EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF
November 13, 2000
BY AND AMONG
MINNESOTA MINING AND MANUFACTURING COMPANY,
EQUINOX ACQUISITION, INC.
AND
MICROTOUCH SYSTEMS, INC.
TABLE OF CONTENTS
Page
ARTICLE I.....................................................................2
Section 1.1 The Offer..........................................2
Section 1.2 Company Actions....................................5
Section 1.3 Directors..........................................6
Section 1.4 The Merger.........................................7
Section 1.5 The Closing; Effective Time........................8
Section 1.6 Subsequent Actions.................................8
Section 1.7 Articles of Organization; By-laws; Directors
and Officers of the Surviving Corporation..........9
ARTICLE II....................................................................9
Section 2.1 Effect on Capital Stock............................9
Section 2.2 Exchange of Certificates..........................12
ARTICLE III..................................................................14
Section 3.1 Organization and Qualification; Subsidiaries......14
Section 3.2 Articles of Organization and By-laws..............15
Section 3.3 Capitalization....................................15
Section 3.4 Power and Authority; Authorization; Valid
and Binding.......................................16
Section 3.5 No Conflict; Required Filings and Consents........17
Section 3.6 SEC Reports; Financial Statements.................18
Section 3.7 Absence of Certain Changes........................19
Section 3.8 Litigation and Liabilities........................20
Section 3.9 No Violation of Law; Permits......................20
Section 3.10 Employee Matters; ERISA...........................21
Section 3.11 Labor Matters.....................................23
Section 3.12 Environmental Matters.............................23
Section 3.13 [Intentionally omitted.]..........................26
Section 3.14 Brokers...........................................26
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Section 3.15 Tax Matters.......................................26
Section 3.16 Intellectual Property.............................27
Section 3.17 Insurance.........................................28
Section 3.18 Contracts and Commitments.........................29
Section 3.19 Title to Assets...................................29
Section 3.20 State Takeover Statutes...........................30
Section 3.21 Rights Agreement..................................30
Section 3.22 Product Warranty..................................31
Section 3.23 Product Liability.................................31
Section 3.24 Opinion Of Financial Advisor......................32
ARTICLE IV...................................................................32
Section 4.1 Existence; Corporate Authority....................32
Section 4.2 Authorization, Validity and Effect of
Agreements........................................32
Section 4.3 No Violation......................................33
Section 4.4 Interested Shareholder............................34
Section 4.5 Parent Public Reports; Financial Statements.......34
Section 4.6 Financial Ability to Perform......................34
Section 4.7 Brokers...........................................35
Section 4.8 Opinion Of Financial Advisor......................35
Section 4.9 Litigation........................................35
ARTICLE V....................................................................36
Section 5.1 Interim Operations of The Company.................36
Section 5.2 Interim Operations of Parent......................38
Section 5.3 No Solicitation...................................39
ARTICLE VI...................................................................42
Section 6.1 Preparation of the Proxy Statement;
Shareholders Meeting; Offering Circular...........42
Section 6.2 Filings; Other Action.............................43
Section 6.3 Publicity.........................................44
Section 6.4 Further Action....................................44
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Section 6.5 Expenses..........................................44
Section 6.6 Notification of Certain Matters...................45
Section 6.7 Access to Information.............................45
Section 6.8 Insurance; Indemnity..............................46
Section 6.9 Employee Benefit Plans............................47
Section 6.10 Rights Agreement..................................49
ARTICLE VII..................................................................50
Section 7.1 Conditions to Obligations of the Parties
to Consummate the Merger..........................50
Section 7.2 Additional Conditions to Obligations of
Parent and Merger Sub.............................50
ARTICLE VIII.................................................................51
Section 8.1 Termination.......................................51
Section 8.2 Effect of Termination and Abandonment.............53
Section 8.3 Amendment.........................................54
ARTICLE IX...................................................................554
Section 9.1 Non-Survival of Representations,
Warranties and Agreements.........................54
Section 9.2 Notices...........................................55
Section 9.3 Certain Definitions; Interpretation...............56
Section 9.4 Headings..........................................57
Section 9.5 Severability......................................57
Section 9.6 Entire Agreement; No Third-Party
Beneficiaries.....................................58
Section 9.7 Assignment........................................58
Section 9.8 Governing Law.....................................58
Section 9.9 Counterparts......................................58
Section 9.10 Confidential Nature of Information................59
Exhibit A - Conditions of the Offer.........................................A-1
Exhibit B - List of Shareholders Parties to Shareholders Agreement..........B-1
Exhibit C - Form of Articles of Organization................................C-1
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INDEX OF DEFINED TERMS
DEFINED TERM SECTION
401(k) Plan..............................................................6.11(b)
Acquisition Proposal......................................................5.3(c)
Acquisition Transaction...................................................5.3(c)
Action...................................................................6.10(b)
affiliate.............................................................9.3(a)(ii)
Agreement...............................................................preamble
Audited Balance Sheet.......................................................3.19
Equinox Acquisition.....................................................preamble
Board of Directors...................................................9.3(a)(iii)
Business Combination......................................................2.1(c)
Cap......................................................................6.10(a)
Certificates..............................................................2.2(b)
Closing......................................................................1.5
Closing Date.................................................................1.5
Code......................................................................2.2(e)
Company.................................................................preamble
Company Benefit Plan.....................................................3.10(a)
Company Common Shares...................................................recitals
Company Contracts...........................................................3.18
Company Disclosure Letter............................................Article III
Company Employee.........................................................3.10(b)
Company Employees........................................................3.10(b)
Company ERISA Affiliate..................................................3.10(d)
Company Multiemployer Plan...............................................3.10(a)
Company Options..............................................................3.3
Company Pension Plan.....................................................3.10(c)
Confidentiality Agreement.................................................1.2(c)
control..............................................................9.3(a)(iii)
Effective Time............................................................1.5(b)
Encumbrance.................................................................3.16
Environmental Claim...................................................3.12(e)(i)
Environmental Laws...................................................3.12(e)(ii)
Environmental Permits....................................................3.12(b)
ERISA.................................................................9.3(a)(iv)
Exchange Act..............................................................1.1(a)
Exchange Agent............................................................2.2(a)
Exchange Fund.............................................................2.2(a)
GAAP......................................................................3.6(b)
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Governmental Entity.......................................................3.5(b)
Hazardous Materials.................................................3.12(e)(iii)
HSR Act...................................................................3.5(b)
Indemnified Party........................................................6.10(b)
Intellectual Property.......................................................3.16
knowledge..............................................................9.3(a)(v)
Material Adverse Effect................................................9.3(a)(i)
MBCL.........................................................................1.1
Merger..................................................................recitals
Merger Consideration......................................................2.1(c)
Merger Sub..............................................................preamble
Merger Sub Articles of Organization.......................................1.4(a)
Net Gain..................................................................2.1(e)
Option Agreement........................................................recitals
Parent..................................................................preamble
Parent Common Stock.......................................................2.1(b)
Parent Public Reports........................................................4.5
Paying Agent..............................................................2.2(b)
PCBs...................................................................3.12(iii)
Pension Plan.............................................................3.10(c)
Person................................................................9.3(a)(vi)
Proposing Party...........................................................5.2(b)
Proxy Statement..............................................................6.1
Recommendation............................................................3.4(b)
Release..............................................................3.12(e)(iv)
Rights..................................................................recitals
Rights Agreement........................................................recitals
SEC.......................................................................3.5(b)
SEC Reports...............................................................3.6(a)
Securities Act............................................................3.5(a)
Shareholders Agreement..................................................recitals
Shareholder Approval......................................................3.4(a)
Shareholder Meeting.......................................................6.1(b)
Shareholders............................................................recitals
Stock Option Plans........................................................2.1(e)
Subsidiary..........................................................9.3(a)(viii)
Superior Transaction......................................................5.2(b)
Surviving Corporation........................................................1.4
Tax......................................................................3.15(i)
Tax Return...............................................................3.15(i)
Taxable..................................................................3.15(i)
Taxes....................................................................3.15(i)
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Termination Date..........................................................8.1(b)
Termination Fee...........................................................8.2(b)
Triggering Event..........................................................8.2(b)
VIP.......................................................................6.9(a)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 13, 2000 (this
"Agreement"), by and among Minnesota Mining and Manufacturing Company ("Parent")
a Delaware corporation, Equinox Acquisition, Inc. a Massachusetts corporation
and a wholly owned Subsidiary of Parent ("Equinox Acquisition" or "Merger Sub")
and MicroTouch Systems, Inc. (the "Company"), a Massachusetts corporation.
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have approved the acquisition of the Company by Parent on the terms
and subject to the conditions set forth in this Agreement (the "Acquisition");
WHEREAS, in furtherance of the Acquisition, Parent proposes to cause
Merger Sub to make a cash tender offer (as it may be amended from time to time
as permitted under this Agreement, the "Offer") to purchase all the issued and
outstanding shares of common stock, par value $0.01 per share, of the Company
(the "Company Common Shares") (and the associated rights ("Rights") issued
pursuant to the Rights Agreement, dated as of January 19, 1996, between the
Company and The First National Bank of Boston, as Rights Agent (the "Rights
Agreement")), at a price per share of $21.00, net to the seller in cash without
interest, on the terms and subject to the conditions set forth in this Agreement
and the Offer;
WHEREAS, also in furtherance of the Acquisition, the respective Boards
of Directors of Parent, Merger Sub and the Company have approved this Agreement
and the merger of Merger Sub with and into the Company (the "Merger"), pursuant
to which, on the terms and subject to the conditions set forth in this
Agreement, each issued and outstanding Company Common Share not tendered to and
purchased by Merger Sub pursuant to the Offer and not owned by Parent, Merger
Sub or the Company (other than Dissenting Shares (as defined in Section 2.1(d))
will be converted into the right to receive the highest per share cash
consideration paid pursuant to the Offer in accordance with the Massachusetts
Business Corporation Law (the "MBCL");
WHEREAS, the Board of Directors of the Company (the "Company Board")
has resolved to recommend that all holders of Company Common Shares
("Shareholders") accept the Offer, tender their Company Common Shares pursuant
to the Offer and approve this Agreement and the Merger, and has determined that
the Offer and the Merger are fair to and in the best interests of the Company
and the Shareholders;
WHEREAS, the respective Boards of Directors of Parent and Merger Sub
have each determined that the Merger upon the terms and subject to the
conditions set
1
forth in this Agreement is advisable, and in the best interests
of their respective corporations and shareholders and have approved the Merger;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to Parent's and Merger Sub's willingness to
enter into this Agreement, Parent and the shareholders of the Company listed on
Exhibit B hereto have executed and delivered a Shareholders Agreement (a
"Shareholders Agreement"), dated as of this date, pursuant to which those
shareholders are agreeing to tender their Company Common Shares into the Offer;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to Parent's and Merger Sub's willingness to
enter into this Agreement, Parent and the Company have executed and delivered a
Stock Option Agreement (an "Option Agreement"), dated as of this date, pursuant
to which the Company is granting to Parent an option to purchase, under certain
circumstances, up to 1,291,873 Company Common Shares, with an exercise price of
$21.00 per share; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Offer and the Merger
and also to prescribe various conditions to the Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained in this Agreement, and intending to be
legally bound hereby, the parties hereby agree as follows (certain capitalized
but undefined terms used herein are defined in Section 9.3):
ARTICLE I
Section 1.1. The Offer. (a) Subject to the conditions of this Agreement,
as promptly as practicable, but in no event later than five business days after
the date of the public announcement of this Agreement, Merger Sub shall, and
Parent shall cause Merger Sub to, commence the Offer within the meaning of the
applicable rules and regulations of the United States Securities and Exchange
Commission (the "SEC"). The obligations of Merger Sub to, and of Parent to cause
Merger Sub to, accept for payment or pay for any Company Common Shares tendered
pursuant to the Offer are subject to the conditions set forth in Exhibit A
hereto. The initial expiration date of the Offer shall be January 3, 2001
(determined using Rules 14d-1(g)(3) and 14d-2 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")). Merger Sub expressly
reserves the right to waive any condition to the Offer or to modify the terms of
the Offer, in each case in its sole discretion; provided, however, that without
the consent of the Company, Merger Sub shall not (i) reduce the number of
Company Common Shares subject to the Offer, (ii) reduce the price per Company
Common Share to be paid pursuant to the Offer or change the form or time of
delivery of consideration, (iii) amend
2
or waive the Minimum Tender Condition (as defined in Exhibit A hereto) or add to
the conditions set forth in Exhibit A hereto, (iv) except as provided below in
this Section 1.1(a), extend the Offer, or (v) otherwise amend the terms of the
Offer in any manner adverse to the holders of Company Common Shares.
Notwithstanding the foregoing, Merger Sub may, at any time and from time to
time, and, in each case, subject to Section 8.1 hereof, take one or more of the
following actions without the consent of the Company: (A) extend the Offer for
one or more periods of time that Merger Sub reasonably believes are necessary to
cause the conditions to the Offer to be satisfied, if at the scheduled
expiration date of the Offer any of the conditions to Merger Sub's obligation to
accept Company Common Shares for payment is not satisfied or waived, until such
time as all such conditions are satisfied or waived, (B) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
SEC or the staff thereof that is applicable to the Offer or (C) extend the Offer
for an aggregate period of not more than 10 business days beyond the latest
applicable date that would otherwise be permitted under clause (A) or (B) of
this sentence, if, as of such date, all of the conditions to Merger Sub's
obligation to accept Company Common Shares for payment (including the Minimum
Tender Condition) are satisfied or waived, but the number of Company Common
Shares validly tendered and not withdrawn pursuant to the Offer equals less than
90% of the outstanding Company Common Shares (determined on a fully diluted
basis for all outstanding stock options, convertible securities and any other
rights to acquire Company Common Stock on the date of purchase). Without
limiting the rights of Merger Sub to extend the Offer pursuant to the
immediately preceding sentence, Parent and Merger Sub agree that if (I) (x) all
of the conditions to the Offer are not satisfied on any scheduled expiration
date of the Offer, (y) such conditions are reasonably capable of being satisfied
within 30 days after the initial expiration date of the Offer and (z) the
Company is in compliance with all of its covenants in this Agreement, or (II)
any rule, regulation, interpretation or position of the SEC or the staff thereof
that is applicable to the Offer requires an extension of the Offer, then Merger
Sub shall extend the Offer for one or more periods of time that Merger Sub
reasonably believes are necessary to cause the conditions of the Offer to be
satisfied, until all such conditions are satisfied or waived; provided, however,
that Merger Sub shall not be required to extend the Offer pursuant to this
sentence beyond the 30th day after the initial expiration date of the Offer,
unless otherwise required pursuant to (II) above. Subject to Section 8.1 hereof,
Merger Sub may, without the consent of the Company, elect to provide a
subsequent offering period for the Offer in accordance with Rule 14d-11 under
the Exchange Act, following its acceptance of Company Common Shares for payment
pursuant to the Offer. On the terms and subject to the conditions of the Offer
and this Agreement, Merger Sub shall, and Parent shall cause Merger Sub to, pay
for all Company Common Shares validly tendered and not withdrawn pursuant to the
Offer that Merger Sub becomes obligated to purchase pursuant to the Offer as
soon as practicable after the expiration of the Offer.
3
(b) As soon as practicable on the date of commencement of the Offer,
Merger Sub shall, and Parent shall cause Merger Sub to, file with the SEC a
Tender Offer Statement on Schedule TO with respect to the Offer (such Tender
Offer Statement, together with all amendments and supplements thereto, the
"Schedule TO"), which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule TO and the documents
contained therein pursuant to which the Offer will be made, in each case
together with all supplements and amendments thereto, the "Offer Documents").
Parent and Merger Sub (i) agree that, on the date on which the Schedule TO is
filed with the SEC and on each date on which any amendment or supplement to any
Offer Document is filed with the SEC, the Offer Documents shall comply as to
form in all material respects with the Exchange Act and the rules and
regulations promulgated thereunder, and (ii) represent and warrant that, on the
date first published, sent or given to Shareholders, the Offer Documents will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation or warranty is made by Parent or
Merger Sub with respect to information supplied in writing by or on behalf of
the Company or any of its officers or directors specifically for inclusion or
incorporation by reference in any Offer Document. Each of Parent and Merger Sub
(or the Company, in the case of any information supplied by or on behalf of the
Company or any of its officers or directors specifically for inclusion or
incorporation by reference in any Offer Document) agree promptly to correct any
information contained in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect, and
each of Parent and Merger Sub shall take all steps necessary to amend or
supplement the Offer Documents to reflect such correction and to cause the Offer
Documents as so amended or supplemented to be filed with the SEC and
disseminated to the Shareholders, in each case as and to the extent required by
applicable Federal and state securities laws. Parent and Merger Sub shall
provide the Company and its counsel a reasonable opportunity to review and
comment upon the Offer Documents (including, without limitation, any amendment
or supplement thereto) prior to their filing with the SEC or dissemination to
the Shareholders. Parent and Merger Sub shall provide the Company and its
counsel in writing with any written comments (and orally, with any oral
comments) that Parent, Merger Sub or their counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after the receipt of such
comments and shall provide the Company and its counsel with a reasonable
opportunity to participate in the response of Parent and Merger Sub to any such
comments.
(c) The parties hereto agree to promptly file with the Commonwealth of
Massachusetts any registration statement relating to the Offer required to be
filed pursuant to Chapter 110C of the Massachusetts
4
General Laws. Parent and Merger Sub shall disseminate to the Shareholders the
information contained in any such registration statement relating to the Offer
required to be filed pursuant to 110C of the Massachusetts General Laws, in each
case to the extent and within the time period required by 110C of the
Massachusetts General Laws.
(d) Prior to the expiration of the Offer, Parent shall provide or cause
to be provided to Merger Sub on a timely basis the funds necessary to purchase
all Company Common Shares that Merger Sub becomes obligated to purchase pursuant
to the Offer.
Section 1.2 Company Actions. (a) Subject to Section 5.3, the Company
hereby approves of and consents to the Offer, the Merger and the other
transactions contemplated by this Agreement. The Company hereby consents to the
inclusion in the Offer Documents of the Recommendation (as defined in Section
3.4(b)), and the Company shall not permit the Recommendation or any component
thereof to be modified in any manner adverse to Parent or Merger Sub or
withdrawn by the Company Board or in any other manner, except as provided in
this Agreement.
(b) On the date on which the Offer Documents are filed with the SEC,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 under the Exchange Act with respect to the Offer (such Schedule
14D-9, as amended or supplemented from time to time, the "Schedule 14D-9") in
which the Company makes the recommendations referred to in Section 3.4(b),
subject to any permitted withdrawal or modification thereof in accordance with
this Agreement, and shall mail the Schedule 14D-9 to the Shareholders. The
Company shall include in the Schedule 14D-9 information furnished by Parent in
writing concerning Parent's designees for directors of the Company as required
by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder, and shall use
its reasonable efforts to have the Schedule 14D-9 available for inclusion in the
initial mailing of the Offer Documents to the Shareholders. The Company (i)
agrees that on the date on which the Schedule 14D-9 is filed with the SEC and on
each date on which any amendment or supplement to the Schedule 14D-9 is filed
with the SEC, the Schedule 14D-9 shall comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder, and (ii) represents and warrants that, on the date filed
with the SEC and on the date first published, sent or given to Shareholders, the
Schedule 14D-9 will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation or warranty is made by
the Company with respect to information supplied in writing by Parent or Merger
Sub pursuant to this Agreement specifically for inclusion in the Schedule 14D-9.
The Company (or Parent and Merger Sub, with respect to information supplied by
Parent or Merger Sub pursuant to this Agreement specifically for inclusion in
the Schedule 14D-9) shall promptly correct any information contained in the
Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect, and the Company shall take all
steps necessary to amend or
5
supplement the Schedule 14D-9 to reflect such correction and to cause the
Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to the Shareholders, in each case as and to the extent required by
applicable Federal securities laws. The Company shall provide Parent, Merger Sub
and their counsel in writing with any written comments (and orally, with any
oral comments) that the Company or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments.
(c) In connection with the Offer and the Merger, the Company shall as
promptly as reasonably practicable but, in any event, within two business days
after the date hereof, furnish, or cause its transfer agent to furnish, Merger
Sub promptly with mailing labels containing the names and addresses of all
record holders of Company Common Shares as of a recent date and, as soon as
practicable thereafter, of those persons becoming record holders subsequent to
such date, together with copies of all lists of Shareholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Company Common Shares,
and shall furnish to Merger Sub such information and assistance (including
updated lists of Shareholders, security position listings and computer files) as
Merger Sub or Parent may reasonably request in communicating the Offer to
Shareholders. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer, the Merger and the other
transactions contemplated by this Agreement, Parent and Merger Sub shall hold in
confidence pursuant to the Confidential Disclosure Agreement dated September 27,
2000 between Parent and the Company (the "Confidentiality Agreement") the
information contained in any such labels, listings and files, and shall use the
information referred to in this Section 1.2(c) solely for the purpose of
communicating the Offer and disseminating any other documents necessary to
consummate the Offer, the Merger and the other transactions contemplated by this
Agreement and, if this Agreement shall be terminated, shall promptly deliver to
the Company all copies of such information then in their possession.
Section 1.3 Directors. Promptly upon the satisfaction of the Minimum
Tender Condition and the acceptance for payment of, and payment by Merger Sub
for, any Company Common Shares pursuant to the Offer, Merger Sub shall, subject
to compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, be entitled to designate such number of directors on the Company
Board as will give Merger Sub representation on the Company Board equal to that
number of directors, rounded down to the next whole number, which is the product
of (a) the total number of directors on the Company Board (giving effect to the
directors elected pursuant to this sentence) multiplied by (b) a fraction, the
numerator of which is the number of Company Common Shares so accepted for
payment and paid for by Merger Sub and the denominator of which is the number of
Company Common Shares outstanding at the time of acceptance
6
for payment of Company Common Shares pursuant to the Offer, and the Company
shall, promptly upon such designation by Merger Sub, cause Merger Sub's
designees to be elected or appointed to the Company Board; provided, however,
that during the period commencing with the election or appointment of Merger
Sub's designees to the Company Board until the Effective Time or earlier
termination of this Agreement, the Company Board shall have at least two
directors who are directors on the date of this Agreement and who are not
officers of the Company or representatives of any affiliates of the Company (the
"Independent Directors"); and provided further, however, that if during such
period the number of Independent Directors shall be reduced below two for any
reason whatsoever, the remaining Independent Directors (or Independent Director,
if there shall be only one remaining) shall be entitled to designate persons to
fill any such vacancies who shall be deemed to be Independent Directors for
purposes of this Agreement or, if no Independent Directors then remain, the
other directors shall designate two persons to fill such vacancies who are not
officers, affiliates, associates or shareholders of Parent or Merger Sub, and
such persons shall be deemed to be Independent Directors for purposes of this
Agreement. Subject to applicable law, the Company shall take all action
requested by Parent for the purpose of effecting any such election or
appointment of Merger Sub's designees. In connection with the foregoing, the
Company shall promptly, at the option of Merger Sub, either increase the size of
the Company Board or accept the resignations (which resignations the Company
will obtain on or before the date of this Agreement, and which resignations
shall only be effective as of the time of, and shall be conditional upon,
acceptance for payment of any Company Common Shares pursuant to the Offer) of
such number of its current directors as is necessary to enable Merger Sub's
designees to be elected or appointed to the Company Board as provided above.
Prior to the Effective Time, the Company shall cause each member of the Company
Board, other than Merger Sub's designees, to execute and deliver a letter
effectuating his or her resignation as a director of the Company Board effective
immediately prior to the Effective Time.
Section 1.4 The Merger. (a) Subject to the terms and conditions of this
Agreement and in accordance with the MBCL, at the Effective Time, Merger Sub
will merge with and into the Company. At the Effective Time, the separate
corporate existence of Merger Sub shall cease and the Company shall be the
surviving corporation in the Merger (the "Surviving Corporation").
(b) At the Effective Time, the Merger will have the other effects
provided in the applicable provisions of the MBCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers, immunities and franchises of the Company
and Merger Sub will vest in the Surviving Corporation, and all debts,
liabilities, obligations and duties of the Company and Merger Sub will become,
by operation of law, the debts, liabilities, obligations and duties of the
Surviving Corporation. The name of the Surviving Corporation shall be
7
"3M MicroTouch Systems, Inc." and the purpose thereof shall be as set forth in
Section 2 of the Articles of Organization of the Surviving Corporation.
Section 1.5 The Closing; Effective Time. (a) The closing of the Merger
(the "Closing") shall take place (i) at the offices of Parent, in St. Xxxx, at
10:00 A.M. local time, on the second business day following the date on which
the last to be satisfied or waived 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 satisfaction or, where permitted, waiver of those
conditions) shall be satisfied or waived in accordance with this Agreement or
(ii) at such other place, time and/or date as the Company and Parent shall agree
in writing (the date on which the Closing occurs, the "Closing Date").
(b) Prior to the Closing, Parent shall prepare and give the Company and
its counsel an adequate opportunity to review, and on the Closing Date, the
Company and Merger Sub shall cause articles of merger in respect of the Merger
to be properly executed and filed with the Secretary of State of the
Commonwealth of Massachusetts under the relevant provisions of the MBCL and
shall make all other filings or recordings required under the MBCL. The Merger
shall become effective at such time at which the articles of merger shall be
duly filed with the Secretary of State of the Commonwealth of Massachusetts or
at such later time reflected in the articles of merger as shall be agreed by the
Company and Parent (the time that the Merger becomes effective being the
"Effective Time").
Section 1.6 Subsequent Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to continue, vest, perfect or confirm of record or otherwise the
Surviving Corporation's right, title or interest in, to or under any of the
rights, properties, privileges, franchises or assets of either of its
constituent corporations acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger, or otherwise to carry out the
intent of this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of either of the constituent corporations of the Merger, all such deeds,
bills of sale, assignments and assurances and to take and do, in the name and on
behalf of each of such corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties, privileges,
franchises or assets in the Surviving Corporation or otherwise to carry out the
intent of this Agreement.
8
Section 1.7 Articles of Organization; By-laws; Directors and Officers of
the Surviving Corporation. Unless otherwise agreed by Parent, Merger Sub and the
Company prior to the Closing, at the Effective Time:
(a) The Articles of Organization of the Company (the "Company Articles
of Organization") shall be amended at the Effective Time to read in the form of
Exhibit C hereto and, as so amended, such Articles of Organization shall be the
Articles of Organization of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law, subject to the provisions
of Section 6.8(c);
(b) Subject to the provisions of Section 6.8(c), the By-laws of the
Merger Sub as in effect immediately prior to the Effective Time shall be at and
after the Effective Time (until amended as provided by law, the Company Articles
of Organization and the By-laws of the Company, as applicable) the By-laws of
the Surviving Corporation;
(c) The officers of Merger Sub immediately prior to the Effective Time
shall continue to serve in their respective offices of the Surviving Corporation
from and after the Effective Time, until their successors are elected or
appointed and qualified or until their resignation or removal; and
(d) The directors of Merger Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation from and after the Effective
Time, until their successors are elected or appointed and qualified or until
their resignation or removal.
ARTICLE II
Section 2.1 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Sub or any
Shareholder:
(a) Capital Stock of Merger Sub. All of the issued and outstanding
shares of common stock, par value $.01 per share, of Merger Sub (the "Merger Sub
Common Stock") shall be converted into an equal number of fully paid and
nonassessable shares of common stock, $.01 par value per share, of the Surviving
Corporation (the "Surviving Corporation Common Stock"), which will constitute
all of the issued and outstanding shares of capital stock of the Surviving
Corporation immediately after the Effective Time. From and after the Effective
Time, each outstanding certificate theretofore representing shares of Merger Sub
Common Stock will be deemed for all purposes to evidence ownership and to
represent the same number of shares of Surviving Corporation Common Stock.
9
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each Company
Common Share that is owned directly by the Company (as treasury stock), Parent
or Merger Sub immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, without payment of any consideration in respect thereof.
(c) Conversion of Company Common Shares. (i) Subject to Sections 2.1(b)
and 2.1(d), each Company Common Share issued and outstanding immediately prior
to the Effective Time shall be converted into the right to receive in cash from
the Surviving Corporation the highest price per Company Common Share paid
pursuant to the Offer.
(ii) The cash payable upon the conversion of Company Common Shares
pursuant to this Section 2.1(c) is referred to collectively as the "Merger
Consideration." At the Effective Time all such Company Common Shares shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate that immediately prior to the
Effective Time represented any such shares (a "Certificate") shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration.
(d) Dissenters' Rights. (i) Notwithstanding any provision of this
Section 2.1 to the contrary, any Company Common Shares that are outstanding
immediately prior to the Effective Time and that are held by a Shareholder who
has not voted such Company Common Shares in favor of this Agreement and who has
properly exercised, preserved and perfected dissenters' rights with respect to
such Company Common Shares in accordance with the MBCL, including Sections 86
through 98 thereof (the "Dissenting Provisions") and, as of the Effective Time,
has neither effectively withdrawn nor lost its right to exercise such
dissenters' rights ("Dissenting Shares"), will not be converted into or
represent a right to receive the Merger Consideration pursuant to Section
2.1(c), but the holder thereof will be entitled to payment of the fair value of
such Dissenting Shares in accordance with the Dissenting Provisions.
(ii) Notwithstanding the provisions of Section 2.1(c), if any
holder of Company Common Shares who demands dissenters' rights with respect to
its Company Common Shares under the MBCL effectively withdraws or loses
(through failure to perfect or otherwise) its dissenters' rights, then as of the
Effective Time or the occurrence of such event, whichever later occurs, such
Shareholder's Company Common Shares will automatically be converted into and
represent only the right to receive the Merger Consideration as provided in
Section 2.1(c), without interest thereon, upon surrender of the certificate or
certificates formerly representing such Company Common Shares.
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(iii) The Company will give Parent (x) prompt notice of any
written intent to demand payment of the fair value of any Company Common Shares,
withdrawals of such demands and any other instruments served pursuant to the
MBCL received by the Company and (y) the opportunity to direct all negotiations
and proceedings with respect to dissenters' rights under the MBCL. The Company
may not voluntarily make any payment with respect to any exercise of dissenters'
rights and may not, except with the prior written consent of Parent, settle or
offer to settle any such dissenters' rights.
(e) Termination and Satisfaction of Company Options. As of the
Effective Time, each Company Option issued under either (i) the Company's 1992
Equity Incentive Plan, (ii) the Company's 1994 Directors Stock Option Plan, or
(iii) the Company's 1998 Employee and Consultant Non-Qualified Stock Option Plan
(collectively the "Stock Option Plans") and outstanding immediately prior to the
Effective Time shall be converted into the right to receive in cash an amount
equal to the "Net Gain" attributable to such Company Option. At the Effective
Time all such Company Options shall no longer be outstanding and shall
automatically be cancelled and terminated and shall cease to exist, and each
holder of a Company Option shall cease to have any rights with respect thereto,
except the right to receive the Net Gain attributable thereto. For purposes of
this Agreement, the term "Net Gain" with respect to a Company Option shall mean
the product of (x) the excess of the Merger Consideration over the exercise
price per Company Common Share of such Company Option, and (y) the number of
Company Common Shares subject to such Company Option. Immediately prior to the
Effective Time, Parent shall provide or cause to be provided to the Company in a
timely manner the funds necessary to pay the aggregate amount of "Net Gains"
attributable to all Company Options that the Company becomes obligated to pay
pursuant to this Section 2.1(e). The Company shall make all payments of "Net
Gains" required by this Section 2.1(e) immediately prior to the Effective Time,
although it shall deduct and withhold from the amounts otherwise payable
pursuant to this Section 2.1(e) such amounts as it is required to deduct and
withhold with respect to the making of such payments under the Internal Revenue
Code of 1986 (the "Code") or any other applicable state, local or federal tax
law or tax laws of foreign jurisdictions. To the extent that amounts are so
withheld by the Company, the withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the Company Option in
respect of which such withholding was made by the Company. The Surviving
Corporation will promptly comply with all tax laws requiring it to forward such
withheld taxes and/or pay its own taxes to the responsible Governmental Entity,
as well as reporting the amount of income resulting from the payments made
pursuant to this Section 2.1(e).
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Section 2.2 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall shall
designate, or shall cause to be designated, a bank or trust company reasonably
acceptable to the Company to act as agent for the payment of the Merger
Consideration (the "Paying Agent") upon surrender of Certificates, and, from
time to time after the Effective Time, Parent shall provide, or cause the
Surviving Corporation to provide, to the Paying Agent funds in amounts and at
the times necessary for the payment of the Merger Consideration pursuant to
Section 2.1(c) and any payments that holders of Dissenting Shares become
entitled to under Section 2.1(d) (such cash being hereinafter referred to as the
"Exchange Fund"), upon surrender of Certificates, it being understood that any
and all interest or income earned on funds made available to the Paying Agent
pursuant to this Agreement shall be for the benefit of, and shall be paid to,
Parent. If for any reason the Exchange Fund is inadequate to pay the amounts to
which holders of Company Common Shares and Dissenting Shares shall be entitled
under this Section 2.2(a), Parent shall take all steps necessary to enable or
cause the Surviving Corporation promptly to deposit additional cash with the
Paying Agent sufficient to make all payments required under this Agreement, and
Parent and the Surviving Corporation shall in any event be liable for payment
thereof. The Exchange Fund shall not be used for any purpose except as expressly
provided in this Agreement.
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause the Paying Agent to mail
to each holder of record of a certificate or certificates (referred to
hereinafter individually as a "Certificate" and collectively as "Certificates")
that immediately prior to the Effective Time represented outstanding Company
Common Shares whose shares were converted into the right to receive Merger
Consideration pursuant to Section 2.1, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates held by such person shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in customary form and have such
other provisions as Parent may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent, together with such letter of transmittal, duly completed and validly
executed, and such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor the Merger Consideration and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company Common
Shares that is not registered in the stock transfer books of the Company, the
proper amount of cash may be paid in exchange therefor to a person other than
the person in whose name the Certificate so surrendered is registered if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a
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person other than the registered holder of such Certificate the Merger
Consideration or establish to the satisfaction of Parent that such tax has been
paid or is not applicable. No interest shall be paid or shall accrue on the cash
payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Shares. The Merger
Consideration paid upon the surrender of a Certificate in accordance with the
terms of this Article II shall be deemed to have been paid in full satisfaction
of all rights pertaining to the Company Common Shares formerly represented by
such Certificate. At the Effective Time the stock transfer books of the Company
shall be closed, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the Company Common Shares
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or the
Paying Agent for transfer or any other reason, they shall be canceled and
exchanged as provided in this Article II.
(d) No Liability. To the fullest extent permitted by applicable law,
none of Parent, Merger Sub, the Company or the Paying Agent shall be liable to
any person in respect of any cash from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to six years after the
Effective Time (or immediately prior to such earlier date on which any Merger
Consideration would otherwise escheat to or became the property of any
Governmental Entity (as defined in Section 3.5(b)), any such Merger
Consideration in respect thereof shall, to the fullest extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interests of any person previously entitled thereto.
(e) Lost, Stolen or Destroyed Certificates. In the event that any
Certificate shall have been lost, stolen or destroyed, the Surviving Corporation
or Paying Agent shall pay the Merger Consideration in exchange for such lost,
stolen or destroyed Certificate, upon the making of an affidavit of that fact by
the holder thereof in form and substance reasonably satisfactory to the
Surviving Corporation or Paying Agent, as the case may be; provided, however,
that the Surviving Corporation may, in its discretion and as a condition
precedent to the payment of such Merger Consideration, require the owner of such
lost, stolen or destroyed Certificate to deliver a bond in such sum as the
Surviving Corporation may reasonably direct as indemnity against any claim that
may be made against the Surviving Corporation or the Paying Agent with respect
to such Certificate.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of Company Common Shares for six months
after the Effective Time shall be returned to Parent, upon demand, and any
holder of Company Common Shares shall look as a general creditor only to Parent
for payment of such cash to which such holder may be due subject to applicable
law.
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(g) Withholding Rights. Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement such amounts
as Parent is required to deduct and withhold with respect to the making of such
payment under the Code or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by Parent, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the holder
of the Company Common Shares in respect of which such deduction and withholding
was made by Parent.
(h) Charges and Expenses. The Surviving Corporation shall pay all
charges and expenses, including those of the Paying Agent, in connection with
the exchange of cash for Company Common Shares.
ARTICLE III
Except as set forth in the corresponding sections or subsections of the
disclosure letter, dated this date, delivered by the Company to Parent (the
"Company Disclosure Letter"), the Company hereby represents and warrants to
Parent and Merger Sub as follows:
Section 3.1 Organization and Qualification; Subsidiaries. (a) The Company
is a corporation duly organized and validly existing under the laws of The
Commonwealth of Massachusetts and with respect to which no articles of
dissolution have been filed. Each of the Subsidiaries of the Company is a
corporation or other business entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization, and each of the Company and its Subsidiaries has the requisite
corporate or other organizational power and authority to own, operate or lease
its properties and to carry on its business as it is now being conducted, and is
duly qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its properties owned, operated or
leased or the nature of its activities makes such qualification necessary, in
each case except as would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect.
(b) All of the outstanding shares of capital stock and other equity
securities of the Subsidiaries of the Company have been validly issued and are
fully paid and nonassessable, and are owned, directly or indirectly, by the
Company, free and clear of all pledges and security interests, except for a de
minimis number of shares of capital stock of certain Subsidiaries that, due to
the requirements of local law, must be held by the managing director (or other
Person with comparable duties or responsibilities) of the Subsidiary who resides
in the jurisdiction of incorporation. There are no subscriptions, options,
warrants, calls, commitments, agreements, conversion rights or other rights of
any character (contingent or otherwise) entitling any Person to purchase or
otherwise acquire from the Company or any of its Subsidiaries at any time, or
upon the happening of
14
any stated event, any shares of capital stock or other equity securities of any
of the Subsidiaries of the Company. The Company Disclosure Letter lists the name
and jurisdiction of incorporation or organization of each Subsidiary of the
Company.
(c) Except for interests in its Subsidiaries, neither the Company nor
any of its Subsidiaries owns directly or indirectly any capital stock of, or
other equity or voting or similar interest (including a joint venture interest)
in any Person or has any monetary or other obligation or made any commitment to
acquire any such interest or make any such investment.
Section 3.2 Articles of Organization and By-laws. The Company has
furnished, or otherwise made available, to Parent a complete and correct copy of
the Company's Articles of Organization and its By-laws, each as amended to the
date of this Agreement. Such Articles of Organization and By-laws are in full
force and effect. The Company is not in violation of any of the provisions of
the Articles of Organization or By-laws.
Section 3.3 Capitalization. As of November10, 2000, the authorized
capital stock of the Company consists of 20,000,000 Company Common Shares, and
500,000 shares of preferred stock, $0.01 par value per share (the "Preferred
Stock"), of which 100,000 shares are designated as shares of Series A Junior
Participating Preferred Stock, $0.01 par value per share ("Company Preferred
Shares"). As of November10, 2000, (a) 6,491,823 Company Common Shares were
outstanding, (b) 6,491,823 Rights issued pursuant to the Rights Agreement were
outstanding, (c) Company Options to purchase an aggregate of 1,755,486 Company
Common Shares were outstanding, all of which were granted under the 1992 Equity
Incentive Plan, 1994 Directors Stock Option Plan and 1998 Employee and
Consultant Non-Qualified Stock Option Plan (collectively, the "Stock Option
Plans"), 1,755,486 Company Common Shares were reserved for issuance upon the
exercise of outstanding Company Options, 1,206,159 Company Common Shares were
reserved for future grants under the Stock Option Plans and 100,000 Company
Preferred Shares were reserved for issuance under the Rights Agreement, (d)
1,937,776 Company Common Shares were held by the Company in its treasury, and
(e) no shares of capital stock of the Company were held by the Company's
Subsidiaries. Except for the Rights, the Company has no outstanding bonds,
debentures, notes or other obligations entitling the holders thereof to vote (or
which are convertible into or exercisable for securities having the right to
vote) with the shareholders of the Company on any matter. Since November 10,
2000, the Company (i) has not issued any Company Common Shares other than upon
the exercise of Company Options, (ii) has granted no Company Options to purchase
Company Common Shares under the Stock Option Plans or otherwise, and (iii) has
not split, combined or reclassified any of its shares of capital stock. All
issued and outstanding Company Common Shares are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. Except for the
Rights, there are no other shares of capital stock or voting securities of the
Company, and no existing options,
15
warrants, calls, subscriptions, convertible securities, or other rights,
agreements or commitments which obligate the Company or any of its Subsidiaries
to issue, transfer or sell any shares of capital stock of, or equity interests
in, the Company or any of its Subsidiaries and there are no stock appreciation
rights or limited stock appreciation rights outstanding other than those
attached to such Company Options. There are no outstanding obligations of the
Company or any Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company and there are no performance awards
outstanding under the Stock Option Plans or any other outstanding stock related
awards. After the Effective Time, the Surviving Corporation will have no
obligation to issue, transfer or sell any shares of capital stock of the
Company, the Parent or the Surviving Corporation pursuant to any Company Benefit
Plan, including the Stock Option Plans. There are no voting trusts or other
agreements or understandings to which the Company or any of its Subsidiaries is
a party with respect to the voting of capital stock of the Company or any of its
Subsidiaries. No Company Common Shares have been repurchased by the Company or
any of its Subsidiaries since May 10, 2000. For purposes of this Agreement,
"Company Options" shall mean subscriptions, options (including those granted
under the Stock Option Plans), warrants, calls, commitments, agreements,
conversion rights or other rights of any character (contingent or otherwise) to
purchase or otherwise acquire from the Company or any of its Subsidiaries at any
time, or upon the happening of any stated event, any shares of the capital stock
of the Company, whether or not then exercisable by their terms.
Section 3.4 Power and Authority; Authorization; Valid and Binding.(a) The
Company has the requisite corporate power and authority to execute and deliver
this Agreement and, subject to the approval of the Merger and this Agreement by
an affirmative vote of the holders of not less than a majority of the
outstanding shares of Company Common Shares (the "Shareholder Approval"), to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company, the performance by it of its obligations
hereunder and the consummation by the Company of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action on the part
of the Company (other than the Shareholder Approval). This Agreement has been
duly executed and delivered by the Company and, assuming the due authorization,
execution and delivery of this Agreement by Parent and Merger Sub, this
Agreement constitutes a legal, valid and binding obligation (subject to the
Shareholder Approval) of the Company enforceable against it in accordance with
the terms hereof, subject to bankruptcy, insolvency, fraudulent transfer,
moratorium, reorganization and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
16
(b) The Board of Directors, at a meeting duly called and held, or by
unanimous written consent, has adopted resolutions (x) determining that the
terms of this Agreement, the Offer and the Merger are fair to and in the best
interests of the Company and the Shareholders, (y) approving this Agreement and
the transactions contemplated hereby, including the Offer and the Merger, and
(z) resolving to recommend that the Shareholders accept the Offer and tender
their Company Common Shares pursuant to the Offer (the determinations, approvals
and recommendations of the Company Board being hereinafter collectively referred
to as the "Recommendation"). Assuming the accuracy of Parent's and Merger Sub's
representation in Section 4.4, such resolutions are necessary to render
inapplicable to Parent and Merger Sub and this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, the provisions of
Chapter 110C (assuming the requirement that the terms of the Offer be furnished
to the Shareholders is satisfied), Chapter 110D and Chapter 110F of the MBCL.
Section 3.5 No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement by the Company do not, and the performance by the
Company of its obligations hereunder and the consummation by the Company of the
transactions contemplated hereby, will not (i) violate or conflict with the
Articles of Organization or the By-laws of the Company, (ii) subject to
obtaining or making the notices, reports, filings, waivers, consents, approvals
and authorizations referred to in paragraph (b) below, conflict with or violate
any law, regulation, court order, judgment or decree applicable to the Company
or any of its Subsidiaries or by which any of their respective property is bound
or affected, other than the filings required under the Securities Act of 1933,
as amended (the "Securities Act"), and the Exchange Act, (iii) subject to
obtaining or making the notices, reports, filings, waivers, consents, approvals
and authorizations referred to in paragraph (b) below, require any consent,
approval or authorization of, or declaration, filing or registration with, any
Governmental Entity or (iv) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, cancellation, vesting or
acceleration of any obligation under, result in the creation of a lien, claim or
encumbrance on any of the properties or assets of the Company or any of its
Subsidiaries pursuant to, result in the loss of any benefit under (including an
increase in the price paid by, or cost to, the Company or any of its
Subsidiaries), require the consent of any other party to, or result in any
obligation on the part of the Company or any of its Subsidiaries to repurchase
(with respect to a bond or a note), any agreement, contract, instrument, bond,
note, indenture, permit, license or franchise to which the Company or any of its
Subsidiaries is a party or by which the Company, any of its Subsidiaries or any
of their respective property is bound or affected, except, in the case of
clauses (ii), (iii) and (iv) above, as would not, individually or in the
aggregate, have or reasonably be expected to have a Material Adverse Effect.
17
(b) Except for applicable requirements under the premerger notification
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and for applicable requirements under antitrust laws of
any foreign jurisdiction, the filing of articles of merger with respect to the
Merger as required by the MBCL and other filings with states in which the
Company is qualified to do business, filings with the SEC under the Securities
Act, and the Exchange Act, any filings required pursuant to any state securities
or "blue sky" laws, or pursuant to the rules and regulations of the Nasdaq Stock
Market or any other stock exchange on which the Company Common Shares are
listed, neither the Company nor any of its Subsidiaries is required to submit
any notice, report or other filing with any Governmental Entity in connection
with the execution, delivery, performance or consummation of this Agreement or
the Merger. Except as set forth in the immediately preceding sentence, no
waiver, consent, approval or authorization of any governmental or regulatory
authority, court, agency, commission or other governmental entity, domestic or
foreign, or any securities exchange or other self-regulatory body, domestic or
foreign (each a "Governmental Entity"), is required to be obtained by the
Company or any of its Subsidiaries in connection with its execution, delivery,
performance or consummation of this Agreement or the transactions contemplated
hereby except for such waivers, consents, approvals or authorizations that, if
not obtained or made, would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect.
Section 3.6 SEC Reports; Financial Statements.(a) The Company has filed
all forms, reports and other documents required to be filed by it with the SEC
since January 1, 1998, including any amendments or supplements (collectively,
including any such forms, reports and documents filed after this date, the "SEC
Reports"), and, with respect to the SEC Reports filed by the Company after the
date hereof and prior to the Closing Date, will deliver or make available to
Parent all of its SEC Reports in the form filed with the SEC. The SEC Reports
(i) were (and any SEC Reports filed after this date will be) in all material
respects in compliance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations promulgated
thereunder, and (ii) as of their respective filing dates, did not (and any SEC
Reports filed after the date hereof and prior to the Closing Date will not)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The consolidated financial statements of the Company, including all
related notes and schedules, contained in the SEC Reports (or incorporated
therein by reference) fairly present (or, with respect to financial statements
contained in the SEC Reports filed after this date, will fairly present) the
consolidated financial position of the Company and its consolidated subsidiaries
as of the respective dates thereof and the
18
consolidated results of operations, retained earnings and cash flows of the
Company and its consolidated subsidiaries for the respective periods indicated,
in each case have been prepared in accordance with generally accepted accounting
principles ("GAAP"), applied on a consistent basis throughout the periods
involved (except for changes in accounting principles disclosed in the notes)
and the rules and regulations of the SEC, except that interim financial
statements are subject to normal year-end adjustments which are not and are not
expected to be, individually or in the aggregate, material in amount and do not
include certain notes which may be required by GAAP but which are not required
by Form 10-Q of the SEC.
Section 3.7 Absence of Certain Changes.Except as disclosed in the SEC
Reports filed prior to this date (which SEC Reports for the period ended
September 30, 2000 will not contain financial statements that are materially
different from those financial statements for such period that were previously
provided to Parent and Merger Sub and included in the Company Disclosure
Letter), (a) since September 30, 2000, the Company and each of its Subsidiaries
has conducted its business in the ordinary and usual course of its business
consistent with past practice and there has not been any change in the financial
condition, business, prospects or results of operations of the Company and its
Subsidiaries, or any development or combination of developments that,
individually or in the aggregate, has had or would be expected to have a
Material Adverse Effect and (b) since September 30, 2000, there has not been any
action by the Company which if taken after the date hereof would constitute a
breach of Section 5.1 hereof.
Section 3.8 Litigation and Liabilities.(a) Except as disclosed in the SEC
Reports filed prior to this date, or in the Company Disclosure Letter, there
are no civil, criminal or administrative actions, suits, proceedings (including
condemnation proceedings) or hearings, pending or, to the knowledge of the
Company, threatened against, the Company or any of its Subsidiaries or any of
their respective properties and assets, except for any of the foregoing which
would not, individually or in the aggregate, have or reasonably be expected to
have a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries has any liabilities
or obligations, (absolute, accrued, contingent or otherwise), except (i)
liabilities and obligations in the respective amounts reflected or reserved
against in the Company's consolidated balance sheet as of September 30, 2000
included in the SEC Reports, (ii) liabilities and obligations incurred in the
ordinary course of business since September 30, 2000 consistent with past
practice which individually or in the aggregate would not have or reasonably be
expected to have a Material Adverse Effect, (iii) liabilities permitted to be
incurred pursuant to Section 5.1 or (iv) liabilities or obligations relating to
matters disclosed in the Company Disclosure Letter.
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Section 3.9 No Violation of Law; Permits. The business of the Company and
each of its Subsidiaries is not in violation of any statutes of law, ordinances
regulations, judgments, orders or decrees of any Governmental Entity, any
permits, franchises, licenses, authorizations or consents granted by any
Governmental Entity, and the Company and each of its Subsidiaries has obtained
all permits, franchises, licenses, authorizations or consents necessary for the
conduct of its business, except, with respect to each of the matters herein, as
would not, individually or in the aggregate, have or reasonably be expected to
have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries
is subject to any cease and desist or other order, judgment, injunction or
decree issued by, or is a party to any written agreement, consent agreement or
memorandum of understanding with, is a party to any commitment letter or similar
undertaking to, is subject to any order or directive by, or has adopted any
board resolutions at the request of, any Governmental Entity that restricts the
conduct of its business (whether the type of business, the location or
otherwise) and which, individually or in the aggregate, would have or reasonably
be expected to have a Material Adverse Effect, nor has the Company been advised
that any Governmental Entity has proposed issuing or requesting any of the
foregoing.
Section 3.10 Employee Matters; ERISA. (a) Set forth in the Company
Disclosure Letter is a complete list of each Company Benefit Plan. The term
"Company Benefit Plan" shall mean (i) each plan, program, policy, contract or
agreement providing for compensation, severance, termination pay, performance
awards, stock or stock-related awards, fringe benefits or other employee
benefits of any kind, including, without limitation, any "employee benefit
plan," within the meaning of Section 3(3) of ERISA but excluding any
"multiemployer plan" within the meaning of Sections 3(37) or 4001(a)(3) of
ERISA, and (ii) each employment, severance, consulting, non-compete,
confidentiality, or similar agreement or contract, in case of each of (i) and
(ii) with respect to which the Company or any Subsidiary of the Company has or
may have any liability (accrued, contingent or otherwise) sponsored or
maintained for its United States employees. As of the date hereof, neither the
Company nor any Subsidiary of the Company or other entity considered to be a
single employer with the Company under Section 4001(a)(15) of ERISA or Section
414 of the Code (a "Company ERISA Affiliate") is a party to any Company
Multiemployer Plan. The term "Company Multiemployer Plan" shall mean any
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA in
respect to which the Company or any Subsidiary of the Company, or any Company
ERISA Affiliate of the Company has or may have any liability (accrued,
contingent or otherwise). No current or future liabilities for plans or
arrangements similar to those described in subsections (i) and (ii) above
sponsored or maintained by either the Company or any Subsidiary and in effect
for employees of the Company's Subsidiaries outside the United States would have
or reasonably be expected to have a Material Adverse Effect.
20
(b) The Company has provided or made available, or has caused to be
provided or made available, to Parent (i) current, accurate and complete copies
of all documents embodying each Company Benefit Plan, including all amendments,
written interpretations (which interpretation could be regarded as increasing
the liabilities of the Company and its Subsidiaries taken as a whole under the
relevant Company Benefit Plan) and all trust or funding agreements with respect
thereto; (ii) the most recent annual actuarial valuation, if any, prepared for
each Company Benefit Plan; (iii) the most recent annual report (Series 5500 and
all schedules), if any, required under ERISA in connection with each Company
Benefit Plan or related trust; (iv) the most recent determination letter
received from the Internal Revenue Service, if any, for each Company Benefit
Plan and related trust which is intended to satisfy the requirements of Section
401(a) of the Code; (v) if any Company Benefit Plan is funded, the most recent
annual and periodic accounting of such Company Benefit Plan's assets; (vi) the
most recent summary plan description together with the most recent summary of
material modifications, if any, required under ERISA with respect to each
Company Benefit Plan; and (vii) all material communications to any one or more
current, former or retired employee, officer, consultant, independent
contractor, agent or director of the Company or any Subsidiary of the Company
(each, a "Company Employee" and collectively, the "Company Employees") relating
to each Company Benefit Plan (which communication could be regarded as
increasing the liabilities of the Company and its Subsidiaries taken as a whole
under the relevant Company Benefit Plan).
(c) All Company Benefit Plans have been administered in all respects in
accordance with the terms thereof and all applicable laws except for violations
which, individually or in the aggregate, would not have or reasonably be
expected to have a Material Adverse Effect. Each Company Benefit Plan which is
an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("Pension Plan") and which is intended to be qualified under Section 401(a) of
the Code (each, an " Company Pension Plan"), has received a favorable
determination letter from the Internal Revenue Service, and the Company is not
aware of any circumstances that would reasonably be expected to result in the
revocation or denial of this qualified status. Except as otherwise set forth in
the Company Disclosure Letter or in the SEC Reports filed prior to this date,
there is no pending or, to the Company's knowledge, threatened, claim,
litigation, proceeding, audit, examination or investigation relating to any
Company Benefit Plans or Company Employees that, individually or in the
aggregate, would have or reasonably be expected to have a Material Adverse
Effect.
(d) No Company Benefit Plan nor any plan sponsored by any Subsidiary or
any Company ERISA Affiliate is subject to Title IV of ERISA.
21
(e) All contributions, premiums and payments (other than contributions,
premiums or payments that are not material, in the aggregate) required to be
made under the terms of any Company Benefit Plan have been made.
(f) Except as set forth in the Company Disclosure Letter, the execution
of, and performance of the transactions contemplated in, this Agreement will not
(either alone or upon the occurrence of any additional or subsequent events) (i)
constitute an event under any Company Benefit Plan, trust or loan that will or
may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting (except as may be required by law),
distribution, increase in benefits or obligation to fund benefits with respect
to any Company Employee, or (ii) result in the triggering or imposition of any
restrictions or limitations on the right of the Company, any Subsidiary of the
Company or Parent to amend or terminate any Company Benefit Plan. Except as set
forth in the Company Disclosure Letter, no payment or benefit which will or may
be made by the Company, any Subsidiary of the Company, Parent or any of their
respective affiliates with respect to any Company Employee will be characterized
as an "excess parachute payment," within the meaning of Section 280G(b)(1) of
the Code.
(g) Set forth in the Company Disclosure Letter is a list of all
outstanding and unexercised options granted under the Company's Stock Option
Plans, specifying the name of each optionee, the date on which each option was
granted, the number of shares that may be purchased pursuant to each option, the
exercise price at which such shares may be purchased, the vesting period for
each option, and the expiration date of each option. Immediately prior to the
Closing, there will be no Company Options outstanding.
Section 3.11 Labor Matters. Except as set forth in the SEC Reports filed
prior to this date, and except for those matters that would not, individually or
in the aggregate, have or reasonably be expected to have a Material Adverse
Effect, there is no (i) work stoppage, slowdown, lockout or labor strike against
the Company or any Subsidiary of the Company by Company Employees (or any union
that represents them) pending or, to the knowledge of the Company, threatened,
or (ii) alleged unfair labor practice, labor dispute (other than routine
grievances), union organizing activity or labor arbitration proceeding pending
or, to the knowledge of the Company, threatened against the Company or any of
its Subsidiaries relating to their businesses. Neither the Company nor any of
its Subsidiaries is a party to, or bound by, any collective bargaining agreement
or other contracts with a labor union or labor organization. The Company is in
compliance with all laws regarding employment, employment practices, terms and
conditions of employment and wages and laws, except for such noncompliance
which, either individually or in the aggregate, would not have or reasonably be
expected to have a Material Adverse Effect. Except as set forth in the Company
Disclosure Letter, to the knowledge of the Company, no employee of the Company
or any of its Subsidiaries
22
having total annual compensation of more than $50,000 has given oral (within the
two months immediately preceding the date of this Agreement) or written notice
of intent to terminate such employee's employment.
Section 3.12 Environmental Matters. Except (1) as set forth in the SEC
Reports filed prior to this date, or in the Company Disclosure Letter; and (2)
for those matters that do not, individually or in the aggregate, have or are
reasonably expected to have a Material Adverse Effect (for purposes of Section
3.12(c)(ii), 3.12(c)(iii) (relating to any real or personal property not owned
by the Company or its Subsidiaries at present or in the past), 3.12(d)(ii) and
3.12(e) (relating to property not owned by the Company or its Subsidiaries at
present or in the past) only, the dollar thresholds for determining whether a
matter or matters constitute a Material Adverse Effect shall be $1,000,000
individually or $6,000,000 in the aggregate):
(a) The Company and each of its Subsidiaries is in compliance with all
applicable Environmental Laws, and neither the Company nor any of its
Subsidiaries has received any written communication from any Person or
Governmental Entity that alleges that the Company or any of its Subsidiaries is
not in compliance with applicable Environmental Laws.
(b) The Company and each of its Subsidiaries has obtained or has
applied for all applicable environmental, health and safety permits, licenses,
variances, approvals and authorizations required under Environmental Laws
(collectively, the "Environmental Permits") necessary for the construction of
its facilities or the conduct of its operations, and all those Environmental
Permits are in effect or, where applicable, a renewal application has been
timely filed and is pending agency approval, and the Company and its
Subsidiaries are in compliance with all terms and conditions of such
Environmental Permits. All Environmental Permits of the Company and its
Subsidiaries are listed in the Company Disclosure Letter referencing this
Section 3.12(b), and the Company and its Subsidiaries previously has made
available to Parent and Merger Sub true, correct and complete copies of all such
Environmental Permits.
(c) There is no Environmental Claim pending or, to the knowledge of the
Company, threatened (i) against the Company or any of its Subsidiaries, (ii)
against any Person whose liability for any Environmental Claim has been retained
or assumed contractually by the Company or any of its Subsidiaries, or (iii)
against any real or personal property or operations which the Company or any of
its Subsidiaries owns, leases or operates, in whole or in part.
(d) There have been no Releases of any Hazardous Material that the
Company reasonably believes form the basis of any Environmental Claim (i)
against the Company or any of its Subsidiaries, or (ii) against any Person whose
liability for any
23
Environmental Claim has been retained or assumed contractually by the
Company or any of its Subsidiaries.
(e) None of the properties owned, leased or operated by the Company,
its Subsidiaries or any predecessor thereof are now, or were in the past, listed
on the National Priorities List of Superfund Sites or any analogous state list
(excluding easements that transgress those Superfund sites).
For purposes of this Agreement:
(i) "Environmental Claim" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, directives, claims, liens,
investigations, proceedings or notices of noncompliance or violation by any
Person (including any federal, state, local or foreign governmental authority)
alleging potential liability (including, without limitation, potential
responsibility for or liability for enforcement, investigatory costs, cleanup
costs, governmental response costs, removal costs, remedial costs, natural
resources damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from (A) the presence, or Release or threatened
Release into the environment, of any Hazardous Materials at any location,
whether or not owned, operated, leased or managed by the Company or any of its
Subsidiaries; or (B) circumstances forming the basis of any violation or alleged
violation of any Environmental Law; or (C) any and all claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence or Release of any Hazardous
Materials.
(ii) "Environmental Laws" means all applicable foreign, federal, state
and local laws, rules, requirements and regulations relating to the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or protection of human health as it relates to the
environment including, without limitation, laws and regulations relating to
Releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials or relating to management of asbestos in
buildings.
(iii) "Hazardous Materials" means (A) any petroleum or any by-products
or fractions thereof, asbestos or asbestos-containing materials, urea
formaldehyde foam insulation, any form of natural gas, explosives,
polychlorinated biphenyls ("PCBs"), radioactive materials, ionizing radiation,
electromagnetic field radiation or microwave transmissions; (B) any chemicals,
materials or substances, whether waste materials, raw materials or finished
products, which are now defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
substances," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," "pollutants," "contaminants" or words of similar import
24
under any Environmental Law; and (C) any other chemical, material or substance,
whether waste materials, raw materials or finished products, regulated under any
Environmental Law.
(iv) "Release" means any release, spill, emission, leaking, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
environment (including without limitation ambient air, atmosphere, soil, surface
water, groundwater or property).
Section 3.13 [Intentionally omitted.]
Section 3.14 Brokers. Set forth in the Company Disclosure Letter is a
list of each broker, finder or investment banker and other Person entitled to
any brokerage, finder's, investment banking or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or any of its Subsidiaries and
the expected amounts of such fees and commissions. The Company has previously
provided to Parent copies of any agreements giving rise to any such fee or
commission.
Section 3.15 Tax Matters. Except (1) as set forth in the SEC Reports
filed prior to this date, and (2) for those matters that do not, individually or
in the aggregate, have or are reasonably likely to have a Material Adverse
Effect:
(a) All Tax Returns required to be filed by the Company or its
Subsidiaries on or prior to the Effective Time have been or will be prepared in
good faith and timely filed with the appropriate Governmental Entity on or prior
to the Effective Time and all such Tax Returns are (or, as to Tax Returns not
filed on the date hereof, will be) complete and accurate in all respects.
(b) All Taxes that are required to be paid by the Company or its
Subsidiaries, either (x) have been fully paid on a timely basis (except with
respect to matters contested in good faith as set forth in the Company
Disclosure Letter) or (y) are adequately reflected as a liability on the
Company's or its Subsidiaries' books and records and financial statements and
remitted to the appropriate Governmental Entity. All Taxes required to be
collected or withheld from third parties by the Company or its Subsidiaries have
been collected or withheld.
(c) The Company and its Subsidiaries have made due and sufficient
accruals and reserves for their respective liabilities for Taxes in their
respective books and records and financial statements.
25
(d) The Company and each of its Subsidiaries have not waived any
statute of limitations, or agreed to any extension of time, with respect to
Taxes or a Tax assessment or deficiency, which waiver or extension is in effect.
(e) As of this date, (A) there are not pending or, threatened in
writing, any audits, examinations, investigations or other proceedings in
respect of Taxes or Tax matters and (B) there are not any unresolved questions
or claims concerning the Company's or any of its Subsidiary's Tax liability that
(i) were raised by any taxing authority in a communication to the Company or any
Subsidiary and (ii) would be individually or in the aggregate, material to the
Company and its Subsidiaries taken as a whole, after taking into account any
reserves for Taxes set forth on the most recent balance sheet contained in the
SEC Reports filed prior to this date.
(f) The Company has made available to Parent true and correct copies of
the United States federal income and all state income or franchise Tax Returns
filed by the Company and its Subsidiaries for each of its fiscal years ended on
or about December 31, 1997, 1998 and 1999.
(g) The Company has not distributed the stock of a "controlled
corporation" (as defined in section 355(a) of the Code) in a transaction subject
to section 355 of the Code within the past two years or before such time if the
distribution was part of a plan (or series of related transactions) of which the
Merger is also a part.
(h) Neither Company nor any of its Subsidiaries (i) has any liability
under Treasury Regulation Section 1.1502-6 or analogous state, local or foreign
Law for any Taxes, other than for Taxes of Company or its Subsidiaries or (ii)
is a party to a Tax sharing or Tax indemnity contract or any other contract of a
similar nature with any entity other than Company or any of its Subsidiaries
that remains in effect.
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes" and "Taxable") includes all federal,
state, local and foreign income, profits, franchise, gross receipts, license,
premium, environmental (including taxes under Section 59A of the Code), capital
stock, severance, stamp, payroll, sales, employment, unemployment, disability,
use, transfer, property, withholding, excise, production, occupation, windfall
profits, customs duties, social security (or similar), registration, value
added, alternative or add-on minimum, estimated, occupancy and other taxes,
duties or governmental assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts and any
interest in respect of such penalties and additions, and (ii) the term "Tax
Return" includes all returns and reports (including elections, declarations,
disclosures, schedules, estimates and information returns) required to be
supplied to a Tax authority relating to Taxes.
26
Section 3.16 Intellectual Property. Neither the Company nor any of its
Subsidiaries currently utilizes, any patented invention, trademark, trade name,
service xxxx, copyright, software, trade secret or know-how (collectively,
"Intellectual Property"), except for those which are owned, possessed or
lawfully used by the Company or its Subsidiaries in their business operations,
and neither the Company nor any of its Subsidiaries infringes upon or unlawfully
uses any patented invention, trademark, trade name, service xxxx, copyright, or
trade secret owned or validly claimed by another Person except, in each case, as
would not, individually or in the aggregate, have or reasonably be expected to
have a Material Adverse Effect. The Company and its Subsidiaries own, have a
valid license to use or have the right validly to use all patented inventions,
trademarks, tradenames, service marks, copyrights, trade secrets, know how and
software necessary to carry on their respective businesses except the failure of
which to own, validly license or have the right validly to use, individually or
in the aggregate, would not have or reasonably be expected to have a Material
Adverse Effect. All ownership rights, license rights and other rights to use any
patented invention, trademark, trade name, service xxxx, copyright, software
(except for commercial software programs that are generally available to the
public through dealers in commercial software or directly from the manufacturer
which have been licensed to the Company), trade secret or know-how necessary to
carry on the businesses of the Company and its Subsidiaries are transferable
free of any lien, pledge, charge, security interest or other encumbrance (each,
an "Encumbrance"), except the failure of which to be freely transferable would
not have or reasonably be expected to have a Material Adverse Effect. Neither
the Company nor its Subsidiaries are aware of any third party infringement or
misappropriation of any patent, trademark, trade name, service xxxx, copyright,
software, trade secret or know-how owned by the Company or its Subsidiaries.
Section 3.17 Insurance. Except to the extent adequately accrued on the
most recent balance sheet contained in the SEC Reports filed as of this date,
neither the Company nor its Subsidiaries has any obligation (contingent or
otherwise) to pay in connection with any insurance policies any retroactive
premiums or "retro-premiums" that, individually or in the aggregate, would have
or reasonably be expected to have a Material Adverse Effect. The Company and its
Subsidiaries have obtained and maintained in full force and effect insurance
with insurance companies or associations in such amounts, on such terms and
covering such risks, as is customarily carried by reasonably prudent persons
conducting businesses or owning or leasing assets similar to those conducted,
owned or leased by the Company, except where the failure to obtain or maintain
such insurance, individually or in the aggregate, would not have or be
reasonably be expected to have a Material Adverse Effect.
Section 3.18 Contracts and Commitments. Set forth in the Company
Disclosure Letter is a complete and accurate list of all of the following
contracts (written or oral),
27
plans, undertakings, commitments or agreements ("Company Contracts") to which
the Company or any of its Subsidiaries is a party or by which any of them is
bound as of the date of this Agreement:
(a) each distribution, supply, inventory purchase, franchise, license,
joint development, sales, agency or advertising contract involving annual
expenditures or liabilities in excess of $200,000 which is not cancelable
(without material penalty, cost or other liability) within one year;
(b) each promissory note, loan, agreement, indenture, evidence of
indebtedness or other instrument providing for the lending of money, whether as
borrower, lender or guarantor, in excess of $100,000;
(c) each contract, lease, agreement, instrument or other arrangement
containing any covenant limiting the freedom of the Company or any of its
subsidiaries to engage in the business of the Company or compete with any
person;
(d) each joint venture or partnership agreement that is material to the
Company and its Subsidiaries taken as a whole; and
(e) any contract that would constitute a "material contract" (as such
term is defined in Item 601(b)(10) of Regulation S-K of the SEC).
True and complete copies of the written Company Contracts, as amended
to date, that would be required to be filed as exhibits to the Company's Form
10-K if such Form 10-K were being filed on this date, that have not been filed
prior to the date hereof as exhibits to the SEC Reports have been delivered or
made available to Parent.
Each Company Contract is valid and binding on the Company, and any
Subsidiary of the Company which is a party thereto and, to the knowledge of the
Company, each other party thereto and is in full force and effect, and the
Company and its Subsidiaries have performed and complied with all obligations
required to be performed or complied with by them under each Company Contract,
except in each case as would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect.
Section 3.19 Title to Assets. The Company and its Subsidiaries have good
and marketable title to all of their real and personal properties and assets
reflected in the unaudited consolidated balance sheet of the Company as of
September 30, 2000 (the "Latest Balance Sheet") (other than assets disposed of
since September 30, 2000 in the ordinary course of business, and properties and
assets acquired since September 30, 2000), in each case free and clear of all
Encumbrances except for (i) Encumbrances which secure indebtedness reflected in
the SEC Reports; (ii) liens for Taxes accrued but
28
not yet due; (iii) liens arising as a matter of law in the ordinary course of
business with respect to obligations incurred after the date of the Latest
Balance Sheet, provided that the obligations secured by such liens are not
delinquent; and (iv) such imperfections of title and Encumbrances, if any, as
would not have or reasonably be expected to have a Material Adverse Effect. The
Company and its Subsidiaries own, or have valid leasehold interests in, all
properties and assets used in the conduct of their business. Any real property
and other assets held under lease by the Company or any of its Subsidiaries are
held under valid, subsisting and enforceable leases with such exceptions which,
individually or in the aggregate, would not reasonably be expected to interfere
with the use made or proposed to be made by the Company or any of its
Subsidiaries of such property.
Section 3.20 State Takeover Statutes. The Board of Directors of the
Company has approved the Offer, the Merger and this Agreement and, assuming the
accuracy of Parent's and Merger Sub's representation in Section 4.4, such
approval is necessary to render inapplicable to the Offer, the Merger, this
Agreement and the transactions contemplated by this Agreement, the provisions of
Chapters 110D and 110F of the Massachusetts General Laws to the extent, if any,
such chapters are applicable to the transactions contemplated by this Agreement.
No other "fair price," "merger moratorium," "control share acquisition" or other
anti-takeover statute or similar statute or regulation (other than Chapter 110C
of the Massachusetts General Laws) applies or purports to apply to the Merger,
this Agreement, the Offer or any of the transactions contemplated hereby or
thereby.
Section 3.21 Rights Agreement. To the best of the Company's knowledge, no
"Distribution Date" or "Triggering Event" (as such terms are defined in the
Rights Agreement) has occurred as of this date. This Agreement and the Option
Agreement and the consummation of the transactions contemplated hereunder and
thereunder, including the Offer and the Merger, have been approved by at least
two-thirds (2/3) of the Continuing Directors (as defined in the Rights
Agreement). The Rights Agreement has been amended so that the execution or
delivery of this Agreement, the acquisition or deemed beneficial ownership of
any Company Common Shares by Parent or Merger Sub pursuant to the Shareholders
Agreement or the Option Agreement, or the exchange of the Company Common Shares
for cash in accordance with Article II will not cause (A) the Rights issued
pursuant to the Rights Agreement to become exercisable under the Rights
Agreement, (B) Parent or Merger Sub to be deemed an "Acquiring Person" (as
defined in the Rights Agreement), or (C) a "Stock Acquisition Date" or a
"Triggering Event" (each as defined in the Rights Agreement) to occur upon any
such event. The execution and delivery of this Agreement, the Option Agreement
and the Shareholders Agreement and the consummation of the transactions
contemplated hereby and thereby will not result in the ability of any Person to
exercise any Rights or cause the Rights to separate from the
29
Company Common Shares to which they are attached or to be triggered or become
exercisable.
Section 3.22 Product Warranty. Each product manufactured, sold, leased, or
delivered by any of the Company and its Subsidiaries has been in substantial
conformity with all applicable contractual commitments and all express and
implied warranties, and none of the Company and its Subsidiaries has any
liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability) for replacement or repair thereof or
other damages in connection therewith other than liabilities that would not have
or reasonably be expected to have a Material Adverse Effect, subject only to the
reserve for product warranty claims as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the Company
and its Subsidiaries. No product manufactured, sold, leased, or delivered by any
of the Company and its Subsidiaries is subject to any guaranty, warranty, or
other indemnity beyond the applicable standard terms and conditions of sale or
lease. The Company has provided the Parent on or prior to the date hereof copies
of the standard terms and conditions of sale or lease of products for each of
the Company and its Subsidiaries (containing applicable guaranty, warranty, and
indemnity provisions).
Section 3.23 Product Liability. None of the Company and its Subsidiaries
has any liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, leased, or delivered by any of the Company and its
Subsidiaries, other than liabilities that would not have or reasonably be
expected to have a Material Adverse Effect.
Section 3.24 Opinion Of Financial Advisor.
The Company has received the written opinion of Broadview International
LLC, substantially to the effect that, as of the date hereof, the consideration
to be received in the Offer and the Merger by the Shareholders is fair to the
Shareholders from a financial point of view. A true and complete copy of such
opinion has been delivered to Parent.
30
ARTICLE IV
Parent and Merger Sub hereby represent and warrant to the Company as of
the date of this Agreement as follows:
Section 4.1 Existence; Corporate Authority. Parent and Merger Sub are
corporations duly incorporated, validly existing and in good standing under the
laws of their jurisdiction of incorporation and have all requisite corporate
power and authority to own, operate and lease its properties and carry on its
business as now conducted, except where the failure to have such power and
authority, individually or in the aggregate, would not delay the consummation of
the Offer or the Merger or materially adversely affect their ability to
consummate the Offer or the Merger. Merger Sub is directly and wholly owned by
Parent and has conducted no business other than in connection with the
transactions contemplated by this Agreement.
Section 4.2 Authorization, Validity and Effect of Agreements. Each of
Parent and Merger Sub has the necessary corporate power and authority to enter
into and deliver this Agreement and to perform their obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by each of Parent and Merger Sub, the performance by each of
them of their respective obligations hereunder and the consummation by each of
Parent and Merger Sub of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on their respective parts. This
Agreement has been duly executed and delivered by each of Parent and Merger Sub
and, assuming the due authorization, execution and delivery of this Agreement by
the Company, this Agreement constitutes a legal, valid and binding obligation of
each of Parent and Merger Sub enforceable against each of them in accordance
with the terms hereof, subject to bankruptcy, insolvency, fraudulent transfer,
moratorium, reorganization and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Section 4.3 No Violation. (a) The execution and delivery of this
Agreement by Parent and Merger Sub does not, and the performance by Parent and
Merger Sub of their obligations hereunder and the consummation by Parent and
Merger Sub of the transactions contemplated hereby, will not (i) violate or
conflict with the Merger Sub's articles of organization, Parent's certificate of
incorporation or the bylaws of Parent or Merger Sub, (ii) subject to obtaining
or making the notices, reports, filings, waivers, consents, approvals or
authorizations referred to in paragraph (b) below, conflict with or violate any
law, regulation, court order, judgment or decree applicable to Parent or any of
its Subsidiaries (including Merger Sub) or by which any of their respective
property is bound or affected, other than the filings required under the
Exchange Act and the
31
Securities Act, except, in the case of clause (ii) above, as would not,
individually or in the aggregate, have or reasonably be expected to have a
material adverse effect on their ability to consummate the Offer or the Merger.
(b) Except for applicable requirements, if any, under the premerger
notification requirements of the HSR Act, the filing of articles of merger with
respect to the Merger as required by the MBCL, filings with the SEC under the
Securities Act and the Exchange Act, any filings required pursuant to any state
securities or "blue sky" laws, or pursuant to the rules and regulations of any
stock exchange on which shares of Parent Common Stock are listed, neither Parent
nor any of its Subsidiaries (including Merger Sub) is required to submit any
notice, report or other filing with any Governmental Entity in connection with
the execution, delivery, performance or consummation of the transactions
contemplated by this Agreement, including the Offer and the Merger, except where
the failure to submit such notice, report or other filing would not,
individually or in the aggregate, delay the consummation of the Offer or the
Merger or have or reasonably be expected to have a material adverse effect on
Parent's or Merger Sub's ability to consummate the Merger or otherwise prevent
Parent or Merger Sub from performing its obligations under this Agreement.
Except as set forth in the immediately preceding sentence, no waiver, consent,
approval or authorization of any governmental or regulatory authority, court,
agency, commission or other governmental entity or any securities exchange or
other self-regulatory body, domestic or foreign Governmental Entity is required
to be obtained by Parent or any of its Subsidiaries (including Merger Sub) in
connection with its execution, delivery, performance or consummation of this
Agreement or the transactions contemplated hereby except for such waivers,
consents, approvals or authorizations that, if not obtained or made, would not,
individually or in the aggregate, delay the consummation of the Offer or the
Merger or have or be expected to have a material adverse effect on Parent's or
Merger Sub's ability to consummate the Offer or the Merger or otherwise prevent
Parent or Merger Sub from performing their obligations under this Agreement.
Section 4.4 Interested Shareholder. As of the date hereof (excluding any
beneficial ownership that may be attributed to Parent or Merger Sub by virtue of
any transaction contemplated by this Agreement or by the execution of this
Agreement), (i) neither Parent, Merger Sub nor any of their affiliates is, with
respect to the Company, an "Interested Shareholder", as such term is defined in
Chapter 110F of the MBCL and (ii) neither Parent, Merger Sub nor any of their
affiliates beneficially owns any Company Common Shares.
Section 4.5 Parent Public Reports; Financial Statements. Parent has
delivered to the Company true and complete copies of, including all amendments
thereto, its Annual Report for the calendar year ended December 31, 1999, the
annual report on Form
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10-K for the year ended December 31, 1999, and the quarterly reports on Form
10-Q for the quarters ended March 31, 2000 and June 30, 2000 (collectively, the
"Parent Public Reports"). The consolidated financial statements of Parent
contained in the Parent Public Reports present fairly the financial position of
Parent and its consolidated subsidiaries at the respective dates of the balance
sheet and the results of operations for the periods then ended, in conformity
with generally accepted accounting principles applied on a consistent basis. The
Parent Public Reports do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
Section 4.6 Financial Ability to Perform. Parent and Merger Sub will have
cash funds sufficient as and when needed to pay (a) all cash payments for
Company Common Shares tendered in connection with the Offer and the Merger, (b)
the aggregate amount of Net Gains attributable to all Company Options that the
Company becomes obligated to pay pursuant to Section 2.1(e) of this Agreement,
and (c) all related fees and expenses.
Section 4.7 Brokers. No broker, finder, financial advisor or investment
banker and other Person is entitled to any brokerage, finder's, financial
advisor's investment banking or other similar fee or commission in connection
with the Offer, the Merger or the other transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent, other xxxx
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx").
Section 4.8 Opinion Of Financial Advisor.
Parent has received an oral opinion of Xxxxxxx Xxxxx (which opinion
will be confirmed in writing dated the date of this Agreement), substantially to
the effect that, as of such date, the consideration to be paid in the Offer and
the Merger to the Shareholders is fair to Parent from a financial point of view.
Section 4.9 Litigation. There is no civil, criminal or administrative
action, suit, claim, proceeding, hearing or investigation pending or, to the
knowledge of Parent or its Subsidiaries (including Merger Sub), threatened
against, or otherwise adversely affecting Parent or its Subsidiaries (including
Merger Sub) or any of their respective properties and assets that (a) has or
reasonably would be expected to have a material adverse effect on the ability of
Parent and Merger Sub to consummate the Offer or the Merger or (b) seeks to
materially delay or prevent the consummation of the Offer or the Merger or
otherwise prevent either Parent or Merger Sub from performing their respective
obligations under this Agreement. Neither Parent or its Subsidiaries (including
Merger Sub) nor any property or asset of Parent or its Subsidiaries (including
Merger Sub) is subject to any continuing order of, consent decree, settlement
agreement or similar written agreement
33
with, or continuing investigation by, any Governmental Entity, or any order,
writ, judgment, injunction, decree, determination or award of any Governmental
Entity that would prevent or materially delay consummation of the Offer of the
Merger or otherwise prevent or materially delay Parent or Merger Sub from
performing their respective obligations under this Agreement or have or
reasonably be expected to have a material adverse effect on the ability of
Parent and Merger Sub to consummate the Offer or the Merger; provided, however
that a material adverse effect with respect to Parent and its Subsidiaries
(including Merger Sub), taken as a whole, will not be deemed to have occurred if
the change, circumstance, event, effect or state of facts results primarily from
(i) changes in general business conditions in the input device industry or (ii)
the public announcement by the Company or pendency of the Merger.
ARTICLE V
Section 5.1 Interim Operations of The Company. The Company covenants and
agrees as to itself and its Subsidiaries that, after the date hereof, until the
earlier to occur of (a) the termination of this Agreement pursuant to Section
8.1 and (b) the Effective Time (unless Parent shall otherwise approve in
writing, or unless as otherwise expressly contemplated by this Agreement or
expressly disclosed in the Company Disclosure Letter):
(i) the business of the Company and its Subsidiaries (other than the
Company's Subsidiary in Australia) taken as a whole shall be conducted in all
material respects in the ordinary and usual course consistent with the Company's
past practice and, to the extent consistent therewith, the Company shall use,
and shall cause its Subsidiaries to use, reasonable commercial efforts to
preserve its business organization intact in all material respects, keep
available the services of its officers and employees as a group (subject to
changes in the ordinary course) and maintain its existing relations and goodwill
in all material respects with customers, suppliers, regulators, distributors,
creditors, lessors, and others having business dealings with it, in each case,
consistent with the Company's past practice;
(ii) the Company shall not issue, deliver, grant or sell any additional
Company Common Shares or any Company Options (other than the issuance, delivery,
grant or sale of Company Common Shares pursuant to the exercise or conversion of
Company Options outstanding as of this date);
(iii) the Company shall not (A) amend its Articles of Organization or
By-laws, amend or take any action under the Rights Agreement (except as set
forth in Section 6.10), or adopt any other shareholders rights plan or enter
into any agreement with any of its shareholders in their capacity as such; (B)
split, combine, subdivide or reclassify its outstanding shares of capital stock;
(C) declare, set aside or pay any
34
dividend or distribution payable in cash, stock or property in respect of any of
its capital stock, other than dividends and distributions by a direct or
indirect wholly-owned subsidiary of the Company to its parent corporation; or
(D) repurchase, redeem or otherwise acquire or permit any of its Subsidiaries to
purchase, redeem or otherwise acquire, any shares of its capital stock or any
Company Options (it being understood that this provision shall not prohibit the
exercise (cashless or otherwise) of Company Options);
(iv) the Company shall not, and shall not cause or permit any of its
Subsidiaries to, take any action that it knows would cause any of its
representations and warranties in this Agreement to become inaccurate in any
material respect;
(v) except as expressly permitted by this Agreement, and except as
required by applicable law or pursuant to contractual obligations in effect on
this date; the Company shall not, and shall not permit its Subsidiaries to, (A)
enter into, adopt or amend (except for renewals on substantially identical
terms) any agreement or arrangement relating to severance, (B) enter into, adopt
or amend (except for renewals on substantially identical terms) any employee
benefit plan or employment or consulting agreement (including, without
limitation, the Company Benefit Plans referred to in Section 3.10); or (C) grant
any stock options or other equity related awards;
(vi) except for borrowings under lines of credit contemplated by the
Company Disclosure Letter and trade debt incurred in the ordinary course of
business consistent with past practice, neither the Company nor any of its
Subsidiaries shall issue, incur or amend the terms of any indebtedness for
borrowed money or guarantee any such indebtedness (other than indebtedness of
the Company or any wholly-owned Subsidiary);
(vii) neither the Company nor any of its Subsidiaries shall make any
capital expenditures in an aggregate amount in excess of the aggregate amount
reflected in the capital expenditure budget, a copy of which is attached to the
Company Disclosure Letter;
(viii) other than in the ordinary course of business consistent with
past practice, neither the Company nor any of its Subsidiaries shall transfer,
lease, license, sell, mortgage, pledge, encumber or otherwise dispose of any of
its or its Subsidiaries' property or assets (including capital stock of any of
its Subsidiaries) material to the Company and its Subsidiaries taken as a whole,
except pursuant to contracts existing as of this date (the terms of which have
been previously disclosed to Parent);
(ix) neither the Company nor any of its Subsidiaries shall issue,
deliver, sell or encumber shares of any class of its capital stock or any
securities convertible into, or any rights, warrants or options to acquire, any
such shares, except any
35
such shares issued pursuant to options and other awards outstanding on this date
under Company Benefit Plans or as otherwise permitted by this Agreement;
(x) neither the Company nor any of its Subsidiaries shall acquire any
business, including any facilities, whether by merger, consolidation, purchase
of property or assets or otherwise, except to the extent provided for in the
capital expenditure budget attached to the Company Disclosure Letter;
(xi) The Company shall not change its accounting policies, practices or
methods in any manner that materially affects the reported consolidated assets,
liabilities or results of operations of the Company, except as required by GAAP,
applicable law or by the rules and regulations of the SEC;
(xii) other than pursuant to this Agreement, the Company shall not, and
shall not permit any of its Subsidiaries to, take any action to cause Company
Common Shares to cease to be listed on the Nasdaq National Market System;
(xiii) The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any Company Contract described in clauses (c) and
(d) of Section 3.18, or enter into or amend any distribution, supply, inventory
purchase, franchise, license, sales agency or advertising contract outside of
the ordinary course of business consistent with past practice in scope and
amount but in no event for a term (or an extension of a term) beyond the date
that is twelve months after the date of this Agreement;
(xiv) The Company shall not, and shall not cause or permit any of its
Subsidiaries to, change or, other than in the ordinary course of business
consistent with past practice, make any material Tax election, settle any audit
or file any amended Tax Returns, except as required by applicable law;
(xv) The Company shall not take any action that could reasonably be
expected to result in (A) any representation and warranty of the Company set
forth in this Agreement that is qualified as to materiality becoming untrue, (B)
any such representation and warranty that is not so qualified becoming untrue in
any manner that has or is reasonably expected to have a Material Adverse Effect
or (C) any condition to the Offer or the Merger not being satisfied; or
(xvi) The Company shall not enter into, or permit any of its
Subsidiaries to enter into, any commitments or agreements to do any of the
foregoing.
Section 5.2 Interim Operations of Parent. Parent covenants and agrees as
to itself and its Subsidiaries (including Merger Sub) that, after this date,
until the earlier to occur of (a) the termination of this Agreement pursuant to
Section 8.1 and (b) the
36
Effective Time (unless the Company shall otherwise approve in writing, or unless
as otherwise expressly contemplated by this Agreement), Parent shall not take
any action that could reasonably be expected to result in (A) any representation
and warranty of Parent or Merger Sub set forth in this Agreement that is
qualified as to materiality becoming untrue, (B) any such representation and
warranty that is not so qualified becoming untrue in any material respect or (C)
any condition to the Offer or the Merger not being satisfied.
Section 5.3 No Solicitation.
(a) The Company shall immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or negotiation
with any Persons conducted heretofore by the Company, its Subsidiaries or any of
their respective representatives with respect to any proposed, potential or
contemplated Acquisition Transaction.
(b) From and after this date, without the prior written consent of
Parent, the Company will not, and will not authorize or permit any of its
Subsidiaries to, and shall use its reasonable best efforts to cause any of its
or their respective officers, directors, employees, financial advisors, agents
or other representatives not to, directly or indirectly, solicit, initiate or
encourage (including by way of furnishing information) or take any other action
(other than public disclosure by the Company in the ordinary course of the
Company's business consistent with the Company's past practices) to facilitate
the making of any proposal which constitutes or may reasonably be expected to
lead to an Acquisition Proposal from any Person, engage in any discussion or
negotiations relating thereto or accept any Acquisition Proposal or enter into
any contract or understanding requiring it to abandon, terminate or fail to
consummate the Merger or any of the other transactions contemplated by this
Agreement; provided that, at any time prior to the acceptance for payment of
Company Common Shares pursuant to the Offer, the Company may, subject to
compliance with this Section 5.3(b), furnish information to, and negotiate or
otherwise engage in discussions with, any Person (a "Proposing Party") who (x)
delivers a bona fide written Acquisition Proposal which was not solicited,
initiated, encouraged or facilitated by the Company, directly or indirectly,
after the date of this Agreement or otherwise resulted from a breach of this
Section 5.3, and (y) enters into an appropriate confidentiality agreement with
the Company (which agreement shall be no less favorable to the Company than the
Confidentiality Agreement and a copy of which will be delivered to Parent
promptly after the execution thereof), if, but only if, the Board of Directors
determines in good faith by a majority vote, (i) after consultation with, and
receipt of advice from, its outside legal counsel, and taking into account,
among other things, all legal, financial, regulatory and other aspects of the
proposal and the party making the proposal, that such proposal would, if
consummated, result in a transaction that is more favorable to its shareholders
(in their capacities as shareholders), from a
37
financial point of view, than the transactions contemplated by this Agreement,
and (ii) after consultation with the Company's independent financial advisors,
that such proposal could reasonably be expected to be completed (a "Superior
Transaction").
(c) The Company shall notify Parent orally and in writing (1) of any
such offers or proposals (including, without limitation, the terms and
conditions of any such offers or proposals), and any amendments or revisions
thereto, (2) whether the Person making such offer or proposal has a class of
equity securities that is publicly traded, and whether such Person is a Fortune
500 company, is listed on the New York Stock Exchange or is traded on The Nasdaq
National Market, and (3) without requiring the Company to divulge information
that reasonably could lead Parent to identify the Person making such offer or
proposal, such other information regarding the financial position of the Person
making such offer or proposal and such other information as Parent reasonably
may request relating to such Person's ability to finance and consummate the
Acquisition Transaction so offered or proposed. The foregoing information shall
be delivered to Parent as promptly as practicable following the receipt by the
Company of such offer or proposal, and the Company shall keep Parent reasonably
informed of the status and material terms of any such offer or proposal. For
purposes of this Agreement, "Acquisition Proposal" shall mean, with respect to
the Company, any proposal or offer from any Person (other than Parent or any of
its Subsidiaries) relating to any (i) direct or indirect acquisition or purchase
of a portion of the business of the Company or any of its Subsidiaries that
generates 20% or more of the consolidated net revenues or constitutes 20% or
more of the assets of the Company and its Subsidiaries, (ii) direct or indirect
acquisition or purchase of 20% or more of any class of equity securities of the
Company or any of its Subsidiaries whose business generates 20% or more of the
consolidated net revenues or constitutes 20% or more of the assets of the
Company and its Subsidiaries, (iii) tender offer or exchange offer that if
consummated would result in any Person beneficially owning 20% or more of the
capital stock of the Company, or (iv) merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries whose business generates 20% or
more of the consolidated net revenues or constitutes 20% or more of the assets
of the Company and its Subsidiaries. Each of the transactions referred to in
clauses (i) - (iv) of the definition of Acquisition Proposal, other than any
such transaction to which Parent or any of its Subsidiaries is a party, shall be
deemed to exclude the Company's Subsidiary in Australia and is referred to as an
"Acquisition Transaction". For purposes of this Section 5.1(c), "consolidated
net revenues" shall refer to the aggregate revenues of the Company and its
Subsidiaries for the 12-month period ending on the last day of the period
covered by the most recent Form 10-K report of the Company or, if later, the
most recent Form 10-Q report of the Company filed with the SEC.
(d) If, prior to the acceptance for payment of Company Common Shares
pursuant to the Offer, the Board of Directors determines in good faith by a
majority vote,
38
with respect to any Acquisition Proposal from a Proposing Party for an
Acquisition Transaction received after the date hereof that was not solicited,
initiated, encouraged or facilitated by the Company, directly or indirectly, as
required by, and in accordance with, Section 5.3(b) above, after the date of
this Agreement or did not otherwise result from a breach of this Section 5.3,
that, based upon consultations with the Company's independent financial advisors
and outside legal counsel, the Acquisition Transaction is a Superior
Transaction, then the Company may terminate this Agreement and enter into an
acquisition agreement for the Superior Transaction; provided that, prior to any
such termination, and in order for such termination to be effective, (i) the
Company shall provide Parent three business day's written notice that it intends
to terminate this Agreement pursuant to this Section 5.3(d), identifying the
Superior Transaction and delivering an accurate description of all material
terms of the Superior Transaction to be entered into, and (ii) on the date of
termination (provided that the advice of the Company's independent financial
advisors and outside legal counsel referred to above shall continue in effect
without revocation, revision or modification), the Company shall deliver to
Parent (A) a written notice of termination of this Agreement pursuant to this
Section 5.3(d), (B) wire transfer of immediately available funds in the amount
of the Termination Fee, (C) a written acknowledgment from the Company that the
termination of this Agreement and the entry into the Superior Transaction are a
Triggering Event, and (D) a written acknowledgment from each other party to the
Superior Transaction that it has read the Company's acknowledgment referred to
in clause (C) above and will not contest the matters thus acknowledged by the
Company, including the payment of the Termination Fee.
(e) Nothing in this Section 5.3 shall prevent the Board of Directors
from taking, and disclosing to the Shareholders, a position contemplated by Rule
14d-9 and Rule 14e-2(a) promulgated under the Exchange Act or making any
disclosure required under the MBCL (subject, however, to compliance with the
balance of this sentence where applicable), and the Board of Directors may prior
to the acceptance for payment of Company Common Shares pursuant to the Offer,
withdraw, modify or change its Recommendation if, in the good faith judgment of
the Board of Directors, after consultation with outside legal counsel, failure
to take such action would be inconsistent with its obligations under applicable
law; provided that in the case of a tender offer made by any Person other than
Parent or Merger Sub, the Board of Directors shall not recommend that
shareholders tender their Company Common Shares in such tender offer unless (i)
such tender offer is determined to be a Superior Transaction in accordance with
the provisions of Section 5.3(d) and (ii) the Company has provided Parent with
not less than three business day's prior written notice of any such action;
provided, further, that in no event shall the Company or its Board of Directors
take, agree, or resolve to take any action prohibited by Section 5.3(b) or
5.3(d) except as expressly permitted by such Sections.
39
(f) Except pursuant to the exercise of its rights in compliance with
this Section 5.3, the Company shall not take any action to make the provisions
of Chapter 110D or Chapter 110F of the MBCL inapplicable to any Acquisition
Transaction in respect of the Company or release any standstill agreements or
other similar restrictions, or amend the Rights Agreement, redeem the Rights or
take any other action which would result in the Rights Agreement becoming
inapplicable to any Person or any Acquisition Transaction prior to the
termination of this Agreement in accordance with its terms.
ARTICLE VI
Section 6.1 Preparation of the Proxy Statement; Shareholders Meeting;
Offering Circular.
(a) If the approval of this Agreement by the Shareholders is required
by law, the Company and Parent shall, as promptly as practicable following the
expiration of the Offer (provided that the Minimum Tender Condition shall have
been satisfied), prepare and file with the SEC a proxy statement or information
statement relating to the Shareholder Approval (as amended or supplemented from
time to time, the "Proxy Statement") and the Company shall use its commercially
reasonable efforts to have the Proxy Statement promptly declared effective by
the SEC and to cause the Proxy Statement to be mailed to the Shareholders as
promptly as practicable following the expiration of the Offer in accordance with
the provisions of the MBCL. The Company shall promptly notify Parent upon the
receipt of any comments from the SEC or its staff or any request from the SEC or
its staff for amendments or supplements to the Proxy Statement and shall provide
Parent with copies of all correspondence between the Company and its
representatives, on the one hand, and the SEC and its staff, on the other hand.
Notwithstanding the foregoing, prior to filing or mailing the Proxy Statement
(or any amendment or supplement thereto) or responding to any comments of the
SEC with respect thereto, the Company (i) shall provide Parent a reasonable
opportunity to review and comment on such document or response, (ii) shall
include in such document or response all comments reasonably proposed by Parent
and (iii) shall not file or mail such document or respond to the SEC prior to
receiving Parent's approval, which approval shall not be unreasonably withheld
or delayed.
(b) If the approval of this Agreement by the Shareholders is required
by law, the Company shall, as promptly as practicable following the expiration
of the Offer (provided that the Minimum Tender Condition shall have been
satisfied), establish a record date (which will be as promptly as reasonably
practicable following the expiration of the Offer) for, duly call, give notice
of, convene and hold a meeting of the Shareholders (the "Shareholders Meeting")
for the purpose of obtaining the Shareholder Approval. Subject to Section
5.3(e), the Company shall, through the Board of Directors, declare advisable and
recommend to its Shareholders that they approve this Agreement, and shall
include such recommendation in the Proxy Statement. Without limiting the
40
generality of the foregoing, the Company agrees that its obligations pursuant to
the first sentence of this Section 6.1(b) shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to the Company
or any other person of any Acquisition Proposal or (ii) the withdrawal or
modification by the Board of Directors of its approval or recommendation of the
Offer, the Merger or this Agreement.
(c) The Company represents and warrants that the information (other
than information with respect to Parent and Merger Sub which is supplied by
Parent and Merger Sub in writing to the Company specifically for use in the
Proxy Statement) contained in the Proxy Statement will not, at the date of
mailing to the Shareholders or at the date of such Shareholders Meeting, contain
any statement which, at the time and in light of the circumstances under which
it is made, is false or misleading with respect to any material fact required to
be stated therein or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for such Shareholders
Meeting. The Company represents and warrants that the Proxy Statement will
comply as to form in all material respects with the Exchange Act and the rules
and regulations of the SEC thereunder. Parent and Merger Sub represent and
warrant that the information supplied by Parent and Merger Sub in writing to the
Company specifically for use in the Proxy Statement will not, at the date of
mailing to the Shareholders or at the date of the Shareholders Meeting, contain
any statement which, at the time and in light of the circumstances under which
it is made, is false or misleading with respect to any material fact required to
be stated therein or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Shareholders
Meeting.
(d) Notwithstanding Section 6.1(a), (b) or (c), in the event that
Parent, Merger Sub or any other Subsidiary of Parent acquires, directly or
indirectly, at least 90% of the outstanding Company Common Shares pursuant to
the Offer or otherwise, the parties hereto will take all necessary and
appropriate action to cause the Merger to become effective in accordance with
Section 82 of the MBCL without a meeting of the Shareholders as soon as
practicable after the acceptance for payment and purchase of the Company Common
Shares by Parent pursuant to the Offer.
Section 6.2 Filings; Other Action. Subject to the terms and conditions
herein provided, the Company, Parent and Merger Sub shall: (a) make promptly
their respective filings, and any other submissions, under the HSR Act with
respect to the Merger and the other transactions contemplated hereby, (b) use
their reasonable best efforts to cooperate with one another in (i) determining
which other filings are required to be made prior to the expiration of the
Effective Time with, and which consents, approvals, permits or authorizations
are required to be obtained prior to the Effective Time from, Governmental
Entities or other third parties in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby and
(ii) timely making all such filings and timely seek all such consents,
approvals, permits,
41
authorizations and waivers, and (c) use their reasonable best efforts to take,
or cause to be taken, all other actions and do, or cause to be done, all other
things necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement; provided, however, that such
reasonable best efforts shall not include (i) the sale or divestiture of any
assets of Parent (or its affiliates) or (ii) the licensing of any Intellectual
Property of Parent or its affiliates or Intellectual Property to be acquired
under this Agreement. If, at any time after the Effective Time, any further
action is necessary or desirable to carry out the purpose of this Agreement, the
proper officers and directors of Parent or the Surviving Corporation shall take
all such necessary action.
Section 6.3 Publicity. The initial press release relating to this
Agreement shall be issued jointly by the Company, Parent and Merger Sub.
Thereafter, subject to their respective legal obligations, the Company, Parent
and Merger Sub shall consult with each other, and use reasonable efforts to
agree upon the text of any press release, before issuing any such press release
or otherwise making public statements with respect to the transactions
contemplated hereby and in making any filings with any Governmental Entity or
with any national securities exchange with respect thereto.
Section 6.4 Further Action. Each of the parties shall, subject to the
fulfillment at or before the Effective Time of each of the conditions of
performance set forth in this Agreement or the waiver thereof, use its
reasonable best efforts to perform those further acts and execute those
documents as may be reasonably required to effect the transactions contemplated
hereby. Each of the parties agrees to use its reasonable best efforts to obtain
in a timely manner all necessary waivers, consents, approvals and opinions and
to effect all necessary registrations and filings, and to use its reasonable
best efforts to take, or cause to be taken, all other actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the Offer and the Merger. In
furtherance of the foregoing, the Company shall use its reasonable best efforts
to procure the execution of agreements between the Surviving Corporation and
employees of the Company identified by Parent on terms satisfactory to Parent
and such employees.
Section 6.5 Expenses. Whether or not the Offer or the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby (including the Offer and the Merger)
shall be paid by the party incurring those expenses except as expressly provided
in this Agreement. All reasonable fees and expenses of the Company's financial
advisor and legal counsel shall be paid by the Surviving Corporation upon the
consummation of the Merger.
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Section 6.6 Notification of Certain Matters. Each party shall give prompt
notice to the other parties of the following:
(a) the occurrence or nonoccurrence of any event whose occurrence or
nonoccurrence is reasonably expected to cause any of the conditions precedent
set forth in Article VII not to be satisfied; and
(b) any facts relating to that party which would make it necessary or
advisable to amend the Schedule TO or the Proxy Statement in order to make the
statements therein not untrue or misleading or to comply with applicable law;
provided, however, that the delivery of any notice pursuant to this Section 6.6
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
(c) From time to time after the date of this Agreement and prior to the
acceptance for payment of Company Common Shares pursuant to the Offer, the
Company will promptly supplement or amend the Company Disclosure Letter with
respect to any matter hereafter arising which, if existing or occurring at or
prior to the date of this Agreement, would have been required to be set forth or
described in the Company Disclosure Letter which is necessary to correct any
information in the Company Disclosure Letter or in any representation and
warranty of the Company that has been rendered inaccurate thereby. For purposes
of determining the accuracy of the representations and warranties of the Company
contained in Article III in order to determine the fulfillment of the conditions
set forth in paragraph (d) of Exhibit A, the Company Disclosure Letter delivered
by the Company shall be deemed to include only that information contained
therein on the date of this Agreement and shall be deemed to exclude any
information contained in any subsequent supplement or amendment thereto.
Section 6.7 Access to Information. From the date of this Agreement until
the Closing, upon reasonable notice, the Company shall, and shall cause its
Subsidiaries to, (i) give Parent and its authorized representatives full access
to all books, records (except personnel files), personnel, offices and other
facilities and properties of the Company and its Subsidiaries and their
accountants and accountants' work papers, (ii) permit Parent to make such copies
and inspections thereof as Parent may reasonably request and (iii) furnish
Parent with such financial and operating data and other information with respect
to the business and properties of the Company and its Subsidiaries as Parent may
from time to time reasonably request; provided that no investigation or
information furnished pursuant to this Section 6.7 shall affect any
representation or warranty made herein by the Company or the conditions to the
obligations of Parent and Merger Sub to consummate the transactions contemplated
by this Agreement. Parent will endeavor to describe information requests with as
much specificity as is practicable. Each of Parent and the Company shall
designate a representative to coordinate information and other requests pursuant
to this Section 6.7. All access shall be subject to the condition that such
43
examinations shall be conducted during normal business hours and in a manner
designed to minimize to the extent practicable disruption to the normal business
operations of the Company.
Section 6.8 Insurance; Indemnity. (a) Parent will maintain in effect with
a carrier reasonably acceptable to the Company for not less than six years after
the Effective Time, the Company's current directors and officers insurance
policies, if such insurance is obtainable (or policies of at least the same
coverage containing terms and conditions no less advantageous to the current and
all former directors and officers of the Company) with respect to acts or
failures to act prior to the Effective Time, including acts relating to the
transactions contemplated by this Agreement; provided, however, that in order to
maintain or procure such coverage, Parent shall not be required to maintain or
obtain policies providing such coverage except to the extent such coverage can
be provided at an annual cost of no greater than two times the most recent
annual premium paid by the Company prior to the date hereof (the "Cap"); and
provided, further, that if equivalent coverage cannot be obtained, or can be
obtained only by paying an annual premium in excess of the Cap, Parent shall
only be required to obtain as much coverage as can be obtained by paying an
annual premium equal to the Cap.
(b) From and after the Effective Time, Parent shall indemnify and hold
harmless to the fullest extent permitted under applicable law, each Person who
is, or has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of the Company or any of its Subsidiaries
(each, an "Indemnified Party") against all losses, claims, damages, liabilities,
costs or expenses (including attorneys' fees), judgments, fines, penalties and
amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation arising out of or pertaining to acts or omissions,
or alleged acts or omissions, by them in their capacities as such, which acts or
omissions occurred prior to the Effective Time, whether asserted or claimed
prior to, at or after the Effective Time. In the event of any such claim,
action, suit, proceeding or investigation (an "Action"), the Parent shall
control the defense of such Action with counsel selected by the Parent, which
counsel shall be reasonably acceptable to the Indemnified Party; provided,
however, that the Indemnified Party shall be permitted to participate in the
defense of such Action through counsel selected by the Indemnified Party, which
counsel shall be reasonably acceptable to the Parent, at the Indemnified Party's
expense. Notwithstanding the foregoing, if there is any conflict between the
Parent and any Indemnified Parties or there are additional defenses available to
any Indemnified Parties, the Indemnified Parties shall be permitted to
participate in the defense of such Action with counsel selected by the
Indemnified Parties, which counsel shall be reasonably acceptable to the Parent,
and Parent shall cause Parent to pay the reasonable fees and expenses of such
counsel, as accrued and in advance of the final disposition of such Action to
the fullest extent permitted by applicable law; provided,
44
however, that the Parent shall not be obligated to pay the reasonable fees and
expenses of more than one counsel for all Indemnified Parties in any single
Action except to the extent that, in the opinion of counsel for the Indemnified
Parties, two or more of such Indemnified Parties have conflicting interests in
the outcome of such Action. The Parent shall not be liable for any settlement
effected without its written consent, which consent shall not unreasonably be
withheld.
(c) The Surviving Corporation shall keep in effect all provisions in
its articles of organization and by-laws that provide for exculpation of
director and officer liability and indemnification (and advancement of expenses
related thereto) of the past and present officers and directors of the Company
to the fullest extent permitted by the MBCL and such provisions shall not be
amended except as either required by applicable law or to make changes permitted
by law that would enhance the rights of past or present officers and directors
to indemnification or advancement of expenses.
(d) If the Surviving Corporation or any of its respective successors or
assigns (i) shall consolidate with or merge into any other corporation or other
entity and shall not be the continuing or surviving corporation or entity of the
consolidation or merger or (ii) shall transfer all or substantially all of its
properties and assets to any individual, corporation or other entity, then and
in each such case, proper provisions shall be made so that the successors and
assigns of the Surviving Corporation shall assume all of the obligations set
forth in this Section 6.8.
(e) The provisions of this Section 6.8 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives.
Section 6.9 Employee Benefit Plans. The Company agrees to promptly take
all actions necessary to cause the following to occur on or prior to the Closing
Date:
(a) Merger of 401(k) Plan. As the plan sponsor, the Company will (on or
before the Closing Date, except with respect to 6.9(a)(viii) herein, which shall
occur as soon as administratively practicable following the Closing Date) (i)
adopt all amendments to the Company's 401(k) plan (the "401(k) Plan") necessary
to make such Plan comply with the applicable legal requirements as changed by
the laws described in Rev. Proc. 99-23 issued by the Internal Revenue Service,
(ii) make its matching contributions (in amounts consistent with its practice of
making such contributions in prior years) to the accounts of participants in
such 401(k) Plan for the plan year ending December 31, 2000, (iii) comply with
the 401(k) Plan's provisions with respect to participant loans by placing in
default and treating as deemed distributions the amount of any loans outstanding
to former employees of the Company which have not been repaid in full (other
than the former employees affected by the sale of the Company's Factura
business), (iv) obtain the
45
resignations of Xxxxxxxx Clear, Xxxxx Xxxxxxxx and Xxxx Xxxxx Xxxx as trustees
of the trust forming part of such 401(k) Plan, effective as of the Closing Date,
(v) appoint L. Xxxxxx Xxxxxxxx as successor trustee of the trust forming part of
such 401(k) Plan, effective as of the Closing Date, (vi) approve the merger of
such 401(k) Plan with the Minnesota Mining and Manufacturing Company Voluntary
Investment Plan and Employee Stock Ownership Plan (the "VIP") effective as soon
as administratively practicable, but in any event at a time agreed upon by
Parent and the Surviving Corporation, which may occur following the Closing
Date, (vii) direct the trustees of the 401(k) Plan to prepare for the transfer
of the assets and records of such Plan to the trustee of the VIP as soon as
reasonably possible following the Closing Date, and (viii) prior to the merger
of the 401(k) Plan into the VIP, which may occur following the Closing Date,
cause the 401(k) Plan to return sufficient contributions and earnings thereon to
the Company's highly compensated employees so that the 401(k) Plan complies with
the anti-discrimination provisions of Section 401(k) of the Code for the plan
year ending December 31, 2000.
(b) Termination of Stock Option Plans. As the plan sponsor, the Company
will (i) not issue options to purchase Company Common Shares under any of the
Stock Option Plans after the date of this Agreement, (ii) cause all of the
Company Options issued under the Stock Option Plans and outstanding as of the
date of this Agreement to become fully vested and immediately exercisable upon
the satisfaction of the Minimum Tender Condition, (iii) exercise its authority
under the Stock Option Plans to cause each Company Option still outstanding at
the Effective Time of the Merger to be converted into the right to receive in
cash an amount equal to the Net Gain attributable to such Company Option, and
(iv) cause all of the Stock Option Plans and all of the Company Options
outstanding under such Plans to be terminated effective as of the Closing Date,
subject to the right of the holders of Company Options to receive the Net Gains
attributable to their Company Options as described in Section 2.1(e) hereof.
(c) Employment Agreements. The Company will assist Parent in (i)
identifying those key employees of the Company and its subsidiaries whose
continued employment following the Closing Date should be covered by individual
employment agreements, and (ii) designing the provisions of such agreements;
provided, however, that the Surviving Corporation shall have the final authority
to decide which of the Company's employees will be offered such employment
agreements. The Company will use reasonable commercial efforts to convince such
key employees to enter into such individual employment agreements on or prior to
the Closing Date.
(d) Retention Incentives. The Company will assist Parent in (i)
identifying those key employees of the Company and its subsidiaries who should
be eligible for retention bonuses/compensation as an incentive for them to
continue their employment following the Closing Date, and (ii) designing the
terms and conditions of
46
such retention bonuses/compensation; provided, however, that the Surviving
Corporation shall have the final authority to decide both the employees eligible
for such retention bonuses/compensation as well as the terms and conditions of
such bonuses/compensation.
(e) Termination of Stock Purchase Plan. As the plan sponsor, the
Company will (i) exercise its authority under the 1995 Employee Stock Purchase
Plan to treat the Closing Date of the Merger as an Offering Termination Date for
purposes of such Plan, (ii) cause each Option in effect under the 1995 Employee
Stock Purchase Plan as of such Offering Termination Date to be exercised as of
the Closing Date, and (iii) cause the 1995 Employee Stock Purchase Plan and all
of the Options outstanding under such Plan to be terminated effective as of the
Closing Date, subject to the right of the Option holders to receive the Merger
Consideration for the Company Common Shares they become entitled to receive upon
the exercise of their Options.
(f) Participation in 401(k) Plan. The Surviving Corporation shall
permit its employees to continue their participation in the 401(k) Plan (if they
have not become eligible to participate in the VIP) until such time as the
401(k) Plan is merged into the VIP.
(g) No Action. Parent shall not take any action following the Effective
Time that would cause a breach of the Company's agreements made in this Section
6.9.
Section 6.10 Rights Agreement. The Board of Directors of the Company
shall take all action requested by Parent in order to render the Rights
inapplicable to the Offer, the Merger and the other transactions contemplated
hereby.
ARTICLE VII
Section 7.1 Conditions to Obligations of the Parties to Consummate the
Merger. The respective obligation of each party to consummate the Merger shall
be subject to the satisfaction of each of the following conditions:
(a) Shareholder Approval. The Shareholder Approval shall have been
obtained, if required by applicable law.
(b) Legality. No order, decree or injunction (collectively, "Legal
Restraints") shall have been entered or issued by any Governmental Entity which
is in effect and has the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger. Each party agrees that, in the event
that any such order, decree or injunction shall be entered or issued, it shall
use its reasonable best efforts (using the standard described in Section 6.2(c)
of this Agreement) to cause any such order, decree or injunction to be lifted or
vacated.
47
(c) Antitrust. The waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated and any
other approval or waiting period required prior to the Effective Time under any
other applicable competition, merger control, antitrust or similar law or
regulation of any Governmental Entity shall have been obtained or terminated or
shall have expired, other than those the failure of which to have been obtained
or terminated or to have expired would not (x) reasonably be expected to have a
Material Adverse Effect (it being understood for purposes of this clause (x)
that no party may rely on the failure of this condition to be satisfied if such
failure was caused by such party's failure to comply with the terms of Section
6.2) or (y) result in the commission of a criminal offense.
(d) Purchase of Company Common Shares in the Offer. Merger Sub shall
have previously accepted for payment and paid for the Company Common Shares
pursuant to the Offer.
Section 7.2 Additional Conditions to Obligations of Parent and Merger
Sub.The obligations of Parent and Merger Sub to consummate the Merger shall also
be subject to the satisfaction or waiver of each of the following conditions:
(a) The Company shall have performed in all material respects its
covenants contained in Section 1.3 of this Agreement required to be performed on
or prior to the Closing Date.
(b) The Shareholders Agreement shall be in full force and effect.
(c) The Option Agreement shall be in full force and effect.
(d) The Company shall have performed in all material respects its
covenants contained in Section 6.9 of this Agreement that are required to be
performed on or prior to the Closing Date.
ARTICLE VIII
Section 8.1 Termination. This Agreement may be terminated, and the Offer
and the Merger contemplated hereby may be abandoned, at any time before the
Effective Time (except as otherwise provided), whether before or after the
Shareholder Approval has been obtained, as follows:
(a) by mutual written consent of each of the Company and Parent;
48
(b) by any party, if Merger Sub shall not have accepted for payment any
Company Common Shares pursuant to the Offer satisfying the Minimum Tender
Condition prior to February 28, 2001 (the "Termination Date"); provided,
however, that the right to terminate this Agreement under this Section 8.1(b)
shall not be available to any party whose breach of this Agreement has been a
principal reason the Offer has not been consummated by such date; and provided
further, that either party, by written notice to the other party, may extend the
aforementioned February 28, 2001 date to a date not later than April 30, 2001 if
all conditions of the Offer other than those conditions set forth in subsection
(f) of Exhibit A to this Agreement have been satisfied on or before February 28,
2001;
(c) by any party, if a Governmental Entity shall have issued an order,
decree or injunction or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or payment
for the company Common Shares pursuant to the Offer or the Merger and such
order, decree or injunction shall have become final and nonappealable (but only
if such party shall have used its reasonable best efforts to cause such order,
decree or injunction to be lifted or vacated);
(d) by Parent, (i) if the Company shall have breached or failed to
perform any of its representations, warranties, covenants or agreements
contained in this Agreement, which breach individually or in the aggregate with
other such breaches, would give rise to the failure of a condition set forth in
paragraph (d) or (e) of Exhibit A hereto and has not been or is incapable of
being cured by the Company within 20 business days after its receipt of written
notice thereof from Parent, or (ii) if any suit, action or proceeding described
in paragraph (a) of Exhibit A hereto shall have prevailed and become final and
nonappealable;
(e) by the Company, if either Parent or Merger Sub shall have breached
or failed to perform in any material respect any of its representations,
warranties, covenants or agreements contained in this Agreement except for such
failures that, individually or in the aggregate, would not reasonably be
expected to have a material adverse effect on Parent's or Merger Sub's ability
to consummate the transactions contemplated hereby, including the Offer and the
Merger, which breach or failure to perform has not been or is incapable of being
cured by Parent within 20 business days after its receipt of written notice
thereof from the Company;
(f) by Parent, if the condition set forth in Section 7.1(a) has not
been satisfied, unless Company Common Shares satisfying the Minimum Tender
Condition have been tendered to Merger Sub;
(g) by Parent, if (i) the Board of Directors shall or shall resolve to
(A) either not recommend that the Shareholders accept the Offer or, if
applicable, give the Shareholder Approval, (B) withdraw its Recommendation, (C)
modify its
49
Recommendation in a manner adverse to Parent or Merger Sub, (D) approve,
recommend or fail to take a position that is adverse to any proposed Acquisition
Transaction (other than the Offer or the Merger) involving the Company or any of
its Subsidiaries, or (E) take any action which would constitute a breach of
Section 5.3(f), (ii) the Board of Directors shall have refused to affirm to
Parent its Recommendation to the Shareholders that they accept the Offer and
give the Shareholder Approval as promptly as practicable (but in any case within
five days) after receipt of any reasonable written request for such affirmation
from Parent, or (iii) a person shall have acquired more than 20% of the
outstanding Company Common Shares; or
(h) by the Company pursuant to, but only in compliance with, Section
5.3.
Section 8.2 Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement pursuant to this Article VIII, this Agreement
shall become void (other than this Section 8.2) with no liability on the part of
either party (or of any of its representatives);
(b) Upon the happening of a Triggering Event, the Company shall pay to
Parent (or to any Subsidiary of Parent designated in writing by Parent to the
Company) the amount of $9,000,000 (the "Termination Fee"). "Triggering Event"
means any one of the following:
(i) a termination of this Agreement by Parent pursuant to
Section 8.1(g)(i) or (ii);
(ii) a termination of this Agreement by Parent pursuant to
Section 8.1(d)(i) or 8.1(f) if any Acquisition Proposal is publicly
proposed or announced on or after the date hereof and such Acquisition
Proposal has not been publicly rejected by the Board of Directors; or
(iii) a termination of this Agreement by the Company pursuant
to Section 8.1(h); or
(iv) if, within twelve months after a termination of this
Agreement, any Acquisition Transaction is entered into, agreed to or
consummated by the Company with a Person (other than Parent or Merger
Sub) who made, or who is affiliated with any Person (other than Parent
or Merger Sub) who made, (A) an Acquisition Proposal or (B) a statement
of intent to pursue an Acquisition Transaction, either of which was
publicly proposed or announced prior to a termination of this
Agreement.
Payment of the Termination Fee shall be made by wire transfer of immediately
available funds (1) on the second business day after such termination in the
case of clauses (i) and
50
(ii) of the definition of Triggering Event, (2) on or prior to the date of such
termination, in the case of clause (iii) of the definition of Triggering Event,
or (3) on the earlier of (x) the date a contract is entered into with respect to
an Acquisition Transaction or (y) the date an Acquisition Transaction is
consummated, in the case of clause (iv) of the definition of Triggering Event.
In no event shall more than one Termination Fee be payable by each party under
this Agreement. Notwithstanding any other provision of this Agreement to the
contrary, upon receipt of the Termination Fee by Parent (or its designee),
Parent and Merger Sub shall have no other or further claim or demand of any kind
or nature whatsoever against the Company or any of its affiliates except for any
claims or rights Parent may have under the Shareholders Agreement or the Option
Agreement.
(c) If the Company terminates this Agreement pursuant to Section
8.1(e), Parent shall pay to the Company as liquidated damages the sum of
$9,000,000; and, notwithstanding any other provision of this Agreement to the
contrary, upon receipt of such sum the Company shall have no other or further
claim or demand of any kind or nature whatsoever against Parent, Merger Sub or
any of their affiliates.
(d) The parties acknowledge that the agreements contained in this
Section 8.2 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, neither party would enter into
this Agreement. Accordingly, if either party fails to pay promptly amounts when
due pursuant to this Section 8.2, and, in order to obtain such payment, the
other party commences a suit which results in a judgment against the non-paying
party for such amount (or any portion thereof), the non-paying party shall pay
the costs and expenses (including reasonable attorneys fees) of the other party
in connection with such suit, together with interest on such amount in respect
of the period from the date such amount became due until paid at the prime rate
of The Chase Manhattan Bank in effect from time to time during such period.
Section 8.3 Amendment. This Agreement may be amended by the parties
hereto at any time, whether before or after the Shareholder Approval has been
obtained; provided that, after the purchase of Company Common Shares pursuant to
the Offer, no amendment shall be made which decreases the Merger Consideration
and, after the Shareholder Approval, if required, has been obtained, there shall
be made no amendment that by law requires further approval by the Shareholders
of the parties without the further approval of such Shareholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto. Following the election or appointment of Merger Sub's
designees pursuant to Section 1.3 and prior to the Effective Time, the
affirmative vote of a majority of the Independent Directors then in office shall
be required by the Company to (i) amend or terminate this Agreement by the
Company, (ii) exercise or waive any of the Company's rights or remedies under
this
51
Agreement or (iii) extend the time for performance of Parent and Merger Sub's
respective obligations under this Agreement.
ARTICLE IX
Section 9.1 Non-Survival of Representations, Warranties and Agreements.
The representations, warranties and agreements in this Agreement shall terminate
at the Effective Time or upon the termination of this Agreement pursuant to
Section 8.1, as the case may be, except that (a) the agreements set forth in
Sections 1.3, 6.8 and 6.9 shall survive the Effective Time, and (b) the
agreements set forth in Sections 6.5, 8.2 and this Article IX shall survive
termination indefinitely.
Section 9.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date of receipt and shall be delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested), sent
by overnight courier or sent by telecopy, to the applicable party at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a party as shall be specified by like notice):
(a) if to the Company:
MicroTouch Systems, Inc.
000 Xxxxxxx Xxxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxxx X. Clear
Telecopy No.: (000) 000-0000
with a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
(b) if to Parent or Merger Sub:
Minnesota Mining and Manufacturing Company
Office of the General Counsel
Building 220-14W-07
52
St. Xxxx, MN 55144
Attention: General Counsel
Telecopy No.: (000) 000-0000
with a copy to:
Minnesota Mining and Manufacturing Company
Xxxxxx xx xxx Xxxxxxx Xxxxxxx
Xxxxxxxx 000-00X-00
Xx. Xxxx, XX 00000
Attention: Xxxxx Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
with a further copy to:
Xxxxxx & Xxxxxxx LLP
Pillsbury Center South
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
Section 9.3 Certain Definitions; Interpretation. (a) For purposes of
this Agreement, the following terms shall have the following meanings:
(i) "Material Adverse Effect" means any change, circumstance,
event, effect or state of facts (x) that has or can reasonably be expected to
have a material adverse effect on the business, operations, results of ongoing
operations, assets or conditions (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole, having a value of not less than $600,000
individually or $3,000,000 in the aggregate (except as modified in Section
3.12), or the ability of the Company and its Subsidiaries to conduct their
business after the closing consistent in all material respects with the manner
conducted in the past, or (y) that will prevent or materially impair the
Company's ability to consummate the Merger; provided, however, that a Material
Adverse Effect will not be deemed to have occurred if the change, circumstance,
event, effect or state of facts results primarily from (i) changes in general
business conditions in the input device industry or (ii) the public announcement
by the Company or pendency of the Merger.
(ii) "affiliate" of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person.
53
(iii) "Board of Directors" means the Board of Directors of the
Company and includes any committee thereof.
(iv) "control" (including the terms "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of stock, as trustee or executor, by contract or
credit arrangement or otherwise.
(v) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended and the rules and regulations promulgated thereunder.
(vi) "knowledge" of the Company with respect to any matter means
actual knowledge of any of the Company's senior executive officers after
reasonable investigation and due diligence. Such Persons and their respective
areas of responsibility are set forth on Section 9.3 of the Company Disclosure
Letter.
(vii) "Person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization,
entity or group (as defined in the Exchange Act).
(viii) "Subsidiary" of a Person means any corporation or other
legal entity of which that Person (either alone or through or together with any
other Subsidiary or Subsidiaries) is the general partner or managing entity or
of which at least a majority of the stock (or other equity interests the holders
of which are generally entitled to vote for the election of the board of
directors or others performing similar functions of such corporation or other
legal entity) is directly or indirectly owned or controlled by that Person
(either alone or through or together with any other Subsidiary or Subsidiaries).
(b) When a reference is made in this Agreement to Articles, Sections,
Company Disclosure Letter or Exhibits, this reference is to an Article or a
Section of, or an Exhibit to, this Agreement, unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be understood to be followed by the words "without
limitation."
Section 9.4 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.5 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other
54
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon a determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the maximum extent possible.
Section 9.6 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Company Disclosure Letter and the Confidentiality Agreement
constitute the entire agreement and supersede any and all other prior agreements
and undertakings, both written and oral, among the parties hereto, or any of
them, with respect to the subject matter hereof and, except for Section 6.8
(Insurance; Indemnity), does not, and is not intended to, confer upon any Person
other than the parties hereto any rights or remedies hereunder.
Section 9.7 Assignment. This Agreement shall not be assigned by any
party by operation of law or otherwise without the express written consent of
each of the other parties.
Section 9.8 Governing Law. This Agreement shall be governed by and
construed in accordance with, the laws of the Commonwealth of Massachusetts
without regard to the conflicts of laws provisions thereof. Each of the parties
hereto hereby irrevocably and unconditionally waives any right it may have to
trial by jury in connection with any litigation arising out of or relating to
this Agreement, the Offer, the Merger or any of the other transactions
contemplated hereby or thereby.
Section 9.9 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties in separate counterparts, each of
which when executed shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
Section 9.10 Confidential Nature of Information. Between the date of this
Agreement and the Effective Time the parties hereto will hold and will cause
their respective officers, directors, employees, representatives, consultants
and advisors to hold in strict confidence in accordance with the terms of the
Confidentiality Agreement, all documents and information furnished to such party
by or on behalf of the other party in connection with the transactions
contemplated by this Agreement. If the transactions
55
contemplated by this Agreement are not consummated, such confidence shall be
maintained in accordance with such Confidentiality Agreement.
56
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal as of the date first written above by their respective
officers thereunto duly authorized.
MINNESOTA MINING AND MANUFACTURING COMPANY
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title:
EQUINOX ACQUISITION, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
By: /s/ X.X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Treasurer or Assistant Treasurer
MICROTOUCH SYSTEMS, INC.
By: /s/ X. Xxxxxxxxxx Xxxxx
----------------------------------------
Name: X. Xxxxxxxxxx Xxxxx
Title: Chief Executive Officer
By: /s/ Xxxxxxxx X. Clear
----------------------------------------
Name: Xxxxxxxx X. Clear
Title: Treasurer or Assistant Treasurer
57
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Merger
Sub shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Merger Sub's obligation to pay for or return tendered Company
Common Shares promptly after the termination or withdrawal of the Offer), to pay
for any Company Common Shares tendered pursuant to the Offer and may postpone
the acceptance for payment or payment for any Company Common Shares tendered,
and, when permitted by the Agreement, amend or terminate the Offer unless (i)
there shall have been validly tendered and not withdrawn prior to the expiration
of the Offer that number of Company Common Shares, together with Company Common
Shares owned by Parent or Merger Sub, which would represent at least a majority
of the outstanding Company Common Stock (determined on a fully diluted basis for
all outstanding stock options, convertible securities and any other rights to
acquire Company Common Stock on the date of purchase) (the "Minimum Tender
Condition"), and (ii) any requisite waiting period under the HSR Act (and any
extension thereof) applicable to the purchase of Company Common Shares pursuant
to the Offer or to the Merger and any other requisite waiting periods under any
other applicable material competition, merger, control, antitrust or similar law
or regulation shall have been terminated or shall have expired. Furthermore,
notwithstanding any other term of the Offer or this Agreement, Merger Sub shall
not be required to accept for payment or, subject as aforesaid, to pay for any
Company Common Shares not theretofore accepted for payment or paid for, and,
subject to this Agreement, may terminate or amend the Offer, immediately prior
to the applicable expiration of the Offer, if any of the following conditions
exists:
(a) there shall be pending or formally threatened any suit, action or
proceeding by any Governmental Entity (i) challenging the acquisition by Parent
or Merger Sub of any Company Common Shares, seeking to restrain or prohibit
consummation of the Offer or the Merger, or seeking to place limitations on the
ownership of Company Common Shares (or shares of common stock of the Surviving
Corporation) by Parent or Merger Sub, (ii) seeking to prohibit or limit the
ownership or operation by the Company or Parent and their respective
Subsidiaries of any material portion of the business or assets of the Company or
Parent and their respective Subsidiaries taken as a whole, or to compel the
Company or Parent and their respective Subsidiaries to dispose of or hold
separate any material portion of the business or assets of the Company or Parent
and their respective Subsidiaries taken as a whole, as a result of the Offer,
the Merger or any of the other transactions contemplated by this Agreement,
(iii) seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect the business or operations of the Company or
Parent and Subsidiaries
58
taken as a whole, or (iv) which otherwise is reasonably expected to have a
Material Adverse Effect;
(b) any Legal Restraint that has the effect of preventing the purchase
of Company Common Shares pursuant to the Offer or the Merger shall be in effect;
(c) except as set forth in the Company Disclosure Letter or in the SEC
Reports, since September 30, 2000, there shall have been any state of facts,
change, development, effect, event, condition or occurrence that, individually
or in the aggregate, constitutes or would reasonably be expected to have, a
Material Adverse Effect;
(d) the representation and warranty of the Company contained in Section
3.3 of this Agreement shall not be true and correct in all material respects, or
the other representations and warranties of the Company contained in this
Agreement shall not be true and correct, except for such failures to be true and
correct that (without giving effect, with respect to those representations and
warranties that are not true and correct, to any limitation as to "materiality"
or Material Adverse Effect set forth therein), individually and in the
aggregate, would not reasonably be expected to have a Material Adverse Effect;
(e) the Company shall have failed to perform in any respect any
obligation required to be performed by it under this Agreement at or prior to
the Termination Date, which failure would reasonably be expected to have a
Material Adverse Effect;
(f) Parent shall not have obtained all consents, approvals,
authorizations, qualifications and orders of all Governmental Entities legally
required in connection with this Agreement and the transactions contemplated by
this Agreement, other than any such consents, approvals, authorizations,
qualifications and orders, the failure of which to obtain, individually and in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect; provided, however, that the failure to obtain such consents, approvals,
authorizations, qualifications or orders is not the result of a breach by Parent
or Merger Sub of any of their covenants and other obligations set forth in this
Agreement;
(g) this Agreement shall have been terminated in accordance with its
terms;
(h) the Company Board shall have (A) withdrawn or modified or changed,
in any manner adverse to Parent or Merger Sub, the Recommendation, (B) accepted,
approved or recommended any Acquisition Proposal, or (C) resolved or publicly
disclosed any intention to do any of the foregoing; or
59
(i) there shall have occurred (i) any general suspension of trading in
or on the Nasdaq National Market (other than a shortening of trading hours or
any coordinated trading halt triggered solely as a result of a specified
increase or decrease in a market index), (ii) a decline of at least 30%
(determined for any particular day as of the close of business for such day) in
either the Dow Xxxxx Average of Industrial Stocks or the Standard & Poor's 500
Index from the date hereof, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iv) the
imposition of any limitation (whether or not mandatory) by any government or
Governmental Entity, on the extension of credit by banks or other lending
institutions, (v) a commencement of a war or armed hostilities or any other
national or international calamity directly involving the United States or (vi)
in the case of any of the foregoing existing on the date hereof, a material
acceleration or worsening thereof;
which, in the sole discretion of Merger Sub or Parent, in any such case, and
regardless of the circumstances giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Merger Sub and
Parent and may be asserted by Merger Sub or Parent regardless of the
circumstances giving rise to such condition or may be waived by Merger Sub and
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent, Merger Sub or any other affiliate of Parent
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right; the waiver of any such right with respect to particular facts
and circumstances shall not be deemed a waiver with respect to any other facts
and circumstances and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
The terms in this Exhibit A that are defined in the attached Merger
Agreement have the meanings set forth therein.
60
