any Subsidiary.
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"Material Adverse Effect" means, when used in connection with the
Company or any Subsidiary, any event, circumstance, change or effect that,
individually or in the aggregate with any other events, circumstances, changes
and effects occurring after the date hereof, is or is reasonably likely 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) the ability of the Company to consummate the
Transactions, other than (A) any of the foregoing resulting from events, facts
or circumstances relating to the economy in general or to the Company's industry
in general and not specifically relating to the Company or any Subsidiary, or
(B) any of the foregoing resulting from the announcement or consummation of this
Agreement or the Transactions.
"NASDAQ" means the Nasdaq Stock Market, Inc.
"Owned Intellectual Property" means Intellectual Property owned by the
Company or any Subsidiary.
"person" means an individual, corporation, partnership, limited
partnership, limited liability company, syndicate, person (including 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.
"Software" means computer software, programs and databases in any form,
including Internet web sites, web content and links, all versions, updates,
corrections, enhancements, and modifications thereof, and all related
documentation.
"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.
"Superior Proposal" means an unsolicited written bona fide offer made
by a third party to consummate any Competing Transaction on terms that the Board
determines, in its good faith judgment (after having received the advice of a
financial advisor of nationally recognized reputation), to be more favorable to
the Company's stockholders than the Offer and Merger; provided that, for
purposes of this definition, the percentage referred to in clauses (iii) and
(iv) of the definition of "Competing Transaction" shall be 50%.
"Taxes" shall mean any and all taxes, fees, levies, duties, tariffs,
imposts and other similar charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Authority or taxing authority,
including, without limitation: taxes or other charges on or with respect to
income, franchise, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes;
license, registration and documentation fees; and customers' duties, tariffs and
similar charges.
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"Tax Return" means any return, report, schedule, declaration, estimate
or election (including attachments to any of the foregoing) filed or required to
be filed with any Governmental Authority or taxing authority with respect to
Taxes.
(b) The following terms have the meaning set forth in the Sections set forth
below:
Defined Term Location of Definition
------------ ----------------------
Action.................................... ss. 4.09
Agreement................................. Preamble
Blue Sky Laws............................. ss. 4.05(b)
Board..................................... Recitals
Certificate of Merger..................... ss. 3.02
Certificates.............................. ss. 3.09(b)
Change in the Company Recommendation...... ss. 7.05(c)
Code...................................... ss. 4.10(a)
Company................................... Preamble
Company Preferred Stock................... ss. 4.03(a)
Company Stock Awards...................... ss. 4.03(a)
Company Stock Option...................... ss. 3.07
Company Stock Option Plans................ ss. 3.07
Confidentiality Agreement................. ss. 7.04(b)
DGCL...................................... Recitals
Disclosure Schedule....................... Article IV
Dissenting Shares......................... ss. 3.08(a)
Effective Time............................ ss. 3.02
Environmental Permits..................... ss. 4.16
ERISA..................................... ss. 4.10(a)
Exchange Act.............................. ss. 2.01(a)
Expenses.................................. ss. 9.03(b)
Fairness Opinion.......................... ss. 2.02(a)
FDA....................................... ss. 4.24(d)
Fee....................................... ss. 9.03(a)
Form 10-Q................................. ss. 4.07(a)
GAAP...................................... ss. 4.07(b)
Governmental Authority.................... ss. 4.05(b)
5
HIPAA..................................... ss. 4.24(f)
HSR Act................................... ss. 4.05(b)
Initial Expiration Date................... ss. 2.01(a)
IRS....................................... ss. 4.10(a)
Law....................................... ss. 4.05(a)
Lease Documents........................... ss. 4.13(b)
Liens..................................... ss. 4.13(a)
Material Contracts........................ ss. 4.18(a)
Merger.................................... Recitals
Merger Consideration...................... ss. 3.06(a)
Minimum Condition......................... ss. 2.01(a)
Notice of Superior Proposal............... ss. 7.05(c)
Offer..................................... Recitals
Offer Documents........................... ss. 2.01(b)
Offer to Purchase......................... ss. 2.01(b)
Option Payment............................ ss. 3.07
Parent.................................... Preamble
Paying Agent.............................. ss. 3.09(a)
Permits................................... ss. 4.06(a)
Permitted Liens........................... ss. 4.13(a)
Per Share Amount.......................... Recitals
Plans..................................... ss. 4.10(a)
Proxy Statement........................... ss. 4.12
Purchaser................................. Preamble
Schedule 14D-9............................ ss. 2.02(b)
Schedule TO............................... ss. 2.01(b)
SEC....................................... ss. 2.01(a)
SEC Reports............................... ss. 4.07(a)
Securities Act............................ ss. 4.07(a)
Shares.................................... Recitals
SSA....................................... ss. 1.01(a)
Stockholders' Meeting..................... ss. 7.01(a)
Subsidiary................................ ss. 4.01(a)
Surviving Corporation..................... ss. 3.03
Transactions.............................. ss. 2.02(a)
2003 Balance Sheet........................ ss. 4.07(c)
ARTICLE II
THE OFFER
SECTION 2.01 The Offer. (a) Provided that none of the events set forth
in Annex A hereto shall have occurred or be continuing, Purchaser shall 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 ten business days after the
execution of this Agreement. The obligation of Purchaser to accept for payment
Shares tendered pursuant to the Offer shall be subject to (i) the condition (the
"Minimum Condition") that at least the number of Shares that shall, when added
6
to the Shares already owned by Parent or Purchaser, constitute a majority of the
then outstanding Shares on a Fully Diluted Basis shall have been validly
tendered and not withdrawn prior to the expiration of the Offer and (ii) the
satisfaction of each of the other conditions set forth in Annex A hereto.
Purchaser expressly reserves the right to waive any such condition, to increase
the price per Share payable in the Offer, and to make any other changes in the
terms and conditions of the Offer; provided, however, that no change or waiver
may be made (a) that decreases the price per Share, or changes the form of
consideration, payable in the Offer, (b) that reduces the maximum number of
Shares to be purchased in the Offer, (c) that imposes conditions to the Offer in
addition to those set forth in Annex A hereto, (d) that changes or waives the
Minimum Condition, (e) except as provided in the next sentence, that extends the
Offer beyond the Initial Expiration Date (as defined herein), and (f) amends any
term of 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 beyond the scheduled expiration date, which
initially shall be twenty business days following the commencement of the Offer
(the "Initial Expiration Date"), if, at any scheduled expiration of the Offer,
any of the conditions to Purchaser's obligation to accept for payment Shares as
set forth on Annex A, shall not be satisfied or waived, (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, (iii) extend the Offer for a period of up to ten business days
beyond the scheduled expiration date if as of such date all of the conditions of
the Offer are satisfied or have been waived but the aggregate number of Shares
tendered and not withdrawn, together with Shares then owned by Parent and
Purchaser, is not at least 90% of the then outstanding Shares or (iv) extend the
Offer in accordance with Rule 14d-11 promulgated under the Exchange Act. Parent
and Purchaser agree that if, at any scheduled expiration of the Offer, any of
the conditions to Purchaser's obligation to accept for payment any of the Shares
shall not be satisfied or waived, and such condition is of a nature that it
could reasonably be expected to be satisfied within ninety days of the
commencement of the Offer, Purchaser shall extend the Offer for the shortest
time period that it believes is necessary to satisfy any such condition. 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 pay for all Shares validly tendered and not 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 (as hereinafter defined). Any such delay shall be
effected in compliance with Rule 14e-1(c) under the Exchange Act. If the payment
equal to the Per Share Amount in cash 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 Per Share Amount 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.
(g) As promptly as reasonably practicable on the date of commencement
of the Offer, Purchaser shall file with the SEC a Tender Offer Statement on
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Schedule TO (together with all amendments and supplements thereto, the "Schedule
TO") with respect to the Offer. The Schedule TO shall contain or shall
incorporate by reference an offer to purchase (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 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
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, as so corrected, to be filed 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.
SECTION 2.02 Company Action. (a) The Company hereby approves of and
consents to the Offer and represents that the Board, at a meeting duly called
and held on December 17, 2003, 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 to recommend that the holders of Shares accept
the Offer and tender their Shares pursuant to the Offer, and adopt this
Agreement. The Company further represents that Xxxxx Fargo Securities, LLC has
delivered to the Board an opinion, which will be confirmed promptly in writing,
that, as of the date of this Agreement, the consideration to be received by the
holders of Shares pursuant to each of the Offer and the Merger is fair to the
holders of Shares from a financial point of view (the "Fairness Opinion").
Except as provided in Section 7.05(b), the Company hereby consents to the
inclusion in the Offer Documents of the recommendation of the Board described in
this Section 2.02(a), and the Company 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.
(c) As promptly as reasonably practicable on the date of commencement
of the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") containing the Fairness Opinion and, except as
provided in Section 7.05(b), the recommendation of the Board described in
Section 2.02(a), and 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 with the SEC and disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws.
(d) The Company shall promptly 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 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 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 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 9.01, shall deliver to the Company all copies of such information then
in their possession.
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ARTICLE III
THE MERGER
SECTION 3.01 The Merger. Upon the terms of this Agreement and subject
to the conditions set forth in Article VIII, and in accordance with the DGCL,
Purchaser shall be merged with and into the Company.
SECTION 3.02 Effective Time; Closing. As promptly as practicable after
the conditions to the Merger set forth in Article VIII have been satisfied, the
parties hereto shall cause the Merger to be consummated by filing this Agreement
or 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"). Immediately prior to such filing of the Certificate of Merger, a closing
shall be held at the offices of Shearman & Sterling LLP, 000 Xxxxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, or such other place as the parties shall agree, for
the purpose of confirming the satisfaction or waiver, as the case may be, of the
conditions set forth in Article VIII.
SECTION 3.03 Effect of the Merger. 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"). 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 the Company and Purchaser
shall become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation.
SECTION 3.04 Certificate of Incorporation; By-laws. (a) At the
Effective Time, the Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation.
9
(b) Unless otherwise determined by Parent prior to the Effective Time,
at the Effective Time, the By-laws of the Company, 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 3.05 Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time 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 individuals set
forth in Annex B hereto shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal.
SECTION 3.06 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 3.06(b) and any Dissenting Shares (as hereinafter
defined)) shall be canceled and shall be converted automatically
into the right to receive an amount equal to the Per Share Amount
(the "Merger Consideration") payable, without interest, to the
holder of such Share, upon surrender, in the manner provided in
Section 3.10, 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 wholly owned
subsidiary of Parent or of the Company immediately prior to the
Effective Time shall be canceled without any conversion thereof
and no payment or distribution shall be made with respect
thereto; and
(c) Each share of common stock, par value $.01 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, par value $.01 per share, of the Surviving Corporation.
SECTION 3.07 Employee Stock Options. Effective as of the Effective
Time, the Company shall take all necessary action to provide that each
outstanding option to purchase shares of Company common stock granted under the
Company's 1986 Stock Option Plan and 1986 Non-Statutory Stock Option Plan and
the 1994 Stock Option Plan, each as amended through the date of this Agreement
(the "Company Stock Option Plans"), and each outstanding option to purchase
Shares that was not granted under a Company Stock Option Plan (each such option
to purchase Shares, a "Company Stock Option") that is outstanding and
unexercised, whether or not vested or exercisable, as of such date shall
represent the right to receive the cash payment provided in this Section 3.07.
Each holder of a Company Stock Option that is outstanding and unexercised
immediately prior to the Effective Time shall be entitled (subject to the
provisions of this Section 3.07) to be paid by the Surviving Corporation, with
respect to each share of Company common stock subject to the Company Stock
Option, an amount in cash (subject to any applicable withholding taxes) equal to
the excess, if any, of the Per Share Amount over the applicable per share
exercise price of such Company Stock Option (the "Option Payment"). The
Surviving Corporation shall make such Option Payment as promptly as practicable
after the Effective Time. Any such payment shall be subject to all applicable
federal, state and local tax withholding requirements. The Company shall take
all necessary action to approve the disposition of the Company Stock Options in
connection with the transactions contemplated by this Agreement to the extent
necessary to exempt such dispositions and acquisitions under Rule 16b-3 of the
Exchange Act. At the Effective Time, if necessary, Parent shall provide the
Surviving Corporation with sufficient cash to make the payments required to
holders of Company Stock Options under this Section 3.07.
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SECTION 3.08 Dissenting Shares. (a) Notwithstanding any provision of
this Agreement to the contrary, 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 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 3.10, 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 3.09 Surrender of Shares; Stock Transfer Books. (a) Prior to
the Effective Time, Purchaser shall designate a bank or trust company reasonably
acceptable to the Company to act as agent (the "Paying Agent") for the holders
of Shares to receive the funds to which holders of Shares shall become entitled
pursuant to Section 3.06(a), and at or prior to the Effective Time, Parent shall
deposit with the Paying Agent sufficient cash for this purpose. Such funds shall
be invested by the Paying Agent as directed by the Surviving Corporation.
(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 3.06(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 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.
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(c) At any time following the sixth 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, 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 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) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if reasonably required by
Parent, the posting by such person of a bond in such amount as Parent reasonably
determines is necessary as indemnity against any claim that may be made against
it with respect to such Certificate, the Paying Agent shall issue in exchange
for such lost, stolen or destroyed Certificate, the Merger Consideration such
holder has a right to receive.
(e) 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.
SECTION 3.10 Withholding Rights. 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 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.
12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Parent and Purchaser to enter into this
Agreement, and except as disclosed in the disclosure schedule prepared by the
Company and delivered by the Company to Parent and Purchaser prior to the
execution and delivery of this Agreement (the "Disclosure Schedule"), the
Company hereby represents and warrants to Parent and Purchaser that:
SECTION 4.01 Organization and Qualification; Subsidiaries. (a) Each of
the Company and each subsidiary of the Company (each a "Subsidiary") is a
corporation duly organized, validly existing and in good standing, except as set
forth in Section 4.01(a) of the Disclosure Schedule, under the laws of the
jurisdiction of its incorporation 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, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not prevent or materially
delay consummation of any of the Transactions and would not have a Material
Adverse Effect. The Company and each Subsidiary is duly qualified or licensed as
a foreign corporation 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 prevent or materially delay consummation of any of the
Transactions and would not have a Material Adverse Effect.
(b) A true and complete list of all the Subsidiaries, together with the
jurisdiction of incorporation of each Subsidiary, the percentage of the
outstanding capital stock of each Subsidiary owned by the Company and each other
Subsidiary, and the names of the directors and officers of each Subsidiary, is
set forth in Section 4.01(b) of the Disclosure Schedule. Except as disclosed in
Section 4.01(b) of the 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 4.02 Certificate of Incorporation and By-laws. The Company has
heretofore made available 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 4.03 Capitalization. (a) The authorized capital stock of the
Company consists of 20,000,000 Shares and 1,000,000 shares of preferred stock,
par value $0.01 per share ("Company Preferred Stock"). As of the date of this
Agreement, (i) 5,907,156 Shares are issued and outstanding, all of which are
validly issued, fully paid and nonassessable, (ii) no Shares are held in the
treasury of the Company, (iii) no Shares are held by the Subsidiaries, and (iv)
1,444,912 Shares are reserved for future issuance pursuant to outstanding
13
Company Stock Options and other purchase rights (the "Company Stock Awards"). As
of the date of this Agreement, no shares of Company Preferred Stock are issued
and outstanding. Except as set forth in this Section 4.03, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Company or any
Subsidiary or obligating 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 4.03 of the Disclosure Schedule sets forth the following
information with respect to each Company Stock Award outstanding on the date of
this Agreement: (i) the name and address of the Company Stock Award recipient;
(ii) the particular plan pursuant to which such Company Stock Award was granted;
(iii) the number of shares of Company common stock 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; (vi) the date on which such Company Stock Award expires; and (vii)
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. 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 form of all stock
award agreements evidencing such Company Stock Awards. 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 4.03(a) of the 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 Option as a result of the Offer
or the Merger. All outstanding shares of Company common stock, all outstanding
Company Stock Options and all outstanding shares of capital stock of each
Subsidiary have been issued and granted in compliance 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 of each Subsidiary is duly
authorized, validly issued, fully paid and nonassessable, and each such share 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 4.04 Authority Relative to This Agreement. 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 of this Agreement by the Company and the consummation by
the Company of the Transactions have been duly and validly authorized by all
necessary corporate action on the part of the Company, 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
adoption of this Agreement by the holders of a majority of the then-outstanding
Shares, 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 Parent and Purchaser,
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. The Board has unanimously
approved this Agreement and the Transactions and such approvals are sufficient
so that the restrictions on business combinations set forth in Section 203(a) of
the DGCL shall not apply to the Merger. To the knowledge of the Company, no
other state takeover statute is applicable to any of the Transactions.
14
SECTION 4.05 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, and the consummation of
the Transactions by the Company will not, (i) conflict with or violate the
Certificate of Incorporation, By-laws or any resolution, currently in effect,
adopted by the Board or the stockholders of the Company or any equivalent
organizational documents of the Company or any Subsidiary, (ii) assuming that
all consents, approvals and other authorizations described in Section 4.05(b)
have been obtained and that all filings and other actions described in Section
4.05(b) have been made or taken, conflict with or violate any United States or
non-United States national, state, provincial, municipal or local statute, law,
ordinance, regulation, rule, code, executive order, injunction, judgment, decree
or other order ("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) 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 to which the Company or any Subsidiary is a party or by
which the Company or a Subsidiary or any property or asset of the Company or any
Subsidiary is bound or affected , except, with respect to clauses (ii) and
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not prevent or materially delay consummation of any of
the Transactions and would not have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any United States or non-United States national, state, provincial,
municipal or local government, governmental, regulatory or administrative
authority, agency, instrumentality or commission or any court, tribunal, or
judicial or arbitral body (a "Governmental Authority"), except for (i)
applicable requirements, if any, of the Exchange Act, state securities or "blue
sky" laws ("Blue Sky Laws") and state takeover laws, (ii) the pre-merger
notification requirements of the Xxxx-Xxxxx Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the filing and recordation of appropriate
merger documents and 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 prevent or materially delay consummation of
any of the Transactions and would not have a Material Adverse Effect.
SECTION 4.06 Permits; Compliance. (a) Except as set forth in Section
4.13 (Real Property), Section 4.14 (Intellectual Property) and Section 4.16
(Environmental Matters), Section 4.06 of the Disclosure Schedule contains a
15
complete and accurate list 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 (the "Permits"). Each of the
Company and the Subsidiaries is in possession of all Permits. No suspension or
cancellation of any of the Permits is pending or, to the knowledge of the
Company, threatened. Neither the Company nor any Subsidiary is, in any material
respect, in conflict with, or in default, breach or violation of, (a) any 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, including, without
limitation, with respect to design, labeling, testing and inspection of the
Company's or any Subsidiaries' products, and any Law of the United States Food
and Drug Administration, or (b) any note, bond, mortgage, indenture, contract,
agreement, lease, license, Permit, franchise or other instrument or obligation
to which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any property or asset of the Company or any Subsidiary is bound.
(b) Except as set forth in Section 4.06 of the Disclosure Schedule and
except for matters which would not have a Material Adverse Effect, (i) the
Company has not received, at any time since January 1, 1999, any formal notice
or other formal communication from any Governmental Authority or any other
person regarding (A) any actual, alleged, possible, or potential violation of or
failure to comply with any term or requirement of any Permit, or (B) any actual,
proposed, possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Permit, and (ii) all
applications required to have been filed for the renewal of any Permit have been
duly filed on a timely basis with the appropriate Governmental Authority, and
all other filings required to have been made with respect to any such Permit
have been duly made on a timely basis with the appropriate Governmental
Authority.
SECTION 4.07 SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports and documents required to be filed by it with the SEC
since December 31, 2000, including (i) its Annual Reports on Form 10-K for the
fiscal years ended June 30, 2000, 2001 and 2002, respectively (ii) its Quarterly
Reports on Form 10-Q for the period ended September 30, 2003 (the "Form 10-Q"),
(iii) all proxy statements relating to the Company's meetings of stockholders
(whether annual or special) held since December 31, 2000 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 December 31, 2002 (the forms, reports and other documents referred to
in clauses (i), (ii), (iii) and (iv) above, as amended, where applicable, being,
collectively, the "SEC Reports"). The SEC Reports (i) were prepared in all
material respects 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, as of the date of such amendment,
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.
16
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the 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) 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 covered thereby (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments, the effect of which
are not, individually or in the aggregate, material).
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Subsidiaries as at June 30, 2003,
including the notes thereto (the "2003 Balance Sheet"), neither the Company nor
any Subsidiary has any material liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise), except for liabilities and
obligations, incurred in the ordinary course of business consistent with past
practice since June 30, 2003, and liabilities and obligations reflected on the
Company's balance sheet included in the Form 10-Q.
(d) The Company has heretofore made available 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) To the knowledge of the Company, 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
thereunder since June 30, 2003.
(f) 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
ensure 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.
Section 4.07(f) of the Disclosure Schedule lists, and 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 4.07, the term "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.
(g) The Company maintains and will continue to maintain a standard
system of accounting established and administered 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. Section 4.07(g) of the Disclosure
Schedule lists, and 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.
17
(h) Since December 31, 2000, neither the Company nor any Subsidiary
nor, to the knowledge of the Company, any director, officer, auditor or
accountant of the Company or any Subsidiary, has received or otherwise had or
obtained knowledge of any material 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. Since December 31, 2000,
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 Board or
any committee thereof.
(i) All accounts receivable of the Company and its Subsidiaries
reflected on the 2003 Balance Sheet or arising thereafter have arisen from bona
fide transactions in the ordinary course of business consistent with past
practices and in accordance with SEC regulations and GAAP applied on a
consistent basis and, except to the extent the subject of a reserve made in
accordance with GAAP, are not subject to valid defenses, setoffs or
counterclaims. The Company's reserve for contractual allowances and doubtful
accounts has been calculated in accordance with GAAP in a manner consistent with
past practices. Since the date of the 2003 Balance Sheet, neither the Company
nor any of its Subsidiaries has modified or changed in any material respect its
sales practices or methods including, without limitation, such practices or
methods in accordance with which the Company or any of its Subsidiaries sell
goods, fill orders or record sales.
(j) All accounts payable of the Company and its Subsidiaries reflected
on the 2003 Balance Sheet or arising thereafter are the result of bona fide
transactions in the ordinary course of business and have been paid or are not
yet due or payable. Since the date of the 2003 Balance Sheet, the Company and
its Subsidiaries have not altered in any material respects their practices for
the payment of such accounts payable, including the timing of such payment.
SECTION 4.08 Absence of Certain Changes or Events. Since June 30, 2003,
except as set forth in Section 4.08 of the 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
consistent with past practice, (b) there has not been any 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 6.01.
18
SECTION 4.09 Absence of Litigation. Except as set forth in Section 4.09
of the Disclosure Schedule, there is no litigation, suit, claim, action,
proceeding or investigation (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 that
(a) has had or would have a Material Adverse Effect or (b) seeks to materially
delay or prevent the consummation of any Transaction. 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
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 that
would prevent or materially delay consummation of any of the Transactions or
would have a Material Adverse Effect.
SECTION 4.10 Employee Benefit Plans. (a) Section 4.10(a) of the
Disclosure Schedule lists (i) 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, termination, severance or other contracts or
agreements, whether legally enforceable or not, 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, or any current or former consultant to, the Company or
any Subsidiary, (ii) each employee benefit plan for which the Company or any
Subsidiary could incur liability under Section 4069 of ERISA in the event such
plan has been or were to be terminated, (iii) any plan in respect of which the
Company or any Subsidiary could incur liability under Section 4212(c) of ERISA,
and (iv) any contracts (including loan agreements), arrangements or
understandings between the Company or any Subsidiary and any employee of the
Company or any Subsidiary including, without limitation, any contracts,
arrangements or understandings relating in any way to a sale of the Company or
any Subsidiary (collectively, the "Plans"). Each Plan is in writing and the
Company has furnished to Parent a true and complete copy of each Plan and has
delivered to Parent a true and complete copy of each material document, if any,
prepared in connection with each such Plan, including, without limitation, (i) a
copy of each trust or other funding arrangement, (ii) each summary plan
description and summary of material modifications, (iii) the most recently filed
Internal Revenue Service ("IRS") Form 5500, (iv) the most recently received IRS
determination letter for each such Plan, and (v) the most recently prepared
actuarial report and financial statement in connection with each such Plan.
Neither the Company nor any Subsidiary has any express or implied commitment,
whether legally enforceable or not, (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 any individual, or (iii) to modify, change or terminate any Plan, other than
with respect to a modification, change or termination required by ERISA or the
Internal Revenue Code of 1986, as amended (the "Code").
19
(b) Except as described in Section 4.10(b) of the Disclosure Schedule,
none of the Plans (i) provides for the payment of separation, severance,
termination or similar-type benefits to any person, (ii) 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 (iii) obligates the Company or any Subsidiary to make any payment
or provide any benefit as a result of a "change in control", within the meaning
of such term under Section 280G of the Code. None of the Plans provides for or
promises retiree medical, disability or life insurance benefits to any current
or former employee, officer or director of the Company or any Subsidiary except
as may be required by Law. None of the Plans provides for the lending of money
to any director or officer of the Company or any Subsidiary or otherwise
violates, or could reasonably be expected to violate, Section 402 of the
Xxxxxxxx-Xxxxx Act of 2002. Each of the Plans is subject only to the Laws of the
United States or a political subdivision thereof.
(c) 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. The Company and the
Subsidiaries have performed all obligations required to be performed by them
under, are not in any respect in material 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 claims for benefits in the ordinary course) and no fact
or event exists that could reasonably be expected to give rise to any such
Action.
(d) Each Plan that is intended to be qualified under Section 401(a) of
the Code or Section 401(k) of the Code has timely received a favorable
determination letter from the IRS covering all of the provisions applicable to
the Plan for which determination letters are currently available that the Plan
is so qualified and each trust established in connection with any Plan which is
intended to be exempt from federal income taxation under Section 501(a) of the
Code has received a determination letter from the IRS that it is so exempt, and
no fact or event has occurred since the date of such determination letter or
letters from the IRS to adversely affect the qualified status of any such Plan
or the exempt status of any such trust.
(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.
None of the Plans is subject to Title IV of ERISA and neither the Company nor
any Subsidiary has incurred, or could reasonably be expected to incur, any
liability under, arising out of or by operation of Title IV of ERISA.
(f) All contributions, premiums or payments required to be made with
respect to any Plan have been made on or before their due dates or have been
accrued on the Company's financial statements. 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 give rise to any such challenge or disallowance.
(g) The directors, officers, management employees, and technical and
professional employees of the Company and the Subsidiaries set forth in Section
4.10(g) of the Disclosure Schedule 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.
20
(h) Except as set forth in Section 4.10(h) of the Disclosure Schedule,
the consummation of the transactions contemplated by this Agreement will not,
either alone or in combination with another event, (i) entitle any current or
former employee, officer or director of the Company or any Subsidiary to
severance pay, unemployment compensation or any other payment, (ii) accelerate
the time of payment or vesting, or increase the amount of compensation due any
such employee, officer or director (except as required under Code Section
411(d)(3)), or (iii) fail to be deductible for federal income tax purposes by
virtue of Section 280G of the Code.
SECTION 4.11 Labor and Employment Matters. (a) Except as set forth in
Section 4.11(a) of the Disclosure Schedule, (i) there are no controversies
pending or, to the knowledge of the Company, threatened between the Company or
any Subsidiary and any of their respective employees and (ii) 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.
(b) The Company and the 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 the 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. 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 threatened with respect to the Company. There is no charge of discrimination
in employment or employment practices with respect to the Company, for any
reason, including, without limitation, age, gender, race, religion or other
legally protected category, which has been asserted or is now pending or, to the
knowledge of the Company, 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, employs or has been alleged
to employ any person.
SECTION 4.12 Offer Documents; Schedule 14D-9; Proxy Statement. Neither
the Schedule 14D-9 nor any information supplied by the Company for inclusion in
the Offer Documents shall, at the times the 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. In
the event the Stockholders' Meeting is held, neither the proxy statement to be
sent to the stockholders of the Company in connection with the Stockholders'
Meeting (as defined in Section 7.01), 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, and at the
time of the Stockholders' Meeting contain any untrue statement of material fact,
or omit to state any material fact necessary in order to make the statements
therein, in light of the circumstance 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, 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 expressly for inclusion in the foregoing documents. The Schedule
14D-9 and the Proxy Statement shall comply in all material respects as to form
with the requirements of the Exchange Act and the rules and regulations
thereunder.
21
SECTION 4.13 Real Property; Title to Assets. (a) Section 4.13(a) of the
Disclosure Schedule lists each parcel of real property currently owned, or owned
in the time period between December 31, 1998 and the date hereof, by the Company
or any Subsidiary. 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 (collectively, "Liens"),
other than (A) Liens for current Taxes and assessments not yet past due, (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
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 4.13(b) of the Disclosure Schedule lists each parcel of
real property currently leased or subleased by the Company or any Subsidiary,
with the name of the lessor and the date of the lease, sublease, assignment of
the lease, any guaranty given or leasing commissions payable by the Company or
any Subsidiary in connection therewith and each 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 and subleases 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 default) by the Company or
any Subsidiary or, to the knowledge of the Company, by the other party to such
lease or sublease, or person in the chain of title to such leased premises.
22
(c) There are no contractual or, to the knowledge of the Company, legal
restrictions that preclude or restrict the ability to use any real property
owned or leased by the Company or any Subsidiary for the purposes for which it
is currently being used. To the knowledge of the Company, there are no material
latent defects or material adverse physical conditions affecting the real
property, and improvements thereon, owned or leased by the Company or any
Subsidiary.
(d) 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 tangible properties and assets, real,
personal and mixed, used or held for use in its business, free and clear of any
Liens, except for such imperfections of title, if any, that do not materially
interfere with the present value of the subject property.
SECTION 4.14 Intellectual Property. (a) Section 4.14(a) of the
Disclosure Schedule sets forth a true and complete list of (i) all patents and
patent applications, trademark and copyright registrations and applications,
common law trademarks, and domain names and URLs included in the Owned
Intellectual Property, (ii) all Licenses (other than licenses of commercially
available off-the-shelf Software licensed pursuant to shrink-wrap or click-wrap
licenses), and (iii) Company IT Systems and other Owned Intellectual Property
that are material to the business of the Company or any Subsidiary.
(b) The conduct of the business of the Company and the Subsidiaries as
currently conducted and as currently contemplated to be conducted, the use of
the Owned Intellectual Property, Licensed Intellectual Property and Company IT
Systems in connection therewith and the transmission, use, linking and other
practices of the Company and the Subsidiaries related to their web sites, the
content thereof and the advertisements contained therein, do not conflict with,
infringe upon, misappropriate or otherwise violate the Intellectual Property
rights of any third party (the foregoing being true to the knowledge of the
Company with respect to any third party patent rights), and no Actions are
pending or, to the knowledge of the Company, threatened against the Company or
any Subsidiary alleging any of the foregoing. To the knowledge of the Company,
no person is engaging in any activity that infringes upon, misappropriates or
otherwise violates the Owned Intellectual Property or Licensed Intellectual
Property.
(c) 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. The Company and the Subsidiaries have the right to use the Owned
Intellectual Property and Licensed Intellectual Property, and access and use the
Company IT Systems, in the continued operation of their respective businesses as
presently conducted or as currently contemplated to be conducted.
(d) No Owned Intellectual Property or, to the knowledge of the Company,
any Licensed Intellectual Property (other than commercially available
off-the-shelf Software licensed pursuant to shrink-wrap or click-wrap licenses),
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. The Owned Intellectual
Property and, to the knowledge of the Company, the Licensed Intellectual
Property (other than commercially available off-the-shelf Software licensed
pursuant to shrink-wrap or click-wrap licenses), are subsisting, valid and
enforceable, and have not been adjudged invalid or unenforceable in whole or
part.
23
(e) The Owned Intellectual Property and the Licensed Intellectual
Property include all of the Intellectual Property used in the operation of the
business of the Company and the Subsidiaries, and there are no other items of
Intellectual Property that are material to the operation of the business of the
Company or any Subsidiary. The Company IT Systems include all of the IT Systems
used in the operation of the business of the Company and the Subsidiaries, and
there are no other IT Systems that are material to the operation of the business
of the Company or any Subsidiary.
(f) To the knowledge of the Company, (i) each License is valid and
enforceable, is binding on all parties thereto, and is in full force and effect;
(ii) no party to any License is in material breach thereof or default
thereunder; and (iii) neither the execution of this Agreement nor the
consummation of any Transaction shall (x) adversely affect any of the rights of
the Company or any Subsidiary with respect to the Owned Intellectual Property or
Licensed Intellectual Property, or (y) impair or interrupt the Company's or any
Subsidiary's access and use of, or their right to access and use, the Company IT
Systems or, to the extent applicable, their customers' access and use of, or
their right to access and use, the Company IT Systems.
(g) The Company and the Subsidiaries have taken commercially reasonable
steps to maintain the confidentiality of the trade secrets and other
confidential Intellectual Property used in connection with the business of the
Company or any Subsidiary. To the knowledge of the Company, (i) there has been
no misappropriation by any person of any material trade secrets or other
material confidential Intellectual Property used in connection with the business
of the Company or any Subsidiary; (ii) no employee, former employee, independent
contractor or agent of the Company or any Subsidiary has misappropriated any
trade secrets of any other person in the course of performance as an employee,
independent contractor or agent of the Company or any Subsidiary; and (iii) no
employee, former employee, independent contractor or agent of the Company or any
Subsidiary is in default or material breach of any term of any employment
agreement, nondisclosure agreement, assignment of invention agreement or similar
agreement or contract relating in any way to the protection, ownership,
development, use or transfer of Intellectual Property.
(h) To the knowledge of the Company, the Company IT Systems are free of
all viruses, worms, trojan horses and other known contaminants, and do not
contain any material errors or problems, that would (i) disrupt the ordinary
operation of such IT Systems in the conduct of the business of the Company or
any Subsidiary as presently conducted or as currently contemplated to be
conducted, or (ii) have an adverse impact on the operation of other Software or
operating systems. The Company IT Systems do not incorporate any GNU or "open"
source code or object code under which the Company IT Systems are subject to the
GNU general public license, GNU lesser general public license and other
"copyleft" license. The Company and the Subsidiaries have taken all commercially
reasonable steps to secure the Company IT Systems from unauthorized access or
use by any person, and to enable the continued and uninterrupted operation of
the Company IT Systems subject to down-time associated with planned maintenance
and upgrading of the Company IT Systems. The access and use of the Company IT
Systems by the Company, the Subsidiaries and any customer thereof (to the extent
applicable) in connection with the operation of the business of the Company and
the Subsidiaries as currently conducted and as currently contemplated to be
conducted do not violate any applicable Laws in any material respect.
24
SECTION 4.15 Taxes. Except as specifically disclosed in Section 4.15 of
the Disclosure Schedule:
(a) The Company and its Subsidiaries have filed all Tax Returns
required to be filed by them and have paid and discharged all
Taxes required to be paid or discharged, other than such payments
as are being contested in good faith by appropriate proceedings.
All such Tax Returns are true, accurate and complete. Neither the
IRS nor any other United States or non-United States taxing
authority or agency is now asserting or, to the knowledge of the
Company, threatening to assert against the Company or any of its
Subsidiaries any deficiency or claim for any Taxes or interest
thereon or penalties in connection therewith. Neither the Company
nor any of its Subsidiaries has granted any waiver of any statute
of limitations with respect to, or any extension of a period for
the assessment of, any Tax. The accruals and reserves for Taxes
reflected in the financial statements in the Company SEC Reports
are adequate to cover all Taxes accruable through the date
thereof (including interest and penalties, if any, thereon) in
accordance with GAAP. There are no Tax liens upon any property or
assets of the Company or its Subsidiaries except liens for
current Taxes not yet due.
(b) Neither the Company nor any of its Subsidiaries (i) has liability
for the Taxes of any other person (other than the Company and its
Subsidiaries) by reason of having joined in the filing of a
consolidated, combined or unitary Tax Return, by contract, by
transferee liability or otherwise, (ii) has been required to
include in income any adjustment pursuant to Section 481 of the
Code by reason of a voluntary change in accounting method
initiated by the Company or a Subsidiary (and the IRS has not
initiated or proposed any such adjustment or change in accounting
method), (iii) has entered into a transaction being reported as
an installment sale under Section 453 of the Code, (iv) has been
a "distributing corporation" or a "controlled corporation" in a
distribution intended to qualify under Section 355(e) of the Code
within the past five years, (v) has received a notice from a
taxing authority for a jurisdiction in which a Tax Return has not
been filed asserting that the filing of such a Tax Return may be
required and (vi) has been at any time a member of any
partnership or joint venture or the holder of a beneficial
interest in any trust for any period for which the statute of
limitations for any Tax has not expired.
(c) The Company is not, and has not been at any time during the past
five years, a United States real property holding corporation
within the meaning of Section 897 of the Code.
25
SECTION 4.16 Environmental Matters. Except as described in Section 4.16
of the Disclosure Schedule or as would not, individually or in the aggregate,
prevent or materially delay consummation of any of the Transactions and would
not, individually or in the aggregate, have a Material Adverse Effect, (a) none
of the Company nor any of the Subsidiaries has violated or is in violation of,
or has liability under, any Environmental Law; (b) none of the properties
(including associated soils and surface and ground waters and building
materials) currently or formerly owned, leased, used, occupied or operated by
the Company or any Subsidiary are contaminated with any Hazardous Substance; (c)
none of the Company or any of the Subsidiaries is actually, potentially or
allegedly liable for any off-site contamination by Hazardous Substances; (d)
none of the Company or any of the Subsidiaries is actually, potentially or
allegedly liable under any Environmental Law, or under any contract that
allocates or assigns liability or responsibility with respect to Environmental
Laws or Hazardous Substances (including with respect to pending or threatened
liens or claims for damages, penalties, fines or contribution) and none of the
Company or any of the Subsidiaries has received any notice of such liability;
(e) each of the Company and each Subsidiary has all permits, licenses and other
authorizations required under any Environmental Law ("Environmental Permits");
(f) each of the Company and each Subsidiary has always been and is in compliance
with its Environmental Permits; and (g) 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, including, without
limitation, the Connecticut Transfer Act or the New Jersey Industrial Site
Recovery Act.
SECTION 4.17 No Rights Agreement. The Company has not adopted any
stockholders' rights plan or comparable arrangement.
SECTION 4.18 Material Contracts. (a) Subsections (i) through (xviii) of
Section 4.18(a) of the Disclosure Schedule lists 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 4.18(a) of
the 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 (other than purchase orders made
or accepted in the ordinary course of business), that
contemplates an exchange of consideration with a value of more
than $50,000, in the aggregate, over the term of such contract
or agreement;
(iii) each purchase order made or accepted in the ordinary course of
business that contemplates an exchange of consideration with a
value of more than $50,000;
(iv) all contracts and agreements evidencing indebtedness for
borrowed money;
26
(v) all joint venture, partnership, strategic alliance and
business acquisition or divestiture agreements (and all
letters of intent and term sheets relating to any such pending
transactions);
(vi) all agreements relating to issuances of securities of the
Company or any Subsidiary (and all letters of intent and term
sheets relating to any such pending transactions) other than
those evidencing a Company Stock Option;
(vii) all agreements between the Company, any Subsidiary or any
affiliate of the Company or any Subsidiary, on the one hand,
and the Company, any Subsidiary or any affiliate of the
Company or any Subsidiary, on the other hand;
(viii) all exclusive distribution contracts to which the Company or
any Subsidiary is a party;
(ix) all broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion, market
research, marketing consulting and advertising contracts and
agreements to which the Company or any Subsidiary is a party
and any other contract that compensates any person based on
any sales by the Company or a Subsidiary;
(x) all management contracts (excluding contracts for employment)
and contracts with other consultants, including any contracts
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;
(xi) all contracts and agreements with any Governmental Authority
to which the Company or any Subsidiary is a party;
(xii) all Licenses (other than licenses of commercially available
off-the-shelf Software licensed pursuant to a shrink-wrap or
click-wrap license that is not material to the business of the
Company or any Subsidiary);
(xiii) 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;
(xiv) all material contracts or arrangements that result in any
person or entity holding a power of attorney from the Company
or any Subsidiary that relates to the Company, any Subsidiary
or their respective businesses;
(xv) all agreements related to professional services rendered to
the Company or any Subsidiary in connection with the Offer,
the Merger and this Agreement;
(xvi) each warranty, guaranty or other similar undertaking with
respect to any contractual performance extended by the Company
or any Subsidiary;
27
(xvii) all contracts containing a provision of the type commonly
referred to as a "most favored nation" provision; 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 and the Subsidiaries, taken as a
whole, or the conduct of their respective businesses, or the
absence of which would have a Material Adverse Effect.
(b) (i) Each Material Contract is a legal, valid and binding agreement;
(ii) none of the Company or any Subsidiary has received any claim of material
default under or cancellation of any Material Contract and none of the Company
or any Subsidiary is, in any material respect, in breach or violation of, or
default under, any Material Contract; (iii) to the knowledge of the Company, no
other party is, in any material respect, in breach or violation of, or default
under, any Material Contract; and (iv) neither the execution of this Agreement
nor the consummation of any Transaction shall constitute a material default
under, give rise to cancellation rights under, or otherwise adversely affect any
of the material 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 4.19 Customers and Suppliers. Section 4.19 of the Disclosure
Schedule sets forth a true and complete list of the Company's top ten customers
(based on the revenue from such customer during the 12-month period beginning on
September 30, 2002 and ending on September 30, 2003). As of the date of this
Agreement, none of the Company's customers listed in Section 4.19 of the
Disclosure Schedule and no material supplier of the Company and its
Subsidiaries, (i) has cancelled or otherwise terminated any contract with the
Company or any Subsidiary prior to the expiration of the contract term, or (ii)
to the knowledge of the Company, has threatened, or indicated its intention, to
cancel or otherwise terminate its relationship with the Company or its
Subsidiaries or to reduce substantially its purchase from or sale to the Company
or any Subsidiary of any products, equipment, goods or services.
SECTION 4.20 Inventory. All inventory of the Company and any
Subsidiary, including consigned inventory, whether or not reflected in the 2003
Balance Sheet, consists of a quality and quantity usable and salable in the
ordinary course of business and is sufficient for the operation of the business
of the Company and each Subsidiary in the ordinary course and consistent with
past practice, except for obsolete items and items of below-standard quality,
which have been written off or written down to net realizable value on the 2003
Balance Sheet or on the accounting records of the Company as of the Effective
Time, as the case may be. All inventories not written off have been priced at
the lower of cost or net realizable value on a first in, first out basis. The
quantities of each item of inventory (whether raw materials, work-in-process, or
finished goods) are not excessive, but are reasonable in the present
circumstances of the Company and each Subsidiary. Schedule 4.20 sets forth the
location of all items of the Company's and each Subsidiary's inventory,
including consigned inventory, as of June 30, 2003 and the Company's procedures
for tracking and controlling consigned inventory, and such procedures are
adequate for such purposes and have been followed by the Company and each
Subsidiary consistent with past practice.
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SECTION 4.21 Company Products and Services. (a) Each product
manufactured, sold, leased or delivered by the Company or any Subsidiary has
been in conformity in all material respects with all applicable contractual
commitments, any applicable Law and all express and implied warranties, and
neither the Company nor any Subsidiary has any material liabilities or
obligations for replacement or repair thereof or other damages in connection
therewith. Neither the Company nor any Subsidiary has been required to file any
notice or other report with, or provide information to, any product safety
agency, commission, board or other Governmental Authority concerning actual or
potential hazards with respect to any product manufactured by the Company or any
Subsidiary other than routine filings required of all manufacturers similarly
situated. Except as set forth in the SEC Reports filed prior to the date of this
Agreement, neither the Company nor any Subsidiary has any material liabilities
or obligations arising out of any injury to persons or property as a result of
the ownership, possession or use of any product manufactured, sold, leased or
delivered by the Company or any Subsidiary.
(b) Since January 1, 2002 there have been no (i) recalls related to any
product manufactured sold, leased or delivered by the Company or any Subsidiary,
or (ii) withdrawals of any product manufactured sold, leased or delivered by the
Company or any Subsidiary due to quality or safety issues.
SECTION 4.22 Insurance. The Company and the Subsidiaries maintain
insurance policies, the types and amounts of coverage of which are usual and
customary in the context of the businesses and operations of the Company and the
Subsidiaries.
SECTION 4.23 Certain Business Practices. None of the Company, any
Subsidiary or, to the knowledge of the Company, 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; or (iii) made any payment in the nature of criminal bribery.
SECTION 4.24 Government Regulation. (a) None of the Company, its
Subsidiaries, or any of their managers or employees (as defined in 42 C.F.R.
Part 420 Subpart C and 42 C.F.R. Section 1001.1001(a)(2)) has been, or is being
investigated with respect to, any activity that materially contravenes or could
contravene, or constitutes or could constitute, a material violation of any
Healthcare Law.
(b) None of the Company, any of its Subsidiaries or their managers or
employees has engaged in any activity that contravenes or constitutes a
violation of any Healthcare Law during their employment or association with the
Company or its Subsidiaries.
(c) Neither the Company nor its Subsidiaries has: (i) had a material
civil monetary penalty assessed against it under Section 1128A of the SSA or any
regulations promulgated thereunder; or (ii) been convicted (as that term is
defined in 42 C.F.R. Section 1001.2) of any of the following categories of
offenses as described in SSA Section 1128(a) and (b)(1), (2), (3), or any
regulations promulgated thereunder: (A) criminal offenses relating to the
delivery of an item or service under any state or federal healthcare program;
(B) criminal offenses under federal or state law for misconduct in connection
with the delivery of a healthcare item or service or with respect to any act or
omission in a program operated by or financed in whole or in part by any
federal, state or local government agency; or (C) federal or state laws relating
to the interference with or obstruction of any investigation into any criminal
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offense described in this clause.
(d) Since January 1, 2002, neither the Company nor any of its
Subsidiaries have received or been subject to: (i) any United States Food and
Drug Administration ("FDA") Form 483's relating to any product manufactured,
sold, leased or delivered by the Company or any Subsidiary; (ii) any FDA Notices
of Adverse Findings relating to any product manufactured, sold, leased or
delivered by the Company or any Subsidiary; or (iii) any warning letters or
other written correspondence from the FDA or any other Governmental Authority
concerning any product manufactured, sold, leased or delivered by the Company or
any Subsidiary in which the FDA or such other Governmental Authority asserted
that the operations of the Company or any Subsidiary were not in compliance with
applicable Law, regulations, rules or guidelines with respect to any product
manufactured, sold, leased or delivered by the Company or any Subsidiary.
SECTION 4.25 Brokers. No broker, finder or investment banker (other
than Xxxxx Fargo Securities, LLC) 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 Xxxxx Fargo Securities, LLC pursuant to which such firm would be
entitled to any payment relating to the Transactions.
ARTICLE V
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 5.01 Corporate Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation 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, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, prevent or materially delay consummation of any of the
Transactions.
SECTION 5.02 Authority Relative to This Agreement . Each of Parent and
Purchaser 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 of this Agreement by Parent and
Purchaser and the consummation by Parent and Purchaser of the Transactions have
been duly and validly authorized by all necessary corporate action on the part
of Parent and Purchaser, 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.
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SECTION 5.03 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent and Purchaser do not, and the
performance of this Agreement by Parent and Purchaser will not, and the
consummation of the Transactions by Parent and Purchaser 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 and other authorizations
described in Section 5.03(b) have been obtained and that all filings and other
actions described in Section 5.03(b) have been made or taken, 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 clauses
(ii) and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, prevent or
materially delay consummation of any of the Transactions.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority, except for (i) applicable
requirements, if any, of the Exchange Act, Blue Sky Laws and state takeover
laws, (ii) the pre-merger notification requirements of the HSR Act, (iii) the
filing and recordation of appropriate merger documents as required by the DGCL,
and (iv) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or
materially delay consummation of any of the Transactions.
SECTION 5.04 Financing. Parent has, or has binding commitments from
reputable financial institutions to enable it to borrow, 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 5.05 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. None of the information supplied in writing by Parent or Purchaser
expressly for inclusion in the Schedule 14D-9 shall 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. In the event a
Stockholders' Meeting is held, 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, 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 in writing
by the Company or any of its representatives expressly 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 thereunder.
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SECTION 5.06 Absence of Litigation. There is no Action pending or, to
the knowledge of Parent or Purchaser, threatened against Parent or Purchaser, or
any property or asset of Parent or Purchaser, before any Governmental Authority
that seeks to materially delay or prevent the consummation of any Transaction.
Neither Parent nor Purchaser nor any property or asset of Parent or Purchaser is
subject to any order, writ, judgment, injunction, decree, determination or award
of any Governmental Authority that would prevent or materially delay
consummation of any of the Transactions.
SECTION 5.07 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, other than any broker, finder or investment banker the fees of which
will be payable solely by Parent or Purchaser.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01 Conduct of Business by the Company Pending the Merger. The
Company agrees that, between the date of this Agreement and the Effective Time,
unless Parent shall otherwise agree in writing, the businesses of the Company
and the Subsidiaries shall be conducted only in, and the Company and the
Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use its reasonable best 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. By way of amplification
and not limitation, except as expressly contemplated by this Agreement and
Section 6.01 of the Disclosure Schedule, neither the Company nor any Subsidiary
shall, between the date of this Agreement and the Effective Time, directly or
indirectly, do, or propose to do, any of the following without the prior written
consent of Parent:
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(a) amend or otherwise change its Certificate of Incorporation
or By-laws;
(b) issue, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance
of, (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
a maximum of 1,448,662 Shares issuable pursuant to employee stock
options outstanding on the date hereof) 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 dividends by any direct
or indirect wholly owned Subsidiary to the Company or any other
Subsidiary;
(d) reclassify, combine, split, subdivide or redeem, or
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(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 amount of assets other than the
acquisition of supplies or inventory in the ordinary course of business
and consistent with past practice; (ii) incur any indebtedness for
borrowed money 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, or grant any security interest
in any of its assets except in each case in the ordinary course of
business and consistent with past practice; (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 single capital expenditure which is in excess of
$25,000 or capital expenditures which are, in the aggregate, in excess
of $75,000 for the Company and the Subsidiaries taken as a whole; or
(v) enter into or amend any contract, agreement, commitment or
arrangement with respect to any matter set forth in this Section
6.01(e);
(f) hire additional employees or 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, wages, bonuses,
incentives or benefits of employees of the Company or any Subsidiary
who are not directors or officers of the Company or any Subsidiary, or
grant any severance or termination pay to, or enter into any employment
or severance agreement with, any director, officer or other employee of
the Company or of any Subsidiary, or establish, adopt, enter into or
amend any collective bargaining, bonus, profit-sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of
any director, officer or employee;
33
(g) take any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice,
with respect to accounting policies or procedures;
(h) make, revoke or change any Tax election or method of Tax
accounting or settle or compromise any material Tax liability;
(i) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the 2003 Balance Sheet or
subsequently incurred in the ordinary course of business and consistent
with past practice;
(j) amend, modify or consent to the termination of any
Material Contract, or amend, waive, modify or consent to the
termination of any material rights of the Company or any Subsidiary
thereunder, other than in the ordinary course of business and
consistent with past practice;
(k) commence or settle any Action;
(l) engage in any new line of business or abandon any existing
line of business;
(m) (i) permit any Owned Intellectual Property to lapse or to
be abandoned, dedicated, or disclaimed, fail to perform or make any
applicable filings, recordings or other similar actions or filings, or
fail to pay all required fees and taxes required or advisable to
maintain and protect its interest in any Owned Intellectual Property,
Licensed Intellectual Property, License or Company IT Systems, (ii)
sell, assign, or grant any security interest in or to any Owned
Intellectual Property, Licensed Intellectual Property, License or
Company IT Systems, (iii) grant to any third party any license with
respect to any Owned Intellectual Property, Licensed Intellectual
Property or Company IT Systems, (iv) 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 prior to the date of this Agreement), (v) disclose, or allow
to be disclosed, any confidential Intellectual Property, unless such
Intellectual Property is subject to a confidentiality or non-disclosure
covenant protecting against disclosure thereof, or (vi) execute or
enter into any License or any other agreement relating to Intellectual
Property or IT Systems;
(n) fail to make in a timely manner any filings with the SEC
required under the Securities Act or the Exchange Act or the rules and
regulations promulgated thereunder; or
(o) announce an intention, enter into any formal or informal
agreement or otherwise make a commitment, to do any of the foregoing.
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ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Stockholders' Meeting. (a) If required by applicable law
in order to consummate the Merger, the Company, acting through the Board as then
constituted, shall, in accordance with applicable law and the Company's
Certificate of Incorporation and By-laws, (i) 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 Transactions (the "Stockholders'
Meeting") and (ii) (A) include in the Proxy Statement, and not subsequently
withdraw or modify in any manner adverse to Purchaser or Parent, the unanimous
recommendation of the Board that the stockholders of the Company adopt this
Agreement and (B) use its reasonable best efforts to obtain such adoption. At
the Stockholders' Meeting, Parent and Purchaser shall cause all Shares then
owned by them and their subsidiaries to be voted in favor of the adoption of
this Agreement.
(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 7.02 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 reasonable best efforts to have
the Proxy Statement cleared by the SEC as promptly as practicable. 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 thereto to be mailed to the holders of
Shares entitled to vote at the Stockholders' Meeting at the earliest practicable
time.
SECTION 7.03 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 Board as shall give
Purchaser representation on the Board equal to the product of the total number
of directors on the 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 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 Board of (i) each
committee of the 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. Notwithstanding the foregoing, until the Effective
Time, the Company shall use its reasonable best efforts to ensure that at least
three members of the Board and each committee of the Board and such boards and
committees of the Subsidiaries, as of the date hereof, who are not employees of
the Company shall remain members of the Board and of such boards and committees
and (y) such number of members of the Board shall be independent as required by
the relevant rules of NASDAQ.
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(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 7.03, 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 7.03, prior to the Effective Time, any amendment of this Agreement or
the Certificate of Incorporation or By-laws of the Company, any termination of
this Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Purchaser, or
waiver of any of the Company's rights hereunder, or any other consent or action
of the Company with respect to this Agreement 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.
SECTION 7.04 Access to Information; Confidentiality. (a) From the date
hereof until the Effective Time, the Company shall, and shall cause the
Subsidiaries and the officers, directors, employees, auditors and agents of the
Company and the Subsidiaries to, afford the officers, employees, agents and
financing sources of Parent and Purchaser access on a reasonable basis at all
reasonable times to the officers, employees, agents, properties, offices, plants
and other facilities, books and records of the Company and each Subsidiary and
shall furnish Parent and Purchaser and the financing sources of Parent or
Purchaser with such financial, operating and other data and information as
Parent or Purchaser, through its officers, employees or agents, may reasonably
request.
(b) All information obtained by Parent or Purchaser pursuant to this
Section 7.04 shall be kept confidential in accordance with the letter agreement,
dated November 21, 2003 (the "Confidentiality Agreement"), between Parent and
the Company.
(c) No investigation pursuant to this Section 7.04 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.
(d) Notwithstanding anything in this agreement to the contrary, each
party (and its representatives, agents and employees) may consult any tax
advisor regarding the U.S. federal tax treatment and U.S. federal tax structure
of the transactions contemplated hereby and may disclose to any person, without
limitation of any kind, the U.S. federal tax treatment and U.S. federal tax
structure of the transactions contemplated hereby and all materials (including
opinions or other tax analyses) that are provided relating to such treatment or
structure.
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SECTION 7.05 No Solicitation of Transactions. (a) The Company agrees
that neither it nor any Subsidiary nor any of the directors, officers or
employees of it or any Subsidiary will, and that it will cause its and its
Subsidiaries' agents, advisors and other representatives (including, without
limitation, any investment banker, attorney or accountant retained by it or any
Subsidiary) not to, directly or indirectly, (i) solicit, initiate or knowingly
encourage (including by way of furnishing nonpublic information), 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, or (ii) enter into or maintain or continue
discussions or negotiations with any person or entity in furtherance of 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 contemplating or
otherwise relating to any Competing Transaction, or (iv) authorize or permit any
of the officers, directors or employees of the Company or any of its
Subsidiaries, or any investment banker, financial advisor, attorney, accountant
or other representative retained by 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 one day after the Company attains knowledge thereof),
orally and in writing, if any proposal or offer, or any inquiry or contact with
any person with respect thereto, regarding a Competing Transaction is made,
specifying the material terms and conditions thereof and the identity of the
party making such proposal or offer or inquiry or contact (including material
amendments or proposed material amendments). The Company shall, and shall direct
or cause its and its Subsidiaries' directors, officers, employees,
representatives and agents to, immediately cease and cause to be terminated any
discussions or negotiations with any parties that may have been 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; provided that the Company may waive
the confidentiality provisions of any such agreement to the extent such a waiver
is in the ordinary course of its business consistent with past practice.
(b) Notwithstanding anything to the contrary in this Section 7.05, the
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 Board has (i) determined, in its good faith
judgment (after having received the advice of a financial advisor of nationally
recognized reputation), that such proposal or offer constitutes a Superior
Proposal, (ii) determined, in its good faith judgment after consultation with
independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), that, in light of such Superior Proposal, the
furnishing of such information or entering into discussions is required to
comply with its fiduciary obligations to the Company and its stockholders under
applicable Law, (iii) provided written notice to Parent of its intent to furnish
information or enter into discussions with such person at least two business
days 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).
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(c) Except as set forth in this Section 7.05(c), neither the Board nor
any committee thereof shall withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation by the 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.
Notwithstanding the foregoing, if the Board determines, in its good faith
judgment prior to the time of acceptance for payment of Shares pursuant to the
Offer and after consultation with independent legal counsel (who may be the
Company's regularly engaged independent legal counsel), that it is required to
make a Change in the Company Recommendation to comply with its fiduciary
obligations to the Company and its stockholders under applicable Law, the Board
may make a Change in the Company Recommendation, but only (i) after providing
written notice to Parent (a "Notice of Superior Proposal") advising Parent that
the 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 Board intends to effect a Change in
the Company Recommendation and the manner in which it intends (or may intend) to
do so, (ii) if Parent does not, within three business days of Parent's receipt
of the Notice of Superior Proposal, make an offer that the Board determines, in
its good faith judgment (after having received the advice of a financial advisor
of nationally recognized reputation) to be at least as favorable to the
Company's stockholders as such Superior Proposal and (iii) to terminate this
Agreement in accordance with Section 9.01(d)(ii).
SECTION 7.06 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 the Certificate of Incorporation of the Company, which provisions shall not
be amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who, at or prior to the Effective Time, were directors, officers,
employees, fiduciaries or agents of the Company, unless such modification shall
be required by law. Parent shall cause the Surviving Corporation to indemnify,
defend and hold harmless, the current and former officers, directors, employees
and agents of the Company or any of its Subsidiaries in their capacities as such
in accordance with the Certificate of Incorporation and By-laws, or other
charter documents, of the Company and its Subsidiaries and any agreements or
plans maintained by the Company and its Subsidiaries, to the fullest extent
permitted by the terms thereof against all losses, expenses, claims, damages and
liabilities arising out of actions or omissions occurring on or prior to the
Effective Time.
(b) The Surviving Corporation shall use its reasonable best efforts to
maintain in effect for six years from the Effective Time the current directors'
and officers' liability insurance policies maintained by the Company covering
each person covered thereby immediately prior to the consummation of the Offer
(provided that the Surviving Corporation may substitute therefor policies of at
least the same coverage containing terms and conditions that are not materially
less favorable) with respect to matters occurring prior to the Effective Time;
provided, however, that in no event shall the Surviving Corporation be required
to expend pursuant to this Section 7.06(b) more than an amount per year equal to
175% of current annual premiums paid by the Company for such insurance (which
premiums the Company represents and warrants to be $90,000 in the aggregate),
and if the Surviving Corporation is unable to obtain the full amount of
insurance that is required by this paragraph, it shall obtain as much comparable
insurance for such covered persons as possible for an annual premium equal to
such maximum amount.
38
(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 7.06.
SECTION 7.07 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 reasonably could be expected to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, (b) any failure of the Company, Parent or
Purchaser, as the case may be, to comply in all material respects with or
satisfy any covenant or agreement to be complied with or satisfied by it
hereunder and (c) any other material development relating to the business,
prospects, financial condition or results of operations of the Company and the
Subsidiaries; provided, however, that the delivery of any notice pursuant to
this Section 7.07 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 7.08 Further Action; Reasonable Best Efforts. (a) Upon the
terms and subject to the conditions of this Agreement, each of the parties
hereto shall (i) make its respective initial filing under the HSR Act with
respect to the Transactions within five business days of the date of this
Agreement, and thereafter make any other required submissions promptly, and (ii)
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 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 7.08 to take any action,
including entering into any consent decree, hold separate orders or other
arrangements, that (A) requires the divestiture of any assets of any of
Purchaser, Parent, the Company or any of their respective subsidiaries or (B)
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.
(b) Each of the parties hereto agrees to cooperate and use its
reasonable best efforts to vigorously contest and resist any Action, including
administrative or judicial Action, and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and that restricts, prevents or
prohibits consummation of the Transactions, including, without limitation, by
vigorously pursuing all available avenues of administrative and judicial appeal.
39
SECTION 7.09 Subsequent Financial Statements. The Company shall, if
practicable, consult with Parent prior to making publicly available its
financial results for any period after the date of this Agreement and prior to
filing any report or document with the SEC after the date of this Agreement, it
being understood that Parent shall have no liability by reason of such
consultation.
SECTION 7.10 Public Announcements. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or any Transaction and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by Law or the rules or regulations of
any United States or non-United States securities exchange. The parties have
agreed upon the form of a joint press release announcing the Offer and the
execution of this Agreement.
SECTION 7.11 Tax Certificate. The Company shall provide the Parent and
Purchaser, on or not more than thirty days prior to the Effective Time, a
certificate (in a form reasonably satisfactory to Parent and Purchaser) meeting
the requirements of Treasury regulation sections 1.897-2(h) and
1.1445.5(b)(4)(iii).
SECTION 7.12 Confidentiality Agreement. The Company hereby waives the
provisions of the Confidentiality Agreement as and to the extent necessary to
permit the consummation of each Transaction. Upon the acceptance for payment of
Shares pursuant to the Offer, the Confidentiality Agreement shall be deemed to
have terminated without further action by the parties thereto.
SECTION 7.13 Employee Benefit Matters. If, after the Effective Time,
Parent elects to maintain in effect all or any part of the Company's existing
employee benefit plans, the employees shall continue to participate in such
surviving plans or plan, as applicable. Parent shall also have the ability, in
its discretion, to cancel any existing employee benefit plan or plans and to
enroll those persons who were employees of Company or its subsidiaries
immediately prior to the Effective Time and who remain employees of the
Surviving Corporation or its subsidiaries or become employees of Parent
following the Effective Time in Parent's employee benefit plans for which such
employees are eligible and, to the extent relevant for the application of any
such plan, shall recognize the prior service with the Company of each of such
employees. Notwithstanding anything in this Section 7.13 to the contrary, this
section shall not operate to (a) duplicate any benefit provided to any employee,
(b) require Parent to continue to maintain any employee benefit plan in effect
following the Effective Time or (c) be construed to mean the employment of any
such employees is not terminable by Parent at will at any time, with or without
cause, for any reason or no reason.
40
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Merger. The obligations of each party to
effect the Merger shall be subject to the satisfaction, at or prior to the
Effective Time, of the following conditions:
(a) Stockholder Approval. If and to the extent required by the DGCL
and the Certificate of Incorporation of the Company, this
Agreement shall have been adopted by the affirmative vote of the
stockholders of the Company;
(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act
shall have expired or been terminated;
(c) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) which is then in effect and has the
effect of making the acquisition of Shares by Parent or Purchaser
or any affiliate of either of them illegal or otherwise
restricting, preventing or prohibiting consummation of the
Transactions; and
(d) Offer. Purchaser or its permitted assignee shall have purchased
all Shares validly tendered and not withdrawn pursuant to the
Offer.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite adoption of this Agreement by the
stockholders of the Company:
(a) By mutual written consent of each of Parent, Purchaser and the
Company duly authorized by the Boards of Directors of Parent,
Purchaser and the Company; or
(b) By either Parent, Purchaser or the Company if (i) the Effective
Time shall not have occurred on or before June 30, 2004;
provided, however, that the right to terminate this Agreement
under this Section 9.01(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 Effective
Time to occur on or before such date or (ii) any Governmental
Authority shall have enacted, issued, promulgated, enforced or
entered any injunction, order, decree or ruling (whether
temporary, preliminary or permanent) which has become final and
nonappealable and has the effect of making consummation of the
Offer or the Merger illegal or otherwise preventing or
prohibiting consummation of the Offer or the Merger; or
(c) By Parent if (i) due to an occurrence or circumstance that would
result in a failure to satisfy any condition set forth in Annex A
hereto, Purchaser shall have (A) failed to commence the Offer
within thirty days following the date of this Agreement, (B)
terminated the Offer without having accepted any Shares for
payment thereunder or (C) failed to accept Shares for payment
pursuant to the Offer within ninety days following the
commencement of the Offer, unless such action or inaction under
(A), (B) or (C) 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 (ii) prior to the purchase of Shares
pursuant to the Offer, the Board or any committee thereof shall
have withdrawn or modified in a manner adverse to Purchaser or
Parent its approval or recommendation of this Agreement, the
Offer, the Merger or any other Transaction, or shall have
recommended or approved any Competing Transaction, or shall have
resolved to do any of the foregoing; or
41
(d) By the Company, upon approval of the Board, if (i) Purchaser
shall have (A) failed to commence the Offer within thirty days
following the date of this Agreement, (B) terminated the Offer
without having accepted any Shares for payment thereunder or (C)
failed to accept Shares for payment pursuant to the Offer within
ninety days following the commencement of the Offer, unless such
action or inaction under (A), (B) or (C) 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 or (ii) prior to the purchase of Shares pursuant
to the Offer, the Board determines, in its good faith judgment
after consultation with independent legal counsel (who may be the
Company's regularly engaged independent legal counsel), that it
is required to do so to comply with its fiduciary obligations to
the Company and its stockholders under applicable Law in order to
enter into a definitive agreement with respect to a Superior
Proposal, upon three business days' prior written notice to
Parent, setting forth in reasonable detail the identity of the
person making, and the final terms and conditions of, the
Superior Proposal and after duly considering any proposals that
may be made by Parent during such three business day period
(which three business day period shall be coincident with the
three business day period provided for in Section 7.05(c)(ii));
provided, however, that any termination of this -------- -------
Agreement pursuant to this Section 9.01(d)(ii) shall not be
effective until the Company has made full payment of all amounts
provided under Section 9.03.
SECTION 9.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 9.01, this Agreement shall forthwith become
void, and there shall be no liability on the part of any party hereto, except
(a) as set forth in Section 9.03 and (b) nothing herein shall relieve any party
from liability for any wilful breach hereof prior to the date of such
termination; provided, however, that the Confidentiality Agreement shall survive
any termination of this Agreement.
SECTION 9.03 Fees. (a) In the event that
(i) (x) this Agreement is terminated pursuant to Section
9.01(c)(i) because of the failure of the condition contained in
paragraph (h) of Annex A to be satisfied or (y) any person shall have
commenced, publicly proposed or communicated to the Company a proposal
or offer for a Competing Transaction that is publicly disclosed prior
to the termination of the Offer and (A) the Offer shall have remained
open for at least 20 business days; (B) the Minimum Condition shall not
have been satisfied as of the latest scheduled expiration of the Offer;
and (C) this Agreement shall have been terminated pursuant to Section
9.01(a), 9.01(b)(i), or 9.01(c)(i); and, in the case of either (x) or
(y), within twelve months after the date of such termination, the
Company enters into an agreement with respect to a Competing
Transaction, or a Competing Transaction is consummated, provided that,
for purposes of this provision, the percentage referred to in clauses
(iii) and (iv) of the definition of "Competing Transaction" shall be
50%; or
42
(ii) this Agreement is terminated pursuant to Section
9.01(c)(ii) or 9.01(d)(ii);
then, in any such event, the Company shall pay Parent promptly (but in no event
later than one business day after the first of such events shall have occurred)
a fee of $5 million (the "Fee"), which amount shall be payable in immediately
available funds.
(b) Except as set forth in this Section 9.03, all costs and expenses incurred in
connection with this Agreement and the Transactions shall be paid by the party
incurring such expenses, whether or not any Transaction is consummated.
(c) In the event that the Company shall fail to pay the Fee when due,
the term "Fee" shall be deemed to include the costs and expenses actually
incurred or accrued by Parent and Purchaser (including, without limitation, fees
and expenses of counsel) in connection with the collection under and enforcement
of this Section 9.03, together with interest on such unpaid Fee, commencing on
the date that the Fee became due, at a rate equal to the rate of interest
publicly announced by Citibank, N.A., from time to time, in the City of New
York, as such bank's Base Rate plus 2%.
SECTION 9.04 Amendment. Subject to Section 7.03, 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;
provided, however, that, after the adoption of this Agreement and the
Transactions by the stockholders of the Company, no amendment may be made that
would reduce the amount or change the type of consideration into which each
Share shall be converted upon consummation of the Merger. This Agreement may not
be amended except by an instrument in writing signed by each of the parties
hereto.
SECTION 9.05 Waiver. Subject to Section 7.03, 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 to be bound thereby.
43
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 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 overnight
courier, by facsimile 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 10.01):
if to Parent or Purchaser:
Intermagnetics General Corporation
000 Xxx Xxxxxxxxx Xxxx
X.X. Xxx 000 Xxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
with a copy to:
Shearman & Sterling LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx X'Xxxxx, Esq.
if to the Company:
Invivo Corporation
0000 Xxxxxxx Xx., Xxx. 000
Xxxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
with a copy to:
Fenwick & West LLP
Silicon Valley Center
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
SECTION 10.02 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.
44
SECTION 10.03 Entire Agreement; Assignment. This Agreement constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes, except as set forth in Sections 7.04(b), 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 10.04 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, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than the last sentence of Section 3.07 (which is
intended to be for the benefit of holders of Company Stock Options and may be
enforced by such persons) and Section 7.06 (which is intended to be for the
benefit of the persons covered thereby and may be enforced by such persons).
SECTION 10.05 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 10.06 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State (other than those
provisions set forth herein that are required to be governed by the DGCL). All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined exclusively in any New York state or federal court sitting
in the Borough of Manhattan of The City of New York. The parties hereto hereby
(a) submit to the exclusive jurisdiction of any state or federal court sitting
in the Borough of Manhattan of The City of New York 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 10.07 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, agent or attorney of
any other party has represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce 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 10.07.
45
SECTION 10.08 Headings. 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.
SECTION 10.09 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.
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.
INTERMAGNETICS GENERAL CORPORATION
By /s/ Xxxxx X. Xxxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman and Chief Executive Officer
MAGIC SUBSIDIARY CORPORATION
By /s/ Xxxxx X. Xxxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
INVIVO CORPORATION
By /s/ Xxxxx X. Xxxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
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, if (i) immediately prior to the
expiration of the Offer, the Minimum Condition shall not have been satisfied or
(ii) any applicable waiting period under the HSR Act shall not have expired or
been terminated prior to the expiration of the Offer, or (iii) 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:
(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 materially 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 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; (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 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 would have a 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 to (A) Parent, the Company or any subsidiary or
affiliate of Parent or the Company or (B) any Transaction, by any
United States or non-United States legislative body or Governmental
Authority with appropriate jurisdiction, other than the routine
application of the waiting period provisions of the HSR Act to the
Offer or the Merger, 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;
46
(d) any 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 (ii) any limitation by any United States Governmental
Authority, on the extension of credit by banks or other lending
institutions, that, in either case, would materially impair Parent's
and Purchaser's ability to obtain any financing required to consummate
the Transactions or to operate the business of the Company and Parent
following the consummation of the Offer;
(f) (i) the 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, the Agreement or
approved or recommended any Competing Transaction or (ii) the Board, or
any committee thereof, shall have resolved to do any of the foregoing;
(g) any representation or warranty of the Company in the
Agreement that is qualified as to materiality or Material Adverse
Effect shall not be true and correct, or any such representation or
warranty that is not so qualified shall not be true and correct in any
material respect, in each case as if such representation or warranty
was made as of such time on or after the date of this Agreement (except
for any such representation or warranty made as of another date, which
shall be true and correct as of such other date), except to the extent
that failure of any such representation or warranty to be true and
correct would not, individually or in the aggregate, have a Material
Adverse Effect;
(h) the Company shall have failed to perform, in any material
respect, any obligation or to comply, in any material respect, with any
agreement or covenant of the Company to be performed or complied with
by it under the Agreement; provided that, if such failure is curable,
the condition contained in this clause (h) shall be satisfied if the
Company has cured such failure prior to the then scheduled expiration
date of the Offer;
(i) the Agreement shall have been terminated in accordance
with its terms; or
(j) Purchaser and the Company shall have agreed that Purchaser
shall terminate the Offer or postpone the acceptance for payment of
Shares thereunder;
which, in the sole judgment of Purchaser in any such case, and regardless of the
circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment.
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 rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
47
ANNEX B
Officers of the Surviving Corporation:
Xxxxx X. Xxxxxxx - President
Xxxxxxx X. Xxxxx - Treasurer
Xxxxxxxxx X. Xxxxxxx - Secretary
