AGREEMENT AND PLAN OF MERGER
BY AND AMONG
EM INDUSTRIES, INCORPORATED
EM ACQUISITION CORP.
and
CN BIOSCIENCES, INC.
Dated as of November 18, 1998
TABLE OF CONTENTS
Page
ARTICLE I. TENDER OFFER AND MERGER.................................................................... 2
1.1 The Offer.................................................................................. 2
1.2 Company Action............................................................................. 4
1.3 Directors.................................................................................. 5
1.4 The Merger................................................................................. 6
1.5 Effective Time............................................................................. 6
1.6 Conversion of Shares....................................................................... 6
1.7 Dissenting Shares.......................................................................... 7
1.8 Surrender of Shares........................................................................ 8
1.9 Options.................................................................................... 9
1.10 Certificate of Incorporation and Bylaws.................................................... 10
1.11 Directors and Officers..................................................................... 10
1.12 Other Effects of Merger.................................................................... 10
1.13 Proxy Statement............................................................................ 10
1.14 Merger Without Meeting of Stockholders..................................................... 11
1.15 Additional Actions......................................................................... 11
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................................. 11
2.1 Organization and Good Standing............................................................. 11
2.2 Capitalization............................................................................. 12
2.3 Subsidiaries............................................................................... 12
2.4 Authorization; Binding Agreement........................................................... 13
2.5 Governmental Approvals..................................................................... 13
2.6 No Violations.............................................................................. 14
2.7 Securities Filings......................................................................... 14
2.8 Company Financial Statements............................................................... 15
2.9 Absence of Certain Changes or Events....................................................... 15
2.10 Compliance With Laws....................................................................... 16
2.11 Permits.................................................................................... 16
2.12 Litigation................................................................................. 16
2.13 Contracts.................................................................................. 16
2.14 Employee Benefit Plans..................................................................... 16
2.15 Taxes and Tax Returns...................................................................... 18
2.16 Ownership and Use of Assets and Properties................................................. 20
2.17 Intellectual Property...................................................................... 22
2.18 Insurance.................................................................................. 22
2.19 Environmental Matters...................................................................... 22
2.20 Labor Relations............................................................................ 24
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2.21 Offer Documents; Proxy Statement........................................................... 24
2.22 Finders and Investment Bankers............................................................. 25
2.23 Fairness Opinion........................................................................... 25
2.24 Related Party Transactions................................................................. 25
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PARENT................................................... 25
3.1 Organization and Good Standing............................................................. 25
3.2 Authorization; Binding Agreement........................................................... 26
3.3 Governmental Approvals..................................................................... 26
3.4 No Violations.............................................................................. 26
3.5 Offer Documents; Proxy Statement........................................................... 26
3.6 Finders and Investment Bankers............................................................. 27
3.7 Financing.................................................................................. 27
3.8 No Prior Activities........................................................................ 27
ARTICLE IV. ADDITIONAL COVENANTS OF THE COMPANY........................................................ 27
4.1 Conduct of Business of the Company and the Company Subsidiaries............................ 27
4.2 Notification of Certain Matters............................................................ 30
4.3 Access and Information..................................................................... 30
4.4 Stockholder Approval....................................................................... 30
4.5 Reasonable Best Efforts.................................................................... 31
4.6 Public Announcements....................................................................... 31
4.7 Compliance................................................................................. 31
4.8 No Solicitation............................................................................ 32
4.9 SEC and Stockholder Filings................................................................ 34
4.10 Takeover Statutes.......................................................................... 34
4.11 Related Party Agreements................................................................... 34
ARTICLE V. ADDITIONAL COVENANTS OF PARENT............................................................. 34
5.1 Reasonable Best Efforts.................................................................... 34
5.2 Public Announcements....................................................................... 35
5.3 Compliance................................................................................. 35
5.4 [Intentionally omitted].................................................................... 35
5.5 Indemnification, Exculpation and Insurance................................................. 35
5.6 Certain Share Purchases Prohibited......................................................... 36
ARTICLE VI. MERGER CONDITIONS.......................................................................... 36
6.1 Offer...................................................................................... 36
6.2 Stockholder Approval....................................................................... 36
6.3 No Injunction or Action.................................................................... 36
6.4 Other Approvals............................................................................ 36
6.5 Conditions of Obligations of Parent and Merger Sub......................................... 37
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ARTICLE VII. TERMINATION AND ABANDONMENT................................................................ 37
7.1 Termination................................................................................ 37
7.2 Effect of Termination and Abandonment...................................................... 38
ARTICLE VIII. MISCELLANEOUS.............................................................................. 39
8.1 Confidentiality............................................................................ 39
8.2 Amendment and Modification................................................................. 39
8.3 Waiver of Compliance; Consents............................................................. 39
8.4 Survival................................................................................... 39
8.5 Notices.................................................................................... 40
8.6 Binding Effect; Assignment................................................................. 41
8.7 Expenses................................................................................... 41
8.8 Governing Law.............................................................................. 41
8.9 Counterparts............................................................................... 41
8.10 Interpretation............................................................................. 41
8.11 Entire Agreement........................................................................... 41
8.12 Severability............................................................................... 42
8.13 Specific Performance....................................................................... 42
8.14 Third Parties.............................................................................. 42
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INDEX OF DEFINED TERMS
Term Section Term Section
Acquisition Agreement .......................................................................................4.8(b)
Affiliate .....................................................................................................8.10
Agreement ..................................................................................................Parties
Benefit Plan ..................................................................................................2.14
Certificate of Merger ..........................................................................................1.4
Closing ........................................................................................................1.5
Closing Date ...................................................................................................1.5
Code........................................................................................................2.14(b)
Company ....................................................................................................Parties
Company Benefit Plan ..........................................................................................2.14
Company Class A Common Stock ...................................................................................2.2
Company Common Stock ......................................................................................Recitals
Company Disclosure Letter ........................................................................................2
Company Filed Documents ........................................................................................2.7
Company Financial Statements ...................................................................................2.8
Company Material Adverse Effect ................................................................................2.1
Company Material Contract .....................................................................................2.13
Company Option Plans ........................................................................................1.9(a)
Company Options .............................................................................................1.9(a)
Company Permits ...............................................................................................2.11
Company Proposals ..............................................................................................4.4
Company Securities Filings .....................................................................................2.7
Company Subsidiary .............................................................................................2.1
Confidentiality Agreement ......................................................................................8.1
Consent ........................................................................................................2.5
DGCL ...........................................................................................................1.4
Dissenting Shares ..............................................................................................1.7
Effective Time .................................................................................................1.5
Environmental Claim ........................................................................................2.19(b)
Environmental Laws .........................................................................................2.19(b)
Environmental Permit .......................................................................................2.19(b)
ERISA .........................................................................................................2.14
ERISA Affiliate.............................................................................................2.14(b)
Exchange Agent ..............................................................................................1.8(a)
Expiration Date .............................................................................................1.1(d)
Financial Advisor ...........................................................................................1.2(a)
Governmental Authority .........................................................................................2.5
Hazardous Materials ........................................................................................2.19(b)
HSR Act ........................................................................................................2.5
Independent Directors ..........................................................................................1.3
Law ...........................................................................................................2.6
Leased Real Property .......................................................................................2.16(b)
Litigation ....................................................................................................2.12
Merger ....................................................................................................Recitals
Merger Consideration ........................................................................................1.6(a)
Merger Sub .................................................................................................Parties
Minimum Condition ..........................................................................................Annex I
Multiemployer Plan .........................................................................................2.14(a)
NASD ...........................................................................................................2.5
Offer .....................................................................................................Recitals
Offer Conditions ............................................................................................1.1(a)
Offer Documents .............................................................................................1.1(c)
Offer to Purchase ...........................................................................................1.1(c)
Parent .....................................................................................................Parties
Parent Group ...................................................................................................5.1
Parent Information .............................................................................................3.5
Per Share Amount ..........................................................................................Recitals
Person ........................................................................................................8.10
Proxy Statement ........................................................................................1.13(a)(ii)
Related Party .................................................................................................2.24
Schedule 14D-1...............................................................................................1.1(c)
Schedule 14D-9 ..............................................................................................1.2(b)
SEC .........................................................................................................1.1(c)
Securities Act ................................................................................................2.13
Securities Exchange Act .....................................................................................1.1(a)
Series A Preferred Stock .......................................................................................2.2
Series B Preferred Stock .......................................................................................2.2
Shares ....................................................................................................Recitals
Special Meeting .........................................................................................1.13(a)(i)
Stockholder ...............................................................................................Recitals
Stockholder Agreement .....................................................................................Recitals
Subsidiary ....................................................................................................8.10
Superior Proposal ...........................................................................................4.8(b)
Surviving Corporation ..........................................................................................1.4
Surviving Corporation Common Stock ..........................................................................1.6(c)
Takeover Proposal ...........................................................................................4.8(a)
Takeover Statute ..............................................................................................4.10
Tax ........................................................................................................2.15(f)
Tax Return .................................................................................................2.15(f)
Voting Securities ..........................................................................................Annex I
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and
entered into as of November 18, 1998, by and among EM Industries, Incorporated,
a New York corporation ("Parent"), EM Acquisition Corp., a Delaware corporation
and wholly owned subsidiary of Parent ("Merger Sub"), and CN Biosciences, Inc.,
a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Company, Merger Sub
and Parent have approved the acquisition by Parent of the Company in accordance
with the provisions of this Agreement;
WHEREAS, in furtherance thereof, it is proposed that, upon the terms
and subject to the conditions set forth herein, Merger Sub will make a cash
tender offer (as it may be amended from time to time in accordance herewith, the
"Offer") to purchase all of the outstanding shares (the "Shares") of common
stock, $.01 par value, of the Company (the "Company Common Stock"), for $25.00
per Share (such price or any higher price as may be paid in the Offer, the "Per
Share Amount"), in each case net to the seller in cash, without interest;
WHEREAS, also in furtherance of such acquisition, the respective
Boards of Directors of the Company, Merger Sub and Parent have each approved
the merger (the "Merger") of Merger Sub with and into the Company following
the expiration of the Offer in accordance with the laws of the State of
Delaware and the provisions of this Agreement;
WHEREAS, Parent and Merger Sub are unwilling to enter into this
Agreement (and effect the transactions contemplated hereby) unless,
simultaneously with the execution and delivery hereof, a certain holder of
Shares (the "Stockholder") enters into an agreement (the "Stockholder
Agreement") providing for certain matters with respect to its Shares, the
tender of its Shares and certain other actions relating to the Offer and the
other transactions contemplated by this Agreement and, in order to induce
Parent and Merger Sub to enter into this Agreement, the Company has approved
the execution and delivery by Parent and Merger Sub and Stockholder of the
Stockholder Agreement, and Stockholder has executed and delivered the
Stockholder Agreement;
WHEREAS, the Board of Directors of the Company has approved this
Agreement and the Stockholder Agreement, has resolved to recommend acceptance
of the Offer and the Merger to the holders of Shares and has determined that
the consideration to be paid for each Share in the Offer and the Merger is
fair to the holders of such Shares and to recommend that the holders of such
Shares accept the Offer and adopt this Agreement and the transactions
contemplated hereby; and
WHEREAS, the Company, Merger Sub and Parent desire to make certain
representations, warranties and agreements in connection with, and establish
various conditions precedent to, the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth,
the parties hereto agree as follows:
ARTICLE I.
TENDER OFFER AND MERGER
1.1 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 7.1 hereof and no event set forth in
Annex I hereto shall have occurred and be existing, Parent shall cause Merger
Sub to commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
(the "Securities Exchange Act")) the Offer as promptly as practicable, but in
no event later than five business days following the public announcement of
this Agreement; provided, however, that Parent may designate another direct
subsidiary of Parent as the bidder (within the meaning of Rule 14d-1(c) under
the Securities Exchange Act) in the Offer, in which case references herein to
Merger Sub shall be deemed to apply to such subsidiary, as appropriate. The
obligation of Parent to cause Merger Sub to accept for payment any Shares
tendered shall be subject to the satisfaction of only those conditions set
forth in Annex I hereto (the "Offer Conditions"). The Per Share Amount shall
be net to each seller in cash, subject to reduction only for any applicable
federal back-up withholding or stock transfer taxes payable by such seller.
The Company agrees that no Shares held by the Company shall be tendered
pursuant to the Offer.
(b) Without the prior written consent of the Company,
Parent shall not permit Merger Sub to (i) decrease the Per Share Amount or
change the form of consideration payable in the Offer, (ii) decrease the
number of Shares sought in the Offer, (iii) amend or waive satisfaction of the
Minimum Condition (as defined in Annex I hereto) or (iv) impose additional
conditions to the Offer or amend any other term of the Offer in any manner
adverse to the holders of Shares, provided that nothing herein shall prohibit
any waiver of any condition or term of the Offer (other than the Minimum
Condition) or any other action permitted hereby. Upon the terms and subject to
the conditions of the Offer, Parent shall cause Merger Sub to accept for
payment and purchase, as soon as practicable after the expiration of the
Offer, all Shares validly tendered and not withdrawn prior to the expiration
of the Offer. It is agreed that the Offer Conditions are for the benefit of
Merger Sub and may be asserted by Merger Sub regardless of the circumstances
giving rise to any such condition (except for any action or inaction by Parent
or Merger Sub constituting a breach of this Agreement) or, except with respect
to the Minimum Condition, may be waived by Merger Sub, in whole or in part at
any time and from time to time, in its sole discretion.
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(c) The Offer shall be made by means of an offer to
purchase (the "Offer to Purchase") having only the conditions set forth in
Annex I hereto. On the date the Offer is commenced, Parent and Merger Sub
shall file with the Securities and Exchange Commission (the "SEC") a Tender
Offer Statement on Schedule 14D-1 (together with all amendments and
supplements thereto, the "Schedule 14D-1") with respect to the Offer that
shall contain (including as an exhibit) or incorporate by reference the Offer
to Purchase and forms of the related letter of transmittal and summary
advertisement (which documents, together with any supplements or amendments
thereto, and any other SEC schedule or form which is filed in connection with
the Offer and related transactions, are referred to collectively herein as the
"Offer Documents") and shall mail the Offer to Purchase to the holders of the
Shares. Parent and Merger Sub agree promptly to correct the Schedule 14D-1 if
and to the extent it shall become false and misleading in any material respect
(and the Company, with respect to written information supplied by it
specifically for use in the Schedule 14D-1, shall promptly notify Parent and
Merger Sub of any required corrections of such information and cooperate with
the Company with respect to correcting such information) and to supplement the
information contained in the Schedule 14D-1 to include any information that
shall become necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, and Parent and
Merger Sub shall take all steps necessary to cause the Schedule 14D- 1 as so
corrected to be filed with the SEC and disseminated to the Company's
stockholders to the extent required by applicable Laws, including federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on any Offer Documents before they are filed
with the SEC. In addition, Parent and Merger Sub agree to provide the Company
and its counsel in writing with any comments or other communications that
Parent, Merger Sub or their counsel may receive from time to time from the SEC
or its staff with respect to the Offer Documents promptly after the receipt of
such comments or other communications.
(d) The Offer to Purchase shall provide for an initial
expiration date for the Offer (the "Expiration Date") of 20 business days (as
defined in Rule 14d-1 under the Securities Exchange Act) from the date of
commencement of the Offer. Parent and Merger Sub agree that they shall not
terminate or withdraw the Offer or extend the Expiration Date unless at the
Expiration Date any of the Offer Conditions shall not have been satisfied or
earlier waived. Notwithstanding the foregoing, Merger Sub may (i) extend the
Expiration Date (including as it may be extended) for up to ten business days
in connection with an increase in the consideration to be paid pursuant to the
Offer so as to comply with applicable rules and regulations of the SEC and
(ii) extend the initial Expiration Date (including as it may be extended) for
up to ten business days, notwithstanding that on such Expiration Date the
Offer Conditions shall have been satisfied or waived, if the number of Shares
that have been validly tendered and not withdrawn represents more than 50
percent but less than 90 percent of the then issued and outstanding Shares.
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1.2 Company Action.
(a) The Company hereby approves of and consents to the
Offer and represents and warrants that (A) the Board of Directors of the
Company, at a meeting duly called and held on November 18, 1998, at which all
of the Directors were present, duly approved by unanimous vote this Agreement
and the transactions contemplated hereby, including the Offer, the Merger and
the Stockholder Agreement, resolved to recommend that the stockholders of the
Company accept the Offer, tender their Shares pursuant to the Offer and adopt
this Agreement and the transactions contemplated hereby, including the Merger,
and determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to and in the best interests of
the stockholders of the Company and (B) Vector Securities International, Inc.
(the "Financial Advisor") has delivered to the Board of Directors of the
Company its written opinion that as of the date hereof the consideration to be
received by the stockholders of the Company pursuant to each of the Offer and
the Merger is fair to the stockholders of the Company from a financial point
of view. The Company has been authorized by the Financial Advisor to permit
the inclusion of such fairness opinion (or a reference thereto) in the Offer
Documents and in the Schedule 14D-9 referred to below. The Company hereby
consents to the inclusion in the Offer Documents of the recommendations of the
Company's Board of Directors described in this Section 1.2(a).
(b) The Company shall file with the SEC, no later than
the fifth business day following the public announcement of this Agreement, a
Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together
with any amendments or supplements thereto, the "Schedule 14D-9") that shall
comply in all material respects with the provisions of all applicable Law (as
hereinafter defined), including federal securities laws. The Company shall
mail such Schedule 14D-9 to the stockholders of the Company promptly after the
commencement of the Offer together with the initial mailing of the Offer
Documents. The Schedule 14D-9 and the Offer Documents shall contain the
recommendations of the Board of Directors of the Company described in Section
1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if
and to the extent that it shall become false or misleading in any material
respect (and each of Parent and Merger Sub, with respect to written
information supplied by it specifically for use in the Schedule 14D-9, shall
promptly notify the Company of any required corrections of such information
and cooperate with the Company with respect to correcting such information)
and to supplement the information contained in the Schedule 14D-9 to include
any information that shall become necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and the Company shall take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to
the Company's stockholders to the extent required by applicable Laws,
including federal securities laws. Parent and its counsel shall be given a
reasonable opportunity to review and comment on the Schedule 14D-9 before it
is filed with the SEC. In addition, the Company agrees to provide Parent,
Merger Sub and their counsel in writing with any comments or other
communications that the Company or its counsel may receive from time to time
from the SEC or its staff with respect to the Schedule 14D-9 promptly after
the receipt of such comments or other communications.
4
(c) In connection with the Offer, the Company shall
promptly upon execution of this Agreement furnish Parent with mailing labels
containing the names and addresses of all record holders of Shares,
non-objecting beneficial owner lists (to the extent reasonably available),
security position listings of Shares held in stock depositories, each as of a
recent date, and shall promptly furnish Parent with such additional
information, including updated lists of stockholders, mailing labels and
security position listings, and such other information and assistance as
Parent or its agents may reasonably request for the purpose of communicating
the Offer to the record and beneficial holders of Shares.
1.3 Directors. Promptly upon the purchase by Merger Sub of any Shares
pursuant to the Offer (and assuming that the Minimum Condition has been
satisfied), Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company
as will give Merger Sub, subject to compliance with Section 14(f) of the
Securities Exchange Act, representation on the Board of Directors of the
Company equal to at least that number of directors which equals the product of
the total number of directors on the Board of Directors of the Company (giving
effect to the directors appointed or elected pursuant to this sentence)
multiplied by the percentage that the aggregate number of Shares beneficially
owned by Parent or any affiliate of Parent (including for purposes of this
Section 1.3 such Shares as are accepted for payment pursuant to the Offer, but
excluding Shares held by the Company) bears to the number of Shares
outstanding. At such times, if requested by Parent, the Company shall also
cause each committee of the Board of Directors of the Company and the Board of
Directors of each Company Subsidiary (as hereinafter defined) to include
persons designated by Parent constituting the same percentage of each such
committee and the Board of Directors of each Company Subsidiary as Parent's
designees are of the Board of Directors of the Company. The Company shall,
upon request by Parent, promptly increase the size of the Board of Directors
of the Company and of the Company Subsidiaries as is necessary to enable
Parent's designees to be elected to the Board of Directors of the Company and
of the Company Subsidiaries in accordance with the terms of this Section 1.3
and shall cause Parent's designees to be so elected; provided, however, that,
subject to the following proviso, in the event that Parent's designees are
appointed or elected to the Board of Directors of the Company and of the
Company Subsidiaries, until the Effective Time (as hereinafter defined) the
Board of Directors of the Company shall have at least one director who is a
director on the date hereof and who is neither an officer of the Company nor a
designee, stockholder, affiliate or associate (within the meaning of the
federal securities laws) of Parent (one or more of such directors, the
"Independent Directors"); provided further, that if no Independent Directors
remain, the other directors shall designate one person to fill one of the
vacancies who shall not be either an officer of the Company or a designee,
shareholder, affiliate or associate of Parent, and such person shall be deemed
to be an Independent Director for purposes of this Agreement. Subject to
applicable Law, the Company shall promptly take all action necessary pursuant
to Section 14(f) of the Securities Exchange Act and Rule 14f-1 promulgated
thereunder in order to fulfill its obligations under this Section 1.3 and
shall include in the Schedule 14D-9 mailed to stockholders promptly after the
commencement of the Offer (or an amendment thereof or an information statement
pursuant to Rule 14f-1 if Parent has not theretofore designated directors)
such information with respect to the Company and its officers and directors as
5
is required under Section 14(f) and Rule 14f-1 in order to fulfill its
obligations under this Section 1.3. Parent shall supply the Company and be
solely responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Notwithstanding anything in this Agreement to the contrary, following the time
directors designated by Parent constitute a majority of the Board of Directors
of the Company and prior to the Effective Time, the affirmative vote of a
majority of the Independent Directors shall be required to (i) amend or
terminate this Agreement on behalf of the Company, (ii) exercise or waive any of
the Company's rights or remedies hereunder, (iii) extend the time for
performance of Parent's obligations hereunder or (iv) take any other action by
the Company in connection with this Agreement required to be taken by the Board
of Directors of the Company.
1.4 The Merger. Upon the terms and subject to the conditions of this
Agreement, the Merger shall be consummated in accordance with the Delaware
General Corporation Law (the "DGCL"). At the Effective Time (as defined in
Section 1.5 hereof), upon the terms and subject to the conditions of this
Agreement, Merger Sub shall be merged with and into the Company in accordance
with the DGCL and the separate existence of Merger Sub shall thereupon cease,
and the Company, as the surviving corporation in the Merger (the "Surviving
Corporation"), shall continue its corporate existence under the laws of the
State of Delaware as a Subsidiary of Parent. At Parent's election, any direct
or indirect Subsidiary of Parent other than Merger Sub may be merged with and
into the Company instead of Merger Sub. In the event of such an election, the
parties agree to execute an appropriate amendment to this Agreement to reflect
such election. The parties shall prepare and execute a certificate of merger
in order to comply in all respects with the requirements of the DGCL and with
the provisions of this Agreement or, if applicable, a certificate of ownership
and merger (each, a "Certificate of Merger").
1.5 Effective Time. The Merger shall become effective at the time of
the filing of the Certificate of Merger with the Secretary of State of
Delaware in accordance with the applicable provisions of the DGCL or at such
later time as may be specified in the Certificate of Merger. As soon as
practicable after all of the conditions set forth in Article VI of this
Agreement have been satisfied or waived by the party or parties entitled to
the benefit of the same, the parties hereto shall cause the Merger to become
effective. Parent and the Company shall mutually determine the time of such
filing and the place where the closing of the Merger (the "Closing") shall
occur. The time when the Merger shall become effective is herein referred to
as the "Effective Time" and the date on which the Effective Time occurs is
herein referred to as the "Closing Date."
1.6 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holder of any of the following securities:
(a) Each Share issued and outstanding immediately
before the Effective Time (other than any Shares to be cancelled pursuant to
Section 1.6(b) hereof and any Dissenting Shares (as hereinafter defined)) shall
be cancelled and extinguished and be converted into the
6
right to receive the Per Share Amount (the "Merger Consideration") in cash
payable to the holder thereof, without interest, promptly upon surrender of
the certificate representing such Share or appropriate proof of lost
certificates, in accordance with Section 1.8 hereof. From and after the
Effective Time, the holders of certificates evidencing ownership of any such
Shares outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such Shares except as otherwise provided for herein
or by applicable Law.
(b) Each Share held in the treasury of the Company and
each Share owned by Parent or any direct or indirect wholly owned Subsidiary of
Parent immediately before the Effective Time, including without limitation
Merger Sub, shall be cancelled and extinguished and no payment or other
consideration shall be made with respect thereto.
(c) The shares of Merger Sub common stock outstanding
immediately prior to the Merger shall be converted into one validly issued,
fully paid and non-assessable share of the common stock of the Surviving
Corporation (the "Surviving Corporation Common Stock"), which one share of the
Surviving Corporation Common Stock shall constitute all of the issued and
outstanding capital stock of the Surviving Corporation and shall be owned by
Parent.
1.7 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, any Shares issued and outstanding immediately prior to the Effective
Time and held by a holder who has demanded and perfected his demand for
appraisal of his Shares in accordance with the DGCL (including but not limited
to Section 262 thereof) and as of the Effective Time has neither effectively
withdrawn nor lost his right to such appraisal ("Dissenting Shares") shall not
be converted into or represent a right to receive the Merger Consideration, but
the holder thereof shall be entitled to only such rights as are granted by the
DGCL.
(b) Notwithstanding the provisions of Section 1.7(a)
hereof, if any holder of Shares who demands appraisal of his Shares under the
DGCL shall effectively withdraw or lose (through failure to perfect or
otherwise) his right to appraisal, then as of the Effective Time or the
occurrence of such event, whichever occurs later, such holder's Shares shall
automatically be converted into and represent only the right to receive the
Merger Consideration, without interest thereon, upon surrender of the
certificate or certificates representing such Shares.
(c) The Company shall give Parent (i) prompt notice of any
written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands, and any other instruments served pursuant to the
DGCL which are 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 voluntarily make any payment with respect to any
demands for appraisal and shall not, except with the prior written consent of
Parent, settle or offer to settle any such demands.
7
1.8 Surrender of Shares.
(a) Prior to the Closing Date, Parent shall appoint First
Chicago Trust Company of New York or another agent reasonably acceptable to the
Company to act as exchange agent (the "Exchange Agent") for the Merger. No later
than the business day following the mailing of the letter of transmittal
referred to in Section 1.8(b) hereof, Parent shall make available to the
Exchange Agent for the benefit of holders of Shares, the aggregate Merger
Consideration to which such holders shall be entitled at the Effective Time
pursuant to Section 1.6 hereof. Such funds shall be invested by the Exchange
Agent as directed by Parent or, after the Effective Time, the Surviving
Corporation, provided that such investments shall be in obligations of or
guaranteed by the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Xxxxx'x Investors Service, Inc. or Standard &
Poor's Corporation, respectively, or in certificates of deposit, bank repurchase
agreements or banker's acceptances of commercial banks with capital exceeding
$500 million. Any net profit resulting from, or interest or income produced by,
such investments shall be payable to the Merger Sub or Parent, as Parent
directs.
(b) On the Closing Date, Parent shall instruct the
Exchange Agent to mail to each holder of record of a certificate representing
any Shares cancelled upon the Merger pursuant to Section 1.6(a) hereof, within
five business days of receiving from the Company a list of such holders of
record, (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates shall pass, only upon
delivery of the certificates to the Exchange Agent and shall be in such form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the certificates. Each holder
of a certificate or certificates representing any Shares cancelled upon the
Merger pursuant to Section 1.6(a) hereof may thereafter surrender such
certificate or certificates to the Exchange Agent, as agent for such holder, to
effect the surrender of such certificate or certificates on such holder's behalf
for a period ending one year after the Effective Time. Upon the surrender of
certificates representing the Shares, Parent shall cause the Exchange Agent to
pay the holder of such certificates in exchange therefor cash in an amount equal
to the Per Share Amount multiplied by the number of Shares represented by such
certificate. Until so surrendered, each such certificate (other than
certificates representing Dissenting Shares or Shares referred to in Section
1.6(b) hereof) shall represent solely the right to receive the aggregate Merger
Consideration relating thereto.
(c) If payment of cash in respect of cancelled Shares is
to be made to a person other than the person in whose name a surrendered
certificate or instrument is registered, it shall be a condition to such payment
that the certificate or instrument so surrendered shall be properly endorsed or
shall be otherwise in proper form for transfer and that the person requesting
such payment shall have paid any transfer and other Taxes (as hereinafter
defined) required by reason of such payment in a name other than that of the
registered holder of the certificate or instrument surrendered or shall have
established to the satisfaction of Parent or the Exchange Agent that such Tax
either has been paid or is not payable.
8
(d) At the Effective Time, the stock transfer books of the
Company shall be closed and no transfer of Shares shall be made thereafter,
other than transfers of Shares that have occurred prior to the Effective Time.
In the event that, after the Effective Time, certificates for Shares (other than
Shares referred to in Section 1.6(b) hereof) are presented to the Surviving
Corporation, its transfer agent or the Exchange Agent, they shall be cancelled
and exchanged for cash as provided in Section 1.6(a) hereof. No interest shall
accrue or be paid on any cash payable upon the surrender of a certificate or
certificates which immediately before the Effective Time represented outstanding
Shares.
(e) The Merger Consideration paid in the Merger shall be
net to the holder of Shares in cash, subject to reduction only for any
applicable federal back-up withholding or, as set forth in Section 1.8(c)
hereof, stock transfer Taxes payable by such holder.
(f) Promptly following the date which is one year after
the Effective Time, the Exchange Agent shall deliver to Parent all cash
(including interest received with respect thereto), certificates and other
documents in its possession relating to the transactions contemplated hereby,
and the Exchange Agent's duties shall terminate. Thereafter, each holder of a
certificate representing Shares (other than certificates representing Dissenting
Shares and Shares referred to in Section 1.6(b) hereof) may surrender such
certificate to Parent and (subject to applicable abandoned property, escheat and
similar Laws) receive in consideration thereof the aggregate Merger
Consideration relating thereto payable upon surrender of such certificate,
without any interest or dividends thereon.
(g) None of the Company, Merger Sub, Parent or the
Exchange Agent shall be liable to any holder of Shares for cash delivered to a
public official pursuant to any abandoned property, escheat or similar law,
rule, regulation, statute, order, judgment or decree.
1.9 Options.
(a) The Company hereby represents and warrants, and based
thereon Parent and Merger Sub hereby acknowledge, that (i) all outstanding
options to purchase Shares (the "Company Options") granted under the Company's
stock option plans referred to in Section 2.14 of the Company Disclosure Letter
(as hereinafter defined), each as amended (collectively, the "Company Option
Plans"), whether or not then exercisable or vested, shall, pursuant to the terms
of the Company Option Plans, be cancelled as of the consummation of the Offer
and the holders thereof shall be entitled to receive from Parent upon
consummation of the Offer, in respect of each Share subject to such Company
Option, an amount in cash equal to the excess, if any, of the Per Share Amount
over the exercise price per share thereof (such payment to be net of applicable
withholding taxes).
(b) The Company hereby represents and warrants that all
Company Option Plans provide, or have been or will be amended as and when
required to provide for the actions
9
described in Section 1.9(a) hereof. The Company shall cause the Company Option
Plans to terminate as of the Effective Time.
1.10 Certificate of Incorporation and Bylaws. Subject to Section 5.5
hereof, at the Effective Time, the Certificate of Incorporation and the Bylaws
of the Surviving Corporation shall be the Certificate of Incorporation and the
Bylaws of Merger Sub in effect at the Effective Time (subject to any
subsequent amendments).
1.11 Directors and Officers. At the Effective Time, the directors of
Merger Sub immediately prior to the Effective Time shall be the directors of
the Surviving Corporation, and the officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation, in
each case until their successors are duly elected or appointed and qualified.
1.12 Other Effects of Merger. The Merger shall have all further
effects as specified in the applicable provisions of the DGCL.
1.13 Proxy Statement.
(a) If required by applicable Law in order to consummate
the Merger, the Company, acting through its Board of Directors, shall, in
accordance with applicable Law:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Special Meeting") as soon
as practicable following the acceptance for payment and purchase of
the Shares by Merger Sub pursuant to the Offer for the purpose of
considering and taking action upon this Agreement;
(ii) prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this
Agreement and shall (x) obtain and furnish the information required
to be included by the SEC in the Proxy Statement (as hereinafter
defined) and, after consultation with Parent, to respond promptly to
any comments made by the SEC with respect to the preliminary proxy or
information statement and cause a definitive proxy or information
statement (as amended or supplemented, the "Proxy Statement") to be
mailed to its stockholders and (y) obtain the necessary approvals of
the Merger and this Agreement by its stockholders; and
(iii) include in the Proxy Statement the
recommendation of the Board that stockholders of the Company vote in
favor of approval of the Merger and the adoption of this Agreement.
(b) Parent agrees that it will provide the Company with
the information concerning Parent and Merger Sub required to be included in the
Proxy Statement and will vote, or
10
cause to be voted, all of the Shares then owned by it, Merger Sub or any of its
other Subsidiaries and affiliates in favor of approval of the Merger and the
adoption of this Agreement.
(c) Each of Parent, Merger Sub and the Company agrees
promptly to correct any information provided by it for use in the Proxy
Statement as and to the extent it shall have become false or misleading in any
material respect and to supplement the information provided by it specifically
for use in the Proxy Statement to include any information that shall have become
necessary, in order to make statements contained therein, in light of the
circumstances in which they were made, not misleading, and the Company further
agrees to take all steps necessary to cause the Proxy Statement, as so corrected
or supplemented, to be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws.
1.14 Merger Without Meeting of Stockholders. Notwithstanding Section
1.13 hereof, in the event that Parent, Merger Sub or any other Subsidiary of
Parent shall acquire at least 90 percent of the outstanding Shares pursuant to
the Offer or otherwise, the parties hereto agree to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without a meeting of stockholders of the
Company, in accordance with the DGCL.
1.15 Additional Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills
of sale, assignments, assurances or any other actions or things are necessary
or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Merger Sub or the Company or otherwise to
carry out this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of Merger Sub or the Company, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of
Merger Sub or the Company, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out this Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub that,
except as set forth in the correspondingly numbered Sections of the letter,
dated the date hereof, from the Company to Parent (the "Company Disclosure
Letter"):
2.1 Organization and Good Standing. The Company and each of the
Company Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization and has all requisite corporate power and
11
authority and any necessary governmental approval to own, lease and operate its
properties and to carry on its business as now being conducted. The Company and
each of the Company Subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the character of the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not, individually
or in the aggregate, have or be reasonably likely in the future to have a
material adverse effect on the business, assets, condition (financial or
otherwise), liabilities or results of operations of the Company and the Company
Subsidiaries taken as a whole ("Company Material Adverse Effect") or prevent or
delay the consummation of the Offer or the Merger. The Company has heretofore
made available to Parent accurate and complete copies of the Certificate of
Incorporation and Bylaws or other governing instruments, as currently in effect,
of the Company and each Company Subsidiary. For purposes of this Agreement, the
term "Company Subsidiary" shall mean any corporation, partnership or other legal
entity of which the Company (either alone or through or together with any other
Subsidiary) owns a majority of the capital stock or other equity interests, and
the Company is entitled to vote for the election of the board of directors or
other governing body of such corporation, partnership or other legal entity.
2.2 Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of (a) 30,000,000 shares of Company Common
Stock, (b) 800,000 shares of Class A Common Stock, par value $.01 per share
(the "Company Class A Common Stock"), (c) 5,000 shares of Series A Preferred
Stock, par value $1.00 per share (the "Series A Preferred Stock"), (d) 200,000
shares of Series B Preferred Stock (the "Series B Preferred Stock"), par value
$1.00 per share, and (e) 500,000 shares of preferred stock, par value $.01 per
share. As of the close of business on November 17, 1998, (a) 5,721,790 shares
of Company Common Stock were issued and outstanding, and (b) no shares of
Company Class A Common Stock, Series A Preferred Stock, Series B Preferred
Stock or preferred stock were issued and outstanding. No other capital stock
of the Company is authorized or issued. All issued and outstanding shares of
the Company Common Stock are duly authorized, validly issued, fully paid and
non-assessable and free of preemptive or similar rights. Except as set forth
in the Company Filed Documents (as hereinafter defined) or Section 2.2 of the
Company Disclosure Letter, as of the date hereof there were no, and as of the
Expiration Date there will be no, outstanding options, warrants, rights or
other commitments of any character whatsoever relating to any of the
outstanding, authorized but unissued, unauthorized or treasury shares of the
capital stock or any other interest in the ownership or earnings of the
Company or other security of the Company, and there is no authorized or
outstanding security of any kind convertible into or exchangeable for any such
capital stock or other security and there are no contracts, commitments,
understandings or arrangements by which the Company is bound to issue
additional shares of its capital stock, or options, warrants or rights to
purchase or acquire any additional shares of its capital stock or securities
convertible into or exchangeable for such shares. Except as set forth in
Section 2.2 of the Company Disclosure Letter, there are no outstanding
contractual obligations of the Company or any Company Subsidiaries to
repurchase, redeem or otherwise acquire any shares of common stock of the
Company or the capital stock of any Company Subsidiary or to provide funds
12
to or make any investment (in the form of a loan, capital contribution or
otherwise) in any such Subsidiary or any other entity.
2.3 Subsidiaries. Section 2.3 of the Company Disclosure Letter sets
forth the name and jurisdiction of incorporation or organization of each
Company Subsidiary, each of which is, except for directors' qualifying shares
disclosed in the Company Disclosure Letter, wholly owned by the Company or
another Company Subsidiary. All of the capital stock and other interests of the
Company Subsidiaries so held by the Company are owned by it or a Company
Subsidiary as indicated in Section 2.3 of the Company Disclosure Letter, free
and clear of any claim, lien, encumbrance, security interest or agreement with
respect thereto. All of the outstanding shares of capital stock in each of the
Company Subsidiaries directly or indirectly held by the Company are duly
authorized, validly issued, fully paid and non-assessable and were issued free
of preemptive or similar rights and in compliance with applicable Laws. There
are no outstanding options, warrants, rights or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of any capital stock of any Company Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any Company
Subsidiary is bound to issue additional shares of its capital stock, or options,
warrants or rights to purchase or acquire any additional shares of its capital
stock or securities convertible into or exchangeable for such shares.
2.4 Authorization; Binding Agreement. The Company has all requisite
corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby, including, but
not limited to, the Merger, have been duly and validly authorized by the
Company's Board of Directors and no other corporate proceedings on the part of
the Company or any Company Subsidiary are necessary to authorize the execution
and delivery of this Agreement or to consummate the transactions contemplated
hereby (other than the adoption of this Agreement by the stockholders of the
Company to the extent required by the DGCL). This Agreement has been duly and
validly executed and delivered by the Company and constitutes the legal, valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforceability hereof may
be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
principles of equity regarding the availability of remedies. The Board of
Directors of the Company has approved this Agreement, the Stockholder
Agreement and the transactions contemplated hereby and thereby (including but
not limited to the Offer, the Merger and the matters provided for in the
Stockholder Agreement) so as to render inapplicable hereto and thereto the
limitation on business combinations contained in Section 203 of the DGCL (or
any similar provision). As a result, the only vote of holders of any class or
series of the Company's capital stock required to adopt this Agreement and the
transactions contemplated hereby, including the Merger, is the affirmative
vote of a majority of the outstanding Shares, and if Section 253 of the DGCL
is applicable to the Merger, no such vote shall be required. No other state
takeover or control share statute or similar statute or regulation
13
applies or purports to apply to the Offer, the Merger, the Stockholder Agreement
or any of the transactions contemplated hereby or thereby.
2.5 Governmental Approvals. No consent, approval, waiver or
authorization of, notice to or declaration or filing with ("Consent"), any
nation or government, any state or other political subdivision thereof, any
entity, authority or body exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including, without limitation, any governmental or regulatory authority, agency,
department, board, commission, administration or instrumentality, any court,
tribunal or arbitrator and any self-regulatory organization, domestic or foreign
("Governmental Authority"), on the part of the Company or any of the Company
Subsidiaries is required in connection with the execution, delivery or
performance by the Company of this Agreement or the consummation by the Company
of the transactions contemplated hereby other than (i) the filing of the
Certificate of Merger with the Secretary of State of Delaware in accordance with
the DGCL, (ii) filings with the SEC and the National Association of Securities
Dealers, Inc. ("NASD"), and (iii) filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act") and similar foreign requirements.
2.6 No Violations. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by the Company with any of the provisions hereof will not (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws or other governing instruments of the Company or any
of the Company Subsidiaries, (ii) require any Consent under or result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any Company Material Contract (as hereinafter defined), (iii) result in the
creation or imposition of any lien or encumbrance of any kind upon any of the
assets of the Company or any Company Subsidiary or (iv) subject to obtaining
the Consents from Governmental Authorities referred to in Section 2.5 hereof,
contravene any applicable provision of any statute, law, rule or regulation or
any order, decision, injunction, judgment, award or decree ("Law") to which
the Company or any Company Subsidiary or its or any of their respective assets
or properties are subject.
2.7 Securities Filings. The Company and, to the extent applicable,
each of its then or current Company Subsidiaries, has filed all forms,
reports, statements and documents required to be filed with the SEC since
October 1996, each of which has complied in all material respects with the
applicable requirements of the Securities Act (as hereinafter defined) or the
Securities Exchange Act, each as in effect on the date so filed. The Company
has made available to Parent true and complete copies of (i) its Annual
Reports on Form 10-K, as amended, for the years ended December 31, 1996 and
1997, as filed with the SEC, (ii) its proxy statements relating to all of the
meetings of stockholders (whether annual or special) of the Company since
October 1996, as filed with the SEC, and (iii) all other reports, statements
and registration statements and amendments thereto (including, without
limitation, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
amended)
14
filed by the Company with the SEC since October 1996 and prior to the date
hereof (collectively, the "Company Filed Documents"). The reports and statements
required to be filed or furnished to stockholders pursuant to the Securities
Exchange Act subsequent to the date hereof, collectively with the Company Filed
Documents, are referred to collectively herein as the "Company Securities
Filings." As of their respective dates, or as of the date of the last amendment
thereof, if amended after filing, none of the Company Securities Filings
contained or, as to the Company Securities Filings subsequent to the date
hereof, will contain, any untrue statement of a material fact or omitted or, as
to the Company Securities Filings subsequent to the date hereof, will omit, to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company has heretofore furnished or made available to Parent
a complete and correct copy of any amendments or modifications which have not
yet been filed with the SEC to executed agreements, documents or other
instruments which previously had been filed by the Company with the SEC pursuant
to the Securities Act or the Securities Exchange Act.
2.8 Company Financial Statements. The audited consolidated financial
statements and unaudited interim financial statements of the Company included
in the Company Securities Filings (the "Company Financial Statements") have
been or will be, as the case may be, prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except, with
respect to any Company Filed Documents, as may be indicated therein or in the
notes thereto) and present fairly the consolidated financial position of the
Company and the Company Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended subject, in the case of the unaudited interim financial statements, to
normal year-end audit adjustments (which in the aggregate are not material in
nature or amount), and any other adjustments described in the Company Filed
Documents.
2.9 Absence of Certain Changes or Events. Except as set forth in the
Company Filed Documents or Section 2.9 of the Company Disclosure Letter, since
September 30, 1998, the Company and the Company Subsidiaries have conducted
their businesses only in the ordinary course and in a manner consistent with
past practice and, since such date, there has not been: (i) any event that,
individually or in the aggregate, has had or is reasonably likely in the
future to have a Company Material Adverse Effect, (ii) any declaration,
payment or setting aside for payment of any dividend or other distribution or
any redemption or other acquisition of any shares of capital stock or
securities of the Company by the Company, (iii) any material damage or loss to
any material asset or property, whether or not covered by insurance, (iv) any
change by the Company in accounting principles or practices, (v) any
revaluation by the Company of any material amount of its assets, including but
not limited to, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business, (vi) any
entry by the Company or any Company Subsidiaries into any commitment or
transactions material to the Company and the Company Subsidiaries taken as a
whole (other than commitments or transactions entered into in the ordinary
course of business), or (vii) any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including without limitation the granting of stock
15
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan or agreement or
arrangement, or any other increase in the compensation payable or to become
payable to any present or former directors or officers, or any employment,
consulting or severance agreement or arrangement entered into with any such
present or former directors, officers or employees of the Company or any of the
Company Subsidiaries. Since October 1, 1998, neither the Company nor any Company
Subsidiary has taken, or failed to take, any action that would have constituted
a breach of Section 4.1 hereof had the covenants therein applied since that
date.
2.10 Compliance With Laws. Except as set forth in the Company Filed
Documents, the business and operations of the Company and each of the Company
Subsidiaries have been operated in compliance with all Laws applicable
thereto, except for any instances of non-compliance which, individually or in
the aggregate, have not had and would not be reasonably likely in the future
to have a Company Material Adverse Effect.
2.11 Permits. (i) The Company and the Company Subsidiaries have all
material permits, certificates, licenses, approvals and other authorizations
required in connection with the operation of their respective businesses
(collectively, "Company Permits"), (ii) neither the Company nor any of the
Company Subsidiaries is in violation in any material respect of any Company
Permit and (iii) no proceedings are pending or, to the knowledge of the
Company, threatened, to revoke or limit any Company Permit.
2.12 Litigation. Except as disclosed in the Company Filed Documents,
there is no suit, action, investigation, claim or proceeding ("Litigation")
pending or, to the best knowledge of the Company, threatened against the
Company or any of the Company Subsidiaries, nor is there any judgment, decree,
writ, award, injunction, rule or order of any Governmental Authority
outstanding against the Company or any of the Company Subsidiaries.
2.13 Contracts. Except as set forth in Section 2.13 of the Company
Disclosure Letter, neither the Company nor any of the Company Subsidiaries is
a party or is subject to any note, bond, mortgage, indenture, contract, lease,
license, agreement or instrument that (a) involves the payment of $200,000 or
more, (b) has a remaining term of one year or more, (c) evidences
indebtedness, or (d) is required to be described in or filed as an exhibit to
any Company Securities Filing ("Company Material Contract") which is not so
described in or filed as required by the Securities Act of 1933, as amended,
and the rules and regulations thereunder (the "Securities Act"), or the
Securities Exchange Act. All such Company Material Contracts are valid and
binding and are in full force and effect and enforceable against the Company
or such Subsidiary and, to the knowledge of the Company, against the other
parties thereto in accordance with their respective terms, except to the
extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by principles of equity regarding the
availability of remedies. Neither the Company nor any of the
16
Company Subsidiaries is in violation or breach of or default under any such
Company Material Contract.
2.14 Employee Benefit Plans.
(a) Section 2.14 of the Company Disclosure Letter contains
a complete and accurate list of all Benefit Plans (as hereinafter defined)
maintained or contributed to by the Company or any of the Company Subsidiaries
("Company Benefit Plan"). A "Benefit Plan" shall include (i) an employee benefit
plan as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended, together with all regulations thereunder ("ERISA"), even
if, because of some other provision of ERISA, such plan is not subject to any or
all of ERISA's provisions, and (ii) whether or not described in the preceding
clause, any pension, profit sharing, severance, employment, change-in-control,
bonus, stock bonus, deferred or supplemental compensation, retiree medical or
life insurance, death benefit or insurance, retirement, thrift, stock purchase
or stock option plan or any other compensation, welfare, fringe benefit,
perquisite or retirement plan, or other material program, policy or arrangement
of any kind or nature whatsoever, whether oral or written, providing for
compensation, benefits for or the welfare of any or all of the current or former
employees, directors, consultants or agents of the Company or any of the Company
Subsidiaries or their beneficiaries or dependents. Each of the Company Benefit
Plans has been maintained in compliance in all material respects with its terms
and all applicable Law. Neither the Company nor any of the Company Subsidiaries
contributes to or has contributed to, or has any outstanding liability with
respect to, any Multiemployer Plan as defined in Section 3(37) of ERISA.
(b) Except as set forth in Section 2.14 of the Company
Disclosure Letter: (i) each Benefit Plan has been established and administered
in accordance with its terms and in compliance with applicable provisions of
ERISA, the Internal Revenue Code of 1986, as amended, together with all
regulations thereunder, and any substitute or successor provisions thereof or
thereunder (the "Code") and other applicable laws, rules and regulations; (ii)
the Company has received no notice from any Governmental Authority questioning
or challenging such compliance; (iii) each Benefit Plan which is intended to be
qualified (within the meaning of Code Section 401(a)) is so qualified in form
and operation and has received a favorable determination letter as to its
qualification, and nothing has occurred, whether by action or failure to act,
that would cause the loss of such qualification; (iv) no event has occurred and
no condition exists with respect to a Benefit Plan that would subject the
Company or any of the Company Subsidiaries, either directly or by reason of
their affiliation with an ERISA Affiliate (as hereinafter defined) to any
material tax, fine, lien or penalty imposed by ERISA, the Code or other
applicable laws, rules and regulations; (v) for each Benefit Plan with respect
to which a Form 5500 has been filed, no material change has occurred with
respect to the matters covered by the most recent Form 5500 since the date
thereof; (vi) no "reportable event" (as such term is defined in ERISA Section
4043), "prohibited transactions" (as such term is defined in ERISA Section 406
and Code Section 4975), "accumulated funding deficiency" (as such term is
defined in ERISA Section 302 and Code Section 412 (whether or not waived)) or
failure to make by its due date a required installment under Code Section 412(m)
has
17
occurred with respect to any Benefit Plan or any other plan maintained for
employees of any ERISA Affiliate of the Company or any of the Company
Subsidiaries. "ERISA Affiliate," as applied to any person, means (i) any
corporation which is a member of a controlled group of corporations (within the
meaning of Code Section 414(b)) of which that person is a member, (ii) any trade
or business (whether or not incorporated) which is a member of a group of trades
or businesses under common control (within the meaning of Code Section 414(c))
of which that person is a member and (iii) any member of an affiliated service
group (within the meaning of Code Section 414(m) and (o)) of which that person,
any corporation described in clause (i) above or any trade or business described
in clause (ii) above is a member.
(c) With respect to any Benefit Plan, (i) no actions,
suits or claims (other than routine claims for benefits in the ordinary course)
are pending or, to the knowledge of the Company, threatened and (ii) no facts or
circumstances exist, to the knowledge of the Company, that could reasonably be
expected to give rise to any such actions, suits or claims.
(d) Except as set forth in Section 2.14 of the Company
Disclosure Letter and the accelerated vesting and cash-out of Company Options as
described in Section 1.9 hereof, no Benefit Plan exists that could result in the
payment to any present or former employee, director, consultant or agent of the
Company or any Company Subsidiary of any money or other property, or accelerate
or provide any other rights or benefits, to any such person as a result of the
transactions contemplated by this Agreement, whether or not such payment would
constitute a parachute payment within the meaning of Code Section 280G, and no
payment in respect of a Benefit Plan would constitute an excess parachute
payment under Code Section 280G.
(e) With respect to each Benefit Plan, the Company has
made available to Parent a true and correct copy of (i) the Benefit Plans and
all amendments thereto, (ii) the most recent annual report on Form 5500 filed
with the IRS, (iii) each trust agreement and group annuity contract, if any, and
all amendments thereto relating to such Benefit Plan, (iv) the most recent
actuarial report or valuation relating to any such Benefit Plan subject to Title
IV of ERISA, (v) the most recent IRS determination letter with respect to any
such Benefit Plan which is intended to be "qualified" within the meaning of
Section 401(a) of the Code and (vi) the most recent summary plan descriptions.
(f) As of the date hereof, (i) all material payments
required to be made by or under any Benefit Plan, any related trusts, or any
related collective bargaining agreement have been made or are being processed in
accordance with normal operating procedures, and except as set forth in the
Company's financial statements, all material amounts required to be reflected
thereon have been properly accrued to date as liabilities under or with respect
to each Benefit Plan for the current year.
(g) None of the Benefit Plans is subject to Title IV of
ERISA.
18
(h) The Company does not have any post-retirement or
similar obligations under any employee welfare benefit plan (as such term is
defined in Section 3(1) of ERISA) or otherwise to provide health or death
benefits to or in respect of current or former employees, directors, agents or
consultants, except as specifically required by the continuation requirements of
Part 6 of Title I of ERISA.
2.15 Taxes and Tax Returns. Except as set forth in Section 2.15
of the Company Disclosure Letter:
(a) The Company and each of the Company Subsidiaries and
any consolidated, combined, unitary or aggregate group for tax purposes of which
the Company or any of the Company Subsidiaries is or has been a member has
timely filed, or caused to be timely filed all Tax Returns (as hereinafter
defined) required to be filed by it, and has paid, collected or withheld, or
caused to be paid, collected or withheld, all Taxes required to be paid,
collected or withheld, other than such Taxes for which adequate reserves in the
Company Financial Statements have been established in accordance with generally
accepted accounting principles, consistently applied, or which are being
contested in good faith. All such Tax Returns were true, correct and complete in
all material respects. None of the Tax Returns contains any position which is or
would be subject to penalties under Section 6662 of the Code (or any
corresponding provision of state, local or foreign Tax law). There are no claims
or assessments pending against the Company or any of the Company Subsidiaries
for any alleged deficiency in any Tax, and the Company has not been notified in
writing of any proposed Tax claims or assessments against the Company or any of
the Company Subsidiaries (other than in each case, claims or assessments for
which adequate reserves in the Company Financial Statements have been
established or which are being contested in good faith or are immaterial in
amount). Neither the Company nor any of the Company Subsidiaries has any waivers
or extensions of any applicable statute of limitations to assess any Taxes.
There are no outstanding requests by the Company or any of the Company
Subsidiaries for any extension of time within which to file any Tax Return or
within which to pay any material amounts of Taxes shown to be due on any return.
No claim has been made in writing to the Company or to any of the Company
Subsidiaries in the past three years by an authority in a jurisdiction where the
Company or the Company Subsidiaries do not file Tax Returns that it is or may be
subject to taxation by that jurisdiction, nor is there any meritorious basis for
an investigation or other proceeding that would result in such an assessment. To
the best knowledge of the Company, there are no liens for Taxes on the assets of
the Company or any of the Company Subsidiaries except for statutory liens for
current Taxes not yet due and payable.
(b) Section 2.15 of the Company Disclosure Letter sets
forth (1) the taxable years of the Company and the Company Subsidiaries as to
which the respective statutes of limitations have not expired, and (2) with
respect to such years, sets forth those years for which examinations have been
completed, those years for which examinations are presently being conducted,
those years for which examinations have not been initiated, and those years for
which Tax Returns have not yet been filed.
19
(c) All material elections with respect to Tax affecting
the Company as of the date hereof are set forth in Section 2.15(c) of the
Company Disclosure Letter.
(d) Neither the Company nor any of the Company
Subsidiaries has filed a consent under Section 341(f) of the Code concerning
collapsible corporations. Neither the Company nor any of the Company
Subsidiaries has made any payments, or is obligated to make any payments, or is
a party to any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Sections 162(m) or 280G of
the Code or any similar provision of foreign, state or local law. Neither the
Company nor any of the Company Subsidiaries is a party to or bound by any tax
indemnity, tax sharing or tax allocation agreement or arrangement. Except for
the group of which the Company is presently the common parent, neither the
Company nor any of its Company Subsidiaries has ever been a member of an
affiliated group of corporations, within the meaning of Section 1504 of the
Code.
(e) Neither the Company nor any of its Company
Subsidiaries has (i) a material amount of income reportable for a period ending
after the Closing Date but attributable to a transaction (e.g., an installment
sale) occurring in or a change in accounting method made for a period ending on
or prior to the Closing Date which resulted in a deferred reporting of income
from such transaction or from such change in accounting method (other than a
deferred intercompany transaction); or (ii) deferred gain or loss arising out of
any deferred intercompany transaction. Neither the Company nor any Company
Subsidiary has any excess loss account (as defined in Treasury Regulation
Section 1.1502-19) with respect to the stock of any Company Subsidiary. No
"ownership change" (within the meaning of Section 382(g) of the Code) has, to
the Company's knowledge, occurred prior to the date hereof which currently
limits the Company's ability to utilize any net operating loss carryovers under
Section 382 of the Code.
(f) For purposes of this Agreement, the term "Tax" shall
mean any federal, state, local, foreign or provincial income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
alternative or added minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty imposed by any
Governmental Authority. The term "Tax Return" shall mean a report, return or
other information (including any attached schedules or any amendments to such
report, return or other information) required to be supplied to or filed with a
Governmental Authority with respect to any Tax, including an information return,
claim for refund, amended return or declaration or estimated Tax.
2.16 Ownership and Use of Assets and Properties.
(a) The Company and its Subsidiaries have good and
marketable title to all assets and properties which the Company and the
Subsidiaries own, including, without limitation, the assets and properties
reflected in the Company Financial Statements or acquired after the date of the
Company Financial Statements (other than assets and properties sold or otherwise
disposed of since such date in the ordinary course of business and consistent
with past practice), free and clear
20
of all liens or other encumbrances, except for liens or imperfections of title
which do not, individually or in the aggregate, materially impair the continued
use and operation of the assets to which they relate ("Permitted Liens").
(b) The Company and its Subsidiaries do not own any real
property. Section 2.16(b) of the Company Disclosure Letter contains a complete
and correct list of all real property leased by such persons (the "Leased Real
Property"), in each case indicating the entity leasing such property and the
persons from whom such property is being leased. The Company and the Company
Subsidiaries have previously made available to the Parent complete and correct
copies of each such lease (and any amendments). The Company and the Company
Subsidiaries have good and marketable title to all structures, plants, leasehold
improvements, systems, fixtures and other property located on or about any of
the Leased Real Property, to the extent that the same are used by the Company
and the Company Subsidiaries in the conduct of their business, free of any liens
or other encumbrances other than Permitted Liens or as disclosed in Section
2.16(b) of the Company Disclosure Letter. No work has been performed on or with
respect to or in connection with any of the Leased Real Property that would
cause such Leased Real Property to become subject to any mechanics',
materialmen's, workmen's, repairmen's, carriers' or similar liens which would
result in a Company Material Adverse Effect and which will not be paid by the
Company or any such Subsidiary, as the case may be, in the ordinary course of
its business consistent with past practice. The structures, plants,
improvements, systems (including, without limitation, heating, ventilation, air
conditioning, electrical, plumbing, fire sprinkler, lighting, elevator and other
mechanical systems) and fixtures (including, without limitation, storage tanks
or other impoundment vessels, whether above or below ground) located in or about
each such parcel of Leased Real Property conform in all material respects with
all legal requirements and are in good operating condition and repair, ordinary
wear and tear excepted. Each such parcel of Leased Real Property, in view of the
purposes for which it is currently used, conforms in all material respects with
all covenants or restrictions of record and conforms in all material respects
with all applicable building codes and zoning requirements, and the Company is
not aware of any proposed material change in any such governmental or regulatory
requirements or in any such zoning requirements. The Company and the Company
Subsidiaries have all easements, rights-of-way and similar rights necessary to
conduct their respective businesses as presently conducted and to use the items
of Leased Real Property as currently used, including, without limitation,
easements and licenses for pipelines, power lines, water lines, roadways and
other access the absence of which would result in a Company Material Adverse
Effect.
(c) All personal property of the Company, whether or not
reflected in the Company Financial Statements, is in good operating condition
and repair, ordinary wear and tear excepted, is physically located at or about
the places of business of the Company and the Company Subsidiaries and is owned
outright by the Company and the Company Subsidiaries or is validly leased under
one of the personal property leases set forth in Section 2.16(c) of the Company
Disclosure Letter. The maintenance and operation of all such assets and
properties has complied in all material respects with all applicable laws,
regulations, ordinances, contractual commitments and obligations. None of such
personal property with a fair market value of $200,000 or more is subject
21
to any agreement, arrangement or understanding for its use by any person other
than the Company and the Company Subsidiaries. Except as set forth in Section
2.16(c) of the Company Disclosure Letter, no item of tangible personal property
with a fair market value of $200,000 or more owned or used by the Company or the
Company Subsidiaries as of the date of this Agreement is subject to any lien or
other encumbrance.
(d) Except as set forth in Section 2.16(d) of the Company
Disclosure Letter, with respect to any lease of Leased Real Property or any
lease of personal property involving annual expenditures of $200,000 or more,
(i) each such lease is in full force and effect; (ii) all lease payments due to
date on any such lease have been paid, and neither the Company, any Subsidiary
nor (to the knowledge of the Company) any other party is in default under any
such lease, and no event has occurred which constitutes, or with the lapse of
time or the giving of notice or both would constitute, a default in any material
respect by the Company, any Subsidiary or (to the knowledge of the Company) any
other party under such lease; and (iii) to the knowledge of the Company, there
are no disputes or disagreements between the Company and the Company
Subsidiaries, on the one hand, and any other party with respect to any such
lease.
2.17 Intellectual Property. With respect to all patents, trademarks,
trade names, service marks, copyrights and any applications therefor,
technology, know-how, trade secrets, computer software programs or applications,
trade names and tangible or intangible proprietary information or materials that
are used in the respective businesses of the Company and the Company
Subsidiaries as currently conducted, the Company has no knowledge (a) that such
use violates the rights of any third person or (b) of any pending or threatened
litigation involving such use, which violation or litigation in the aggregate
has or could be reasonably expected to have a Company Material Adverse Effect.
2.18 Insurance. Section 2.18 of the Company Disclosure Letter
contains a complete and correct list of all insurance policies carried by, or
covering, the Company and the Company Subsidiaries with respect to their
businesses, assets and properties, together with, in respect of each such
policy, the name of the insurer, the policy number, the type of policy and
each pending claim. Complete and correct copies of each such policy have
previously been provided to Parent. All such policies are in full force and
effect, and no notice of cancellation has been given with respect to any such
policy. All premiums due on such policies have been paid in a timely manner
and the Company and the Company Subsidiaries have complied in all material
respects with the terms and provisions of such policies.
2.19 Environmental Matters.
(a) Except as set forth in Section 2.19 of the Company
Disclosure Letter and except as, individually or in the aggregate, have not had
and are not reasonably likely in the future to have a Company Material Adverse
Effect or prevent or materially delay the consummation of the Offer or the
Merger:
(i) the Company and the Company Subsidiaries are,
and within the period of all applicable statutes of limitation have
been, in compliance with all Environmental Laws (as hereinafter
defined);
(ii) the Company and the Company Subsidiaries
hold all Environmental Permits (as hereinafter defined) (each of
which is in full force and effect) required for any of their current
operations and for any property owned, leased, or otherwise operated
by any of them, and are, and within the period of all applicable
statutes of limitation have been, in compliance with the terms of all
such Environmental Permits;
22
(iii) no review by, or approval of, any
Governmental Authority or other person is required under any
Environmental Law in connection with the execution or delivery of
this Agreement;
(iv) neither the Company nor any of the Company
Subsidiaries has received any written notice of Environmental Claim
(as hereinafter defined) and, to the knowledge of the Company, no
such Environmental Claims are currently pending or threatened;
(v) to the knowledge of the Company, Hazardous
Materials (as hereinafter defined) are not present on any property
owned, leased or operated by the Company or any Company Subsidiaries
that is reasonably likely to form the basis of any Environmental
Claim against any of them, and neither the Company nor any of the
Company Subsidiaries has reason to believe that Hazardous Materials
are present on any other property that is reasonably likely to form
the basis of any Environmental Claim against any of them; and
(vi) the Company has informed the Parent and
Merger Sub of: (A) all material facts which the Company reasonably
believes could form the basis of a material Environmental Claim
against any person (including, without limitation, any predecessor of
the Company or any of the Company Subsidiaries whose liability the
Company or any of the Company Subsidiaries has or may have retained
or assumed, either contractually or by operation of law, arising out
of non-compliance with any Environmental Law or the presence of
Hazardous Materials at any location owned, operated or leased by the
Company or the Company Subsidiaries or on any other property; (B) all
currently estimated material costs the Company reasonably expects it
and any of the Company Subsidiaries to incur to comply with
Environmental Laws during the next three years; and (C) all currently
estimated material costs the Company and any of the Company
Subsidiaries reasonably expect to incur for ongoing, and reasonably
anticipated, investigation and remediation of Hazardous Materials
(including, without limitation, any payments to resolve any
threatened or asserted Environmental Claim for investigation and
remediation costs).
23
(b) For purposes of this Agreement, the terms below shall
have the following meanings:
"Environmental Claim" means any claim, demand, action, suit,
complaint, proceeding, directive, investigation, lien, demand letter, or
notice of alleged noncompliance, violation or liability, by any person or
entity asserting liability or potential liability (including without
limitation, liability or potential liability for enforcement, investigatory
costs, remediation costs, operation and maintenance costs, governmental
response costs, natural resource damages, property damage, personal injury,
fines or penalties), regardless of legal theory, arising out of, based on or
resulting from (i) the presence, discharge, emission, release or threatened
release of any Hazardous Materials at any location or (ii) otherwise relating to
obligations or liabilities under any Environmental Law.
"Environmental Laws" means any and all laws, rules, orders,
regulations, statutes, ordinances, guidelines, codes, decrees or other legally
enforceable requirement (including, without limitation, common law) of any
foreign government, the United States or any Governmental Authority
regulating, relating to or imposing liability or standards of conduct
concerning protection of human health or the environment.
"Environmental Permit" means all permits, licenses, registrations,
approvals, exemptions and other filings with or authorizations by any
Governmental Authority under any Environmental Law.
"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any fraction
thereof), petroleum products, asbestos, asbestos-containing materials,
pollutants and contaminants that are regulated pursuant to any Environmental
Laws.
2.20 Labor Relations. No employee of the Company or any of the
Company Subsidiaries is represented by any union or other labor organization.
There have been no organizational efforts by any labor union or other
collective bargaining representative with respect to any employees of the
Company or any Company Subsidiary. No representation election, arbitration
proceeding, grievance, labor strike, dispute, slowdown, stoppage or other
labor trouble is pending or, to the knowledge of the Company, threatened
against the Company or any of the Company Subsidiaries. No complaint against
the Company or any of the Company Subsidiaries is pending or, to the knowledge
of the Company, threatened before the National Labor Relations Board, the
Equal Employment Opportunity Commission or any similar foreign, state or local
agency, by or on behalf of any employee of the Company or any of the Company
Subsidiaries. The Company and each Company Subsidiary is in compliance in all
material respects with all laws and regulations governing workplace safety,
terms and conditions of employment, payment of wages and overtime, employment
of non-citizens, discrimination in the workplace, and other employment and
labor laws. The Company and each Company Subsidiary has not engaged in any
unfair labor practice.
24
2.21 Offer Documents; Proxy Statement. The Proxy Statement will
comply in all material respects with the applicable requirements of the
Securities Exchange Act except that no representation or warranty is being
made by the Company with respect to any information supplied to the Company by
Parent or Merger Sub or any of their Affiliates specifically for inclusion in
the Proxy Statement. The Proxy Statement will not, at the time the Proxy
Statement is filed with the SEC or first sent to stockholders, at the time of
the Company's stockholders' meeting or at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the meeting of the Company's
stockholders held for approval of the Merger which has become false or
misleading. Neither the Schedule 14D-9 nor any of the information relating to
the Company or its affiliates provided by or on behalf of the Company
specifically for inclusion in the Schedule 14D-1 or the Offer Documents will, at
the respective times the Schedule 14D-9, the Schedule 14D-1 and the Offer
Documents are filed with the SEC or are first published, sent or given to
stockholders of the Company, 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 light of the circumstances under
which they were made, not misleading, except that no representation is made by
the Company with respect to written information supplied by Parent or Merger Sub
or their Affiliates specifically for inclusion in the Schedule 14D-9. The
Schedule 14D-9 will comply in all material respects with the Securities Exchange
Act.
2.22 Finders and Investment Bankers. Neither the Company nor any of
its officers or directors has employed any broker, finder or financial advisor
or otherwise incurred any liability for any brokerage fees, commissions or
financial advisors' or finders' fees in connection with the transactions
contemplated hereby, other than pursuant to an agreement with the Financial
Advisor, a copy of which has been provided to Parent.
2.23 Fairness Opinion. The Company's Board of Directors has received
from the Financial Advisor a written opinion addressed to it to the effect
that, as of the date hereof, the consideration to be paid to stockholders
pursuant to each of the Offer and the Merger is fair to such stockholders from
a financial point of view.
2.24 Related Party Transactions. Except as set forth in the Company
Filed Documents, no director, officer or affiliate of the Company, including
for these purposes, the Stockholders, or director, officer or partner of such
affiliate (each a "Related Party") (i) has outstanding any indebtedness or
other similar obligation to the Company or any of the Company Subsidiaries or
(ii) other than employment-related benefits contemplated by or disclosed in
this Agreement, is a party to any legally binding material contract,
commitment or obligation to, from or with the Company or any Company
Subsidiary.
25
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that:
3.1 Organization and Good Standing. Each of Parent and Merger Sub are
corporations duly organized, validly existing and in good standing under the
laws of the jurisdiction of their incorporation and have all requisite
corporate power and authority and any necessary governmental authority to own,
lease and operate their properties and to carry on business as now being
conducted.
3.2 Authorization; Binding Agreement. Parent and Merger Sub have all
requisite corporate power and authority to execute and deliver this Agreement,
to perform their obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby, including, but
not limited to, the Merger, have been duly and validly authorized by the
respective Boards of Directors of Parent and Merger Sub, as appropriate, and
no other corporate proceedings on the part of Parent, Merger Sub or any other
Subsidiary of Parent are necessary to authorize the execution and delivery of
this Agreement or to consummate the transactions contemplated hereby (other
than the requisite approval by the sole stockholder of Merger Sub of this
Agreement and the Merger). This Agreement has been duly and validly executed
and delivered by each of Parent and Merger Sub and constitutes the legal,
valid and binding agreements of Parent and Merger Sub, enforceable against
each of Parent and Merger Sub in accordance with its terms, except to the
extent enforceability hereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by principles of equity regarding the
availability of remedies.
3.3 Governmental Approvals. No Consent from or with any Governmental
Authority on the part of Parent or Merger Sub is required in connection with
the execution or delivery by Parent and Merger Sub of this Agreement or the
consummation by Parent and Merger Sub of the transactions contemplated hereby
other than (i) filings under the HSR Act and similar foreign requirements,
(ii) filings with the SEC and the NASD, and (iii) those Consents that, if they
were not obtained or made, would not prevent or materially delay consummation
of the Offer or the Merger, or prevent or materially delay Parent or Merger
Sub from performing its obligations under this Agreement.
3.4 No Violations. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by Parent with any of the provisions hereof will not (i) conflict
with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws or other governing instruments of Parent or any of the
Parent Subsidiaries, (ii) require any Consent under or result in a violation
or breach of, or constitute (with
26
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any material contract, instrument, permit, license
or franchise to which the Parent is a party or by which Parent or any of its
assets or property is subject, (iii) result in the creation or imposition of any
material lien or encumbrance of any kind upon any of the assets of Parent or any
Subsidiary of Parent or (iv) subject to obtaining the Consents from Governmental
Authorities referred to in Section 3.4 hereof, contravene any Law to which
Parent or any Subsidiary of Parent or its or any of their respective assets or
properties are subject.
3.5 Offer Documents; Proxy Statement. None of the information
supplied by Parent, Merger Sub or their respective officers, directors,
representatives, agents or employees (the "Parent Information"), specifically
for inclusion in the Proxy Statement will, on the date the Proxy Statement is
first mailed to stockholders, at the time of the Company's stockholders'
meeting or at the Effective Time, contain any statement which, at such time
and in light of the circumstances under which it will be made, will be false or
misleading with respect to any material fact, or will omit to state any material
fact necessary in order to make the statements therein not false or misleading
or necessary to correct any statement in any earlier communication with respect
to the solicitation of proxies for such stockholders' meeting which has become
false or misleading. Neither the Schedule 14D-1, the Offer Documents, nor any
Parent Information provided by Parent or Merger Sub specifically for inclusion
in the Schedule 14D-9 will, at any time the Offer Documents are filed with the
SEC or first published, sent or given to the Company's stockholders, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Notwithstanding the foregoing, neither
Parent nor Merger Sub makes any representation or warranty with respect to any
information that has been supplied by the Company or its accountants, counsel or
other authorized representatives for use in any of the foregoing documents. The
Schedule 14D-1 and the Offer Documents will comply as to form in all material
respects with the provisions of the Securities Exchange Act.
3.6 Finders and Investment Bankers. Neither Parent nor Merger Sub nor
any of their respective officers or directors has employed any broker, finder
or financial advisor or otherwise incurred any liability for any brokerage
fees, commissions or financial advisors' or finders' fees in connection with
the transactions contemplated hereby, other than pursuant to an agreement with
Bear, Xxxxxxx & Co. Inc.
3.7 Financing. Parent has funds available to it sufficient to
purchase the Shares in accordance with the terms of this Agreement and
sufficient to consummate the Merger.
3.8 No Prior Activities. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the
negotiation and consummation of this Agreement and the transactions
contemplated hereby (including any financing in connection therewith), Merger
Sub has not incurred any obligations or liabilities, and has not engaged in
any business or activities of
27
any type or kind whatsoever or entered into any agreements or arrangements with
any person or entity.
ARTICLE IV.
ADDITIONAL COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
4.1 Conduct of Business of the Company and the Company
Subsidiaries.
(a) During the period from the date of this Agreement to
the Effective Time, (i) the Company shall, and shall cause the Company
Subsidiaries to, conduct their businesses in the ordinary course and consistent
with past practice, and the Company shall, and shall cause the Company
Subsidiaries to, use their reasonable best efforts to preserve intact their
business organization, keep available the services of their officers and
employees and preserve intact the present commercial relationships of the
Company and the Company Subsidiaries with all persons with whom they do business
and (ii) without limiting the generality or effect of the foregoing, the Company
shall not, and shall cause each Company Subsidiary not to:
(A) amend or propose to amend its Certificate of
Incorporation or Bylaws (or comparable governing instruments) or
change the number of directors constituting the entire Board of
Directors of the Company or any of the Company Subsidiaries;
(B) authorize for issuance, issue, deliver,
grant, sell, pledge, or otherwise dispose of or propose to issue,
deliver, grant, sell, pledge or otherwise dispose of any shares of,
or any options, warrants, commitments, subscriptions or rights of any
kind to acquire or sell any shares of, the capital stock or other
securities of the Company or any of the Company Subsidiaries
including, but not limited to, stock appreciation rights, phantom
stock, any securities convertible into or exchangeable for shares of
stock of any class of the Company or any of the Company Subsidiaries;
provided, however, that the foregoing shall not prohibit the issuance
of Shares upon the exercise of Company Options granted prior to the
date of this Agreement;
(C) split, combine or reclassify any shares of
its capital stock or declare, pay or set aside any dividend or other
distribution (whether in cash, stock, securities or other property or
any combination thereof) in respect of its capital stock, or directly
or indirectly redeem, purchase or otherwise acquire or offer to
acquire, directly or indirectly, any shares of its capital stock or
other securities;
(D) (a) except in the ordinary course of business
consistent with past practice (i) assume, guarantee, endorse or
otherwise become liable or responsible (whether
28
directly, indirectly, contingently or otherwise) for the obligations of
any person or (ii) make any loans, advances or capital contributions
to, or investments in, any other person (other than to a Company
Subsidiary); (b) acquire the stock or the assets of, or merge or
consolidate with, any other person; (c) voluntarily incur any liability
or obligation (absolute, accrued, contingent or otherwise) other than
in the ordinary course of business consistent with past practice; or
(d) sell, transfer, mortgage, pledge or otherwise dispose of, or
encumber, or agree to sell, transfer, mortgage, pledge or otherwise
dispose of or encumber, any assets or properties, real, personal or
mixed of the Company and the Company Subsidiaries other than sales of
products in the ordinary course of business and in a manner
consistent with past practice; (e) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any person, or make any loans, advances or capital
contributions to, or investments in, any other person (other than in
the ordinary course of business consistent with past practice); (f)
enter into any contract or agreement, other than in the ordinary
course of business consistent with past practice, or amend, alter or
terminate any Company Material Contract; or (g) except as set forth in
Section 4.1 of the Company Disclosure Letter, authorize any single
capital expenditure which is in excess of $200,000 or capital
expenditures (during any month period) which are, in the aggregate, in
excess of $200,000 for the pany and the Company Subsidiaries taken as a
whole;
(E) increase in any manner the compensation of
any of its directors, officers or employees or enter into, establish,
amend or terminate any Benefit Plan, employment, consulting,
retention, change in control, collective bargaining, bonus or other
incentive compensation, profit sharing, health or other welfare,
stock option or other equity, pension, retirement, vacation,
severance, deferred compensation or other compensation or benefit
plan, policy, agreement, trust, fund or arrangement with, for or in
respect of, any stockholder, officer, director, other employee,
agent, consultant or affiliate other than as required pursuant to the
terms of agreements in effect on the date of this Agreement and set
forth in Section 4.1 of the Company Disclosure Letter;
(F) except as may be required as a result of a
change in Law or in generally accepted accounting principles, change
any of the accounting practices or principles used by it;
(G) make any material Tax election, settle or
compromise any material federal, state, local or foreign Tax
liability, or waive any statute of limitations for any Tax claim or
assessment;
(H) settle or compromise any material pending or
threatened suit, action or claim;
29
(I) adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any
Company Subsidiary (other than the Merger);
(J) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction (a) in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved
against in the financial statements of the Company or incurred in the
ordinary course of business and consistent with past practice and (b)
of liabilities required to be paid, discharged or satisfied pursuant
to the terms of any contract in existence on the date hereof or
entered into in accordance with this Section 4.1;
(K) permit any insurance policy naming the
Company or any Company Subsidiary as a beneficiary or a loss payable
payee to be cancelled or terminated without notice to Parent, except
in the ordinary course of business and consistent with past practice;
or
(L) take, or offer or propose to take, or agree
to take in writing or otherwise, any of the actions described in this
Section 4.1(a) or take or omit to take any action which would make
any of the representations or warranties of the Company contained in
this Agreement untrue and incorrect in any material respect as of the
date when made if such action had then been taken or omitted, or
would result in any of the Offer Conditions or the conditions set
forth in Article VI hereof not being satisfied.
(b) The Company shall, and the Company shall cause each of
the Company Subsidiaries to, use its or their best efforts to comply in all
material respects with all Laws applicable to it or any of its properties,
assets or business and maintain in full force and effect all the Company Permits
necessary for such business.
4.2 Notification of Certain Matters. The Company shall give prompt
notice to Parent if any of the following occur after the date of this
Agreement: (i) receipt of any notice or other communication in writing from
any third party alleging that the Consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement;
(ii) receipt of any notice or other communication from any Governmental
Authority (including, but not limited to, the SEC, the NASD or any securities
exchange) in connection with the transactions contemplated by this Agreement;
(iii) the occurrence of an event which would or would be reasonably likely in
the future to (A) have a Company Material Adverse Effect or prevent or delay
the consummation of the Offer or the Merger or (B) cause any Offer Condition
to be unsatisfied at any time prior to the consummation of the Offer; (iv) any
breach by the Company of any provision hereof; or (v) the commencement or
threat of any Litigation involving or affecting the Company or any of the
Company Subsidiaries, or any of their respective properties or assets, or, to
its knowledge, any
30
employee, agent, director or officer, in his or her capacity as such, of the
Company or any of the Company Subsidiaries.
4.3 Access and Information. Between the date of this Agreement and
the Effective Time, the Company shall give, and shall cause its accountants
and legal counsel to give, Parent and its respective authorized
representatives (including, without limitation, its financial advisors,
accountants and legal counsel), at all reasonable times, access as reasonably
requested to all personnel, offices and other facilities and to all contracts,
agreements, commitments, books and records of or pertaining to the Company and
the Company Subsidiaries, shall permit the foregoing persons to make such
reasonable inspections as they may require and shall cause its officers
promptly to furnish Parent with (a) such financial and operating data and
other information with respect to the business and properties of the Company
and the Company Subsidiaries as Parent may from time to time reasonably
request, and (b) a copy of each report, schedule and other document filed or
received by the Company or any of the Company Subsidiaries pursuant to the
requirements of applicable securities laws or the NASD.
4.4 Stockholder Approval. As soon as practicable following the
consummation of the Offer, the Company shall take all steps necessary to duly
call, give notice of, convene and hold a meeting of its stockholders for the
purpose of voting upon the approval and adoption of this Agreement and the
transactions contemplated hereby and thereby (the "Company Proposals"), if such
meeting is required. Except as otherwise contemplated by this Agreement, (i) the
Board of Directors of the Company shall recommend to the stockholders of the
Company that they approve the Company Proposals, (ii) the Company shall include
in the Proxy Statement the unanimous recommendation of the Company's Board of
Directors that the stockholders of the Company vote in favor of the adoption of
this Agreement and the transactions contemplated hereby and the written opinion
of the Financial Advisor that the consideration to be received by the
stockholders of the Company pursuant to the Offer and the Merger is fair from a
financial point of view and (iii) the Company shall use its reasonable best
efforts to obtain any necessary approval by the Company's stockholders of the
Company Proposals. Notwithstanding the foregoing, in the event that Merger Sub
shall acquire at least 90 percent of the outstanding Shares, the Company agrees,
at the request of Merger Sub, subject to Article VI, to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders, in accordance with Section 253 of the DGCL.
4.5 Reasonable Best Efforts. Subject to the terms and conditions
herein provided, the Company agrees to use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including, but not limited to, (i) obtaining all Consents from Governmental
Authorities and other third parties required for the consummation of the Offer
and the Merger and the transactions contemplated thereby, (ii) timely making
all necessary filings under the HSR Act and similar foreign Laws and (iii)
having vacated, dismissed or withdrawn any order, stay, decree, judgment or
injunction of any
31
Governmental Authority which temporarily, preliminarily or permanently prohibits
or prevents the transactions contemplated by this Agreement. Upon the terms and
subject to the conditions hereof, the Company agrees to use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary to satisfy the other conditions of the Closing set
forth herein.
4.6 Public Announcements. So long as this Agreement is in effect, the
Company shall not, and shall cause its affiliates not to, issue or cause the
publication of any press release or any other announcement with respect to the
Offer or the Merger or the transactions contemplated hereby without the
consent of Parent, except for such of the foregoing as the Company determines
is required by applicable Law or pursuant to any applicable listing agreement
with, or rules or regulations of, the NASD, in which case the Company, prior
to making such announcement, shall consult in advance with Parent regarding
the same.
4.7 Compliance. In consummating the transactions contemplated hereby,
the Company shall comply, and cause the Company Subsidiaries to comply or to
be in compliance, in all material respects, with all applicable Laws.
4.8 No Solicitation.
(a) The Company shall, and shall cause the Company
Subsidiaries and the respective officers, directors, employees, representatives
and agents of the Company and the Company Subsidiaries to, immediately cease any
discussions or negotiations with any parties that may be ongoing with respect to
a Takeover Proposal (as hereinafter defined). The Company shall not, nor shall
it permit any of the Company Subsidiaries to, nor shall it authorize or permit
any of the respective officers, directors or employees of the Company and the
Company Subsidiaries or any investment banker, financial advisor, attorney,
accountant or other representative retained by it or any of the Company
Subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage
(including by way of furnishing information other than publicly available
information provided pursuant to routine stockholder requests consistent with
past practice), or take any other action designed or reasonably likely to
facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Takeover Proposal or (ii) participate
in any discussions or negotiations regarding any Takeover Proposal; provided,
however, that if, at any time prior to the Expiration Date and following the
receipt of a Superior Proposal (as hereinafter defined), the Board of Directors
of the Company determines in good faith, based upon the advice of outside
counsel, that such action is consistent with the Board of Directors' fiduciary
duties to the Company's stockholders under applicable Law, the Company may, in
response to a Superior Proposal that was made in circumstances not otherwise
involving a breach of this Agreement, and subject to compliance with Section
4.8(c), (x) furnish information with respect to the Company and the Company
Subsidiaries to any person pursuant to a confidentiality agreement having terms
substantially the same as the Confidentiality Agreement (as hereinafter
defined), provided that (i) such confidentiality agreement may not include any
provision calling for an exclusive right to negotiate with the Company and (ii)
32
the Company advises Parent of all such nonpublic information delivered to such
person concurrently with or promptly following its delivery to the requesting
party, and (y) participate in negotiations regarding such Superior Proposal.
"Takeover Proposal" means any inquiry, proposal or offer from any person
relating to any direct or indirect acquisition or purchase of 15 percent or more
of the assets of the Company and the Company Subsidiaries or 15 percent or more
of any class of equity securities of the Company or any Company Subsidiary, any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 15 percent or more of any class of equity securities of the
Company or any Company Subsidiary, or any merger, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any Company Subsidiary, but does not
include the transactions contemplated by this Agreement.
(b) Except as set forth in this Section 4.8, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or such
committee of the Offer, the Merger, or the Stockholder Agreement, (ii) approve
or recommend any Takeover Proposal or (iii) cause the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") related to any Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the Expiration Date
the Board of Directors of the Company determines in good faith, in response to a
Superior Proposal that was made in circumstances not otherwise involving a
breach of this Agreement, upon receipt of written advice from outside counsel,
that such action is consistent with the Board of Directors' fiduciary duties to
the Company's stockholders under applicable Law, the Board of Directors of the
Company may (subject to this and the following sentences) take any of the
foregoing actions at any time that is after the second business day following
Parent's receipt of written notice advising Parent that the Board of Directors
of the Company has received a Superior Proposal, specifying the material terms
and conditions of such Superior Proposal, identifying the person making such
Superior Proposal and providing notice of the determination of the Board of
Directors of the Company of what action referred to herein the Board of
Directors of the Company expects to take. The foregoing proviso shall not
prevent the Board of Directors of the Company from taking any actions described
in clause (x) within two business days of the Expiration Date so long as the
notice described in the foregoing proviso is received by Parent prior to Noon,
New York City time, on the then scheduled Expiration Date. For purposes of this
Agreement, a "Superior Proposal" means a bona fide written Takeover Proposal
which (i) a majority of the members of the Board of Directors of the Company
determines, in their good faith judgment (which may be based on the opinion of
independent financial advisors) that the value of the consideration provided for
in such proposal exceeds the Per Share Amount then provided in the Offer, and,
considering all relevant factors, is more favorable to the Company and its
stockholders than the Offer and the Merger and (ii) for which financing, to the
extent required, is then fully committed. Notwithstanding anything to the
contrary contained herein, the Board of Directors may not withdraw or modify its
approval of the Stockholders Agreement or the transactions contemplated thereby
for purposes of Section 203 of the DGCL (or any similar provision).
33
(c) In addition to the obligations of the Company set
forth in paragraphs (a) and (b) of this Section 4.8, the Company shall promptly
advise Parent orally and in writing of any request for information or of any
Takeover Proposal, the material terms and conditions of such request or the
Takeover Proposal and the identity of the person making such request or Takeover
Proposal and shall keep Parent promptly advised of all significant developments
which could reasonably be expected to culminate in the Board of Directors of the
Company withdrawing, modifying or amending its recommendation of the Offer, the
Merger and the transactions contemplated by this Agreement.
(d) Nothing contained in this Section 4.8 shall prohibit
the Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Securities Exchange Act or
from making any disclosure to the Company's stockholders; provided, however,
neither the Company nor its Board of Directors nor any committee thereof shall,
except in accordance with Section 4.8(b), withdraw or modify, or propose
publicly to withdraw or modify, its position with respect to the Offer or the
Company Proposals or approve or recommend, or propose publicly to approve or
recommend, a Takeover Proposal.
4.9 SEC and Stockholder Filings. The Company shall send to Parent a
copy of all public reports and materials as and when it sends the same to its
stockholders, the SEC or any state or foreign Governmental Authority.
4.10 Takeover Statutes. If any "fair price," "moratorium," "control
share acquisition" or other similar antitakeover statute or regulation enacted
under state or federal laws in the United States (each a "Takeover Statute")
is or may become applicable to the Offer or the Merger, the Company and the
members of its Board of Directors shall grant such approvals, and take such
actions as are necessary so that the transactions contemplated by this
Agreement and the Company Proposals may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of any Takeover Statute on any of the transactions
contemplated hereby.
4.11 Related Party Agreements. Except as set forth in Section 4.11 of
the Company Disclosure Letter and except for employment-related agreements or
obligations contemplated by or disclosed in this Agreement, the Company shall
take all actions necessary to terminate, effective as of the Effective Time,
all contracts, commitments or obligations to, from or with the Company or
Company Subsidiary, on the one hand, and any Related Party, on the other hand.
ARTICLE V.
ADDITIONAL COVENANTS OF PARENT
Parent covenants and agrees as follows:
34
5.1 Reasonable Best Efforts. Subject to the terms and conditions
herein provided, Parent agrees to use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, including, but
not limited to, (i) obtaining all Consents from Governmental Authorities and
other third parties required for the consummation of the Offer and the Merger
and the transactions contemplated thereby, (ii) timely making all necessary
filings under the HSR Act and similar foreign Laws and (iii) having vacated,
dismissed or withdrawn any order, stay, decree, judgment or injunction of any
Governmental Authority which temporarily, preliminarily or permanently
prohibits or prevents the transactions contemplated by this Agreement. Upon
the terms and subject to the conditions hereof, Parent agrees to use its
reasonable best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary to satisfy the other conditions of
the Closing set forth herein. Notwithstanding any other provision hereof, in
no event shall Parent, Merger Sub or any of their Affiliates (collectively,
the "Parent Group") be required to take or fail to take any action in order to
obtain or make a Consent arising out of any contractual or legal obligation of
or applicable to the Company or the Company Subsidiaries, other than
obligations such as those under the HSR Act which apply to both the Company
and the Parent Group and then only to the extent applicable to the Parent
Group, and in no event shall any member of the Parent Group be required to enter
into or offer to enter into any divestiture, hold-separate, business limitation
or similar agreement or undertaking in connection with this Agreement or the
transactions contemplated hereby.
5.2 Public Announcements. So long as this Agreement is in effect,
Parent shall not, and shall cause its affiliates not to, issue or cause the
publication of any press release or any other announcement with respect to the
Offer or the Merger or the transactions contemplated hereby without the
consent of the Company, except for such of the foregoing as to which Parent
determines is required by applicable Law or pursuant to any applicable listing
agreement with, or rules or regulations of, any stock exchange on which shares
the Parent's capital stock are listed or the NASD, in which case Parent, prior
to making such announcement, shall consult in advance with the Company
regarding the same.
5.3 Compliance. In consummating the transactions contemplated hereby,
Parent shall comply, and shall cause its Subsidiaries to comply or to be in
compliance, in all material respects, with all applicable Laws.
5.4 [Intentionally omitted].
5.5 Indemnification, Exculpation and Insurance
(a) All rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the Effective Time
existing in favor of the current or former directors, officers or employees of
the Company as provided in the Company's Certificate of Incorporation or Bylaws
or pursuant to agreements existing on the date of this Agreement shall be
35
assumed by the Surviving Corporation, and Parent shall cause the Surviving
Corporation to honor such obligations in accordance with the terms thereof,
without further action, as of the Effective Time, and such rights will continue
in full force and effort in accordance with their respective terms. Such rights,
and the Surviving Corporation's and Parent's related obligations, shall apply in
all respects to the current or former directors, officers and employees of each
of the Company Subsidiaries as though such directors, officers and employees
were entitled to indemnification rights pursuant to the Company's Certificate of
Incorporation or Bylaws as in effect on the date hereof or pursuant to such
agreements, as the case may be. In addition, from and after the Effective Time,
directors and officers of the Company who become or remain directors or officers
of Parent shall be entitled to the same indemnity rights and protections
(including those provided by directors' and officers' liability insurance) as
are afforded to other directors and officers of Parent. Notwithstanding any
other provision hereof, the provisions of this Section 5.5 (i) are intended to
be for the benefit of, and shall be enforceable by, each indemnified party, his
or her heirs and his or her representatives and (ii) are in addition to, and not
in substitution for, any other rights to indemnification or contribution that
any such person may have by contract or otherwise.
(b) Parent shall, and shall cause the Surviving
Corporation or one of its Affiliates to, maintain in effect for six years after
the Effective Time policies of directors' and officers' liability insurance
equivalent in all material respects to those maintained by or on behalf of the
Company and the Company Subsidiaries on the date hereof (and having coverage and
containing terms and conditions which in the aggregate are not less advantageous
to the persons currently covered by such policies as insured) with respect to
claims arising from any actual or alleged wrongful act or omission occurring at
or prior to the Effective Time for which a claim has not been made against any
director or officer of the Company or any director or officer of the Company
Subsidiaries prior to the Effective Time.
5.6 Certain Share Purchases Prohibited. Parent and Merger Sub agree
that they shall not, and that they shall cause their Affiliates not to,
purchase or arrange for the purchase of any Shares at any time prior to the
Effective Time, other than pursuant to the Offer or in connection with the
cashout of Company Options to purchase Shares as contemplated by Section 1.9
hereof or pursuant to the Stockholder Agreement.
ARTICLE VI.
MERGER CONDITIONS
The respective obligations of each party to effect the Merger shall
be subject to the fulfillment or waiver at or prior to the Effective Time of
the following conditions, provided that the obligation of each party to effect
the Merger shall not be relieved by the failure of any such conditions if such
failure is the proximate result of any breach by such party of any of its
material obligations under this Agreement:
36
6.1 Offer. Merger Sub shall have accepted for payment all Shares
validly tendered in the Offer and not withdrawn. Neither Parent nor Merger Sub
may invoke this condition if Merger Sub fails to purchase Shares so tendered and
not withdrawn in violation of the terms of this Agreement or the Offer.
6.2 Stockholder Approval. If required, the Company Proposals shall
have been approved at or prior to the Effective Time by the requisite vote of
the stockholders of the Company in accordance with the DGCL and the Company's
Certificate of Incorporation and Bylaws, which the Company has represented
shall be solely the affirmative vote of a majority of the outstanding Shares.
6.3 No Injunction or Action. No order, statute, rule, regulation,
executive order, stay, decree, judgment or injunction shall have been enacted,
entered, promulgated or enforced by any court or other Governmental Authority
which temporarily, preliminarily or permanently prohibits or prevents the
consummation of the Merger which has not been vacated, dismissed or withdrawn
prior to the Effective Time.
6.4 Other Approvals. On or prior to the Closing Date, the waiting
period (and any extension thereof) applicable to the Merger under the HSR Act
and any similar foreign Laws shall have been terminated or shall have expired
and all Consents necessary for the consummation of the Merger shall have been
obtained.
6.5 Conditions of Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are subject to the
satisfaction of the condition (which may be waived in whole or in part by
Parent) that the Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement on or before
the earlier of (i) such time as Parent's or Merger Sub's designees shall
constitute at least a majority of the Company's Board of Directors pursuant to
Section 1.3 of this Agreement and (ii) the Closing Date; provided, however,
that no failure by the Company to have so performed any such obligation shall
constitute a failure of satisfaction of the foregoing condition where the
Company's failure of performance was caused by Parent.
ARTICLE VII.
TERMINATION AND ABANDONMENT
7.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, whether before or after
approval of the stockholders of the Company and the stockholders of Parent
described herein:
(a) by mutual written consent of Parent and the Company;
37
(b) by Parent or the Company:
(i) if the Offer is terminated or withdrawn
pursuant to its terms without any Shares being purchased thereunder;
provided, however, that neither Parent nor the Company may terminate
this Agreement pursuant to this Section 7.1(b)(i) if such party shall
have materially breached this Agreement; or
(ii) if any Governmental Authority shall have
issued an order, decree, ruling or injunction or taken any other
action permanently enjoining, restraining or otherwise prohibiting
acceptance for payment of Shares pursuant to the Offer or the
consummation of the Merger or, for the benefit of Parent only, the
Stockholder Agreement and such order, decree, ruling, injunction or
other action shall have become final and nonappealable; provided,
however, that Parent or the Company, as the case may be, may not
terminate this Agreement pursuant to this Section 7.1(b)(ii) if it
has not complied with its obligations under Section 5.1 hereof or
Section 4.5 hereof with respect to such order, decree, ruling,
injunction or other action;
(c) by the Company if (i) Parent or Merger Sub fails to
commence the Offer as provided in Section 1.1 hereof, or (ii) Parent or Merger
Sub shall not have accepted for payment and paid for Shares pursuant to the
Offer in violation of the terms hereof and thereof; provided, however, that the
Company may not terminate this Agreement pursuant to this Section 7.1(c) if the
Company shall have materially breached this Agreement;
(d) by Parent if the Company shall have breached in any
material respect any of its material covenants or other agreements contained in
this Agreement which breach or failure to perform is incapable of being cured
or, the Company having been given reasonable written notice of such breach by
Parent, has not been cured within one business day prior to the then scheduled
Expiration Date;
(e) by Parent if (i) the Board of Directors of the Company
or any committee thereof shall have withdrawn or modified or changed in a manner
adverse to Parent or Merger Sub its approval or recommendation of the Offer or
any of the Company Proposals, or approved or recommended any Takeover Proposal
or (ii) the Board of Directors of the Company or any committee thereof shall
have resolved to take any of the foregoing actions;
(f) by the Company if Parent shall have breached in any
material respect any of its material covenants or other agreements contained in
this Agreement, which breach or failure to perform is incapable of being cured
or, Parent having been given reasonable written notice of such breach by the
Company, has not been cured within one business day prior to the Expiration
Date;
(g) by the Company in order to enter into an Acquisition
Agreement providing for a Superior Proposal entered into in accordance with
Section 4.8, provided that prior thereto the
38
Company has reimbursed Parent for all reasonable out-of-pocket charges and
expenses incurred by Parent or its Affiliates in connection with this Agreement
and the transactions contemplated hereby in accordance with Section 7.2; or
(h) by Parent, if the Company, any of its officers or
directors or financial or legal advisors shall take any of the actions that
would be proscribed by Section 4.8 hereof but for the exceptions therein
allowing certain actions to be taken pursuant to the proviso in the second
sentence of Section 4.8(a) hereof or pursuant to the second and following
sentences of Section 4.8(b) hereof.
The party desiring to terminate this Agreement pursuant to the
preceding paragraphs shall give written notice of such termination to the
other party in accordance with Section 8.5 hereof.
7.2 Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and the
abandonment of the Offer or the Merger pursuant to this Article VII, this
Agreement (other than this Section 7.2 and Article VIII hereof) shall become
void and of no effect with no liability on the part of any party hereto (or of
any of its directors, officers, employees, agents, legal or financial advisors
or other representatives); provided, however, that no such termination shall
relieve any party hereto from any liability for any breach of this Agreement
prior to termination. If this Agreement is terminated as provided herein, each
party shall hold in confidence in accordance with the terms and conditions of
the Confidentiality Agreement all materials obtained from, or based on or
otherwise reflecting or generated in whole or in part from information obtained
from, any other party hereto in connection with the transactions contemplated by
this Agreement, and shall not use any such materials for the purpose of
competing with the businesses of the other parties hereto, whether obtained
before or after the execution hereof.
(b) In the event that this Agreement is terminated (x) by
the Company pursuant to Section 7.1(g) hereof or (y) by Parent pursuant to
Section 7.1(e) hereof, then the Company shall promptly pay Parent upon its
request all reasonable out-of-pocket charges and expenses incurred by Parent or
its Affiliates in connection with this Agreement and the transactions
contemplated hereby, including without limitation reasonable attorneys' and
accountants' fees and disbursements and fees and expenses of Parent's financial
advisor and any information agent and depositary retained in connection with the
Offer and all printing and mailing fees and expenses, in an amount not to exceed
$1,500,000.
ARTICLE VIII.
MISCELLANEOUS
8.1 Confidentiality. Each of Parent, Merger Sub and the Company shall
hold, and shall cause its respective officers, employees, accountants,
counsel, financial advisors and other
39
representatives to hold, any nonpublic information in accordance with the terms
of the Confidentiality Agreement dated June 3, 1998, between Parent and the
Company (the "Confidentiality Agreement").
8.2 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by a written agreement among the Company
(authorized by the affirmative vote required by Section 1.3, if applicable),
Parent and Merger Sub.
8.3 Waiver of Compliance; Consents. Any failure of the Company on the
one hand, or Parent and Merger Sub on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived by Parent on
the one hand, or the Company on the other hand (authorized by the affirmative
vote required by Section 1.3, if applicable), only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent
or other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in
this Section 8.3.
8.4 Survival. The respective representations, warranties, covenants
and agreements of the Company and Parent contained herein or in any
certificates or other documents delivered prior to or at the Closing shall
survive the execution and delivery of this Agreement, notwithstanding any
investigation made or information obtained by the other party, but shall
terminate at the Effective Time or the earlier termination of this Agreement in
accordance with its terms, except for those contained in Sections 1.7, 1.8, 1.9,
1.14, 5.5, 7.2(b) and 8.1 hereof, which shall survive beyond the Effective Time
and, in the case of Section 8.1 hereof, which shall survive beyond any such
earlier termination.
8.5 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when delivered in
person, by facsimile, receipt confirmed, or on the next business day when sent
by overnight courier or on the second succeeding business day when sent 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 by like notice):
(i) if to the Company, to:
CN Biosciences, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxxxx
Facsimile: (000) 000-0000
40
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
and
(ii) if to Parent or Merger Sub, to:
EM Industries, Incorporated
0 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
with copies to:
Coudert Brothers
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
8.6 Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned or delegated by any of the parties hereto prior to the Effective
Time without the prior written consent of the other party hereto except that
Parent and Merger Sub may assign or delegate all or any of their respective
rights and obligations hereunder to a direct or indirect wholly-owned
Subsidiary or Subsidiaries of Parent, provided, however, that no such
assignment or delegation shall relieve the assigning or delegating party of
its duties hereunder.
8.7 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs or expenses, subject to the rights of Parent under
Section 7.2(b) hereof.
8.8 Governing Law. This Agreement shall be deemed to be made in, and
in all respects shall be interpreted, construed and governed by and in
accordance with the internal laws of, the State of New York without regard to
its conflict of laws principles.
41
8.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10 Interpretation. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, (i) the term
"Person" shall mean and include an individual, a partnership, a joint venture,
a corporation, a limited liability company, a trust, an association, an
unincorporated organization, a Governmental Authority and any other entity,
(ii) unless otherwise specified herein, the term "Affiliate," with respect to
any person, shall mean and include any person controlling, controlled by or
under common control with such person and (iii) the term "Subsidiary" of any
specified person shall mean any corporation 50 percent or more of the
outstanding voting power of which, or any partnership, joint venture, limited
liability company or other entity 50 percent or more of the total equity
interest of which, is directly or indirectly owned by such specified person.
8.11 Entire Agreement. This Agreement and the documents or
instruments referred to herein including, but not limited to, the Annex(es)
attached hereto and the Company Disclosure Letter referred to herein, which
Annex(es) and Company Disclosure Letter are incorporated herein by reference,
the Confidentiality Agreement and the Stockholder Agreement embody the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, representations,
warranties, covenants, or undertakings, other than those expressly set forth
or referred to herein or therein. This Agreement and such other documents,
instruments and agreements supersede all prior agreements and the
understandings between the parties with respect to such subject matter.
8.12 Severability. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable in a jurisdiction, such provision shall
be modified or deleted, as to the jurisdiction involved, only to the extent
necessary to render the same valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions hereof shall not in
any way be affected or impaired thereby nor shall the validity, legality or
enforceability of such provision be affected thereby in any other
jurisdiction.
8.13 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Accordingly, the parties further agree that each party shall be
entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other right or remedy to which such party may be entitled
under this Agreement, at law or in equity.
42
8.14 Third Parties. Nothing contained in this Agreement or in any
instrument or document executed by any party in connection with the
transactions contemplated hereby shall create any rights in, or be deemed to
have been executed for the benefit of, any person that is not a party hereto
or thereto or a successor or permitted assign of such a party; provided
however, that the parties hereto specifically acknowledge that the provisions
of Sections 1.9 and 5.5 hereof are intended to be for the benefit of, and
shall be enforceable by, the current or former employees, officers and
directors of the Company and/or the Company Subsidiaries affected thereby and
their heirs and representatives and the provisions of Section 1.8(b) are
intended to be for the benefit of, and shall be enforceable by, stockholders
of the Company affected thereby and their heirs and representatives.
43
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be signed and delivered by their respective duly authorized
officers as of the date first above written.
EM INDUSTRIES, INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President, Finance
EM ACQUISITION CORP.
By: /s/ Xxxxxx Xxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxx
Title: President & CEO
CN BIOSCIENCES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxxxxx
Title: Chairman & CEO
44
ANNEX I
Conditions to the Offer
Notwithstanding any other provision of the Offer, Merger Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) promulgated under the
Securities Exchange Act (relating to Merger Sub's obligation to pay for or
return tendered Shares promptly after termination or withdrawal of the Offer),
pay for, and (subject to any such rules or regulations) may delay the
acceptance for payment of any tendered Shares and (except as provided in this
Agreement) amend or terminate the Offer (whether or not any Shares have been
theretofore purchased or paid for pursuant to the Offer) (A) unless the
following conditions shall have been satisfied: (i) there shall be validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which represents a majority of the total voting power of the
outstanding securities of the Company entitled to vote in the election of
directors or in a merger ("Voting Securities") on a fully-diluted basis (the
"Minimum Condition") ("on a fully-diluted basis" having the following meaning
as of any date: the number of Voting Securities outstanding, together with
Voting Securities issuable pursuant to obligations outstanding at that date
under employee stock option or other benefit plans or otherwise) and (ii) any
applicable waiting period under the HSR Act or any similar applicable foreign
Law shall have expired or been terminated prior to the expiration of the Offer
and the required approval of any Governmental Authority for this Agreement or
the consummation of the transactions contemplated by this Agreement shall have
been obtained or (B) if at any time after the date of this Agreement and
before the time of payment for any such Shares (whether or not any Shares have
theretofore been accepted for payment or paid for pursuant to the Offer), any
of the following events shall occur and be continuing:
(a) there shall be any Law, injunction or other order, decree,
judgment or ruling by a Governmental Authority of competent jurisdiction
promulgated, enacted, issued or taken by a Governmental Authority of competent
jurisdiction which in any such case (i) restrains or prohibits the making or
consummation of the Offer, the consummation of the Merger or the transactions
contemplated by the Stockholder Agreement, (ii) prohibits or restricts the
ownership or operation by Parent (or any of its affiliates or Subsidiaries) of
any portion of the business or assets of Parent, the Company or the Company
Subsidiaries which is material to the business of all such entities taken as a
whole, or compels Parent (or any of its affiliates or Subsidiaries) to dispose
of or hold separate any portion of the business or assets of Parent, the
Company or the Company Subsidiaries which is material to the business of all
such entities taken as a whole, (iii) imposes material limitations on the
ability of Merger Sub effectively to acquire or to hold or to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by Merger Sub on all matters properly presented to
the stockholders of the Company, or (iv) imposes any material limitations on
the ability of Parent or any of its affiliates or Subsidiaries effectively to
control in any material respect the business and operations of the Company or
the Company Subsidiaries;
A-1
(b) this Agreement shall have been terminated by the Company or
Parent in accordance with its terms or any event shall have occurred which
gives Parent or Merger Sub the right to terminate the Agreement or not to
consummate the Merger;
(c) there shall have occurred any event that, individually or when
considered together with any other matter, has had or is reasonably likely in
the future to have a Company Material Adverse Effect;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices (other than suspensions or limitations triggered by price
fluctuations on a trading day) for, trading in securities on any national
securities exchange or the over-the-counter market, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any material limitation (whether or not mandatory) by any
government or governmental, administrative or regulatory authority or agency,
domestic or foreign, on, the extension of credit by banks or other lending
institutions, (iv) a commencement of a war or armed hostilities or other
national calamity directly involving the United States and Parent shall have
determined that there is a reasonable likelihood that such event may be of
material adverse significance to it or the Company, or (v) in the case of any
of the foregoing existing at the time of the execution of this Agreement, a
material acceleration or worsening thereof;
(e) any of the representations and warranties of the Company set
forth in this Agreement that are qualified by reference to a Company Material
Adverse Effect shall not be true and correct, or any such representations and
warranties that are not so qualified shall not be true and correct in any
respect that is reasonably likely to have a Company Material Adverse Effect,
in each case as if such representations and warranties were made at the time
of such determination;
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any material
agreement or covenant of the Company to be performed or complied with by it
under this Agreement;
(g) the Company shall have entered into an Acquisition Agreement with
any person with respect to a Takeover Proposal or shall have resolved to do
so; or
(h) the Company's Board of Directors or any committee thereof shall
have withdrawn, or modified or changed in a manner adverse to Parent or Merger
Sub (including by amendment of the Schedule 14D-9) its recommendation of the
Offer, the Merger or this Agreement or approved or recommended a Takeover
Proposal, or shall have resolved to do so;
which, in the judgment of Parent with respect to each and every matter
referred to above and regardless of the circumstances giving rise to any such
condition, makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Shares or to proceed with the Merger.
A-2
The foregoing conditions are for the sole benefit of Merger Sub and
may be asserted by Merger Sub regardless of the circumstances giving rise to
any such condition and (other than the Minimum Condition) may be waived by
Merger Sub in whole or in part at any time and from time to time in its sole
discretion (subject to the terms of this Agreement). The failure by Merger Sub
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.
A-3