EXHIBIT 3
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 5, 2000, is
among Loronix Information Systems, Inc., a Nevada corporation (the "COMPANY"),
Comverse Technology, Inc., a New York corporation ("PARENT"), and Comverse
Acquisition Corp., a Nevada corporation and a direct wholly owned subsidiary (as
hereinafter defined) of Parent ("MERGER SUB").
WHEREAS, the Boards of Directors of the Company, Parent and Merger
Sub each have, in light of and subject to the terms and conditions set forth
herein, resolved to deem this Agreement and the transactions contemplated
hereby, including the Merger, taken together, advisable and fair to, and in the
best interests of, their respective stockholders;
WHEREAS, for federal income Tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "CODE");
WHEREAS, for accounting purposes, it is intended that the Merger be
accounted for as a "pooling of interests" under APB 16 (as hereinafter defined)
and the applicable rules and regulations of the Securities and Exchange
Commission (the "SEC"); and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, as a condition and an inducement to the willingness of Parent and
Merger Sub to enter into this Agreement, the Company is entering into a stock
option agreement with Parent (the "STOCK OPTION AGREEMENT"), pursuant to which
the Company has granted Parent an option to purchase Shares (as hereinafter
defined) under the terms and conditions set forth in the Stock Option Agreement;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Merger Sub hereby
agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. At the Effective Time (as hereinafter
defined) and upon the terms and subject to the conditions of this Agreement and
in accordance with the Chapter 92A of the Nevada Revised Statutes (the "NRS"),
Merger Sub shall be merged with and into the Company (the "MERGER"). Following
the Merger, the Company shall continue as the surviving corporation (the
"SURVIVING CORPORATION") and the separate corporate existence of Merger Sub
shall cease.
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SECTION 1.2 Effective Time. Subject to the provisions of this
Agreement, Parent, Merger Sub and the Company shall cause the Merger to be
consummated by filing the appropriate Articles of Merger or other appropriate
documents (the "ARTICLES OF MERGER") with the Secretary of State of the State of
Nevada in such form as required by, and executed in accordance with, the
relevant provisions of the NRS, as soon as practicable on or after the Closing
Date (as hereinafter defined). The Merger shall become effective upon such
filing or at such time thereafter as is provided in the Certificate of Merger
(the "EFFECTIVE TIME").
SECTION 1.3 Closing of the Merger. The closing of the Merger (the
"CLOSING") will take place at a time and on a date to be specified by the
parties (the "CLOSING DATE"), which shall be no later than the second business
day after satisfaction or waiver of the conditions set forth in Article VII
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions), at the
offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, or at such other time, date or place as agreed to in writing by the
parties hereto.
SECTION 1.4 Effects of the Merger. The Merger shall have the effects
set forth in the NRS. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.5 Certificate of Incorporation and Bylaws. The Restated
Articles of Incorporation of the Company in effect at the Effective Time shall
be the articles of incorporation of the Surviving Corporation until amended in
accordance with applicable Law (as hereinafter defined). The bylaws of the
Company in effect at the Effective Time shall be the bylaws of the Surviving
Corporation until amended in accordance with applicable Law and as may be
required to increase the size of the Board of Directors of the Surviving
Company.
SECTION 1.6 Directors. The directors of Merger Sub at the Effective
Time shall be the initial directors of the Surviving Corporation, to hold office
in accordance with the certificate of incorporation and bylaws of the Surviving
Corporation until their successors are duly elected or appointed and qualified
or until their earlier death, resignation or removal; provided, however, that
Parent shall cause each of Messrs. C. Xxxxxx Xxxxxx, Xxxxxx X. Xxxxxxx and Xxxxx
X. Xxxxxxx to be elected to the Board of Directors of the Surviving Corporation
until May 2003; provided, further, however, that such individuals shall then
continue to desire to be elected as directors of the Surviving Corporation.
SECTION 1.7 Officers. The officers of the Company at the Effective Time shall be
the initial officers of the Surviving Corporation, to hold office in accordance
with the certificate of incorporation and bylaws of the Surviving Corporation
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until their successors are duly elected or appointed and qualified or until
their earlier death, resignation or removal.
ARTICLE II
CONVERSION OF SHARES
SECTION 2.1 Conversion of Shares. (a) At the Effective Time, each
outstanding share of the common stock, par value $.01 per share, of Merger Sub
shall, by virtue of the Merger and without any action on the part of Parent,
Merger Sub or the Company, be converted into one fully paid and non-assessable
share of common stock, par value $.01 per share, of the Surviving Corporation.
(b) At the Effective Time, each share of common stock, par value $.01
per share, of the Company including the associated Rights (as hereinafter
defined) ("COMPANY COMMON STOCK") issued and outstanding immediately prior to
the Effective Time (individually, a "SHARE" and collectively, the "SHARES")
(other than (i) Shares held by the Company and (ii) Shares held by Parent or
Merger Sub) shall, by virtue of the Merger and without any action on the part of
Merger Sub, the Company or any holder thereof, be converted into and be
exchangeable for the right to receive 0.1925 fully paid and non-assessable
shares (the "EXCHANGE RATIO") of common stock, par value $.10 per share, of
Parent, (all such shares of Parent Common Stock issued, together with any cash
in lieu of fractional shares of Parent Common Stock to be paid pursuant to
Section 2.7, being referred to as the "MERGER CONSIDERATION"); provided,
however, that in the event the Exchange Ratio multiplied by the Average Parent
Stock Price is less than $36 the Company shall have the right to give written
notice to Parent (the "SECTION 2.1(B) TERMINATION NOTICE") that the Company
elects to terminate this Agreement under this Section 2.1(b). The Section 2.1(b)
Termination Notice shall be delivered to Parent not later than 5:00 pm, New York
time, on the second trading day prior to the Effective Time. Upon delivery of a
Section 2.1(b) Termination Notice, Parent shall have the option, in it sole
discretion, by written notice to the Company (the "TOP-UP NOTICE") delivered not
later than 5:00 pm, New York time, on the trading day prior to the Effective
Time, to increase the Exchange Ratio to an amount equal to $36 divided by the
Average Parent Stock Price (the "TOP-UP EXCHANGE RATIO"). If Parent delivers a
Top-Up Notice, this Agreement shall not terminate and the Exchange Ratio shall
be the Top-Up Exchange Ratio for all purposes under this Agreement. As used
herein, the "AVERAGE PARENT STOCK PRICE" shall mean the average of the daily
closing prices, regular way, of one share of Parent Common Stock (rounded to the
nearest thousandth) on the Nasdaq National Market (as reported in the New York
City edition of the Wall Street Journal or, if not reported thereby, another
nationally recognized source) for the five (5) consecutive trading day period
ending on the third trading day prior to the Effective Time.
(c) At the Effective Time, each Share held by Parent, Merger Sub or
the Company immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or Parent,
be canceled, retired and cease to exist and no payment shall be made with
respect thereto.
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(d) If between the date of this Agreement and the Effective Time the
outstanding shares of Parent Common Stock shall have been changed into a
different number of shares or a different class by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares or any similar event, the amount of shares of Parent Common Stock
constituting the Exchange Ratio shall be correspondingly adjusted to reflect
such stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares or such similar event.
SECTION 2.2 Stock Options. (a) As soon as practicable following the
date of this Agreement, Parent and Company (or, if appropriate, any committee of
the Board of Directors of Company administering Company's 1992 Stock Plan, 1995
Director Option Plan, and the 1999 Nonstatutory Stock Option Plan (collectively,
the "COMPANY OPTION PLANS") shall take such action as may be required to effect
the following provisions of this Section 2.2(a). Subject to the provisions of
Section 16 of the Exchange Act (as hereinafter defined), as of the Effective
Time each option to purchase Shares pursuant to the Company Stock Plans (a
"COMPANY STOCK OPTION") which is then outstanding shall be assumed by Parent and
converted into an option (or a new substitute option shall be granted) (an
"ASSUMED STOCK OPTION") to purchase the number of shares of Parent Common Stock
(rounded up to the nearest whole share) equal to (x) the number of Shares
subject to such option multiplied by (y) the Exchange Ratio, at an exercise
price per share of Parent Common Stock (rounded down to the nearest xxxxx) equal
to (A) the former exercise price per share of Company Common Stock under such
option immediately prior to the Effective Time divided by (B) the Exchange
Ratio; provided, however, that in the case of any Company Stock Option which is
an "incentive stock option" (as defined in Section 422 of the Code), the
conversion formula shall be adjusted, if necessary, in a manner consistent with
Section 424(a) of the Code. Except as provided above, the Assumed Stock Option
shall be subject to the same terms and conditions (including expiration date,
vesting and exercise provisions) as were applicable to the converted Company
Stock Option immediately prior to the Effective Time.
(b) As soon as practicable after the Effective Time, Parent shall or
shall cause the Surviving Corporation on its behalf to deliver to the holders of
Company Stock Options appropriate notices setting forth such holders' rights
pursuant to the respective Company Option Plans and the agreements evidencing
the grants of such Company Stock Options and that such Company Stock Options and
agreements have been assumed by Parent and shall continue in effect on the same
terms and conditions (subject to the adjustments required by this Section 2.2).
Parent shall comply with the terms of the Company Option Plans and ensure, to
the extent required by, and subject to the provisions of, such Company Option
Plans, that the Company Stock Options which qualified as incentive stock options
prior to the Effective Time continue to qualify as incentive stock options after
the Effective Time.
(c) Parent shall take such actions as are reasonably necessary for
the assumption of the Company Option Plans pursuant to this Section 2.2,
including the reservation, issuance and listing of Parent Common Stock as is
necessary to effectuate the
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transactions contemplated by this Section 2.2. Parent shall use its reasonable
best efforts to prepare and file with the SEC a registration statement on Form
S-8 or other appropriate form with respect to shares of Parent Common Stock
subject to the Assumed Stock Options within 30 days following the Effective Time
and to maintain the effectiveness of such registration statement or registration
statements covering such Assumed Stock Options (and maintain the current status
of the prospectus or prospectuses contained therein) for so long as such Assumed
Stock Options remain outstanding.
SECTION 2.3 Exchange Fund. Prior to the Effective Time, Parent shall
appoint a commercial bank or trust company reasonably acceptable to the Company
to act as exchange agent hereunder for the purpose of exchanging Shares for the
Merger Consideration (the "EXCHANGE AGENT"). At or prior to the Effective Time,
Parent shall deposit with the Exchange Agent, in trust for the benefit of
holders of Shares, certificates representing the Parent Common Stock issuable
pursuant to Section 2.1 in exchange for outstanding Shares. Parent agrees to
make available to the Exchange Agent from time to time as needed, cash
sufficient to pay cash in lieu of fractional shares pursuant to Section 2.7 and
any dividends and other distributions pursuant to Section 2.5. Any cash and
certificates of Parent Common Stock deposited with the Exchange Agent shall
hereinafter be referred to as the "EXCHANGE FUND."
SECTION 2.4 Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall cause the Exchange
Agent to mail to each holder of a certificate or certificates which immediately
prior to the Effective Time represented outstanding Shares (the "CERTIFICATES")
(i) a letter of transmittal which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent, and which letter shall be in customary
form and have such other provisions as Parent may reasonably specify; and (ii)
instructions for effecting the surrender of such Certificates in exchange for
the applicable Merger Consideration. Upon surrender of a Certificate to the
Exchange Agent together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, and such other documents
as may reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor (A) shares of
Parent Common Stock representing, in the aggregate, the whole number of shares
that such holder has the right to receive pursuant to Section 2.1 (after taking
into account all Shares then held by such holder) and (B) a check in the amount
equal to the cash that such holder has the right to receive pursuant to the
provisions of this Article II, including cash in lieu of any dividends and other
distributions pursuant to Section 2.5. No interest will be paid or will accrue
on any cash payable pursuant to Section 2.5 or Section 2.7. In the event of a
transfer of ownership of Company Common Stock which is not registered in the
transfer records of the Company, shares of Parent Common Stock evidencing, in
the aggregate, the proper number of shares of Parent Common Stock, a check in
the proper amount of cash in lieu of any fractional shares of Parent Common
Stock pursuant to Section 2.7 and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.5, may be issued with respect to
such Shares to the a transferee if the Certificate representing such Shares
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are presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer Taxes have been paid.
SECTION 2.5 Distributions with Respect to Unsurrendered Certificates.
No dividends or other distributions declared or made with respect to shares of
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock that such holder would be entitled to receive upon surrender of
such Certificate and no cash payment in lieu of fractional shares of Parent
Common Stock shall be paid to any such holder pursuant to Section 2.7 until such
holder shall surrender such Certificate in accordance with Section 2.4. Subject
to the effect of applicable Laws, following surrender of any such Certificate,
there shall be paid to such holder of shares of Parent Common Stock issuable in
exchange therefor, without interest, (a) promptly after the time of such
surrender, the amount of any cash payable in lieu of fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section 2.7 and the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock, and (b) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender payable with
respect to such shares of Parent Common Stock.
SECTION 2.6 No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued and cash paid upon conversion of the Shares
in accordance with the terms of Article I and this Article II (including any
cash paid pursuant to Sections 2.5 and 2.7) shall be deemed to have been issued
or paid in full satisfaction of all rights pertaining to the Shares.
SECTION 2.7 No Fractional Shares of Parent Common Stock. (a) No
certificates or scrip of shares of Parent Common Stock representing fractional
shares of Parent Common Stock or book-entry credit of the same shall be issued
upon the surrender for exchange of Certificates and such fractional share
interests will not entitle the owner thereof to vote or to have any rights of a
shareholder of Parent or a holder of shares of Parent Common Stock.
(b) Notwithstanding any other provision of this Agreement, each
holder of Shares exchanged pursuant to the Merger who would otherwise have been
entitled to receive a fraction of a share of Parent Common Stock (after taking
into account all Certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to the product of (i) such
fractional part of a share of Parent Common Stock multiplied by (ii) the closing
price on the Nasdaq National Market (as reported in the New York City edition of
the Wall Street Journal or, if not reported thereby, another nationally
recognized source) for a share of Parent Common Stock on the date of the
Effective Time. As promptly as practicable after the determination of the
aggregate amount of cash to be paid to holders of fractional interests, the
Exchange Agent shall notify Parent and Parent shall cause the Surviving
Corporation to deposit such amount
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with the Exchange Agent and shall cause the Exchange Agent to forward payments
to such holders of fractional interests subject to and in accordance with the
terms hereof.
SECTION 2.8 Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of Certificates for six months
after the Effective Time shall be delivered to Parent or otherwise on the
instruction of Parent, and any holders of the Certificates who have not
theretofore complied with this Article II shall thereafter look only to the
Surviving Corporation and Parent for the Merger Consideration with respect to
the Shares formerly represented thereby to which such holders are entitled
pursuant to Section 2.1 and Section 2.4, any cash in lieu of fractional shares
of Parent Common Stock to which such holders are entitled pursuant to Section
2.7 and any dividends or distributions with respect to shares of parent Common
Stock to which such holders are entitled pursuant to Section 2.5. Any such
portion of the Exchange Fund remaining unclaimed by holders of Shares five years
after the Effective Time (or such earlier date immediately prior to such time as
such amounts would otherwise escheat to or become property of any Governmental
Entity (as hereinafter defined)) shall, to the extent permitted by law, become
the property of the Surviving Corporation free and clear of any claims or
interest of any person previously entitled thereto.
SECTION 2.9 No Liability. None of Parent, Merger Sub, the Company,
the Surviving Corporation or the Exchange Agent shall be liable to any person in
respect of any Merger Consideration from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
SECTION 2.10 Investment of the Exchange Fund. The Exchange Agent
shall invest any cash included in the Exchange Fund as directed by Parent on a
daily basis. Any interest and other income resulting from such investments shall
promptly be paid to Parent.
SECTION 2.11 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the Shares
formerly represented thereby, any cash in lieu of fractional shares of Parent
Common Stock and unpaid dividends and distributions on shares of Parent Common
Stock deliverable in respect thereof, pursuant to this Agreement.
SECTION 2.12 Withholding Rights. Each of the Surviving Corporation
and Parent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code and the rules and regulations promulgated
thereunder, or any provision of a Tax Law.
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To the extent that amounts are so withheld by the Surviving Corporation or
Parent, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the Shares in
respect to which such deduction and withholding was made by the Surviving
Corporation or Parent, as the case may be.
SECTION 2.13 Stock Transfer Books. The stock transfer books of the
Company shall be closed immediately upon the Effective Time and there shall be
no further registration of transfers of Shares thereafter on the records of the
Company. On or after the Effective Time, any Certificates presented to the
Exchange Agent or Parent for any reason shall be converted into the Merger
Consideration with respect to the Shares formerly represented thereby, any cash
in lieu of fractional shares of Parent Common Stock to which the holders thereof
are entitled pursuant to Section 2.7 and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 2.5.
SECTION 2.14 Affiliates. Notwithstanding anything to the contrary
herein, no shares of Parent Common Stock or cash shall be delivered to a person
who may be deemed an "affiliate" of the Company in accordance with Section 6.11
hereof for purposes of Rule 145 under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), or for purposes of qualifying the Merger for "pooling of
interests" under APB 16 and the applicable SEC rules and regulations until such
person has executed and delivered to Parent the written agreement contemplated
by Section 6.11.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the
Company to Parent prior to the execution of this Agreement (the "COMPANY
DISCLOSURE SCHEDULE") (each section of which qualifies the correspondingly
numbered representation and warranty or covenant to the extent specified
therein), the Company hereby represents and warrants to each of Parent and
Merger Sub as follows:
SECTION 3.1 Organization and Qualification; Subsidiaries. (a) The
Company and each of its subsidiaries, is a corporation or legal entity duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation and has all requisite corporate, partnership
or similar power and authority to own, lease and operate its properties and to
carry on its businesses as now conducted and proposed by the Company to be
conducted.
(b) Section 3.1(b) of the Company Disclosure Schedule sets forth a
list of all subsidiaries of the Company. Except as listed in Section 3.1(b) of
the Company Disclosure Schedule, the Company does not own, directly or
indirectly, beneficially or of record, any shares of capital stock or other
security of any other entity or any other investment in any other entity.
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(c) Each of the Company and its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which 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 does not and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
(d) The Company has heretofore delivered to Parent accurate and
complete copies of the certificate of incorporation and bylaws, as currently in
effect, of each of the Company.
SECTION 3.2 Capitalization of the Company and Its Subsidiaries. (a)
The authorized capital stock of the Company consists of: (i) 22,000,000 Shares,
of which 5,127,775 Shares were issued and outstanding as of the close of
business on March 3, 2000 and none of which are held in the Company's treasury,
and (ii) 2,000,000 shares of preferred stock, par value $.001 per share (the
"PREFERRED STOCK"), no shares of which are outstanding. All of the issued and
outstanding Shares have been validly issued, and are duly authorized, fully
paid, non-assessable and free of preemptive rights. As of March 3, 2000, 952,541
Shares were reserved for issuance and issuable upon or otherwise deliverable in
connection with the exercise of outstanding Company Stock Options issued
pursuant to the Company Option Plans. Since September 30, 1999, no shares of the
Company's capital stock have been issued other than pursuant to Company Stock
Options already in existence on such date. Except as set forth above, as of the
date hereof, there are outstanding (i) no shares of capital stock or other
voting securities of the Company; (ii) no securities of the Company or any of
its subsidiaries convertible into or exchangeable for shares of capital stock or
voting securities of the Company; (iii) except for the Company Rights Agreement
(as hereinafter defined) and the Stock Option Agreement, no options or other
rights to acquire from the Company or any of its subsidiaries, and no
obligations of the Company or any of its subsidiaries to issue, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company; and (iv) no equity
equivalents, interests in the ownership or earnings of the Company or any of its
subsidiaries or other similar rights (including stock appreciation rights)
(collectively, "COMPANY SECURITIES"). There are no outstanding obligations of
the Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any Company Securities. There are no stockholder agreements (other than
the Voting Agreements dated as of the date hereof between Parent and each of
Xxxxxx Xxxxxxxxx and Xxxxx Xxxxxxxxx), voting trusts or other agreements or
understandings to which the Company or any of its subsidiaries is a party or to
which it is bound relating to the voting of any shares of capital stock of the
Company. Section 3.2 of the Company Disclosure Schedule sets forth information
regarding the current exercise price, date of grant and number granted Company
Stock Options for each holder thereof. Following the Effective Time, no holder
of Company Stock Options will have any right to receive shares of common stock
of the Surviving Corporation upon exercise of the Company Stock Options.
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(b) All of the outstanding capital stock of the Company's
subsidiaries is owned by the Company, directly or indirectly, free and clear of
any Lien (as hereinafter defined) or any other limitation or restriction
(including any restriction on the right to vote or sell the same, except as may
be provided as a matter of Law). There are no securities of the Company or its
subsidiaries convertible into or exchangeable for, no options or other rights to
acquire from the Company or its subsidiaries, and no other contract,
understanding, arrangement or obligation (whether or not contingent) providing
for the issuance or sale, directly or indirectly of, any capital stock or other
ownership interests in, or any other securities of, any subsidiary of the
Company. There are no outstanding contractual obligations of the Company or its
subsidiaries to repurchase, redeem or otherwise acquire any outstanding shares
of capital stock or other ownership interests in any subsidiary of the Company.
For purposes of this Agreement, "LIEN" means, with respect to any asset
(including, without limitation, any security) any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
SECTION 3.3 Authority Relative to This Agreement; Consents and
Approvals. (a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby. No other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
and the Stock Option Agreement or to consummate the transactions contemplated
hereby and thereby (other than, with respect to the Merger and this Agreement,
the Company Requisite Vote (as hereinafter defined)). This Agreement and the
Stock Option Agreement have been duly and validly executed and delivered by the
Company and constitute valid, legal and binding agreements of the Company,
enforceable against the Company in accordance with their respective terms.
(b) The Board of Directors of the Company (the "COMPANY BOARD") has,
by unanimous vote of those present duly and validly authorized the execution and
delivery of this Agreement and the Stock Option Agreement and approved the
consummation of the transactions contemplated hereby and thereby, and taken all
corporate actions required to be taken by the Company Board for the consummation
of the transactions, including the Merger, contemplated hereby and has resolved
(i) to deem this Agreement and the transactions contemplated hereby, including
the Merger, taken together, advisable and fair to, and in the best interests of,
the Company and its stockholders; and (ii) to recommend that the stockholders of
the Company approve and adopt this Agreement. The Company Board has directed
that this Agreement be submitted to the stockholders of the Company for their
approval. The affirmative approval of the holders of Shares representing a
majority of the votes that may be cast by the holders of all outstanding Shares
(voting as a single class) as of the record date for the Company (the "COMPANY
REQUISITE VOTE") is the only vote of the holders of any class or series of
capital stock of the Company necessary to adopt this Agreement and approve the
transactions contemplated hereby, including the Merger.
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SECTION 3.4 SEC Reports; Financial Statements. The Company has filed
all required forms, reports and documents with the SEC since January 1, 1997,
each of which has complied in all material respects with all applicable
requirements of the Securities Act and the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), each as in effect on the dates such forms, reports
and documents were filed. The Company has heretofore made available to Parent,
in the form filed with the SEC (including any amendments thereto), (i) its
Annual Reports on Form 10-KSB for each of the fiscal years ended December 31,
1997 and 1998; (ii) all definitive proxy statements relating to the Company's
meetings of stockholders (whether annual or special) held since January 1, 1997;
and (iii) all other reports or registration statements filed by the Company with
the SEC since January 1, 1997 (the "COMPANY SEC Reports"). None of such forms,
reports or documents, including, without limitation, any financial statements or
schedules included or incorporated by reference therein, contained, when filed,
any untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The draft of the Company's Annual Report on Form
10-KSB for the year ended December 31, 1999 previously provided to Parent (which
omits the financial statements) does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
The consolidated financial statements of the Company included in the Company SEC
Reports complied, and the unaudited consolidated financial statements of the
Company for its fiscal year ended December 31, 1999 (including the notes
thereto) previously provided to Parent (the "UNAUDITED 1999 FINANCIAL
STATEMENTS") comply, as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto and fairly present, in conformity with generally accepted
accounting principles applied on a consistent basis ("GAAP") (except as may be
indicated in the notes thereto), the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments). The audited consolidated financial
statements of the Company for the year ended December 31, 1999 (including the
notes thereto) shall not differ in any material respect from the Unaudited 1999
Financial Statements. Since January 1, 1999, there has not been any change, or
any application or request for any change, by the Company or any of its
subsidiaries in accounting principles, methods or policies for financial
accounting or Tax purposes (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments).
SECTION 3.5 No Undisclosed Liabilities. Except as and to the extent
set forth in the Company's unaudited balance sheet as of December 31, 1999 (the
"BALANCE SHEET DATE") and notes thereto previously provided to Parent, or as
incurred by the Company subsequent to the Balance Sheet Date in the ordinary and
usual course of business consistent with past practice, none of the Company or
its subsidiaries has any
11
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, and whether due or to become due or asserted or unasserted, which
would be required by GAAP to be reflected in, reserved against or otherwise
described in the consolidated balance sheet of the Company (including the notes
thereto).
SECTION 3.6 Absence of Changes. Except as and to the extent publicly
disclosed in the Company SEC Reports as set forth in Section 3.6 of the Company
Disclosure Schedule or as otherwise permitted pursuant to this Agreement, since
the Balance Sheet Date, the Company and its subsidiaries have conducted their
business in the ordinary and usual course consistent with past practice and
there has not been:
(a) any event, occurrence or development which does or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the Company,
or any repurchase, redemption or other acquisition by the Company or any
subsidiary of any Company securities;
(c) any amendment of any term of any outstanding security of the
Company or any subsidiary that would materially increase the obligations of the
Company or such subsidiary under such security;
(d) (i) any incurrence or assumption by the Company or any subsidiary
of any indebtedness for borrowed money other than under existing credit
facilities (or any renewals, replacements or extensions that do not increase the
aggregate commitments thereunder) other than (A) in the ordinary and usual
course of business consistent with past practice or (B) in connection with (x)
any acquisition or capital expenditure permitted by Section 5.1 or (y) the
transactions contemplated hereby, or (ii) any guarantee, endorsement or other
incurrence or assumption of liability (whether directly, contingently or
otherwise) by the Company or any subsidiary for the obligations of any other
person (other than any wholly owned subsidiary of the Company) other than in the
ordinary and usual course of business consistent with past practice;
(e) any creation or assumption by the Company or any subsidiary of
any Lien which is material to the Company on any material asset of the Company
or any subsidiary other than in the ordinary and usual course of business
consistent with past practice;
(f) any making of any loan, advance or capital contribution to or
investment in any person by the Company or any subsidiary other than (i) any
acquisition permitted by Section 5.1, (ii) loans, advances or capital
contributions to or investments in wholly owned subsidiaries of the Company or
(iii) loans or advances to employees of the
12
Company or any subsidiary made in the ordinary and usual course of business
consistent with past practice;
(g) (i) any contract or agreement entered into by the Company or any
subsidiary on or prior to the date hereof relating to any material acquisition
or disposition of any assets or business or (ii) any modification, amendment,
assignment, termination or relinquishment by the Company or any subsidiary of
any material contract, license or other material right (including any insurance
policy naming it as a beneficiary or a loss payable payee) other than, in the
case of (i) and (ii), transactions, commitments, contracts or agreements in the
ordinary and usual course of business consistent with past practice and those
contemplated by this Agreement; (h) any material change in any method of
accounting or accounting principles or practice by the Company or any
subsidiary, except for any such change required by reason of a change in GAAP;
(i) any (i) grant of any severance or termination pay to any
director, officer or employee of the Company or any of its subsidiaries; (ii)
entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or employee of the Company or any of its subsidiaries; (iii) increase in
benefits payable under any existing severance or termination pay policies or
employment agreements; or (iv) increase in compensation, bonus or other benefits
payable to directors, officers or employees of the Company or any of its
subsidiaries other than, in the case of clause (iv) only, increases prior to the
date hereof in compensation, bonus or other benefits payable to employees of the
Company or any of its subsidiaries in the ordinary and usual course of business
consistent with past practice or merit increases in salaries of employees at
regularly scheduled times in customary amounts consistent with past practices;
or
(j) any making or rescission of any material express or deemed
election relating to Taxes, settlement or compromise of any material claim,
action, suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes, or except as may be required by applicable law,
making of any change to any of its material methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of its most recently filed federal income tax return.
SECTION 3.7 Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in (i)
the registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of Parent Common Stock as required by the terms of
this Agreement pursuant to the Merger (the "S-4"), at the time the S-4 is filed
with the SEC and at the time it becomes effective under the Securities Act, will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and (ii) the proxy statement relating to the Company Stockholder
Meeting (as hereinafter defined) to be held in connection with the Merger (the
"PROXY STATEMENT") will, at the date mailed to
13
stockholders and at the times of the meeting of stockholders to be held in
connection with the Merger, 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 are made, not misleading. If at any time prior to the Effective Time any
event with respect to the Company, its officers and directors or any of its
subsidiaries should occur which is required to be described in an amendment of,
or a supplement to, the S-4 or the Proxy Statement, the Company shall promptly
so advise Parent and such event shall be so described, and such amendment or
supplement (which Parent shall have a reasonable opportunity to review) shall be
promptly filed with the SEC and, as required by Law, disseminated to the
stockholders of the Company. The Proxy Statement, insofar as it relates to the
Company Stockholder Meeting, will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder.
SECTION 3.8 Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, state securities or blue sky Laws, the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), the filing and recordation
of the Articles of Merger as required by the NRS and as otherwise set forth in
Section 3.8 to the Company Disclosure Schedule, no filing by the Company with or
notice by the Company to, and no permit, authorization, consent or approval of,
any court or tribunal or administrative, governmental or regulatory body, agency
or authority (a "GOVERNMENTAL ENTITY") is necessary for the execution and
delivery by the Company of this Agreement or the Stock Option Agreement or the
consummation by the Company of the transactions contemplated hereby or thereby.
Neither the execution, delivery and performance of this Agreement or the Stock
Option Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby or thereby will (i) conflict with or result in
any breach of any provision of the respective certificate or articles of
incorporation or bylaws (or similar governing documents) of the Company or any
of its subsidiaries, (ii) 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, amendment, cancellation or acceleration or Lien)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound, or (iii)
violate any Law applicable to the Company or any of its subsidiaries or any of
their respective properties or assets, except in the case of (ii) or (iii) for
violations, breaches or defaults which do not or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company.
SECTION 3.9 No Default. Neither the Company nor any of its
subsidiaries are in violation of any term of (i) its certificate of
incorporation, bylaws or other organizational documents, (ii) any agreement or
instrument related to indebtedness for borrowed money or any other agreement to
which it is a party or by which it is bound,
14
or (iii) any foreign or domestic law, order, writ, injunction, decree,
ordinance, award, stipulation, statute, judicial or administrative doctrine,
rule or regulation entered by a Governmental Entity ("LAW") applicable to the
Company, its subsidiaries or any of their respective properties or assets, the
consequence of which violation does or would reasonably be expected to (A) have,
individually or in the aggregate, a Material Adverse Effect on the Company or
(B) prevent or materially delay the performance of this Agreement and the Stock
Option Agreement by the Company. Except as set forth in Section 3.6 of the
Company Disclosure Schedule, the execution, delivery and performance of this
Agreement and the Stock Option Agreement and the consummation of the
transactions contemplated hereby and thereby will not result in any violation of
or conflict with, constitute a default under, require any consent, waiver or
notice under any term of, or result in the reduction or loss of any benefit or
the creation or acceleration of any right or obligation under, (i) the
certificate of incorporation, bylaws or other organizational document of the
Company (or any of its subsidiaries), (ii) any agreement, note, bond, mortgage,
indenture, contract, lease, Company Permit (as hereinafter defined), instrument
or other obligation or right to which the Company or any of its subsidiaries is
a party or by which any of the assets or properties of the Company or any of its
subsidiaries is bound, (iii) any Law, or (iv) result in the creation of (or
impose any obligation on the Company or any of its subsidiaries to create) any
Lien upon any of the properties or assets of the Company or any of its
subsidiaries pursuant to any such term, except in the case of clause (ii) where
any of the foregoing do not or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
SECTION 3.10 Real Property. (a) Section 3.10 of the Company
Disclosure Schedule sets forth all of the real property owned in fee by the
Company and its subsidiaries. Except as set forth on Section 3.10 of the Company
Disclosure Schedule, each of the Company and its subsidiaries has good and
marketable title to each parcel of real property owned by it free and clear of
all Liens, except (i) Taxes and general and special assessments not in default
and payable without penalty and interest, and (ii) other Liens, which do not
materially interfere with the Company's or any of its subsidiaries' use and
enjoyment of such real property.
(b) Section 3.10 of the Company Disclosure Schedule sets forth all
leases, subleases and other agreements (the "REAL PROPERTY LEASES") under which
the Company or any of its subsidiaries uses or occupies or has the right to use
or occupy, now or in the future, any real property. The Company has heretofore
delivered to Parent true, correct and complete copies of all Real Property
Leases (and all modifications, amendments and supplements thereto and all side
letters to which the Company or any of its subsidiaries is a party affecting the
obligations of any party thereunder). Each Real Property Lease constitutes the
valid and legally binding obligation of the Company or its subsidiaries,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar Laws of general applicability relating to or
affecting creditors' rights or by general equity principles), and is in full
force and effect. No termination event or
15
condition or uncured default of a material nature on the part of the Company or
any such subsidiary or, to the Company's knowledge, the landlord, exists under
any Real Property Lease. Each of the Company and its subsidiaries has a good and
valid leasehold interest in each parcel of real property leased by it free and
clear of all Liens, except (i) Taxes and general and special assessments not in
default and payable without penalty and interest, and (ii) other Liens, which do
not materially interfere with the Company's or any of its subsidiaries' use and
enjoyment of such real property.
(c) No party to any such Real Property Leases has given notice to the
Company or any of its subsidiaries of or made a claim against the Company or any
of its subsidiaries with respect to any breach or default thereunder, in any
such case in which such breach or default does or would reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on the
Company.
SECTION 3.11 Litigation. Except as and to the extent publicly
disclosed by the Company in the Company SEC Reports, and except for litigation
that may arise as a result of the announcement, pendency or performance of this
Agreement or the transactions contemplated hereby, there is no suit, claim,
action, proceeding or investigation pending or, to the Company's knowledge,
threatened against the Company or any of its subsidiaries or any of their
respective properties or assets which (a) seeks damages in excess of $500,000,
(b) seeks equitable relief or remediation, (c) does or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company or (d) questions the validity of this Agreement, the Stock Option
Agreement or any action to be taken by the Company in connection with the
consummation of the transactions contemplated hereby or could otherwise prevent
or delay the consummation of the transactions contemplated by this Agreement.
Except as and to the extent publicly disclosed by the Company in the Company SEC
Reports, none of the Company or its subsidiaries is subject to any outstanding
order, writ, injunction or decree.
SECTION 3.12 Compliance with Applicable Law. The Company and its
subsidiaries hold all material permits, licenses, variances, exemptions, orders
and approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses (the "COMPANY PERMITS"). The Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure to so comply does not or would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company. The businesses of the Company and its subsidiaries are being conducted
in compliance in all material respects with all Laws applicable to the Company
or its subsidiaries. To the Company's knowledge, no investigation or review by
any Governmental Entity with respect to the Company or its subsidiaries is
pending or threatened, nor, to the Company's knowledge, has any Governmental
Entity indicated an intention to conduct the same.
SECTION 3.13 Employee Plans. (a) Section 3.13(a) of the Company
Disclosure Schedule sets forth a list of (i) all material "employee benefit
plans," as defined in Section 3(3) of ERISA, and all other employee benefit
plans or other benefit
16
arrangements or payroll practices including, without limitation, bonus plans,
executive compensation, consulting or other compensation agreements, incentive,
equity or equity-based compensation, deferred compensation arrangements, stock
purchase, severance pay, sick leave, vacation pay, salary continuation
disability, hospitalization, medical insurance, life insurance, scholarship
programs, directors' benefit, bonus or other incentive compensation, which the
Company or any of its subsidiaries maintains, contributes to or has any
obligation to or liability for (each an "EMPLOYEE BENEFIT PLAN" and
collectively, the "EMPLOYEE BENEFIT PLANS"); and (ii) all "employee pension
plans", as defined in Section 3(2) of ERISA, subject to Title IV of ERISA or
Section 412 of the Code, to which the Company, any of its subsidiaries or any
trade or business (whether or not incorporated) which is or has ever been under
common control, or which is or has ever been treated as a single employer, with
the Company or any subsidiary under Section 414(b), (c), (m) or (o) of the Code
("ERISA AFFILIATE") has ever sponsored, maintained, contributed or been
obligated to contribute in the last six years (the "TITLE IV PLANS"). Except as
separately set forth on Section 3.14(a) of the Company Disclosure Schedule, none
of the Employee Benefit Plans is a multiemployer plan, as defined in Section
3(37) of ERISA ("MULTIEMPLOYER PLAN"), or is or has been subject to Sections
4063 or 4064 of ERISA ("MULTIPLE EMPLOYER PLANS"), nor has the Company, its
subsidiaries or any ERISA Affiliate ever been obligated to contribute to a
Multiemployer Plan.
(b) True, correct and complete copies of the following documents,
with respect to each of the Employee Benefit Plans and Title IV Plans (other
than a Multiemployer Plan) have been made available or delivered to Parent by
the Company (i) any plans and related trust documents, and amendments thereto;
(ii) the three most recent Forms 5500 and schedules thereto; (iii) the most
recent Internal Revenue Service ("IRS") determination letter; (iv) the three
most recent financial statements and actuarial valuations, if applicable; (v)
summary plan descriptions; (vi) written communications to employees relating to
the Employee Benefit Plans; and (vii) written descriptions of all non-written
agreements relating to the Employee Benefit Plans.
(c) As of the date hereof, (i) all material payments required to be
made by or under any Employee Benefit Plan, any related trusts, or any
collective bargaining agreement or pursuant to Law have been made by the due
date thereof (including any valid extension), and all contributions for any
period ending on or before the Closing Date which are not yet due will have been
paid or accrued on the balance sheet on or prior to the Closing Date; (ii) the
Company and its subsidiaries have performed all material obligations required to
be performed by them under any Employee Benefit Plan; (iii) the Employee Benefit
Plans, have been administered in material compliance with their terms and the
requirements of ERISA, the Code and other applicable Laws; (iv) there are no
material actions, suits, arbitrations or claims (other than routine claims for
benefit) pending or threatened with respect to any Employee Benefit Plan; and
(v) the Company and its subsidiaries have no material liability as a result of
any "prohibited transaction" (as defined in Section 406 of ERISA and Section
4975 of the Code) for any excise Tax or civil penalty.
17
(d) Except as set forth in Section 3.13(d) of the Company Disclosure
Schedule:
(i) There is no "amount of unfunded benefit liabilities" as
defined in Section 4001(a)(18) of ERISA in any of the respective Title IV
Plans. Each of the respective Title IV Plans are fully funded in
accordance with the actuarial assumptions used by the Pension Benefit
Guaranty Corporation ("PBGC") to determine the level of funding required
in the event of the termination of such Title IV Plan and the "benefit
liabilities" as defined in Section 4001(a)(16) of ERISA of such Title IV
Plan using such PBGC assumptions do not exceed the assets of such Title IV
Plan.
(ii) There has been no "reportable event" as that term is
defined in Section 4043 of ERISA and the regulations thereunder with
respect to the Title Iv Plans which would require the giving of notice or
any event requiring disclosure under Section 4041(c)(3)(C) or 4063(a) of
ERISA.
(iii) Neither the Company nor any ERISA Affiliate has
terminated any Title IV Plan, or incurred any outstanding liability under
Section 4062 of ERISA to the PBGC, or to a trustee appointed under Section
4042 of ERISA. All premiums due the PBGC with respect to the Title IV
Plans have been paid.
(iv) Neither the Company nor any ERISA Affiliate or any
organization to which the Company or any ERISA Affiliate is a successor or
parent corporation, within the meaning of Section 4069(b) of ERISA, has
engaged in any transaction within the last five years which might be
alleged to come within the meaning of Section 4069 of ERISA.
(e) The Company and its subsidiaries are not subject to any
unsatisfied withdrawal liability with respect to any Multiemployer Plan.
(f) Each of the Employee Benefit Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has been determined
by the IRS to be so "qualified" and the trusts maintained pursuant thereto are
exempt from federal income taxation under Section 501 of the Code, and the
Company knows of no fact which would adversely affect the qualified status of
any such Employee Benefit Plans or the exemption of such trust.
(g) None of the Employee Benefit Plans provide for continuing
post-employment health or life insurance coverage for any participant or any
beneficiary of a participant except as may be required under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, ("COBRA"). Each of the
Company and any ERISA Affiliate which maintains a "group health plan" within the
meaning Section 5000(b)(1) of the Code has materially complied with the notice
and continuation
18
requirements of Section 4980B of the Code, COBRA, Part 6 of Subtitle B of Title
I of ERISA and the regulations thereunder.
(h) No stock or other security issued by the Company forms or has
formed a material part of the assets of any Employee Benefit Plan.
(i) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will by itself or in
combination with any other event, except as expressly contemplated by this
Agreement, (i) result in any material payment becoming due, or materially
increase the amount of compensation due, to any current or former employee of
the Company or any of its subsidiaries; (ii) materially increase any benefits
otherwise payable under any Employee Benefit Plan; or (iii) result in the
acceleration of the time of payment or vesting of any such material benefits.
SECTION 3.14 Labor Matters. (a) Section 3.14 of the Company
Disclosure sets forth a list of all employment, labor or collective bargaining
agreements to which the Company or any subsidiary is party and except as set
forth therein, there are no employment, labor or collective bargaining
agreements which pertain to employees of the Company or any of its subsidiaries.
The Company has heretofore made available to Parent true and complete copies of
(i) the employment agreements listed on Section 3.14 of the Company Disclosure
Schedule and (ii) the labor or collective bargaining agreements listed on
Section 3.14 of the Company Disclosure Schedule, together with all amendments,
modifications, supplements and side letters affecting the duties, rights and
obligations of any party thereunder.
(b) No employees of the Company or any of its subsidiaries are
represented by any labor organization; no labor organization or group of
employees of the Company or any of its subsidiaries has made a pending demand
for recognition or certification; and, to the Company's knowledge, there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened in writing to be
brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority. To the Company's knowledge, there are no
organizing activities involving the Company or any of its Subsidiaries pending
with any labor organization or group of employees of the Company or any of its
subsidiaries.
(c) There are no strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor disputes
pending or threatened in writing against or involving the Company. There are no
unfair labor practice charges, grievances or complaints pending or threatened in
writing by or on behalf of any employee or group of employees of the Company
which, if individually or collectively resolved against Company, as the case may
be, could result in a material liability.
19
(d) There are no unfair labor practice charges, grievances or
complaints pending or threatened in writing by or on behalf of any employee or
group of employees of the Company or any of its Subsidiaries.
(e) There are no complaints, charges or claims against the Company or
any of its subsidiaries pending, or threatened in writing to be brought or
filed, with any Governmental Entity or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment of any individual by the Company or any of its subsidiaries.
(f) The Company and each of its subsidiaries is in compliance with
all Laws relating to the employment of labor, including all such Laws and orders
relating to wages, hours, collective bargaining, discrimination, civil rights,
safety and health workers' compensation and the collection and payment of
withholding and/or Social Security Taxes and similar Taxes other than any such
non-compliance which does not or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
(g) There has been no "mass layoff" or "plant closing" as defined by
the Workers Adjustment Retraining Notification Act, as amended ("WARN"), with
respect to the Company within the six (6) months prior to Closing.
SECTION 3.15 Environmental Matters. (a) For purposes of this
Agreement:
(i) "ENVIRONMENTAL COSTS AND LIABILITIES" means any and all
losses, liabilities, obligations, damages (including compensatory,
punitive and consequential damages), fines, penalties, judgments, actions,
claims, costs and expenses (including, without limitation, fees,
disbursements and expenses of legal counsel, experts, engineers and
consultants and the costs of investigation and feasibility studies and
clean up, remove, treat, or in any other way address any Hazardous
Materials (as hereinafter defined)) arising from, under or pursuant to any
Environmental Law (as hereinafter defined);
(ii) "ENVIRONMENTAL LAW" means any applicable federal,
state, local or foreign Law (including common Law), statute, rule,
regulation, ordinance, decree or other legal requirement relating to the
protection of natural resources, the environment and public and employee
health and safety or pollution or the release or exposure to Hazardous
Materials (as hereinafter defined) and shall include, without limitation,
the Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA") (42 X.X.X.xx. 9601 et seq.), the Hazardous Materials
Transportation Act (49 X.X.X.xx. 1801 et seq.), the Resource Conservation
and Recovery Act (42 X.X.X.xx. 6901 et seq.), the Clean Water Act (33
X.X.X.xx. 1251 et seq.), the Clean Air Act (33 X.X.X.xx. 7401 et seq.),
the Toxic Substances Control Act (15 X.X.X.xx. 7401 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 X.X.X.xx. 136 et seq.), and
the
20
Occupational Safety and Health Act (29 X.X.X.xx. 651 et seq.) ("OSHA") and
the regulations promulgated pursuant thereto, and any such applicable
state or local statutes, and the regulations promulgated pursuant thereto,
as such Laws have been and may be amended or supplemented through the
Closing Date;
(iii) "HAZARDOUS MATERIAL" means any substance, material or
waste which is regulated, classified or otherwise characterized as
hazardous, toxic, pollutant, contaminant or words of similar meaning or
regulatory effect by any Governmental Entity or the United States, and
includes, without limitation, petroleum, petroleum by-products, asbestos
and polychlorinated biphenyls;
(iv) "RELEASE" means any release, spill, effluent,
emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching, or migration into the environment, including any
property owned, operated or leased by the applicable party or its
subsidiaries; and
(v) "REMEDIAL ACTION" means all actions, including, without
limitation, any capital expenditures, required by a Governmental Entity or
required under or taken pursuant to any Environmental Law, or voluntarily
undertaken to (A) clean up, remove, treat, or in any other way, ameliorate
or address any Hazardous Materials released into the environment; (B)
prevent the Release or threat of Release, or minimize the further Release
of any Hazardous Material so it does not endanger or threaten to endanger
the public health or welfare of the environment; (C) perform pre-remedial
studies and investigations or post-remedial monitoring and care pertaining
or relating to a Release; or (D) bring the applicable party into
compliance with any Environmental Law.
(b) Except as set forth in Section 3.15 of the Company Disclosure
Schedule:
(i) The operations of the Company and its subsidiaries have
been and, as of the Closing Date, will be, in compliance with all
Environmental Laws except where the failure to be in compliance would be
material to the Company, and the Company is not aware of any facts,
circumstances or conditions, which without significant capital
expenditures, would prevent material compliance in the future;
(ii) The Company and its subsidiaries have obtained all
material permits, authorizations, licenses or similar approvals required
under applicable Environmental Laws for the continued operations of their
respective businesses as currently conducted;
(iii) The Company and its subsidiaries are not subject to
any outstanding written orders or material agreements with any
Governmental Entity or other person respecting (A) Environmental Laws, (B)
Remedial Action or (C) any Release or threatened Release of a Hazardous
Material;
21
(iv) The Company and its subsidiaries have not received any
written communication alleging, with respect to any such party, the
violation of or liability (real or potential) under any Environmental Law;
(v) Neither the Company nor any of its subsidiaries has any
contingent liability in connection with the Release of any Hazardous
Material (whether on-site or off-site) which does or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect;
(vi) The operations of the Company or its subsidiaries do
not involve the generation, transportation, treatment, storage or disposal
of hazardous waste, as defined and regulated and requiring a permit under
40 C.F.R. Parts 260-270 (in effect as of the date of this Agreement) or
any state equivalent;
(vii) To the Company's knowledge, there is not now nor has
there been in the past, on or in any property of the Company or its
subsidiaries any of the following: (A) any underground storage tanks or
surface impoundments, (B) any asbestos-containing materials, or (C) any
polychlorinated biphenyls; and
(viii) No judicial or administrative proceedings are
pending or, to the Company's knowledge, threatened against the Company and
its subsidiaries alleging the violation of or seeking to impose liability
pursuant to any Environmental Law and, to the Company's knowledge, there
are no investigations pending or threatened against the Company or any of
its subsidiaries under Environmental Laws.
(c) None of the exceptions set forth on Schedule 3.15 are reasonably
likely to result in the Company and its Subsidiaries incurring Environmental
Costs and Liabilities which would exceed $500,000 in the aggregate.
(d) The Company has provided to or made available for inspection to
Parent and Purchaser copies of all environmentally related assessments, audits,
investigations, sampling or similar reports relating to the Company or its
subsidiaries or any real property currently or formerly owned, operated or
leased by or for the Company and its subsidiaries.
SECTION 3.16 Tax Matters. (a) The Company and each of its
subsidiaries, and each affiliated group (within the meaning of Section 1504 of
the Code) of which the Company or any of its subsidiaries is or has been a
member, has timely filed all federal income Tax Returns and all other material
Tax Returns and reports required to be filed by it. All such Tax Returns are
true, complete and correct in all material respects. The Company and each of its
subsidiaries has paid (or the Company has paid on its subsidiaries' behalf) all
Taxes shown due on such Tax Returns. The Unaudited 1999 Financial Statements
reflect an adequate reserve for all Taxes payable by the Company and its
subsidiaries for all Taxable periods and portions thereof through the
22
date of such financial statements. The Company has made available to Parent
copies of (i) all federal, state, local and foreign income and franchise Tax
Returns filed by the Company and each of its subsidiaries related to the Taxable
years since December 31, 1996; and (ii) any audit report issued within the last
three years (or otherwise with respect to any audit or investigation in
progress) relating to Taxes due from or with respect to the Company and each of
its subsidiaries. For purposes of this Agreement, "TAX" or "TAXES" shall mean
all Taxes, charges, fees, imposts, levies, gaming or other assessments,
including, without limitation, all net income, gross receipts, capital, sales,
use, ad valorem, value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated Taxes, customs
duties, fees, assessments and charges of any kind whatsoever, together with any
interest and any penalties, fines, additions to Tax or additional amounts
imposed by any taxing authority (domestic or foreign) and shall include any
transferee liability in respect of Taxes, any liability in respect of Taxes
imposed by contract, Tax sharing agreement, Tax indemnity agreement or any
similar agreement (whether oral or written). "TAX RETURNS" shall mean any
report, return, document, declaration or any other information or filing
required to be supplied to any taxing authority or jurisdiction (foreign or
domestic) with respect to Taxes, including, without limitation, information
returns, any document with respect to or accompanying payments or estimated
Taxes, or with respect to or accompanying requests for the extension of time in
which to file any such report, return document, declaration or other
information.
(b) No material deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of its subsidiaries that have
not been fully paid or adequately provided for in the appropriate financial
statements of the Company and its subsidiaries, and no power of attorney with
respect to any Taxes has been executed or filed with any taxing authority.
(c) No liens for Taxes exist with respect to any assets or properties
of the Company or any of its subsidiaries, except for statutory liens for Taxes
not yet due.
(d) None of the Company or any of its subsidiaries is a party to or
is bound by any Tax sharing agreement, Tax indemnity obligation or similar
agreement, arrangement or practice with respect to Taxes (including any advance
pricing agreement or other agreement relating to Taxes with any taxing
authority).
(e) None of the Company or any of its subsidiaries has taken or
agreed to take any action that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code.
(f) The Company has duly and timely withheld from employee salaries,
wages and other compensation and has paid over to the appropriate taxing
authorities all amounts required to be so withheld and paid over for all periods
under all applicable laws.
23
(g) There are no employment, severance or termination agreements,
other compensation arrangements or Employee Benefit Plans currently in effect
which provide for the payment of any amount (whether in cash or property or the
vesting of property) as a result of any of the transactions contemplated by this
Agreement that would give rise to a payment which is nondeductable by reason of
Section 280G of the Code.
(h) No federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any federal income or material state, local or foreign Taxes or Tax
Returns of the Company or its subsidiaries and neither the Company nor any of
its subsidiaries has received a written notice of any pending audit or
proceeding.
(i) Neither the Company nor any of its subsidiaries has agreed to or
is required to make any adjustment under Section 481(a) of the Code.
(j) Neither the Company nor any of its subsidiaries has (i) with
regard to any assets or property held or acquired by any of them, filed a
consent to the application of Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by the Company
or any of its subsidiaries; (ii) executed or entered into a closing agreement
pursuant to Section 7121 of the Code or any similar provision of state, local or
foreign Tax Law; (iii) received or filed any requests for rulings or
determinations in respect of any Taxes within the last five years; or (iv)
extended the time within which to file any Tax Return, which Tax Return has
since not been filed.
(k) No property owned by the Company or any of its subsidiaries (i)
is property required to be treated as being owned by another person pursuant to
the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately prior to the enactment of the Tax Reform Act
of 1986; (ii) constitutes "TAX EXEMPT USE PROPERTY" within the meaning of
Section 168(h)(1) of the Code; (iii) is "TAX EXEMPT BOND FINANCED PROPERTY"
within the meaning of Section 168(g) of the Code; or (iv) is "LIMITED USE
PROPERTY" within the meaning of Rev. Proc. 76-30.
(l) The Company and each of its subsidiaries are not currently, have
not been within the last five years, and do not anticipate becoming a "UNITED
STATES REAL PROPERTY HOLDING COMPANY" within the meaning of Section 897(c) of
the Code.
(m) No subsidiary of the Company owns any Shares.
(n) No claim has been made by a taxing authority in a jurisdiction
where the Company or any of its subsidiaries does not file Tax Returns to the
effect that the Company or any of its subsidiaries is or may be subject to
Taxation by that jurisdiction.
(o) Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or other arrangement which could result in the payment of
amounts that could be nondeductible by reason of Section 162(m) of the Code.
24
(p) Neither the Company nor any of its subsidiaries has received any
private letter rulings from the IRS or comparable rulings from other taxing
authorities.
SECTION 3.17 Material Contracts. (a) Section 3.17 of the Company
Disclosure Schedule sets forth a list of all Material Contracts (as hereinafter
defined). The Company has heretofore made available to Parent true, correct and
complete copies of all written or oral contracts and agreements (and all
amendments, modifications and supplements thereto and all side letters to which
the Company or any of its subsidiaries is a party affecting the obligations of
any party thereunder) to which the Company or any of its subsidiaries is a party
or by which any of its properties or assets are bound that are material to the
business, properties or assets of the Company and its subsidiaries taken as a
whole, including, without limitation, to the extent any of the following are,
individually or in the aggregate, material to the business, properties or assets
of the Company and its subsidiaries taken as a whole, all: (i) employment,
severance, product design or development, personal services, consulting,
non-competition or indemnification contracts (including, without limitation, any
contract to which the Company or any of its subsidiaries is a party involving
employees of the Company); (ii) licensing, merchandising or distribution
agreements; (iii) contracts granting a right of first refusal or first
negotiation; (iv) partnership or joint venture agreements; (v) agreements for
the acquisition, sale or lease of material properties or assets of the Company
other than real property (by merger, purchase or sale of assets or stock or
otherwise) entered into since January 1, 1997; (vi) contracts or agreements with
any Governmental Entity; (vii) loan or credit agreements, mortgages, indentures
or other agreements or instruments evidencing indebtedness for borrowed money by
the Company or any of its subsidiaries or any such agreement pursuant to which
indebtedness for borrowed money may be incurred; (viii) agreements that purport
to limit, curtail or restrict the ability of the Company or any of its
subsidiaries to compete in any geographic area or line of business; (ix)
contracts or agreements that would be required to be filed as an exhibit to a
Form 10-K filed by the Company with the SEC on the date hereof; (x) contracts
with customers (other than purchase orders) accounting for, or expected to
account for, in excess of $1.8 million and (xi) commitments and agreements to
enter into any of the foregoing (collectively, together with any such contracts
entered into in accordance with Section 5.1 hereof, the "MATERIAL CONTRACTS").
Neither the Company nor any of its subsidiaries is a party to or bound by any
severance or other agreement with any employee or consultant pursuant to which
such person would be entitled to receive any additional compensation or an
accelerated payment of compensation as a result of the consummation of the
transactions contemplated hereby.
(b) Each of the Material Contracts constitutes the valid and legally
binding obligation of the Company or its subsidiaries, enforceable in accordance
with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar Laws of general applicability relating to or affecting creditors' rights
or by general equity principles), and is in full force and effect. There is no
default under any Material Contract so listed either by the Company or, to the
Company's knowledge, by any other party thereto, and no event has
25
occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder by the Company or, to the Company's knowledge,
any other party.
(c) No party to any such Material Contract has given notice to the
Company of or made a claim against the Company with respect to any breach or
default thereunder, and the Company is not aware of any basis for such claim, in
any such case in which such breach or default does or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company.
SECTION 3.18 Insurance. The insurance coverage maintained by the
Company and any of its subsidiaries have been issued by insurers, which, to the
Company's knowledge, are reputable and financially sound and provide coverage
for the operations conducted by the Company and its subsidiaries of a scope and
coverage consistent with customary industry practice.
SECTION 3.19 Intellectual Property. (a) (i) Except as set forth on
Section 3.19(a)(i) of the Company Disclosure Schedule, the Company is the sole
and exclusive owner of, or has the valid and transferable exclusive right to use
and enforce, the Trademarks (as hereinafter defined), free and clear of all
Liens. Section 3.19(a)(i) of the Company Disclosure Schedule sets forth a list
of all U.S., state and foreign (A) Trademark registrations and applications, and
(B) material unregistered Trademarks, each as owned by the Company or its
subsidiaries. The Company currently is listed in the records of the appropriate
U.S., state or foreign Governmental Entity as the sole owner of record for each
application and registration listed on Section 3.19(a)(i) of the Company
Disclosure Schedule.
(ii) Except as set forth on Section 3.19(a)(ii) of the
Company Disclosure Schedule, the Company is the sole and exclusive owner
of, or has the valid and transferable exclusive right to use and enforce
any Other Intellectual Property (as hereinafter defined) that is material
to the business of the Company, free and clear of all Liens. Section
3.19(a)(ii) of the Company Disclosure Schedule sets forth a list of all
U.S. and foreign: (A) patents and patent applications, (B) copyright
registration and applications, and (C) material unregistered copyrights.
The Company currently is listed in the records of the appropriate U.S.,
state or foreign Governmental Entity as the sole owner of record for each
patent, patent application, copyright application, and copyright
registration listed on Section 3.19(a)(ii) of the Company Disclosure
Schedule that is currently owned by the Company or one of its
subsidiaries.
(b) The Company does not own any patents and has no pending patent
applications. To the Company's knowledge, there is no pending, existing or
threatened, opposition, interference, cancellation proceedings or other legal or
governmental proceeding before any Governmental Entity in any jurisdiction
against any of the Trademarks or any of the material Other Intellectual Property
owned by the Company or its Subsidiaries.
26
(c) Section 3.19(c)(i) of the Company Disclosure Schedule sets forth
a list of all agreements granting to third parties any right to use or practice
any rights under any of the Trademarks or any of the material Other Intellectual
Property owned by the Company. Section 3.19(c)(ii) of the Company Disclosure
Schedule sets forth a list of all agreements permitting the Company or its
subsidiaries to use any third party's Trademarks or Other Intellectual Property
(such agreements, together with the agreements referenced on Section 3.19(c)(i)
of the Company Disclosure Schedule are collectively referred to herein as the
"Licenses"). The Licenses are valid and binding agreements of the Company or one
or more of its subsidiaries, as applicable, fully transferable to Parent and
Merger Sub, enforceable in accordance with their terms, and the Company and the
subsidiaries, and to the Company's knowledge, the other parties thereto, as
applicable, are not in material breach or default thereunder.
(d) The Company has taken reasonable measures to protect the
confidentiality of its material trade secrets, including requiring employees
having access thereto to execute written non-disclosure agreements. To the
Company's knowledge, no trade secret or confidential know-how material to the
business of the Company or any of its subsidiaries as currently operated has
been disclosed or authorized to be disclosed to any third party, other than
pursuant to a non-disclosure agreement that protects the Company's or such
subsidiary's proprietary interests in and to such trade secrets and confidential
know-how.
(e) To the Company's knowledge, the conduct of the business of the
Company and each of its subsidiaries does not infringe upon any intellectual
property right owned or controlled by any person. There are no claims or suits
pending or, to the Company's knowledge, threatened, and neither the Company nor
any of its subsidiaries has received any written notice of a third party claim
or suit: (i) alleging that the Company's or such subsidiary's activities or the
conduct of its business infringes upon or constitutes the unauthorized use of
the proprietary rights of any third party; or (ii) challenging the ownership,
use, validity or enforceability of the Trademarks or the Other Intellectual
Property owned or used by the Company or its subsidiaries.
(f) To the Company's knowledge, except as set forth on Section
3.19(f) of the Company Disclosure Schedule, no third party is infringing upon
any of the Trademarks or the Other Intellectual Property owned by the Company or
any of its subsidiaries and, except as set forth on Section 3.19(f) of the
Company Disclosure Schedule, no such claims have been made against a third party
by the Company or any of its subsidiaries.
(g) Except as set forth on Section 3.19(g) of the Company Disclosure
Schedule, there are no settlements, consents, judgments or orders or other
agreements which restrict the Company's or any of its subsidiaries' rights to
use any of the Trademarks or the Other Intellectual Property, and no concurrent
use or other agreements (aside from license and other like agreements) which
restrict the Company's or any of its subsidiaries' rights to use any of the
Trademarks or the Other Intellectual Property owned by the Company or any of its
subsidiaries.
27
(h) The consummation of the transactions contemplated by this
Agreement and the Stock Option Agreement will not result in the loss or
impairment of the Company's or any of its subsidiaries' rights to own or use any
of the Trademarks or the material Other Intellectual Property owned by or
licensed to the Company or its subsidiaries nor will it require the consent of
any Governmental Entity or third party in respect of any such Trademarks or the
Other Intellectual Property.
1. For purposes of this Agreement, "TRADEMARKS" means all
United States and foreign trademarks (including service
marks and trade names, whether registered or at common
law), registrations and applications therefor, owned or
licensed by the Company or its subsidiaries, and the
goodwill of the Company's and each of its subsidiaries'
respective businesses associated therewith, together with
any and all (i) rights of renewal thereof and (ii) rights
to xxx for past, present and future infringements or
misappropriation thereof; and "OTHER INTELLECTUAL
PROPERTY" means all intellectual property rights used in
the business of the Company or any of its subsidiaries as
currently conducted, including but not limited to all
patents and patent applications; copyrights, copyright
registrations and applications (including copyrights in
Computer Programs (as hereinafter defined); Computer
Programs; technology, trade secrets, know-how,
confidential information, proprietary processes and
formulae; semiconductor chip product" and "mask works" (as
such terms are defined in 17 U.S.C. 901); and rights of
publicity and privacy relating to the use of the names,
signatures, likenesses, voices and biographical
information of real persons; together with any and all
rights of renewal thereof and the right to xxx for past,
present or future infringements or misappropriations
thereof.
SECTION 3.20 Opinion of Financial Advisor. Broadview International
LLC (the "FINANCIAL ADVISOR") has delivered to the Company Board its opinion,
dated the date of this Agreement, to the effect that, as of such date, the
Merger Consideration is fair to the holders of Shares from a financial point of
view, and such opinion has not been withdrawn or modified.
SECTION 3.21 Brokers. No broker, finder or investment banker (other
than the Financial Advisor, a true and correct copy of whose engagement
agreement has been provided to Parent) is entitled to any brokerage, finder's or
other fee or commission or expense reimbursement in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of the Company or any of its affiliates.
SECTION 3.22 Accounting Matters; Tax Treatment. To the Company's
knowledge, neither the Company nor, any of its affiliates or stockholders, has
taken or agreed to take any action or is aware of any fact or circumstance that
would (i) prevent the Merger from qualifying as a "pooling of interests" under
APB 16 and the applicable SEC rules and regulations or (ii) cause any
representation contained in the
28
certificates relating to tax-free reorganization treatment attached hereto as
Exhibit D to be untrue. The Company has not failed to bring to the attention of
Parent any actions, agreements or understandings, whether written or oral, that
to its knowledge would be reasonably likely to prevent Parent from accounting
for the Merger as a "pooling of interests" under APB 16 and the applicable SEC
rules and regulations.
SECTION 3.23 Takeover Statute; Dissenters' Rights. The Company has
taken all action required to be taken by it in order to exempt this Agreement,
the Stock Option Agreement and the transactions contemplated hereby and thereby
from, and this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby (the "COVERED TRANSACTIONS") are exempt from,
the requirements of any "moratorium", "control share", "fair price", "affiliate
transaction", "business combination" or other antitakeover Laws and regulations
of any state (collectively, "TAKEOVER STATUTES"). The provisions of Sections
78.378 through 78.3793 of the NRS do not apply to the Covered Transactions.
Holders of Shares do not have dissenters' rights in connection with the Merger.
SECTION 3.24 Amendment to the Company Rights Agreement. The Company
Board has taken all necessary action (including any amendment thereof) under the
Preferred Shares Rights Agreement, dated as of January 9, 1997, between the
Company and American Stock Transfer & Trust Company, as Rights Agent (the
"COMPANY RIGHTS AGREEMENT") so that (a) none of the execution or delivery of
this Agreement or the Stock Option Agreement, the exchange of the shares of
Parent Common Stock for the Shares in accordance with Article II, or any other
transaction contemplated hereby or thereby will cause (i) the rights (the
"RIGHTS") issued pursuant to the Company Rights Agreement to become exercisable
under the Company Rights Agreement, (ii) Parent or Merger Sub to be deemed an
"ACQUIRING PERSON" (as defined in the Company Rights Agreement), or (iii) the
"SHARES ACQUISITION DATE" or "DISTRIBUTION DATE" (as defined in the Company
Rights Agreement) to occur upon any such event; and (b) the "EXPIRATION DATE"
(as defined in the Company Rights Agreement) of the Rights shall occur
immediately prior to the Effective Time.
SECTION 3.25 Related Party Transactions. Except as set forth in the
Company SEC Reports or Section 3.25 of the Company Disclosure Schedule, no
director or officer of the Company, nor any Affiliate of the Company or of any
such director or officer (i) has borrowed any money from or has outstanding,
directly or indirectly, any indebtedness or other similar obligations to the
Company; (ii) owns any direct or indirect interest in, or controls or is a
director, officer or partner of, or consultant or lender to, or borrower from,
or has the right to participate in the profits of, any Person which is a
competitor, supplier, customer, landlord, tenant, lessor, lessee, creditor or
debtor of the Company; or (iii) is a party to any Contract with the Company.
SECTION 3.26 Product Warranty. To the Company's knowledge, except as
set forth in Section 3.26 of the Company Disclosure Schedule, since January 1,
1998 (i) the Company has not experienced or received any material claims from
any person relating to the performance of the products designed, manufactured,
assembled,
29
repaired, maintained or delivered by the Company prior to the Closing, or
relating to the repair, maintenance or installation by the Company of such
products or to services otherwise rendered by the Company prior to the Closing,
and (ii) there has been no occurrence which would give rise to or form the basis
of, any material liability for breach of warranty (whether covered by insurance
or not) on the part of the Company with respect to products designed,
manufactured, assembled, repaired, maintained, delivered or installed by the
Company or services rendered by the Company prior to the Closing. Except as set
forth in Section 3.26 of the Company Disclosure Schedule, since January 1, 1998,
the Company has not experienced any significant delays in the release of any of
the Company's products.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Except as set forth in the disclosure schedule delivered by Parent to
the Company prior to the execution of this Agreement (the "PARENT DISCLOSURE
SCHEDULE") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), Parent
and Merger Sub hereby represent and warrant to the Company as follows:
SECTION 4.1 Organization. (a) Each of Parent and its subsidiaries is
a corporation duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
businesses as now conducted or proposed by Parent to be conducted, except where
the failure to be duly organized, existing and in good standing or to have such
power and authority would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Parent.
(b) Each of Parent and its subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which 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 does not and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent.
(c) Parent has heretofore delivered to the Company accurate and
complete copies of the articles of incorporation and bylaws of Parent as
currently in effect.
SECTION 4.2 Capitalization of Parent and Its Subsidiaries. (a) The
authorized capital stock of Parent consists of: (i) 300,000,000 shares of Parent
Common Stock, of which 76,911,204 shares of Parent Common Stock were issued and
outstanding as of the close of business on January 31, 2000, none of which are
held in Parent's treasury, and (ii) 2,500,000 shares of preferred stock, $.01
par value per share, none of
30
which are outstanding. All of the shares of Parent Common Stock have been
validly issued, and are fully paid, non-assessable and free of preemptive
rights. As of January 31, 2000, 12,662,116 shares of Parent Common Stock were
reserved for issuance and issuable upon or otherwise deliverable in connection
with the exercise of outstanding options and warrants and 6,976,744 shares of
Parent Common Stock reserved for issuance upon conversion of Parent's
convertible subordinated debentures. Except as described in the Parent SEC
Reports and as set forth above, as of the date hereof, there are outstanding (i)
no shares of capital stock or other voting securities of Parent, (ii) no
securities of Parent or any of its subsidiaries convertible into or exchangeable
for shares of capital stock or voting securities of Parent, (iii) no options or
other rights to acquire from Parent or any of its subsidiaries, and no
obligations of Parent or any of its subsidiaries to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of Parent, and (iv) no equity equivalents, interests
in the ownership or earnings of Parent or other similar rights (including stock
appreciation rights) (collectively, "PARENT SECURITIES").
SECTION 4.3 Authority Relative to This Agreement. (a) Each of Parent
and Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and the Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby. No other corporate proceedings on
the part of Parent or Merger Sub are necessary to authorize this Agreement and
the Stock Option Agreement or to consummate the transactions contemplated hereby
or thereby. This Agreement and the Stock Option Agreement have been duly and
validly executed and delivered by each of Parent and Merger Sub and constitute
valid, legal and binding agreements of each of Parent and Merger Sub,
enforceable against each of Parent and Merger Sub in accordance with their
respective terms.
(b) The Boards of Directors of Parent (the "PARENT BOARD") and Merger
Sub and Parent as the sole stockholder of Merger Sub have duly and validly
authorized the execution and delivery of this Agreement and the Stock Option
Agreement and the consummation of the transactions contemplated hereby and
thereby, and taken all corporate actions required to be taken by such Boards of
Directors and Parent as the sole stockholder of Merger Sub for the consummation
of the transactions. No approval by the shareholders of Parent is necessary for
the consummation of the transactions contemplated hereby.
SECTION 4.4 SEC Reports; Financial Statements. (a) Parent has filed
all required forms, reports and documents with the SEC since January 1, 1997,
each of which has complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, each as in effect on
the dates such forms, reports and documents were filed (the "PARENT SEC
REPORTS"). None of such forms, reports or documents, including, without
limitation, any financial statements or schedules included or incorporated by
reference therein, contained, when filed, any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
consolidated financial
31
statements of Parent included in the Parent SEC Reports complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto and fairly present, in
conformity with GAAP on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of Parent and its
consolidated subsidiaries as of the dates thereof and their consolidated results
of operations and changes in financial position for the periods then ended
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments).
SECTION 4.5 Information Supplied. None of the information supplied or
to be supplied by Parent or Merger Sub for inclusion or incorporation by
reference in (i) the S-4 will, at the time the S-4 is filed with the SEC and at
the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and
(ii) the Proxy Statement will, at the date mailed to stockholders and at the
times of the Company Stockholder Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Effective Time any event with respect to Parent, its officers and directors
or any of its subsidiaries should occur which is required to be described in an
amendment of, or a supplement to, the S-4 or the Proxy Statement, Parent shall
promptly so advise the Company and such event shall be so described, and such
amendment or supplement (which the Company shall have a reasonable opportunity
to review) shall be promptly filed with the SEC. The S-4 will comply as to form
in all material respects with the provisions of the Securities Act and the rules
and regulations thereunder.
SECTION 4.6 Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, state securities or blue sky Laws, the HSR Act, the filing and recordation
of the Articles of Merger as required by the NRS and as otherwise set forth in
Section 4.6 to the Parent Disclosure Schedule, no filing with or notice to, and
no permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery by Parent or Merger Sub of this
Agreement or the Stock Option Agreement or the consummation by Parent or Merger
Sub of the transactions contemplated hereby or thereby, except where the failure
to obtain such permits, authorizations, consents or approvals or to make such
filings or give such notice do not or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent. Neither
the execution, delivery and performance of this Agreement or the Stock Option
Agreement by Parent or Merger Sub nor the consummation by Parent or Merger Sub
of the transactions contemplated hereby or thereby will (i) conflict with or
result in any breach of any provision of the respective articles of
incorporation or bylaws (or similar governing documents) of Parent or Merger Sub
or any of Parent's subsidiaries, (ii) 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
32
termination, amendment, cancellation or acceleration or Lien) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which Parent
or Merger Sub or any of Parent's subsidiaries is a party or by which any of them
or any of their respective properties or assets may be bound or (iii) violate
any Law applicable to Parent or Merger Sub or any of Parent's subsidiaries or
any of their respective properties or assets, except in the case of (ii) or
(iii) for violations, breaches or defaults which do not or would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on Parent.
SECTION 4.7 No Prior Activities. Except for obligations incurred in
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby, Merger
Sub has neither incurred any obligation or liability nor engaged in any business
or activity of any type or kind whatsoever or entered into any agreement or
arrangement with any person.
SECTION 4.8 No Undisclosed Liabilities. Except as and to the extent
publicly disclosed by Parent in the Parent SEC Reports, as of October 31, 1999,
or as incurred by Parent or any of its subsidiaries subsequent to such date in
the ordinary and usual course of business consistent with past practice, none of
the Parent or its subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, and whether due or to become
due or asserted or unasserted, which would be required by GAAP to be reflected
in, reserved against or otherwise described in the consolidated balance sheet of
Parent (including the notes thereto).
SECTION 4.9 Absence of Changes. Except as and to the extent publicly
disclosed in Parent SEC Reports, since October 31, 1999, there has not been any
event, occurrence or development which does or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Parent and
its subsidiaries taken as a whole.
SECTION 4.10 Litigation. Except as and to the extent publicly
disclosed by Parent in the Parent SEC Reports, and except for litigation that
may arise as a result of the announcement or performance of this Agreement or
the transactions contemplated hereby, there is no suit, claim, action,
proceeding or investigation pending or, to Parent's knowledge, threatened
against Parent or any of its subsidiaries or any of their respective properties
or assets which (a) does or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Parent and its subsidiaries
taken as a whole, or (b) questions the validity of this Agreement, or any action
to be taken by Parent in connection with the consummation of the transactions
contemplated hereby or could otherwise prevent or delay the consummation of the
transactions contemplated by this Agreement.
SECTION 4.11 Accounting Matters; Tax Treatment. Neither Parent nor,
to Parent's knowledge, any of its affiliates, has taken or agreed to take any
action or is aware of any fact or circumstance that would (a) prevent the Merger
from qualifying as
33
a "pooling of interests" under APB 16 and the applicable SEC rules and
regulations, or (b) cause any representation contained in the certificates
relating to tax-free reorganization treatment attached hereto as Exhibit C to be
untrue. Parent has not failed to bring to the attention of the Company any
actions, agreements or understandings, whether written or oral, that would be
reasonably likely to prevent Parent from accounting for the Merger as a "pooling
of interests" under APB 16 and the applicable SEC rules and regulations.
ARTICLE V
COVENANTS RELATED TO CONDUCT OF BUSINESS
SECTION 5.1 Conduct of Business of the Company. Except as
contemplated by this Agreement, during the period from the date hereof to the
Effective Time, the Company will, and will cause each of its subsidiaries to,
conduct its operations in the ordinary and usual course of business consistent
with past practice and, to the extent consistent therewith, with no less
diligence and effort than would be applied in the absence of this Agreement,
seek to preserve intact its current business organizations, seek to keep
available the service of its current officers and employees and seek to preserve
its relationships with customers, suppliers and others having business dealings
with it to the end that goodwill and ongoing businesses shall be unimpaired at
the Effective Time. Without limiting the generality of the foregoing, and except
as otherwise expressly provided in this Agreement or in Section 5.1 of the
Company Disclosure Schedule, prior to the Effective Time, neither the Company
nor any of its subsidiaries will, without the prior written consent of Parent:
(a) amend its articles of incorporation or bylaws (or other similar
governing instrument) or amend, modify or terminate the Company Rights
Agreement;
(b) authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities convertible into or exchangeable for any
stock or any equity equivalents (including, without limitation, any stock
options or stock appreciation rights), except for the issuance or sale of Shares
pursuant to outstanding Company Stock Options;
(c) (i) split, combine or reclassify any shares of its capital stock;
(ii) declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock; (iii) make any other actual, constructive or deemed distribution in
respect of any shares of its capital stock or otherwise make any payments to
stockholders in their capacity as such; or (iv) redeem, repurchase or otherwise
acquire any of its securities or any securities of any of its subsidiaries
(including redeeming any Rights);
34
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its subsidiaries (other than the Merger);
(e) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any subsidiary;
(f) (i) incur or assume any long-term or short-term debt or issue any
debt securities; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person, except in either case in the ordinary and usual course of
business consistent with past practice and in amounts not material to the
Company and its subsidiaries, taken as a whole, and except for obligations of
the wholly owned subsidiaries of the Company; (iii) make any loans, advances or
capital contributions to, or investments in, any other person (other than to the
wholly owned subsidiaries of the Company or customary loans or advances to
employees in the ordinary and usual course of business consistent with past
practice and in amounts not material to the maker of such loan or advance); (iv)
pledge or otherwise encumber shares of capital stock of the Company or its
subsidiaries; or (v) mortgage or pledge any of its material assets, tangible or
intangible, or create or suffer to exist any material Lien thereupon;
(g) except as may be required by Law or as contemplated by this
Agreement, enter into, adopt or amend or terminate any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent, stock purchase agreement,
pension, retirement, deferred compensation, employment, severance or other
employee benefit agreement, trust, plan, fund, award or other arrangement for
the benefit or welfare of any director, officer, employee or independent
contractor in any manner, or (except as set forth in Section 5.1(g) of the
Company Disclosure Schedule, and as required under existing agreements) increase
in any manner the compensation or fringe benefits of any director, officer,
employee or independent contractor or pay any benefit not required by any plan
and arrangement as in effect as of the date hereof (including, without
limitation, the granting of any equity based compensation except as in the
ordinary and usual course of business);
(h) acquire, sell, lease or dispose of any assets outside the
ordinary and usual course of business consistent with past practice or any
assets which in the aggregate are material to the Company and its subsidiaries
taken as a whole, enter into any commitment or transaction outside the ordinary
and usual course of business consistent with past practice or grant any
exclusive distribution rights;
(i) except as may be required as a result of a change in Law or in
GAAP, change any of the accounting principles or practices used by it;
(j) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing-off notes or
accounts
35
receivable other than in the ordinary and usual course of business consistent
with past practice or as required by GAAP;
(k) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein; (ii) enter into any contract or
agreement, other than in the ordinary and usual course of business consistent
with past practice or amend in any material respect any of the Material
Contracts or the agreements referred to in Section 3.17; (iii) authorize any new
capital expenditure if the amount of such capital expenditure plus the sum all
other capital expenditures previously authorized by the Company exceeds an
aggregate of $1,200,000; or (iv) enter into or amend any contract, agreement,
commitment or arrangement providing for the taking of any action that would be
prohibited hereunder;
(l) make or rescind any material express or deemed election relating
to Taxes, settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to Taxes,
or except as may be required by applicable law, make any change to any of its
material methods of reporting income or deductions for federal income tax
purposes from those employed in the preparation of its most recently filed
federal income tax return;
(m) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
and usual course of business consistent with past practice of liabilities
reflected or reserved against in, the consolidated financial statements of the
Company and its subsidiaries or incurred in the ordinary and usual course of
business consistent with past practice or waive the benefits of, or agree to
modify in any manner, any confidentiality, standstill or similar agreement to
which the Company or any of its subsidiaries is a party;
(n) settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby;
(o) take any action (including any action otherwise permitted by this
Section 5.1) that would prevent or impede the Merger from qualifying as a
"pooling of interests" under APB 16 and the applicable SEC rules and regulations
or as a reorganization under Section 368 of the Code;
(p) enter into any agreement or arrangement that limits or otherwise
restricts the Company or any of its subsidiaries or any successor thereto or
that could, after the Effective Time, limit or restrict the Surviving
Corporation and its affiliates (including Parent) or any successor thereto, from
engaging or competing in any line of business or in any geographic area; or
(q) take, propose to take, or agree in writing or otherwise to take,
any of the actions described in Sections 5.1(a) through 5.1(p) or any action
which would make
36
any of the representations or warranties of the Company contained in this
Agreement (i) which are qualified as to materiality untrue or incorrect or (ii)
which are not so qualified untrue or incorrect in any material respect.
SECTION 5.2 Access to Information. (a) Between the date hereof and
the Effective Time, the Company will give Parent and Merger Sub and their
authorized representatives (including counsel, financial advisors and auditors)
reasonable access during normal business hours to all employees, plants,
offices, warehouses and other facilities and to all books and records of the
Company and its subsidiaries, will permit Parent and Merger Sub to make such
inspections as Parent and Merger Sub may reasonably require including
investigations of the environmental conditions of the properties and facilities
of the Company and will cause the Company's officers and those of its
subsidiaries to furnish Parent and Merger Sub with such financial and operating
data and other information with respect to the business, properties and
personnel of the Company and its subsidiaries as Parent or Merger Sub may from
time to time reasonably request, provided that no investigation pursuant to this
Section 5.2(a) shall affect or be deemed to modify any of the representations or
warranties made by the Company.
(b) Between the date hereof and the Effective Time, the Company shall
furnish to Parent and Merger Sub (i) within five business days after the
delivery thereof to management, such monthly financial statements and data as
are regularly prepared for distribution to Company management, (ii) at the
earliest time they are available, such quarterly and annual financial statements
as are prepared for the Company's SEC filings, which (in the case of this clause
(ii)), shall be in accordance with the books and records of the Company, and
(iii) no later than two Business Days prior to the release thereof to the
public, any press release announcing any quarterly or annual financial results
or financial statements of the Company.
(c) Each of Parent and Merger Sub will hold and will cause its
authorized representatives to hold in confidence all documents and information
concerning the Company and its subsidiaries furnished to Parent or Merger Sub in
connection with the transactions contemplated by this Agreement pursuant to the
terms of that certain Confidentiality Agreement entered into between the Company
and Parent dated February 24, 2000 (the "CONFIDENTIALITY AGREEMENT").
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Preparation of S-4 and the Proxy Statement. Parent and
the Company will, as promptly as practicable, jointly prepare and file with the
SEC the Proxy Statement in connection with the vote of the stockholders of the
Company with respect to the Merger. Parent will, as promptly as practicable,
prepare, following receipt of notification from the SEC that it has no further
comments on the Proxy Statement, and file with the SEC the S-4, containing a
proxy statement/prospectus and form of proxy, in connection with the
registration under the Securities Act of the shares of Parent Common
37
Stock issuable upon conversion of the Shares and the other transactions
contemplated hereby. Parent and the Company will, and will use reasonable best
efforts to cause their accountants and lawyers to, use all reasonable best
efforts to have or cause the S-4 declared effective as promptly as practicable
after filing with the SEC, including, without limitation, using reasonable best
efforts to cause their accountants to deliver necessary or required instruments
such as opinions, consents and certificates, and will take any other action
required or necessary to be taken under federal or state securities Laws or
otherwise in connection with the registration process (other than qualifying to
do business in any jurisdiction which it is not now so qualified or to file a
general consent to service of process in any jurisdiction). The Company and
Parent shall, as promptly as practicable after the receipt thereof, provide to
the other party copies of any written comments and advise the other party of any
oral comments, with respect to the Proxy Statement or the S-4 received from the
staff of the SEC. The Company will provide Parent with a reasonable opportunity
to review and comment on any amendment or supplement to the Proxy Statement
prior to filing with the SEC and will provide Parent with a copy of all such
filings with the SEC. The Company will use its reasonable best efforts to cause
the Proxy Statement to be mailed to its stockholders at the earliest practicable
date.
SECTION 6.2 Meeting. The Company shall take all lawful action to (i)
cause a special meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING")
to be duly called and held as soon as practicable after the date of this
Agreement for the purpose of voting on the approval and adoption of this
Agreement and (ii) solicit proxies from its stockholders to obtain the Company
Requisite Vote for the approval and adoption of this Agreement. The Company
Board shall recommend approval and adoption of this Agreement and the Merger by
the Company's stockholders and, except as permitted by Section 6.4(b), the
Company Board shall not withdraw, amend or modify in a manner adverse to Parent
such recommendation (or announce publicly its intention to do so).
SECTION 6.3 Reasonable Best Efforts. (a) Subject to the terms and
conditions of this Agreement, each party will 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 under applicable Laws to consummate the
Merger and the other transactions contemplated by this Agreement. In furtherance
and not in limitation of the foregoing, each party hereto agrees to make an
appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated hereby as promptly as practicable
and in any event within ten business days of the date hereof and to supply as
promptly as practicable any additional information and documentary material that
may be requested pursuant to the HSR Act and use its reasonable best efforts to
take, or cause to be taken, all other actions consistent with this Section 6.3
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable.
(b) Each of Parent and the Company shall, in connection with the
efforts referenced in Section 6.3(a) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under the HSR
Act or any other Antitrust
38
Law, use its reasonable best efforts to (i) cooperate in all respects with each
other in connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party; (ii) keep the other party informed in all material respects of any
material communication received by such party from, or given by such party to,
the Federal Trade Commission (the "FTC"), the Antitrust Division of the
Department of Justice (the "DOJ") or any other Governmental Entity and of any
material communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby; and (iii) permit the other party to review any material communication
given by it to, and consult with each other in advance of any meeting or
conference with, the FTC, the DOJ or any such other Governmental Entity or, in
connection with any proceeding by a private party, with any other person, and to
the extent permitted by the FTC, the DOJ or such other applicable Governmental
Entity or other person, give the other party the opportunity to attend and
participate in such meetings and conferences. For purposes of this Agreement,
"ANTITRUST LAW" means the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended,
the HSR Act, the Federal Trade Commission Act, as amended, and all other Laws
that are designed or intended to prohibit, restrict or regulate actions having
the purpose or effect of monopolization or restraint of trade or lessening of
competition through merger or acquisition.
(c) The Company shall use its reasonable best efforts to obtain as
promptly as practicable and maintain any licenses or approvals required to be
obtained by the Company pursuant to the Sale and Software License Agreement
dated February 2000 between the Company and the Forest County Potawatomi
Community of Wisconsin and shall use reasonable best efforts to cause each of
its directors and officers to provide all information required to be provided by
them in connection with such licenses or approvals; provided that the Company
shall not be in breach of this covenant if and to the extent Parent (or its
directors and officers) fails to provide information required to be provided by
them in order to obtain such licenses or approvals.
SECTION 6.4 Acquisition Proposals. (a) From the date hereof until the
termination hereof and except as expressly permitted by the following provisions
of this Section 6.4, the Company will not, nor will it permit any of its
subsidiaries to, nor will it authorize or permit any officer, director or
employee of or any investment banker, attorney, accountant or other advisor or
representative of, the Company or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any Acquisition
Proposal (as hereinafter defined) or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate, any Acquisition Proposal or any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal; provided, however, that nothing
contained in this Section 6.4(a) shall prohibit the Company Board from
furnishing information to, or entering into discussions or negotiations with,
any person that makes an unsolicited bona fide written Acquisition Proposal if,
and only to the extent that (A) the Company Stockholder Meeting shall not have
occurred or shall have occurred and the Merger shall not have been approved, (B)
39
the Company Board, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that such action is
necessary for the Company Board to comply with its fiduciary duties to the
Company's stockholders under applicable Law, (C) the Company Board determines in
good faith that such Acquisition Proposal, if accepted, is reasonably likely to
be consummated taking into account all legal, financial, regulatory and other
aspects of the proposal and the person making the proposal, and believes in good
faith, after consultation with its Financial Advisor and after taking into
account the strategic benefits to be derived from the Merger, would, if
consummated, result in a transaction more favorable to the Company's
stockholders from a financial point of view than the Merger (any such more
favorable Acquisition Proposal being referred to herein as a "SUPERIOR
PROPOSAL"), and (D) prior to taking such action, the Company (x) provides
reasonable notice to Parent to the effect that it is taking such action and (y)
receives from such person an executed confidentiality/standstill agreement in
reasonably customary form and in any event containing terms at least as
stringent as those contained in the Confidentiality Agreement between Parent and
the Company. Prior to providing any information to or entering into discussions
or negotiations with any person in connection with an Acquisition Proposal by
such person, the Company shall notify Parent of any Acquisition Proposal
(including, without limitation, the material terms and conditions thereof and
the identity of the person making it) as promptly as practicable (but in no case
later than 24 hours) after its receipt thereof, and shall provide Parent with a
copy of any written Acquisition Proposal or amendments or supplements thereto,
and shall thereafter inform Parent on a prompt basis of the status of any
discussions or negotiations with such a third party, and any material changes to
the terms and conditions of such Acquisition Proposal, and shall promptly give
Parent a copy of any information delivered to such person which has not
previously been delivered to Parent. Immediately after the execution and
delivery of this Agreement, the Company will, and will cause its subsidiaries
and affiliates, and their respective officers, directors, employees, investment
bankers, attorneys, accountants and other agents to, cease and terminate any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any possible Acquisition Proposal and shall notify
each party that it, or any officer, director, investment advisor, financial
advisor, attorney or other representative retained by it, has had discussions
with during the 30 days prior to the date of this Agreement that the Company
Board no longer seeks the making of any Acquisition Proposal. The Company agrees
that it will take the necessary steps to promptly inform the individuals or
entities referred to in the first sentence hereof of the obligations undertaken
in this Section 6.4(a).
(b) The Company Board will not withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent, its approval or
recommendation of this Agreement or the Merger unless the Company Board after
consultation with and based upon the advice of independent legal counsel,
determines in good faith that such action is necessary for the Company Board to
comply with the fiduciary duties to the Company's stockholders under applicable
Law; provided, however, the Company Board may not approve or recommend (and in
connection therewith, withdraw or modify its approval or recommendation of this
Agreement or the Merger) an Acquisition Proposal
40
unless such an Acquisition Proposal is a Superior Proposal (and the Company
shall have first complied with its obligations set forth in Section 8.3(a) and
the time period referred to in the last sentence of Section 8.3(a) has expired)
and unless it shall have first consulted with independent legal counsel, and
have determined, based upon such advice, that such action is necessary for the
Company Board to comply with its fiduciary duties to the Company's stockholders.
Nothing contained in this Section 6.4(b) shall prohibit the Company from taking
and disclosing to its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders which, in the good faith reasonable judgment of the
Company Board, based on the advice of independent legal counsel, is required
under applicable Law; provided, that except as otherwise permitted in this
Section 6.4(b), the Company does not withdraw or modify, or propose to withdraw
or modify, its position with respect to the Merger or approve or recommend, or
propose to approve or recommend, an Acquisition Proposal. Notwithstanding
anything contained in this Agreement to the contrary, any action by the Company
Board permitted by, and taken in accordance with, this Section 6.4(b) shall not
constitute a breach of this Agreement by the Company. Nothing in this Section
6.4(b) shall (i) permit the Company to terminate this Agreement (except as
provided in Article VIII hereof) or (ii) affect any other obligations of the
Company under this Agreement.
SECTION 6.5 Public Announcements. Each of Parent, Merger Sub and the
Company will consult with one another before issuing any press release or
otherwise making any public statements with respect to the transactions
contemplated by this Agreement, including, without limitation, the Merger, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable Law or by
obligations pursuant to any listing agreement, as determined by Parent, Merger
Sub or the Company, as the case may be. The parties agree that the initial press
release to be issued with respect to the transaction contemplated by this
Agreement shall be in the form agreed to by the parties.
SECTION 6.6 Indemnification; Directors' and Officers' Insurance. (a)
From and after the Effective Time, Parent shall, to the fullest extent permitted
by applicable Law, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof, or who becomes prior to the
Effective Time, a director, officer or employee of the parties hereto or any
subsidiary thereof (each an "INDEMNIFIED PARTY" and, collectively, the
"INDEMNIFIED PARTIES") against all losses, expenses (including reasonable
attorneys' fees and expenses), claims, damages or liabilities or, subject to the
proviso of the next succeeding sentence, amounts paid in settlement, arising out
of actions or omissions occurring at or prior to the Effective Time and whether
asserted or claimed prior to, at or after the Effective Time that are in whole
or in part (i) based on, or arising out of the fact that such person is or was a
director, officer or employee of such party or a subsidiary of such party or
(ii) based on, arising out of or pertaining to the transactions contemplated by
this Agreement.
(b) For a period of 5 years after the Effective Time, Parent shall
cause to be obtained and maintained in effect policies of directors' and
officers' liability insurance
41
for the benefit of those persons who are directors and officers of the Company
following the Effective Time consistent with insurance coverage provided for
Parent's or its subsidiary's directors and officers of similar position.
(c) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity or such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in either such case, proper provision shall be made so that the
successors and assigns of Parent shall assume the obligations set for in this
Section 6.6.
(d) To the fullest extent permitted by Law, from and after the
Effective Time, all rights to indemnification now existing in favor of the
employees, agents, directors or officers of the Company and its subsidiaries
with respect to their activities as such prior to the Effective Time, as
provided in the Company's certificate of incorporation or bylaws, in effect on
the date thereof or otherwise in effect on the date hereof, shall survive the
Merger and shall continue in full force and effect for a period of not less than
six years from the Effective Time.
(e) The provisions of this Section 6.6 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
SECTION 6.7 Notification of Certain Matters. The Company shall give
prompt notice to Parent and Merger Sub, and Parent and Merger Sub shall give
prompt notice to the Company, of (i) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in this Agreement, which is qualified as to
materiality, to be untrue or inaccurate, or any representation or warranty not
so qualified, to be untrue or inaccurate in any material respect at or prior to
the Effective Time, (ii) any material failure of the Company, Parent or Merger
Sub, as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder, (iii) any notice of,
or other communication relating to, a default or event which, with notice or
lapse of time or both, would become a default, received by it or any of its
subsidiaries subsequent to the date of this Agreement and prior to the Effective
Time, under any contract or agreement material to the financial condition,
properties, businesses, results of operations or prospects of it and its
subsidiaries taken as a whole to which it or any of its subsidiaries is a party
or is subject, (iv) any notice or other communication 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, or (v) any
Material Adverse Effect in their respective financial condition, properties,
businesses, results of operations or prospects, taken as a whole, other than
changes resulting from general economic conditions; provided, however, that the
delivery of any notice pursuant to this Section 6.7 shall not cure such breach
or non-compliance or limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
42
SECTION 6.8 Pooling. (a) The Company shall use its reasonable best
efforts to cause to be delivered to Parent a letter from KPMG LLP dated as of
the date the S-4 is declared effective and dated as of the Closing Date, stating
that the accounting of the Merger as a "pooling of interests" under Opinion 16
of the Accounting Principles Board ("APB 16") and the applicable SEC rules and
regulations is appropriate if the Merger is consummated as contemplated by this
Agreement.
(b) Parent shall use its reasonable best efforts to cause to be
delivered to the Company a letter from Deloitte & Touche LLP dated as of the
date the S-4 is declared effective and dated as of the Closing Date, stating
that the accounting of the Merger as a "pooling of interests" under APB 16 and
the applicable SEC rules and regulations is appropriate if the Merger is
consummated as contemplated by this Agreement.
SECTION 6.9 Tax-Free Reorganization Treatment. The Company, Parent
and Merger Sub shall execute and deliver to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, counsel to the Company, and Weil, Gotshal & Xxxxxx
LLP, counsel to Parent, certificates substantially in the forms attached hereto
a Exhibits C and D at such time or times as reasonably requested by such law
firms in connection with their respective deliveries of opinions with respect to
the transactions contemplated hereby. Prior to the Effective Time, none of the
Company, Parent or Merger Sub shall take or cause to be taken any action which
would cause to be untrue (or fail to take or cause not to be taken any action
which would cause to be untrue) any of the representations in such
previously-agreed certificates.
SECTION 6.10 Employee Matters. (a) Parent will cause the Surviving
Corporation to honor the obligations of the Company or any of its subsidiaries
under the provisions of all employment, consulting, termination, severance,
change in control and indemnification agreements between and among the Company
or any of its subsidiaries and any current or former officer, director,
consultant or employee of the Company or any of its subsidiaries and to enter
into employment agreements (the "Employment Agreements") with the following
officers of the Company in the form of Exhibit E hereto: Xxxxx Xxxxxxx, Xxxxx
Xxxxxxxxx and Xxxxxxxx Xxxxx.
(b) Following the Effective Time, Parent shall either: (A) cause
Surviving Corporation to adopt and maintain Company Employee Benefit Plans in
effect immediately prior to the Effective Time and, accordingly, shall thereby
continue in full force and effect each such Company Employee Benefit Plan
subject to the terms and conditions thereof for a period of at least one (1)
year, or (B) arrange for each employee of the Company or any Company subsidiary
to participate in any counterpart Parent Employee Benefit Plan (which shall mean
all plans, programs and arrangements set forth in Section 3.14(a) that are
maintained by Parent or its subsidiaries at or after the Effective Time) in
accordance with the eligibility criteria thereof, provided that (i) such
participants shall receive full credit for years of service with the Company or
any Company subsidiary (and service otherwise credited by the Company or any
Company subsidiary) prior to the Effective Time for all purposes for which such
service was recognized under the Company Employee Benefit Plans including, but
not limited to,
43
eligibility to participate and vesting, (ii) such participants and their
dependents (to the extent that the terms and conditions of each Parent Employee
Benefit Plan provide for coverage and/or benefits of eligible employees'
dependents) shall participate in the Parent Employee Benefit Plans on terms no
less favorable than those offered by Parent to employees of Parent, and (iii)
Parent shall cause any and all pre-existing condition limitations, eligibility
waiting periods and evidence of insurability requirements under any group plans
to be waived with respect to such participants and their eligible dependents and
shall provide each such participant with credit for any co-payments and
deductibles paid prior to the Effective Time for purposes of satisfying any
applicable deductible, out-of-pocket, or similar requirements under all Parent
Employee Benefit Plans in which such participants are eligible to participate
after the Effective Time. Notwithstanding any of the foregoing to the contrary,
none of the provisions contained herein shall operate to duplicate any benefit
provided to any employee of the Company or the funding of any such benefit.
SECTION 6.11 Affiliate Letters. Section 6.11 of the Company
Disclosure Schedule sets forth a list of all persons who are, and all persons
who to the Company's knowledge will be at the Closing Date, "affiliates" of the
Company for purposes of Rule 145 under the Securities Act or for purposes of
qualifying the Merger for "pooling-of-interests" accounting treatment under APB
16 and applicable SEC rules, and Section 6.11 of the Parent Disclosure Schedule
sets forth a list of all persons who are, and all persons who to Parent's
knowledge will be at the Closing Date, "affiliates" of Parent for purposes of
qualifying the Merger for "pooling of interests" under APB 16 and the applicable
SEC rules and regulations. The Company and Parent will each respectively cause
such lists to be updated promptly through the Closing Date. Not later than 45
days prior to the date of the Company Stockholder Meeting, the Company shall
cause its "affiliates" to deliver to Parent a written agreement substantially in
the form attached as Exhibit A, and Parent shall cause its "affiliates" to
deliver to the Company a written agreement substantially in the form attached as
Exhibit B.
SECTION 6.12 SEC Filings. Each of Parent and the Company shall
promptly provide the other party (or its counsel) with copies of all filings
made by the other party or any of its subsidiaries with the SEC or any other
state or federal Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
SECTION 6.13 Fees and Expenses. Whether or not the Merger is
consummated, all Expenses (as hereinafter defined) incurred in connection with
this Agreement, the Stock Option Agreement and the transactions contemplated
hereby and thereby shall be paid by the party incurring such Expenses, except as
provided in Section 8.5. As used in this Agreement, "EXPENSES" includes all
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with, or related to, the authorization, preparation, negotiation, execution and
performance of this Agreement, the Stock Option Agreement and the transactions
contemplated hereby and thereby, including the preparation, filing, printing and
44
mailing of the Proxy Statement and the S-4 and the solicitation of stockholder
approvals and all other matters related to the transactions contemplated hereby.
SECTION 6.14 Obligations of Merger Sub. Parent will take all action
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
SECTION 6.15 Listing of Stock. Parent shall use its best efforts to
cause the shares of Parent Common Stock to be issued in connection with the
Merger to be listed for quotation on the Nasdaq National Market on or prior to
the Closing Date, subject to official notice of issuance.
SECTION 6.16 Antitakeover Statutes. If any Takeover Statute is or may
become applicable to the Merger, each of Parent and Company shall take such
actions as are necessary so that the transactions contemplated by this Agreement
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 the Merger.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of which may be
waived in whole or in part by the party being benefited thereby, to the extent
permitted by applicable Law:
(a) This Agreement shall have been approved and adopted by the
Company Requisite Vote;
(b) Any waiting period applicable to the Merger under the HSR Act
shall have expired or early termination thereof shall have been granted without
limitation, restriction or condition;
(c) Not later than 45 days prior to the date of the Company
Stockholder Meeting, the Company shall have received from Parent's "affiliates"
a written agreement substantially in the form attached as Exhibit B, and Parent
shall have received from the Company's "affiliates" a written agreement
substantially in the form attached as Exhibit A.
(d) There shall not be in effect any Law of any Governmental Entity
of competent jurisdiction, restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement or permitting
such consummation only subject to any condition or restriction that has or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company (or an effect
45
on Parent and its subsidiaries that, were such effect applied to the Company and
its subsidiaries, has or would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company) and no Governmental
Entity shall have instituted any proceeding which continues to be pending
seeking any such Law.
(e) The S-4 shall have been declared effective by the SEC and shall
be effective at the Effective Time, and no stop order suspending effectiveness
shall have been issued, no action, suit, proceeding or investigation by the SEC
to suspend the effectiveness thereof shall have been initiated and be
continuing, and all necessary approvals under state securities Laws or the
Securities Act or Exchange Act relating to the issuance or trading of the Parent
Common Stock shall have been received.
(f) The Parent Common Stock required to be issued hereunder shall
have been listed for quotation on the Nasdaq National Market, subject only to
official notice of issuance.
(g) The Company shall have received and delivered to Parent a letter
from KPMG LLP dated as of the date the S-4 is declared effective and dated as of
the Closing Date, stating that the accounting of the Merger as a "pooling of
interests" under APB 16 and the applicable SEC rules and regulations is
appropriate if the Merger is consummated as contemplated by this Agreement.
Parent shall have received and delivered to the Company a letter from Deloitte &
Touche LLP, dated as of the date the S-4 is declared effective and dated as of
the Closing Date, stating that accounting of the Merger as a "pooling of
interests" under APB 16 and the applicable SEC rules and regulations is
appropriate if the Merger is consummated as contemplated by this Agreement.
SECTION 7.2 Conditions to the Obligations of the Parent and Merger
Sub. The respective obligations of Parent and Merger Sub to consummate the
transactions contemplated by this Agreement are subject to the fulfillment at or
prior to the Effective Time of each of the following additional conditions, any
or all of which may be waived in whole or part by Parent and Merger Sub, as the
case may be, to the extent permitted by applicable Law:
(a) The representations and warranties of the Company contained
herein or otherwise required to be made after the date hereof in a writing
expressly referred to herein by or on behalf of the Company pursuant to this
Agreement, to the extent qualified by materiality or Material Adverse Effect,
shall have been true and, to the extent not qualified by materiality or Material
Adverse Effect, shall have been true in all material respects, in each case when
made and on and as of the Closing Date as though made on and as of the Closing
Date (except for representations and warranties made as of a specified date,
which need be true, or true in all material respects, as the case may be, only
as of the specified date).
(b) The Company shall have performed or complied in all material
respects with all agreements and conditions contained herein required to be
performed or complied with by it prior to or at the time of the Closing.
46
(c) The Company shall have delivered to Parent a certificate, dated
the date of the Closing, signed by the President or any Vice President of the
Company (but without personal liability thereto), certifying as to the
fulfillment of the conditions specified in Sections 7.2(a) and 7.2(b).
(d) Parent shall have received an opinion of Weil, Gotshal & Xxxxxx
LLP, dated the Effective Time, based on the representations of Parent and the
Company substantially in the forms attached hereto as Exhibits C and D, to the
effect that the Merger will be treated for federal income Tax purposes as a
reorganization within the meaning of Section 368(a) of the Code.
(e) All authorizations, consents or approvals of a Governmental
Entity (other than those specified in Section 7.1(b) hereof) required in
connection with the execution and delivery of this Agreement and the performance
of the obligations hereunder shall have been made or obtained, without any
limitation, restriction or condition that has or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the Company
(or an effect on Parent and its subsidiaries that, were such effect applied to
the Company and its subsidiaries, would have or would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company), except for such authorizations, consents or approvals, the failure of
which to have been made or obtained does not and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company (or an effect on Parent and its subsidiaries that, were such effect
applied to the Company and its subsidiaries, would have or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company).
(f) Each of the officers of the Company named in Section 6.10(a)
shall have entered into an Employment Agreement.
SECTION 7.3 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to the Effective Time of
each of the following conditions, any or all of which may be waived in whole or
in part by the Company to the extent permitted by applicable Law:
(a) The representations and warranties of Parent and Merger Sub
contained herein or otherwise required to be made after the date hereof in a
writing expressly referred to herein by or on behalf of Parent and Merger Sub
pursuant to this Agreement, to the extent qualified by materiality or Material
Adverse Effect, shall have been true and, to the extent not qualified by
materiality or Material Adverse Effect, shall have been true in all material
respects, in each case when made and on and as of the Closing Date as though
made on and as of the Closing Date (except for representations and warranties
made as of a specified date, which need be true, or true in all material
respects, as the case may be, only as of the specified date).
47
(b) Parent shall have performed or complied in all material respects
with all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the time of the Closing.
(c) Parent shall have delivered to the Company a certificate, dated
the date of the Closing, signed by the President or any Vice President of Parent
(but without personal liability thereto), certifying as to the fulfillment of
the conditions specified in Section 7.3(a) and 7.3(b).
(d) The Company shall have received an opinion of Xxxxxx Xxxxxxx,
Xxxxxxxx & Xxxxxx, Professional Corporation dated the Effective Time, based on
the representations of Parent and the Company substantially in the forms
attached hereto as Exhibits C and D , to the effect that the Merger will be
treated for federal income Tax purposes as a reorganization within the meaning
of Section 368(a) of the Code.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 Termination by Mutual Agreement. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval of the Merger by the Company
Requisite Vote referred to in Section 7.1(a), by mutual written consent of the
Company and Parent by action of their respective Boards of Directors.
SECTION 8.2 Termination by Either Parent or the Company. This
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Time by action of the Board of Directors of either Parent or the
Company if:
(a) the Merger shall not have been consummated by August 31, 2000,
whether such date is before or after the date of approval of the Merger by the
Company Requisite Vote (the "TERMINATION DATE");
(b) the Company Requisite Vote shall not have been obtained at the
Company Stockholder Meeting or at any adjournment or postponement thereof;
(c) any Law permanently restraining, enjoining or otherwise
prohibiting consummation of the Merger shall become final and non-appealable
(whether before or after the approval of the Merger by the Company Requisite
Vote; or
(d) any Governmental Entity shall have failed to issue an order,
decree or ruling or to take any other action which is necessary to fulfill the
conditions set forth in Sections 7.1(b), and 7.2(e), as applicable, and such
denial of a request to issue such order, decree, ruling or take such other
action shall have been final and nonappealable;
48
provided, that the right to terminate this Agreement pursuant to this Section
8.2 shall not be available to any party that has breached in any material
respect its obligations under this Agreement in any manner that shall have
proximately contributed to the occurrence of the failure of the Merger to be
consummated.
SECTION 8.3 Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval of the Merger by the Company
Requisite Vote referred to in Section 7.1(a), by action of the Company Board:
(a) if (i) the Company is not in material breach of Section 6.4, (ii)
the Merger shall not have been approved by the Company Requisite Vote, (iii) the
Company Board authorizes the Company, subject to complying with the terms of
this Agreement, to enter into a binding written agreement concerning a
transaction that constitutes a Superior Proposal and the Company notifies Parent
in writing as soon as practicable, but in any event no later than three business
days in advance of entering into such agreement, that it intends to enter into
such an agreement, attaching the most current version of such agreement to such
notice, and (iv) during the three business day period after the Company's
notice, (A) the Company shall have negotiated with, and shall have caused its
respective financial and legal advisors to, negotiate with Parent to attempt to
make such commercially reasonable adjustments in the terms and conditions of
this Agreement as would enable the Company to proceed with the transactions
contemplated herein and (B) but only if the Board of Directors of the Company
shall have concluded, after considering the results of such negotiations, that
any Superior Proposal giving rise to the Company's notice continues to be a
Superior Proposal. The Company may not effect such termination unless
contemporaneously therewith the Company pays to Parent in immediately available
funds the fees required to be paid pursuant to Section 8.5. The Company agrees
(x) that it will not enter into a binding agreement referred to in clause (iii)
above until at least the fourth business day after it has provided the notice to
Parent required thereby and (y) to notify Parent promptly if its intention to
enter into a written agreement referred to in its notification shall change at
any time after giving such notification;
(b) if there is a breach by Parent or Merger Subsidiary of any
representation, warranty, covenant or agreement contained in this Agreement that
cannot be cured and would cause a condition set forth in Section 7.3(a) or
7.3(b) to be incapable of being satisfied as of the Termination Date; or
(c) pursuant to, and in accordance with, Section 2.1(b) if Parent has
not delivered a Top-Up Notice.
SECTION 8.4 Termination by Parent. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, by
action of the Parent Board of Directors if:
49
(a) (i) the Company enters or shall have determined to enter into a
binding agreement for a Superior Proposal, (ii) the Company Board shall have
withdrawn or adversely modified its approval or recommendation of this Agreement
or the Merger or failed to reconfirm its recommendation of this Agreement or the
Merger within five business days after a written request by Parent to do so,
(iii) the Company shall have recommended or determined to recommend any other
Acquisition Proposal or (iv) any Person or group shall have acquired beneficial
ownership of at least 15% of the outstanding shares; or
(b) there is a breach by the Company of any representation, warranty,
covenant or agreement contained in this Agreement that cannot be cured and would
cause a condition set forth in Section 7.2(a) or 7.2(b) to be incapable of being
satisfied as of the Termination Date.
SECTION 8.5 Effect of Termination and Abandonment. (a) In the event
of termination of this Agreement and the abandonment of the Merger pursuant to
this Article VIII, this Agreement (other than this Section 8.5 and Sections
5.2(c), 6.13 and Article IX) 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 and financial advisors or other representatives);
provided, however, except as otherwise provided herein, no such termination
shall relieve any party hereto of any liability or damages resulting from any
willful breach of this Agreement.
(b) In the event that (i) this Agreement is terminated by the Company
pursuant to Section 8.3(a), or (ii) this Agreement is terminated by Parent
pursuant to Section 8.4(a) (other than Section 8.4(a)(iv) unless the Company
shall have permitted the acquisition of shares pursuant thereto), or (iii) if
within 6 months of the termination of this Agreement by Parent pursuant to
Section 8.2(a), 8.2(b) or 8.4(b) and if on or before the Termination Date, prior
to the time of the Company Stockholder Meeting or prior to the Company's breach,
as applicable, an Acquisition Proposal has been made to the Company or any
person shall have announced an intention to make an Acquisition Proposal and
such Acquisition Proposal or intention shall not have been withdrawn, any
Acquisition Proposal by a third party is entered into, agreed to or consummated
by the Company, then the Company shall pay Parent a termination fee of
$11,000,000 in same-day funds, on the date of such termination, in the case of
clauses (i) or (ii), or on the earlier of the date an agreement is entered into
with respect to an Acquisition Proposal or an Acquisition Proposal is
consummated in the case of clause (iii). Any amount paid pursuant to this
Section 8.5(b) shall be net of any amount previously paid to Parent pursuant to
Section 8.5(c).
(c) In the event this Agreement is terminated pursuant to Section
8.4(b), then the Company shall reimburse Parent for its Expenses in same day
funds, on the date of such termination, provided that in no event shall such
reimbursement exceed $1,000,000.
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(d) The Company acknowledges that the agreements contained in Section
8.5(b) and 8.5(c) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the Company, Parent and Merger
Sub would not have entered into this Agreement; accordingly, if the Company
fails to promptly pay the amount due pursuant to Section 8.5(b) or 8.5(c), and,
in order to obtain such payment, Parent commences a suit which results in a
judgment against the Company for the fee set forth in this Section 8.5, the
Company shall pay to Parent its costs and expenses (including attorneys' fees)
in connection with such suit, together with interest from the date of
termination of this Agreement on the amounts owed at the prime rate of Chase
Manhattan Bank in effect from time to time during such period plus two percent.
SECTION 8.6 Amendment. This Agreement may be amended by action taken
by the Company, Parent and Merger Sub at any time before or after approval of
the Merger by the Company Requisite Vote but, after any such approval, no
amendment shall be made which requires the approval of such stockholders under
applicable Law without such approval. This Agreement may not be amended except
by an instrument in writing signed on behalf of the parties hereto.
SECTION 8.7 Extension; Waiver. At any time prior to the Effective
Time, each party hereto (for these purposes, Parent and Merger Sub shall
together be deemed one party and the Company shall be deemed the other party)
may (i) extend the time for the performance of any of the obligations or other
acts of the other party, (ii) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document, certificate
or writing delivered pursuant hereto, or (iii) waive compliance by the other
party with any of the agreements or conditions contained herein. Any agreement
on the part of either party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of either party hereto to assert any of its rights hereunder
shall not constitute a waiver of such rights.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Nonsurvival of Representations and Warranties. None of
the representations, warranties, covenants and agreements in this Agreement or
in any exhibit, schedule or instrument delivered pursuant to this Agreement
shall survive beyond the Effective Time, except for those covenants and
agreements contained herein and therein that by their terms apply or are to be
performed in whole or in part after the Effective Time and this Article IX. This
Section 9.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 9.2 Entire Agreement; Assignment. (a) This Agreement
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written
51
and oral, between the parties with respect to the subject matter hereof other
than the Confidentiality Agreement.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by operation of Law (including, but not
limited to, by merger or consolidation) or otherwise; provided, however, that
Merger Sub may assign, in its sole discretion, any or all of its rights,
interests and obligations under this Agreement to any direct wholly owned
subsidiary of Parent, but no such assignment shall relieve Parent or Merger Sub
of its obligations hereunder if such assignee does not perform such obligations.
Any assignment in violation of the preceding sentence shall be void. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
SECTION 9.3 Notices. All notices, requests, instructions or other
documents to be given under this Agreement shall be in writing and shall be
deemed given, (i) five business days following sending by registered or
certified mail, postage prepaid, (ii) when sent if sent by facsimile; provided
that the fax is promptly confirmed by telephone confirmation thereof, (iii) when
delivered, if delivered personally to the intended recipient and (iv) one
business day following sending by overnight delivery via a national courier
service, and in each case, addressed to a party at the following address for
such party:
52
if to Parent or to Merger
Sub, to: Comverse Technology, Inc.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
if to the Company, to: Loronix Information Systems, Inc.
000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to: Wilson, Sonsini, Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx
X. Xxxxxx, Xx., Esq.
Facsimile: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 9.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Nevada, without giving
effect to the choice of Law principles thereof.
SECTION 9.5 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.6 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and, except as provided in Section 6.6, nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 9.7 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this
53
Agreement, or the application thereof to any person or any circumstance, is
invalid or unenforceable, (a) if necessary, a suitable and equitable provision
shall be substituted therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable provision
and (b) the remainder of this Agreement and the application of such provision to
other persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.
SECTION 9.8 Specific Performance. The parties 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. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Nevada or in Nevada state court, this
being in addition to any other remedy to which they are entitled at Law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any federal court located in the State of Nevada or
any Nevada state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated hereby, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated hereby in any
court other than a federal or state court sitting in the State of Nevada.
SECTION 9.9 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 9.10 Interpretation. (a) The words "hereof," "herein" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." All terms defined in
this Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time, amended, qualified or supplemented, including (in
the case of agreements and instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and
54
all attachments thereto and instruments incorporated therein. References to a
person are also to its permitted successors and assigns.
(b) The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to March 5, 2000. The phrase "made available" in this agreement shall
mean that the information referred to has been actually delivered to the party
to whom such information is to be made available.
(c) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
SECTION 9.11 Definitions. (a) "ACQUISITION PROPOSAL" means an offer
regarding any of the following (other than the transactions contemplated by this
Agreement) involving the Company or any of its subsidiaries: (i) any merger,
consolidation, share exchange, recapitalization, business combination or other
similar transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of all or substantially all the assets of the Company and
its subsidiaries, taken as a whole, in a single transaction or series of related
transactions; (iii) any tender offer or exchange offer for 40 percent or more of
the outstanding Shares or the filing of a registration statement under the
Securities Act in connection therewith; or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
(b) "BENEFICIAL OWNERSHIP" or "BENEFICIALLY OWN" shall have the
meaning provided in Section 13(d) of the Exchange Act and the rules and
regulations thereunder.
(c) "KNOW" or "KNOWLEDGE" means, with respect to any party, the
knowledge of such party's executive officers after due inquiry, including
inquiry of such party's counsel and other officers or employees of such party
responsible for the relevant matter.
(d) "MATERIAL ADVERSE EFFECT" means with respect to any entity, any
change, circumstance or effect that, individually or in the aggregate with all
other changes, circumstances and effects, is or is reasonably likely to be
materially adverse to (i) the assets, properties, condition (financial or
otherwise), results of operations or prospects of such entity and its
subsidiaries taken as a whole or (ii) the ability of such party to consummate
the transactions contemplated by this Agreement; provided, however, that with
respect to the Company a Material Adverse Effect shall not include litigation
commenced subsequent to the public announcement of the Merger or other events
resulting from the announcement or pendancy of the transactions contemplated
hereby.
55
(e) "PERSON" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(f) "SUBSIDIARY" means, when used with reference to any entity, any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other subsidiary of such party is a general or
managing partner or (ii) the outstanding voting securities or interests of,
which having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization, is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries.
[signature page follows]
56
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be duly executed on its behalf as of the day and year first above written.
COMVERSE TECHNOLOGY, INC.
By: /s/ Xxxx Xxxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxxx
Title:
COMVERSE ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxx
Title:
LORONIX INFORMATION SYSTEMS, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
Title:
57
================================================================================
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 5, 2000
AMONG
LORONIX INFORMATION SYSTEMS, INC.
COMVERSE TECHNOLOGY, INC.
AND
COMVERSE ACQUISITION CORP.
================================================================================
TABLE OF CONTENTS
PAGE
Article I THE MERGER......................................................................................1
SECTION 1.1..........................................................................................The Merger 1
SECTION 1.2......................................................................................Effective Time 2
SECTION 1.3...............................................................................Closing of the Merger 2
SECTION 1.4...............................................................................Effects of the Merger 2
SECTION 1.5.............................................................Certificate of Incorporation and Bylaws 2
SECTION 1.6...........................................................................................Directors 2
SECTION 1.7............................................................................................Officers 2
Article II CONVERSION OF SHARES............................................................................3
SECTION 2.1................................................................................Conversion of Shares 3
SECTION 2.2.......................................................................................Stock Options 4
SECTION 2.3.......................................................................................Exchange Fund 5
SECTION 2.4.................................................................................Exchange Procedures 5
SECTION 2.5............................................Distributions with Respect to Unsurrendered Certificates 6
SECTION 2.6.................................................No Further Ownership Rights in Company Common Stock 6
SECTION 2.7.........................................................No Fractional Shares of Parent Common Stock 6
SECTION 2.8........................................................................Termination of Exchange Fund 7
SECTION 2.9........................................................................................No Liability 7
SECTION 2.10....................................................................Investment of the Exchange Fund 7
SECTION 2.11..................................................................................Lost Certificates 7
SECTION 2.12.................................................................................Withholding Rights 7
SECTION 2.13...............................................................................Stock Transfer Books 8
SECTION 2.14.........................................................................................Affiliates 8
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................8
SECTION 3.1........................................................Organization and Qualification; Subsidiaries 8
SECTION 3.2..................................................Capitalization of the Company and Its Subsidiaries 9
SECTION 3.3........................................Authority Relative to This Agreement; Consents and Approvals 10
SECTION 3.4...................................................................SEC Reports; Financial Statements 11
SECTION 3.5..........................................................................No Undisclosed Liabilities 11
SECTION 3.6..................................................................................Absence of Changes 12
i
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(continued)
PAGE
SECTION 3.7................................................................................Information Supplied 13
SECTION 3.8...............................................................Consents and Approvals; No Violations 14
SECTION 3.9..........................................................................................No Default 14
SECTION 3.10......................................................................................Real Property 15
SECTION 3.11.........................................................................................Litigation 16
SECTION 3.12.....................................................................Compliance with Applicable Law 16
SECTION 3.13.....................................................................................Employee Plans 17
SECTION 3.14......................................................................................Labor Matters 19
SECTION 3.15..............................................................................Environmental Matters 20
SECTION 3.16........................................................................................Tax Matters 22
SECTION 3.17.................................................................................Material Contracts 25
SECTION 3.18..........................................................................................Insurance 26
SECTION 3.19..............................................................................Intellectual Property 26
SECTION 3.20.......................................................................Opinion of Financial Advisor 28
SECTION 3.21............................................................................................Brokers 28
SECTION 3.22..................................................................Accounting Matters; Tax Treatment 29
SECTION 3.23...............................................................Takeover Statute; Dissenters' Rights 29
SECTION 3.24..........................................................Amendment to the Company Rights Agreement 29
SECTION 3.25.........................................................................Related Party Transactions 29
Article IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB........................................30
SECTION 4.1........................................................................................Organization 30
SECTION 4.2.......................................................Capitalization of Parent and Its Subsidiaries 30
SECTION 4.3................................................................Authority Relative to This Agreement 31
SECTION 4.4...................................................................SEC Reports; Financial Statements 31
SECTION 4.5................................................................................Information Supplied 32
SECTION 4.6...............................................................Consents and Approvals; No Violations 32
SECTION 4.7.................................................................................No Prior Activities 33
SECTION 4.8..........................................................................No Undisclosed Liabilities 33
SECTION 4.9..................................................................................Absence of Changes 33
SECTION 4.10.........................................................................................Litigation 33
ii
TABLE OF CONTENTS
(continued)
PAGE
SECTION 4.11..................................................................Accounting Matters; Tax Treatment 33
Article V COVENANTS RELATED TO CONDUCT OF BUSINESS.......................................................34
SECTION 5.1..................................................................Conduct of Business of the Company 34
SECTION 5.2...............................................................................Access to Information 36
Article VI ADDITIONAL AGREEMENTS..........................................................................37
SECTION 6.1..........................................................Preparation of S-4 and the Proxy Statement 37
SECTION 6.2.............................................................................................Meeting 38
SECTION 6.3.............................................................................Reasonable Best Efforts 38
SECTION 6.4...............................................................................Acquisition Proposals 39
SECTION 6.5................................................................................Public Announcements 41
SECTION 6.6.................................................Indemnification; Directors' and Officers' Insurance 41
SECTION 6.7.....................................................................Notification of Certain Matters 42
SECTION 6.8.............................................................................................Pooling 42
SECTION 6.9...................................................................Tax-Free Reorganization Treatment 42
SECTION 6.10...................................................................................Employee Matters 43
SECTION 6.11..................................................................................Affiliate Letters 44
SECTION 6.12........................................................................................SEC Filings 44
SECTION 6.13..................................................................................Fees and Expenses 44
SECTION 6.14..........................................................................Obligations of Merger Sub 44
SECTION 6.15...................................................................................Listing of Stock 44
SECTION 6.16..............................................................................Antitakeover Statutes 44
Article VII CONDITIONS TO CONSUMMATION OF THE MERGER.......................................................45
SECTION 7.1.........................................Conditions to Each Party's Obligations to Effect the Merger 45
SECTION 7.2..........................................Conditions to the Obligations of the Parent and Merger Sub 46
SECTION 7.3........................................................Conditions to the Obligations of the Company 47
Article VIII TERMINATION; AMENDMENT; WAIVER.................................................................48
SECTION 8.1.....................................................................Termination by Mutual Agreement 48
SECTION 8.2.........................................................Termination by Either Parent or the Company 48
SECTION 8.3..........................................................................Termination by the Company 48
SECTION 8.4...............................................................................Termination by Parent 49
iii
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(continued)
PAGE
SECTION 8.5...............................................................Effect of Termination and Abandonment 49
SECTION 8.6...........................................................................................Amendment 50
SECTION 8.7...................................................................................Extension; Waiver 51
Article IX MISCELLANEOUS..................................................................................51
SECTION 9.1.......................................................Nonsurvival of Representations and Warranties 51
SECTION 9.2........................................................................Entire Agreement; Assignment 51
SECTION 9.3.............................................................................................Notices 51
SECTION 9.4.......................................................................................Governing Law 53
SECTION 9.5................................................................................Descriptive Headings 53
SECTION 9.6.................................................................................Parties in Interest 53
SECTION 9.7........................................................................................Severability 53
SECTION 9.8................................................................................Specific Performance 54
SECTION 9.9........................................................................................Counterparts 54
SECTION 9.10.....................................................................................Interpretation 54
SECTION 9.11........................................................................................Definitions 55
iv
Glossary of Defined Terms
-------------------------
Defined Terms Defined in Page
------------- ---------------
ACQUIRING PERSON:................................................29
ACQUISITION PROPOSAL:............................................55
ANTITRUST LAW:...................................................39
APB 16:..........................................................43
ARTICLES OF MERGER:...............................................2
ASSUMED STOCK OPTION:.............................................4
AVERAGE PARENT STOCK PRICE:.......................................3
BALANCE SHEET DATE:..............................................11
BENEFICIAL OWNERSHIP:............................................55
BENEFICIALLY OWN:................................................55
CERCLA:..........................................................20
CERTIFICATES:.....................................................5
CLOSING DATE:.....................................................2
CLOSING:..........................................................2
COBRA:...........................................................18
CODE:.............................................................1
COMPANY BOARD:...................................................10
COMPANY COMMON STOCK:.............................................3
COMPANY DISCLOSURE SCHEDULE:......................................8
COMPANY OPTION PLANS:.............................................4
COMPANY PERMITS:.................................................16
COMPANY REQUISITE VOTE:..........................................10
COMPANY RIGHTS AGREEMENT:........................................29
COMPANY SEC REPORTS:.............................................11
COMPANY SECURITIES:...............................................9
COMPANY STOCK OPTION:.............................................4
COMPANY STOCKHOLDER MEETING:.....................................38
COMPANY:..........................................................1
CONFIDENTIALITY AGREEMENT:.......................................37
COVERED TRANSACTIONS:............................................29
DOJ:.............................................................39
EFFECTIVE TIME:...................................................2
EMPLOYEE BENEFIT PLAN:...........................................17
EMPLOYEE BENEFIT PLANS:..........................................17
ENVIRONMENTAL COSTS AND LIABILITIES:.............................20
ENVIRONMENTAL LAW:...............................................20
ERISA AFFILIATE:.................................................17
EXCHANGE ACT:....................................................11
EXCHANGE AGENT:...................................................5
EXCHANGE FUND:....................................................5
v
Defined Terms Defined in Page
------------- ---------------
EXCHANGE RATIO:...................................................3
EXPENSES:........................................................44
EXPIRATION DATE:.................................................29
FINANCIAL ADVISOR:...............................................28
FTC:.............................................................39
GAAP:............................................................11
GOVERNMENTAL ENTITY:.............................................14
HAZARDOUS MATERIAL:..............................................21
HSR ACT:.........................................................14
INDEMNIFIED PARTIES:.............................................41
INDEMNIFIED PARTY:...............................................41
IRS:.............................................................17
KNOW:............................................................55
KNOWLEDGE:.......................................................55
LAW:.............................................................15
LICENSES:........................................................27
LIEN:............................................................10
LIMITED USE PROPERTY:............................................24
MATERIAL ADVERSE EFFECT:.........................................55
MATERIAL CONTRACTS:..............................................25
MERGER CONSIDERATION:.............................................3
MERGER SUB:.......................................................1
MERGER:...........................................................1
MULTIEMPLOYER PLAN:..............................................17
MULTIPLE EMPLOYER PLANS:.........................................17
NRS:..............................................................1
OSHA:............................................................21
OTHER INTELLECTUAL PROPERTY:.....................................28
PARENT BOARD:....................................................31
PARENT DISCLOSURE SCHEDULE:......................................30
PARENT SEC REPORTS:..............................................31
PARENT SECURITIES:...............................................31
PARENT:...........................................................1
PBGC:............................................................18
PERSON:..........................................................56
PREFERRED STOCK:..................................................9
PROXY STATEMENT:.................................................13
REAL PROPERTY LEASES:............................................15
RELEASE:.........................................................21
REMEDIAL ACTION:.................................................21
RIGHTS:..........................................................29
S-4:.............................................................13
SEC:...........................................................1, 8
SECURITIES ACT:...................................................8
SHARE:............................................................3
vi
Defined Terms Defined in Page
------------- ---------------
SHARES:...........................................................3
STOCK OPTION AGREEMENT:...........................................1
SUBSIDIARY:......................................................56
SUPERIOR PROPOSAL:...............................................40
SURVIVING CORPORATION:............................................1
TAKEOVER STATUTES:...............................................29
TAX EXEMPT BOND FINANCED PROPERTY:...............................24
TAX EXEMPT USE PROPERTY:.........................................24
TAX RETURNS:.....................................................23
TAX:.............................................................23
TAXES:...........................................................23
TERMINATION DATE:................................................48
TERMINATION NOTICE:...............................................3
TITLE IV PLANS:..................................................17
TOP-UP EXCHANGE RATIO.............................................3
TOP-UP NOTICE.....................................................3
TRADEMARKS:......................................................28
Unaudited 1999 Financial Statements..............................11
vii
