EXHIBIT (C)(1)
AGREEMENT AND PLAN OF MERGER
AMONG
GE FANUC AUTOMATION NORTH AMERICA, INC.,
ORION MERGER CORP.
AND
TOTAL CONTROL PRODUCTS, INC.
DATED AS OF NOVEMBER 22, 1998
TABLE OF CONTENTS
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AGREEMENT AND PLAN OF MERGER
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PAGE
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ARTICLE I
THE OFFER............................................... 2
Section 1.1. The Offer................................. 2
Section 1.2. Company Actions........................... 3
ARTICLE II
THE MERGER.............................................. 5
Section 2.1. The Merger................................. 5
Section 2.2. Effective Time............................. 5
Section 2.3. Effects of the Merger...................... 5
Section 2.4. Charter and Bylaws; Directors and Officers. 6
Section 2.5. Conversion of Securities................... 6
Section 2.6. Exchange of Certificates................... 7
(a) Paying Agent..................................... 7
(b) Exchange Procedure............................... 7
(c) No Further Ownership Rights in Shares............ 8
(d) Termination of Payment Fund...................... 8
(e) No Liability..................................... 8
Section 2.7. Merger Without Meeting of Shareholders..... 8
Section 2.8. Further Assurances......................... 9
Section 2.9. Closing.................................... 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB........ 9
Section 3.1. Organization............................... 9
Section 3.2. Authority.................................. 9
Section 3.3. Consents and Approvals; No Violations...... 10
Section 3.4. Information Supplied....................... 11
Section 3.5. Interim Operations of Sub.................. 11
Section 3.6. Brokers.................................... 11
Section 3.7. Ownership of Shares........................ 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........... 12
Section 4.1. Organization, Standing and Power........... 12
Section 4.2. Capital Structure.......................... 12
Section 4.3. Authority.................................. 13
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PAGE
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Section 4.4. Consents and Approvals; No Violation....................... 14
Section 4.5. SEC Documents and Other Reports............................ 15
Section 4.6. Information Supplied....................................... 15
Section 4.7. Absence of Certain Changes or Events....................... 16
Section 4.8. Permits and Compliance..................................... 16
Section 4.9. Tax Matters................................................ 17
Section 4.10. Actions and Proceedings.................................... 18
Section 4.11. Certain Agreements......................................... 18
Section 4.12. ERISA...................................................... 19
Section 4.13. Compliance with Worker Safety Laws......................... 21
Section 4.14. Liabilities; Products...................................... 21
Section 4.15. Labor Matters.............................................. 22
Section 4.16. Intellectual Property; Year 2000........................... 22
Section 4.17. Title to and Sufficiency of Assets......................... 23
Section 4.18. State Takeover Statutes.................................... 24
Section 4.19. Required Vote of Company Shareholders...................... 24
Section 4.20. Accounts Receivable........................................ 24
Section 4.21. Inventories................................................ 25
Section 4.22. Environmental Matters...................................... 25
Section 4.23. Suppliers, Customers and Employees......................... 26
Section 4.24. Insurance.................................................. 27
Section 4.25. Accuracy of Information.................................... 27
Section 4.26. Transactions with Affiliates............................... 27
Section 4.27. Broker..................................................... 28
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS................................ 28
Section 5.1. Conduct of Business by the Company Pending the Merger...... 28
Section 5.2. No Solicitation............................................ 30
Section 5.3. Third Party Standstill Agreements.......................... 32
ARTICLE VI
ADDITIONAL AGREEMENTS.................................................... 32
Section 6.1. Shareholder Meeting........................................ 32
Section 6.2. Access to Information...................................... 33
Section 6.3. Directors.................................................. 33
Section 6.4. Fees and Expenses.......................................... 34
Section 6.5. Stock Options.............................................. 35
Section 6.6. Reasonable Best Efforts.................................... 36
Section 6.7. Public Announcements....................................... 37
Section 6.8. DEC Letter; Termination of Stock Rights.................... 37
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PAGE
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Section 6.9. State Takeover Laws......................................... 38
Section 6.10. Indemnification; Directors and Officers Insurance........... 38
Section 6.11. Notification of Certain Matters............................. 38
ARTICLE VII
CONDITIONS PRECEDENT TO THE MERGER........................................ 39
Section 7.1. Conditions to Each Party's Obligation to Effect the Merger... 39
Section 7.2. Conditions to Obligations of Parent and Sub to Effect the
Merger...................................................... 39
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER......................................... 40
Section 8.1. Termination.................................................. 40
Section 8.2. Effect of Termination........................................ 41
Section 8.3. Amendment.................................................... 42
Section 8.4. Waiver....................................................... 42
ARTICLE IX
GENERAL PROVISIONS........................................................ 42
Section 9.1. Non-Survival of Representations and Warranties............... 42
Section 9.2. Notices...................................................... 42
Section 9.3. Interpretation............................................... 43
Section 9.4. Counterparts................................................. 44
Section 9.5. Entire Agreement; No Third-Party Beneficiaries............... 44
Section 9.6. Governing Law................................................ 44
Section 9.7. Assignment................................................... 44
Section 9.8. Severability................................................. 44
Section 9.9. Enforcement of this Agreement................................ 45
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER, dated as of November 22, 1998 (this
"Agreement"), among GE Fanuc Automation North America, Inc., a Delaware
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corporation ("Parent"), Orion Merger Corp., an Illinois corporation and a
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wholly-owned subsidiary of Parent ("Sub"), and Total Control Products, Inc., an
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Illinois corporation (the "Company") (Sub and the Company being hereinafter
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collectively referred to as the "Constituent Corporations").
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W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase any and all issued and
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outstanding shares of Common Stock, no par value, of the Company (the "Company
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Common Stock"; the shares of Company Common Stock being hereinafter referred to
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as the "Shares") at a purchase price of $11.00 per share (the "Offer Price"),
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net to the seller in cash, without interest thereon, upon the terms and subject
to the conditions set forth in this Agreement; and the Board of Directors of the
Company has adopted resolutions approving the Offer and the Merger (as defined
below) and recommending that holders of Shares accept the Offer and that the
Company's shareholders approve this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved and declared advisable the merger of Sub and the Company
(the "Merger"), upon the terms and subject to the conditions set forth herein,
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whereby each issued and outstanding Share not owned directly or indirectly by
Parent or the Company will be converted into the right to receive the price per
share paid in the Offer and the respective Boards of Directors of Sub and the
Company have approved and adopted this Agreement; and
WHEREAS, in order to induce Parent and Sub to enter into this
Agreement, concurrently herewith (i) Parent and the Company are entering into
the Stock Option Agreement dated as of the date hereof (the "Stock Option
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Agreement") in the form of the attached Exhibit A and (ii) Parent and certain of
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the shareholders of the Company are entering into Shareholder Agreements dated
as of the date hereof (the "Shareholder Agreements") in the forms of the
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attached Exhibit B.
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NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
THE OFFER
Section 1.1. The Offer. (a) Subject to the provisions of this
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Agreement, as promptly as practicable but in no event later than November 30,
1998, Sub shall, and Parent shall cause Sub to, commence, within the meaning of
Rule 14d-2 under the Securities Exchange Act of 1934, as amended (together with
the rules and regulations promulgated thereunder, the "Exchange Act"), the
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Offer. The obligation of Sub to, and of Parent to cause Sub to, commence the
Offer and accept for payment, and pay for, any Shares tendered pursuant to the
Offer shall be subject only to the conditions set forth in the attached Exhibit
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C (the "Offer Conditions") (any of which may be waived in whole or in part by
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Sub in its sole discretion, except that Sub shall not waive the Minimum
Condition (as defined in Exhibit C) without the consent of the Company) and
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subject to the rights of Parent or Sub to terminate this Agreement as provided
in Section 8.1. Sub expressly reserves the right to modify the terms of the
Offer, except that, without the consent of the Company, Sub shall not (i) reduce
the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii)
impose any other conditions to the Offer other than the Offer Conditions or
modify the Offer Conditions (other than to waive any Offer Conditions to the
extent permitted by this Agreement), (iv) except as provided in the next
sentence, extend the Offer, (v) change the form of consideration payable in the
Offer or (vi) amend any other term of the Offer in any manner adverse to the
holders of Shares. Notwithstanding the foregoing, Sub may, without the consent
of the Company, (i) extend the Offer, if at the scheduled or extended expiration
date of the Offer any of the Offer Conditions shall not be satisfied or waived,
until such time as such conditions are satisfied or waived, (ii) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission (the "SEC") or the staff
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thereof applicable to the Offer and (iii) if all Offer Conditions are satisfied
or waived but the number of Shares tendered is at least equal to 75%, but less
than 90%, of the then outstanding number of Shares, extend the Offer for any
reason on one or more occasions for an aggregate period of not more than 15
business days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of this sentence, in each case subject to the
right of Parent, Sub or the Company to terminate this Agreement pursuant to the
terms hereof. Parent and Sub agree that if at any scheduled expiration date of
the Offer, the Minimum Condition, the HSR Condition (as defined in Exhibit C) or
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either of the conditions set forth in paragraphs (e) or (f) of Exhibit C shall
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not have been satisfied, but at such scheduled expiration date all the
conditions set forth in paragraphs (a), (b), (c), (d) and (g) shall then be
satisfied, at the request of the Company (confirmed in writing), Sub shall
extend the Offer from time to time, subject to the right of Parent, Sub or the
Company to terminate this Agreement pursuant to the terms hereof. Subject to
the terms and conditions of the Offer and this Agreement, Sub shall, and Parent
shall cause Sub to, accept for payment, and pay for, all Shares validly tendered
and not withdrawn pursuant to the Offer that Sub becomes obligated to accept for
payment, and pay for, pursuant to the Offer as soon as practicable after the
expiration of the Offer, and in any event in compliance with the obligations
respecting prompt payment pursuant to Rule 14e-1(c) under the Exchange Act.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-
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1") with respect to the
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Offer, which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule 14D-1 and the documents
included therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "Offer Documents"), and Parent and Sub
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shall cause to be disseminated the Offer Documents to holders of Shares as and
to the extent required by applicable Federal securities laws. Parent, Sub and
the Company each agrees promptly to correct any information provided by it for
use in the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect, and Parent and Sub further
agree to take all steps necessary to cause the Schedule 14D-1 as so corrected to
be filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable Federal securities laws. The Company and its counsel shall be given
reasonable opportunity to review and comment upon the Offer Documents prior to
their filing with the SEC or dissemination to the shareholders of the Company.
Parent and Sub agree to provide the Company and its counsel any comments Parent,
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 to cooperate
with the Company and its counsel in responding to any such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely
basis the funds necessary to accept for payment, and pay for, any Shares that
Sub becomes obligated to accept for payment, and pay for, pursuant to the Offer.
Section 1.2. Company Actions. (a) The Company hereby approves of
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and consents to the Offer and represents and warrants that the Board of
Directors of the Company, at a meeting duly called and held, at which all
directors were present, duly and unanimously adopted resolutions approving and
adopting this Agreement, approving the Offer, the Merger and the Stock Option
Agreement, taking all action necessary to render the provisions of Sections 7.85
and 11.75 of the IBCA inapplicable to the Offer, the Merger, the Stock Option
Agreement and the Shareholder Agreements, determining that the terms of the
Offer and the Merger are fair to, and in the best interests of, the Company's
shareholders and recommending that holders of Shares accept the Offer and that
the Company's shareholders approve this Agreement and the Merger; provided that
such recommendation and approval may be withdrawn, modified or amended to the
extent the Board of Directors of the Company determines in good faith, after
consultation with independent counsel, that such action is required in the
exercise of such Board's fiduciary duties under applicable law. The Company
represents and warrants that its Board of Directors has received the opinion of
Xxxxx, Xxxxxxxx & Xxxx, Inc. that, as of the date of this Agreement and subject
to the matters set forth in such opinion, the proposed consideration to be
received by holders of Shares pursuant to the Offer and the Merger is fair to
such holders from a financial point of view, and a complete and correct signed
copy of such opinion has been delivered by the Company to Parent.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendation described in
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paragraph (a) (subject to the right to withdraw, modify or amend such
recommendation as and to the extent provided in Section 1.2(a)), and the Company
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shall cause to be disseminated the Schedule 14D-9 to holders of Shares as and to
the extent required by applicable Federal securities laws. Each of the Company,
Parent and Sub agrees promptly to correct any information provided by it for use
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 further
agrees to take all steps necessary to amend or supplement the Schedule 14D-9 and
to cause the Schedule 14D-9 as so amended or supplemented to be filed with the
SEC and disseminated to holders of Shares, in each case as and to the extent
required by applicable Federal securities laws. Parent and its counsel shall be
given reasonable opportunity to review and comment upon the Schedule 14D-9 prior
to its filing with the SEC or dissemination to shareholders of the Company. The
Company agrees to provide Parent and its counsel any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments and to cooperate with Parent, Sub
and their counsel in responding to any such comments.
(c) In connection with the Offer and the Merger, the Company shall
direct its transfer agent or agents to furnish Sub promptly with mailing labels
containing the names and addresses of the record holders of Shares as of a
recent date and 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, to the extent reasonably available to the Company,
regarding the beneficial owners of Shares and any securities convertible into
Shares, and shall furnish to Sub such information and assistance (including
updated lists of shareholders, security position listings and computer files) as
Parent may reasonably request in communicating the Offer to the Company's
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 Merger, Parent and Sub and their agents
shall hold in confidence the information contained in any such labels, listings
and files, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, will, upon request, deliver,
and will use their best efforts to cause their agents to deliver, to the Company
all copies of such information then in their possession or control.
(d) The Company shall cause Xxxxxx Industrial Software, Inc., an
Alberta corporation ("Xxxxxx"), to transmit to each holder of shares of Class C
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Exchangeable Common Stock, no par value, of Xxxxxx ("Class C Xxxxxx Shares"),
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contemporaneously with the transmission of the Offer Documents to the holders of
Shares: (i) the Offer Documents; (ii) a letter, in form reasonably satisfactory
to Parent, stating that holders of Class C Xxxxxx Shares who wish to participate
in the Offer must request retraction of such Class C Xxxxxx Shares for shares of
Company Common Stock pursuant to Schedule I to Article 3 of the Articles of
Incorporation, as amended, of Xxxxxx; and (iii) a form of retraction request,
which retraction request shall provide that a holder of Class C Xxxxxx Shares
requests retraction thereof on the date Sub first accepts for payment pursuant
to the Offer and agrees that contemporaneously therewith the shares of Company
Common Stock received upon such retraction shall be deemed validly tendered
pursuant to the Offer. The Company shall cause Xxxxxx to retract such Class C
Xxxxxx Shares in accordance with such retraction request (and the Company
represents and warrants that such retraction can be effected in compliance with
the Business Corporations Act (Alberta)) and
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the Company shall cause to be issued (for tender as so requested) such number of
shares of Company Common Stock as is necessary to satisfy the retraction under
the Articles of Incorporation, as amended, of Xxxxxx and the related Support
Agreement dated September 26, 1996 between the Company and Xxxxxx (the "Xxxxxx
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Support Agreement"). In addition, the Company shall cause (x) Xxxxxx to
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transmit to the holders of Class C Xxxxxx Shares a recommendation of the Company
and Xxxxxx that such holders retract such shares and tender the shares of
Company Common Stock received on such retraction pursuant to the Offer and (y)
Xxxxxx to furnish Sub promptly with the names and addresses of the record
holders of Class C Xxxxxx Shares as of a recent date and of those persons
becoming record holders subsequent to such date and to furnish to Sub such
information and assistance as Parent or Sub may reasonably request in
communicating the documentation referred to in the first sentence of this
Section 1.2(d) to the holders of Class C Xxxxxx Shares. The Company and Parent
agree that it is their intention that the foregoing transaction with respect to
Class C Xxxxxx Shares be treated as an exchange of Company Common Stock for the
Class C Xxxxxx Shares, rather than as a redemption of the Class C Xxxxxx Shares
by Xxxxxx and agree to modify the procedures described in this Section 1.2(d) as
and to the extent necessary to accomplish such intent.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
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hereof, and in accordance with the Business Corporation Act of 1983 of the State
of Illinois, as amended (the "IBCA"), Sub shall be merged with and into the
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Company at the Effective Time (as hereinafter defined). Following the Merger,
the separate corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation") and shall
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succeed to and assume all the rights and obligations of Sub in accordance with
the IBCA. Notwithstanding anything to the contrary herein, at the election of
Parent, any direct wholly-owned Subsidiary (as hereinafter defined) of Parent
may be substituted for Sub as a constituent corporation in the Merger. In such
event, the parties agree to execute an appropriate amendment to this Agreement,
in form and substance reasonably satisfactory to Parent and the Company, in
order to reflect such substitution.
Section 2.2 Effective Time. The Merger shall become effective when
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articles of merger (the "Articles of Merger"), executed in accordance with the
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relevant provisions of the IBCA, are filed with the Secretary of State of the
State of Illinois. When used in this Agreement, the term "Effective Time" shall
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mean the date and time at which the Articles of Merger are accepted for record.
The filing of the Articles of Merger shall be made on the date of the Closing
(as defined in Section 2.9).
Section 2.3 Effects of the Merger. The Merger shall have the
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effects set forth in Section 11.50 of the IBCA.
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Section 2.4 Charter and Bylaws; Directors and Officers. (a) At the
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Effective Time, the Restated and Amended Articles of Incorporation, as amended,
of the Company (the "Company Charter") shall be the Articles of Incorporation of
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the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law. At the Effective Time, the Amended and Restated
Bylaws of the Company, as in effect immediately prior to the Effective Time,
shall be the Bylaws of the Surviving Corporation until thereafter changed or
amended as provided therein or by the Company Charter.
(b) The directors of Sub at the Effective Time of the Merger shall be
the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be. The officers of the Company at the Effective
Time of the Merger shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
Section 2.5 Conversion of Securities. As of the Effective Time, by
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virtue of the Merger and without any action on the part of Sub, the Company or
the holders of any securities of the Constituent Corporations:
(a) Each issued and outstanding share of common stock, par value $.01
per share, of Sub shall be converted into one validly issued, fully paid
and nonassessable Common Share of the Surviving Corporation.
(b) All Shares that are held in the treasury of the Company or by any
wholly-owned Subsidiary of the Company and any Shares owned by Parent or by
any wholly-owned Subsidiary of Parent shall be canceled and no capital
stock of Parent or other consideration shall be delivered in exchange
therefor.
(c) Each Share issued and outstanding immediately prior to the
Effective Time (other than shares to be canceled in accordance with Section
2.5(b) and other than Dissenting Shares (as defined in Section 2.5(d))
shall be converted into the right to receive from the Surviving Corporation
in cash, without interest, the per share price paid in the Offer (the
"Merger Consideration"). All such Shares, when so converted, shall no
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longer be outstanding and shall automatically be canceled and retired and
each holder of a certificate representing any such shares shall cease to
have any rights with respect thereto, except the right to receive the
Merger Consideration.
(d) Shares of Dissenting Shareholders. Notwithstanding anything in
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this Agreement to the contrary, any issued and outstanding Shares held by a
person (a "Dissenting Shareholder") who objects to the Merger and complies
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with all of the provisions of the IBCA concerning the right of holders of
Shares to dissent from the Merger and obtain payment for their Shares
("Dissenting Shares") shall not be converted as described in Section
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2.5(c), but shall be converted into the right to receive such consideration
as may be determined to be due to such Dissenting Shareholder pursuant to
the IBCA. If, after the Effective Time, such Dissenting Shareholder
withdraws his
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demand for payment or fails to perfect or otherwise loses his right of
payment, in any case pursuant to the IBCA, the Shares of such Dissenting
Shareholder shall be deemed to be converted as of the Effective Time into
the right to receive the Merger Consideration. The Company shall give
Parent (i) prompt notice of any demands for payment received by the Company
and (ii) the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands. The Company shall not,
without the prior written consent of Parent, make any payment with respect
to, or settle, offer to settle or otherwise negotiate, any such demands.
Section 2.6. Exchange of Certificates. (a) Paying Agent. Prior to
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the Effective Time, Parent shall designate a bank or trust company (or such
other person or persons as shall be reasonably acceptable to Parent and the
Company) to act as paying agent in the Merger (the "Paying Agent"), and at the
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Effective Time, Parent shall make available, or cause the Surviving Corporation
to make available, to the Paying Agent cash in the amount necessary for the
payment of the Merger Consideration upon surrender of certificates representing
Shares as part of the Merger pursuant to Section 2.5. Any and all interest
earned on funds made available to the Paying Agent pursuant to this Agreement
shall be paid over to Parent.
(b) Exchange Procedure. As soon as reasonably practicable after the
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Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented Shares (the "Certificates"), (i) a letter of transmittal (which
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shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a 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 or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly 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 amount of cash into which the Shares theretofore
represented by such Certificate shall have been converted pursuant to Section
2.5, and the Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, payment may be made 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 person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 2.6, each Certificate (other than Certificates
representing Dissenting Shares) shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the Shares theretofore represented by such
Certificate shall have been converted pursuant to Section 2.5. No interest will
be paid or will accrue on the cash payable upon the surrender of any
Certificate. Parent or the Paying Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement
such amounts as Parent or the Paying Agent is required to deduct and withhold
with respect to the making of such payment
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under the Code (as hereinafter defined) or under any provisions of state, local
or foreign tax law. To the extent that amounts are so withheld by Parent or the
Paying Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the person in respect of which such deduction
or withholding was made by the Parent or the Paying Agent.
(c) No Further Ownership Rights in Shares. All cash paid upon the
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surrender of Certificates 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
Shares theretofore represented by such Certificates. 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 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 any reason, they shall be canceled
and exchanged as provided in this Article II.
(d) Termination of Payment Fund. Any portion of the funds made
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available to the Paying Agent to pay the Merger Consideration which remains
undistributed to the holders of Shares for six months after the Effective Time
shall be delivered to Parent, upon demand, and any holders of Shares who have
not theretofore complied with this Article II and the instructions set forth in
the letter of transmittal mailed to such holders after the Effective Time shall
thereafter look only to Parent for payment of the Merger Consideration to which
they are entitled.
(e) No Liability. None of Parent, Sub, the Company or the Paying
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Agent shall be liable to any person in respect of any cash 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 seven years after
the Effective Time (or immediately prior to such earlier date on which any
payment pursuant to this Article II would otherwise escheat to or become the
property of any Governmental Entity (as hereinafter defined), the cash payment
in respect of such Certificate shall, to the 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.
(f) Lost Certificates. If any Certificate shall have been lost,
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stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent or the Paying Agent, the posting by such person of a bond, in such
reasonable amount as Parent or the Paying Agent may direct as indemnity against
any claim that may be made against them with respect to such Certificate, the
Paying Agent will pay in exchange for such lost, stolen or destroyed Certificate
the amount of cash to which the holders thereof are entitled pursuant to Section
2.5.
Section 2.7 Merger Without Meeting of Shareholders. Notwithstanding
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the foregoing, if Sub, or any other direct or indirect subsidiary of Parent,
shall acquire at least 90 percent of the outstanding Shares, the parties hereto
agree to take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after expiration of the Offer without a meeting
of shareholders of the Company, in accordance with Section 11.30 of the IBCA.
-8-
Section 2.8 Further Assurances. If at any time after the Effective
------------------
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and to do, in the name and on
behalf of either Constituent Corporation, all such other acts and things as may
be necessary, desirable or proper to vest, perfect or confirm the Surviving
Corporation's right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of such Constituent
Corporation and otherwise to carry out the purposes of this Agreement.
Section 2.9 Closing. The closing of the transactions contemplated by
-------
this Agreement (the "Closing") and all actions specified in this Agreement to
-------
occur at the Closing shall take place at the offices of Sidley & Austin, Xxx
Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, at 10:00 a.m., local time, no
later than the second business day following the day on which the last of the
conditions set forth in Article VII shall have been fulfilled or waived (if
permissible) or at such other time and place as Parent and the Company shall
agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
------------------------------------------------
Parent and Sub represent and warrant to the Company as follows:
Section 3.1. Organization. Each of Parent and Sub is a corporation
-------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted.
Section 3.2. Authority. On or prior to the date of this Agreement,
----------
the Boards of Directors of Parent and Sub have declared the Offer and the Merger
advisable and the Board of Directors of Sub has approved and adopted this
Agreement in accordance with the IBCA. Each of Parent and Sub has all requisite
corporate power and authority to execute and deliver this Agreement and the
Shareholder Agreements, Parent has all requisite corporate power and authority
to enter into the Stock Option Agreement, and each of Parent and Sub has all
requisite corporate power and authority to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Parent and Sub of this Agreement and the Shareholder Agreements, the execution
and delivery by Parent of the Stock Option Agreement, and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action (including Board action) on the part of Parent
and Sub subject, in the case of this Agreement, to the filing of the Articles of
Merger as required by
-9-
the IBCA. This Agreement and the Shareholder Agreements have been duly executed
and delivered by Parent and Sub, and the Stock Option Agreement has been duly
executed and delivered by Parent, and (assuming the valid authorization,
execution and delivery of this Agreement and the Stock Option Agreement by the
Company, the valid authorization, execution and delivery of the Shareholder
Agreements by the shareholders who are parties thereto and the validity and
binding effect hereof and thereof on the Company and such shareholders) this
Agreement and the Shareholders Agreements constitute the valid and binding
obligation of each of Parent and Sub enforceable against them in accordance with
its terms and the Stock Option Agreement constitutes the valid and binding
obligation of Parent enforceable against Parent in accordance with its terms.
Section 3.3. Consents and Approvals; No Violations. Assuming that
--------------------------------------
all consents, approvals, authorizations and other actions described in this
Section 3.3 have been obtained and all filings and obligations described in this
Section 3.3 have been made, and the execution and delivery of this Agreement,
the Stock Option Agreement and the Shareholder Agreements do not, and the
consummation of the transactions contemplated hereby and thereby and compliance
with the provisions hereof and thereof will not, result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give to
others a right of termination, cancellation or acceleration of any obligation or
result in the loss of a material benefit under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Parent or any of its Subsidiaries under, any provision of (i) the
Certificate of Incorporation or the By-Laws of Parent, each as amended to date,
(ii) any provision of the comparable charter or organization documents of any of
Parent's Subsidiaries, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Parent or any of its Subsidiaries or (iv) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent
or any of its Subsidiaries or any of their respective properties or assets,
other than, in the case of clauses (ii), (iii) or (iv), any such violations,
defaults, rights, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent, materially impair the ability of Parent or Sub to perform their
respective obligations hereunder or under the Stock Option Agreement or the
Shareholder Agreements or prevent the consummation of any of the transactions
contemplated hereby or thereby. No filing or registration with, or
authorization, consent or approval of, any domestic (federal and state), foreign
or supranational court, commission, governmental body, regulatory agency,
authority or tribunal (a "Governmental Entity") is required by or with respect
-------------------
to Parent or any of its Subsidiaries in connection with the execution and
delivery of this Agreement, the Stock Option Agreement or the Shareholder
Agreements by Parent or Sub or is necessary for the consummation of the Offer,
the Merger and the other transactions contemplated by this Agreement, the Stock
Option Agreement or the Shareholder Agreements, except for (i) in connection, or
in compliance, with the provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the Exchange Act,
-------
(ii) the filing of the Articles of Merger with the Secretary of State of the
State of Illinois and appropriate documents with the relevant authorities of
other states in which the Company or any of its Subsidiaries is qualified to do
business, (iii) such filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Offer, the Merger
or by the
-10-
transactions contemplated by this Agreement, the Stock Option Agreement or the
Shareholder Agreements, (iv) such filings, authorizations, orders and approvals
as may be required by state takeover laws (the "State Takeover Approvals"), (v)
------------------------
applicable requirements, if any, of state securities or "blue sky" laws ("Blue
----
Sky Laws"), (vi) as may be required under foreign laws and (vii) such other
--------
consents, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, materially impair the
ability of Parent or Sub to perform its obligations hereunder or under the Stock
Option Agreement or the Shareholder Agreements or prevent the consummation of
any of the transactions contemplated hereby or thereby.
Section 3.4. Information Supplied. None of the information supplied
---------------------
or to be supplied by Parent or Sub specifically for inclusion or incorporation
by reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
information to be filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the "Information Statement") or
---------------------
(iv) the proxy statement (together with any amendments or supplements thereto,
the "Proxy Statement") relating to any required approval of this Agreement by
---------------
the holders of at least two-thirds of the Shares entitled to vote on the Merger
(the "Company Shareholder Approval"), will (a) in the case of the Offer
----------------------------
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to the Company's
shareholders, or (b) in the case of the Proxy Statement, at the time the Proxy
Statement is first mailed to the Company's shareholders or at the time of the
Shareholder Meeting (as defined in Section 6.1), contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Offer Documents
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by Parent or Sub with respect to statements
made or incorporated by reference therein based on information supplied by the
Company specifically for inclusion or incorporation by reference therein.
Section 3.5. Interim Operations of Sub. Sub was formed solely for
--------------------------
the purpose of engaging in the transactions contemplated hereby, has engaged in
no other business activities and has conducted its operations only as
contemplated hereby.
Section 3.6. Brokers. No broker, investment banker, financial
--------
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Sub.
Section 3.7. Ownership of Shares. As of the date hereof, neither
--------------------
Parent, its Subsidiaries nor any of its Affiliates is an "Interested
Shareholder" as defined in Section 7.85 of the IBCA.
-11-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Parent and Sub as follows
(provided that disclosure of any fact or item in any section of the letter dated
---------
the date hereof and delivered on the date hereof by the Company to Parent, which
relates to this Agreement and is designated therein as the Company Letter (the
"Company Letter"), shall be deemed to be disclosed with respect to every other
---------------
section but only if the level of particularity or manner of disclosure of the
fact or item expressly disclosed in one section of the Company Letter permits a
reasonable person to find such disclosure relevant to another section):
Section 4.1 Organization, Standing and Power. The Company is a
--------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Illinois and has the requisite corporate power and authority to
carry on its business as now being conducted. Each Subsidiary of the Company is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate (in the
case of a Subsidiary that is a corporation) or other power and authority to
carry on its business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power or authority would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. The Company and each of its Subsidiaries are duly qualified to do
business, and are in good standing, in each jurisdiction where the character of
their properties owned or held under lease or the nature of their activities
makes such qualification necessary, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
Section 4.2 Capital Structure. As of the date hereof, the authorized
-----------------
capital stock of the Company consists of 22,500,000 Shares and 1,000,000 shares
of Preferred Stock, no par value ("Company Preferred Stock"). At the close of
-----------------------
business on November 20, 1998:
(i) 8,032,818 Shares were issued and outstanding, all of which were
validly issued, fully paid and nonassessable and free of preemptive rights;
(ii) No Shares of Company Preferred Stock were issued and
outstanding;
(iii) No Shares were held in the treasury of the Company or by
Subsidiaries of the Company;
(iv) 737,112 Shares were reserved for issuance upon the exchange of
the Class C Xxxxxx Shares pursuant to the Articles of Incorporation of
Xxxxxx, as amended, and the Xxxxxx Support Agreement, 737,112 of which were
issued and outstanding as of such date;
(v) 1,386,806 Shares were reserved for issuance in the aggregate
upon the exercise of outstanding stock options issued under the Company's
1996 Employee Stock Option
-12-
Plan, as amended, the Company's 1996 Non-Employee Director Stock Option
Plan or the Company's 1993 Employee Stock Option Plan, as amended,
(collectively, the "Company Stock Option Plans");
--------------------------
(vi) 250,000 Shares were reserved for issuance in the aggregate
pursuant to the Company's Employee Discount Stock Purchase Plan, as amended
(the "Company Stock Purchase Plan"); and
---------------------------
(vii) 100,000 Shares were reserved for issuance upon the exercise of
the Warrant dated October 5, 1997 issued to Xxxx Xxxxxxxx (the "Xxxxxxxx
--------
Warrant").
-------
Section 4.2 of the Company Letter contains a correct and complete list as
of the date of this Agreement of each outstanding option to purchase shares of
Company Common Stock issued under the Company Stock Option Plans (collectively,
the "Company Stock Options"), including the holder, date of grant, exercise
---------------------
price and number of shares of Company Common Stock subject thereto and whether
the option is vested and exercisable. Except for the Class C Xxxxxx Shares
Exchange Agreement, the Company Stock Options and the Company Stock Option
Plans, the Company Stock Purchase Plan and the Xxxxxxxx Warrant and the
contingent payment obligations arising under the Asset Purchase Agreement dated
December 31, 1997 pursuant to which the Company acquired substantially all of
the assets of SensorPulse Corp. and the Asset Purchase Agreement dated as of
October 5, 1997 pursuant to which the Company purchased substantially all of the
assets of Computer Dynamics Services, Inc. (collectively, the "Contingent
----------
Payment Agreements"), there are no options, warrants, calls, rights or
------------------
agreements to which the Company or any of its Subsidiaries is a party or by
which any of them is bound obligating the Company or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of the Company or any of its Subsidiaries or obligating
the Company or any of its Subsidiaries to grant, extend or enter into any such
option, warrant, call, right or agreement. Except as set forth in Section 4.2
of the Company Letter, there are no outstanding contractual obligations of the
Company or any Subsidiary to repurchase, redeem or otherwise acquire any shares
of Company Common Stock or any capital stock of or any equity interests in any
Subsidiary. Each outstanding share of capital stock of each Subsidiary of the
Company that is a corporation is duly authorized, validly issued, fully paid and
nonassessable and, except as set forth in Section 4.2 of the Company Letter,
each such share is owned by the Company or another Subsidiary of the Company,
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on voting rights, charges and
other encumbrances of any nature whatsoever. The Company does not have any
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or convertible into or exercisable for securities having
the right to vote) with the shareholders of the Company on any matter. Exhibit
21 to the Company's Annual Report on Form 10-K for the year ended March 31,
1998, as filed with the SEC (the "Company Annual Report"), is a true, accurate
---------------------
and correct statement in all material respects of all of the information
required to be set forth therein by the regulations of the SEC.
Section 4.3 Authority. On or prior to the date of this Agreement,
---------
the Board of Directors of the Company has unanimously approved the Offer and
declared the Merger advisable
-13-
and fair to and in the best interest of the Company and its shareholders,
approved and adopted this Agreement and the transactions contemplated hereby in
accordance with the IBCA, resolved to recommend the acceptance of the Offer by
the Company's shareholders and directed that this Agreement be submitted to the
Company's shareholders for approval. The Company has all requisite corporate
power and authority to enter into this Agreement and the Stock Option Agreement,
to consummate the transactions contemplated by the Stock Option Agreement and,
subject to approval by the shareholders of the Company of this Agreement, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the Stock Option Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action (including Board
action) on the part of the Company, subject, in the case of this Agreement, to
(x) approval and adoption of this Agreement by the shareholders of the Company
and (y) the filing of the Articles of Merger as required by the IBCA. This
Agreement and the Stock Option Agreement have been duly executed and delivered
by the Company and (assuming the valid authorization, execution and delivery of
this Agreement by Parent and Sub and the Stock Option Agreement by Parent and
the validity and binding effect of this Agreement on Parent and Sub and the
Stock Option Agreement on Parent) constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms. The
issuance of up to 1,598,530 Shares pursuant to the Stock Option Agreement has
been duly authorized by the Company's Board of Directors.
Section 4.4 Consents and Approvals; No Violation. Assuming that all
------------------------------------
consents, approvals, authorizations and other actions described in this Section
4.4 have been obtained and all filings and obligations described in this Section
4.4 have been made, the execution and delivery of this Agreement and the Stock
Option Agreement do not, and the consummation of the transactions contemplated
hereby and thereby and compliance with the provisions hereof and thereof will
not, result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give to others a right of termination, cancellation or
acceleration of any obligation or result in the loss of a material benefit
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or any of its
Subsidiaries under, any provision of (i) the Company Charter or the Amended and
Restated Bylaws of the Company, (ii) any provision of the comparable charter or
organization documents of any of the Company's Subsidiaries, (iii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the Company
or any of its Subsidiaries or (iv) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clauses (ii), (iii) or (iv), any such violations, defaults, rights,
liens, security interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company, materially
impair the ability of the Company to perform its obligations hereunder or under
the Stock Option Agreement or prevent the consummation of any of the
transactions contemplated hereby or thereby. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity is required by or
with respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the Stock Option Agreement by the
Company or is necessary for the consummation of the Offer, the Merger and the
other transactions contemplated by this
-14-
Agreement or the Stock Option Agreement, except for (i) in connection, or in
compliance, with the provisions of the HSR Act and the Exchange Act, (ii) the
filing of the Articles of Merger with the Secretary of State of the State of
Illinois and appropriate documents with the relevant authorities of other states
in which the Company or any of its Subsidiaries is qualified to do business,
(iii) such filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification, disclosure or
required approval triggered by the Offer, the Merger or by the transactions
contemplated by this Agreement or the Stock Option Agreement, (iv) such filings,
authorizations, orders and approvals as may be required to obtain the State
Takeover Approvals, (v) applicable requirements, if any, of Blue Sky Laws or the
Nasdaq National Market, (vi) as may be required under foreign laws and (vii)
such other consents, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not, individually or
in the aggregate, have a Material Adverse Effect on the Company, materially
impair the ability of the Company to perform its obligations hereunder or under
the Stock Option Agreement or prevent the consummation of any of the
transactions contemplated hereby or thereby.
Section 4.5 SEC Documents and Other Reports. The Company has filed
-------------------------------
all required documents (including proxy statements) with the SEC since March 14,
1997 (the "Company SEC Documents"). As of their respective dates, the Company
---------------------
SEC Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
--------------
as the case may be, and, at the respective times they were filed, none of the
Company SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements (including, in each
case, any notes thereto) of the Company included in the Company SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with United States generally accepted
accounting principles (except, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes thereto)
and fairly presented in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as at the respective
dates thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein). Except as disclosed in the Company SEC
Documents or as required by generally accepted accounting principles, the
Company has not, since March 14, 1997, made any change in the accounting
practices or policies applied in the preparation of financial statements.
Section 4.6 Information Supplied. None of the information supplied
---------------------
or to be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement, will (a) in the case of the
Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's shareholders, or (b) in the
-15-
case of the Proxy Statement, at the time the Proxy Statement is first mailed to
the Company's shareholders or at the time of the Shareholder Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-9, the Information Statement and the Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Sub specifically for inclusion or incorporation by reference therein.
Section 4.7 Absence of Certain Changes or Events. Except as
------------------------------------
disclosed in the Company SEC Documents filed with the SEC prior to the date of
this Agreement or as set forth in the Company Letter, since March 31, 1998, (A)
the Company and its Subsidiaries have not incurred any liability or obligation
(indirect, direct or contingent) that would result in a Material Adverse Effect
on the Company, or entered into any material oral or written agreement or other
transaction that is not in the ordinary course of business or that would result
in a Material Adverse Effect on the Company, (B) the Company and its
Subsidiaries have not sustained any loss or interference with their business or
properties from fire, flood, windstorm, accident or other calamity (whether or
not covered by insurance) that has had a Material Adverse Effect on the Company,
(C) there has been no change in the capital stock of the Company except for the
issuance of shares of the Company Common Stock pursuant to Company Stock Options
or the Company Stock Purchase Plan and no dividend or distribution of any kind
declared, paid or made by the Company on any class of its stock, (D) there has
not been (v) any adoption of a new Company Plan (as hereinafter defined), (w)
any amendment to a Company Plan materially increasing benefits thereunder, (x)
any granting by the Company or any of its Subsidiaries to any executive officer
or other key employee of the Company or any of its Subsidiaries of any increase
in compensation, except in the ordinary course of business consistent with prior
practice or as was required under employment agreements in effect as of the date
of the most recent audited financial statements included in the Company Annual
Report, (y) any granting by the Company or any of its Subsidiaries to any such
executive officer or other key employee of any increase in severance or
termination agreements in effect as of the date of the most recent audited
financial statements included in the Company Annual Report or (z) any entry by
the Company or any of its Subsidiaries into any employment, severance or
termination agreement with any such executive officer or other key employee, (E)
there has not been any material changes in the amount or terms of the
indebtedness of the Company and its Subsidiaries from that described in the
Company SEC Documents filed prior to the date hereof and (F) there has been no
event causing a Material Adverse Effect on the Company.
Section 4.8 Permits and Compliance. Each of the Company and its
----------------------
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Entity necessary for the Company or any
of its Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Company Permits"), except where the
---------------
failure to have any of the Company Permits would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, and no suspension or
cancellation of any of the Company Permits is
-16-
pending or, to the Knowledge of the Company (as hereinafter defined),
threatened, except where the suspension or cancellation of any of the Company
Permits would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. Neither the Company nor any of its Subsidiaries is in
violation of (A) its charter, by-laws or other organizational documents, (B) any
law, ordinance, administrative or governmental rule or regulation, or (C) any
order, decree or judgment of any Governmental Entity having jurisdiction over
the Company or any of its Subsidiaries, except, in the case of clauses (A), (B)
and (C), for any violations that, individually or in the aggregate, would not
have a Material Adverse Effect on the Company. Except as disclosed in the
Company SEC Documents filed prior to the date of this Agreement, there are no
contracts or agreements of the Company or its Subsidiaries having terms or
conditions which would have a Material Adverse Effect on the Company or having
covenants not to compete that materially impair the ability of the Company to
conduct its business as currently conducted or purport to bind any shareholder
or any Affiliated Person of any shareholder of the Company after the Effective
Time. Except as set forth in the Company SEC Documents filed prior to the date
of this Agreement, no event of default or event that, but for the giving of
notice or the lapse of time or both, would constitute an event of default exists
or, upon the consummation by the Company of the transactions contemplated by
this Agreement or the Stock Option Agreement, will exist under any indenture,
mortgage, loan agreement, note or other agreement or instrument for borrowed
money, any guarantee of any agreement or instrument for borrowed money or any
lease, contractual license or other agreement or instrument to which the Company
or any of its Subsidiaries is a party or by which the Company or any such
Subsidiary is bound or to which any of the properties, assets or operations of
the Company or any such Subsidiary is subject, other than any defaults that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. "Knowledge of the Company" means the actual knowledge of Xxxxxxxx
------------------------
X. Xxxx, Xxxxx X. Xxxxxxxxx, Xxxxx X'Xxxxxx, Xxxxx Xxxx and Xxxxx Xxxxxx.
Section 4.9 Tax Matters. Except as otherwise set forth in Section
-----------
4.9 of the Company Letter, (i) the Company and each of its Subsidiaries have
filed all federal, and all material state, local, foreign and provincial, Tax
Returns (as hereinafter defined) required to have been filed, and such Tax
Returns are correct and complete, except to the extent that any failure to so
file or any failure to be correct and complete would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company; (ii) all Taxes (as hereinafter defined) shown to be due on such Tax
Returns have been timely paid or extensions for payment have been properly
obtained, or such Taxes are being timely and properly contested; (iii) the
Company and each of its Subsidiaries have complied with all rules and
regulations relating to the withholding of Taxes and the remittance of withheld
Taxes, except to the extent that any failure to comply with such rules and
regulations would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on the Company; (iv) neither the Company nor
any of its Subsidiaries has waived any statute of limitations in respect of its
Taxes; (v) any Tax Returns required to have been filed by or with respect to the
Company and each of its Subsidiaries relating to federal and state income Taxes
have been examined by the Internal Revenue Service ("IRS") or the appropriate
---
foreign or state taxing authority or the period for assessment of the Taxes in
respect of which such Tax Returns were required to be filed has expired; (vi) no
issues that have been raised by the relevant taxing authority in connection with
the examination of Tax Returns required to have been filed by or with respect to
the Company and
-17-
each of its Subsidiaries are currently pending; (vii) all deficiencies asserted
or assessments made as a result of any examination of such Tax Returns by any
taxing authority have been paid in full; and (viii) no withholding is required
under Section 1445 of the Code in connection with the Merger. For purposes of
this Agreement: (i) "Taxes" means any federal, state, local, foreign or
-----
provincial income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or added minimum, ad
valorem, value-added, transfer or excise tax, or other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty imposed by any Governmental Entity, and
(ii) "Tax Return" means any return, report or similar statement (including the
----------
attached schedules) required to be filed with respect to any Tax, including any
information return, claim for refund, amended return or declaration of estimated
Tax.
Section 4.10 Actions and Proceedings. There are no outstanding
-----------------------
orders, judgments, injunctions, awards or decrees of any Governmental Entity
against or involving the Company or any of its Subsidiaries, or against or
involving any of the present or former directors, officers, employees,
consultants, agents or shareholders of the Company or any of its Subsidiaries
with respect to the Company or any of its Subsidiaries, any of the properties,
assets or business of the Company or any of its Subsidiaries or any Company Plan
that, individually or in the aggregate, would have a Material Adverse Effect on
the Company or materially impair the ability of the Company to perform its
obligations hereunder or under the Stock Option Agreement. There are no
actions, suits or claims or legal, administrative or arbitrative proceedings or
investigations (including claims for workers' compensation) pending or, to the
Knowledge of the Company, threatened against or involving the Company or any of
its Subsidiaries or any of its or their present or former directors, officers,
employees, consultants, agents or shareholders with respect to the Company or
any of its Subsidiaries, or any of the properties, assets or business of the
Company or any of its Subsidiaries or any Company Plan that, individually or in
the aggregate, would have a Material Adverse Effect on the Company or materially
impair the ability of the Company to perform its obligations hereunder or under
the Stock Option Agreement. There are no actions, suits, labor disputes or
other litigation, legal or administrative proceedings or governmental
investigations pending or, to the Knowledge of the Company, threatened against
or affecting the Company or any of its Subsidiaries or any of its or their
present or former officers, directors, employees, consultants, agents or
shareholders with respect to the Company or its Subsidiaries, or any of the
properties, assets or business of the Company or any of its Subsidiaries
relating to the transactions contemplated by this Agreement and the Stock Option
Agreement.
Section 4.11 Certain Agreements. Except as set forth in Section 4.11
------------------
of the Company Letter, neither the Company nor any of its Subsidiaries is a
party to any oral or written agreement or plan, including any employment
agreement, severance agreement, stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan (collectively, the
"Compensation Agreements"), pension plan (as defined in Section 3(2) of ERISA)
------------------------
or welfare plan (as defined in Section 3(1) of ERISA) any of the benefits of
which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the Stock Option Agreement or the value of any of the benefits of
which will be calculated on the basis of any of the transactions contemplated by
this Agreement or the Stock Option Agreement. No holder of any option to
purchase Shares, or
-18-
Shares granted in connection with the performance of services for the Company or
its Subsidiaries, is or will be entitled to receive cash from the Company or any
Subsidiary in lieu of or in exchange for such option or shares as a result of
the transactions contemplated by this Agreement or the Stock Option Agreement.
Section 4.11 of the Company Letter sets forth (i) for each officer, director or
employee who is a party to, or will receive benefits under, any Compensation
Agreement as a result of the transactions contemplated herein, the total amount
that each such person may receive, or is eligible to receive, assuming that the
transactions contemplated by this Agreement are consummated on the date hereof,
and (ii) the total amount of indebtedness owed to the Company or its
Subsidiaries from each officer, director or employee of the Company and its
Subsidiaries.
Section 4.12 ERISA. (a) Each material Company Plan is listed in
-----
Section 4.12(a) of the Company Letter. With respect to each Company Plan listed
therein, the Company has made available to Parent a true and correct copy of (i)
the three most recent annual reports (Form 5500) filed with the IRS if
applicable, (ii) each such Company Plan that has been reduced to writing and all
amendments thereto, (iii) each trust agreement, insurance contract or
administration agreement relating to each such Company Plan, (iv) a written
summary of each unwritten Company Plan, (v) the most recent summary plan
description or other written explanation of each Company Plan provided to
participants, (vi) the most recent determination letter and request therefore,
if any, issued by the IRS with respect to any Company Plan intended to be
qualified under section 401(a) of the Code, (vii) any request for a
determination currently pending before the IRS and (viii) all correspondence
with the IRS, the Department of Labor, the SEC or Pension Benefit Guaranty
Corporation relating to any outstanding controversy. Except as would not have a
Material Adverse Effect on the Company, each Company Plan complies in all
respects with the Employee Retirement Income Security Act of 1974, as amended,
the Code and all other applicable statutes and governmental rules and
regulations. Neither the Company nor any ERISA Affiliate currently maintains,
contributes to or has any liability or, at any time during the past six years
has maintained or contributed to any pension plan which is subject to section
412 of the Code or section 302 of the Employee Retirement Income Security Act of
1974, as amended (ERISA) or Title IV of ERISA. Neither the Company nor any
ERISA Affiliate currently maintains, contributes to or has any liability or, at
any time during the past six years has maintained or contributed to any Company
Multiemployer Plan.
(b) Except as listed in Section 4.12(b) of the Company Letter, with
respect to the Company Plans, no event has occurred and, to the Knowledge of the
Company, there exists no condition or set of circumstances in connection with
which the Company or any Subsidiary or ERISA Affiliate or Company Plan fiduciary
could be subject to any liability under the terms of such Company Plans, ERISA,
the Code or any other applicable law which would have a Material Adverse Effect
on the Company. All Company Plans that are intended to be qualified under
Section 401(a) of the Code have been determined by the IRS to be so qualified,
or a timely application for such determination is now pending and the Company is
not aware of any reason why any such Company Plan is not so qualified in
operation. Except as disclosed in Section 4.12(b) of the Company Letter,
neither the Company nor any of its Subsidiaries or ERISA Affiliates has any
liability or obligation under any welfare plan to provide benefits after
-19-
termination of employment to any employee or dependent other than as required by
Section 4980B of the Code.
(c) As used herein, (i) "Company Plan" means a "pension plan" (as
------------ ------------
defined in Section 3(2) of ERISA (other than a Company Multiemployer Plan)), a
"welfare plan" (as defined in Section 3(1) of ERISA), or any other written or
-------------
oral bonus, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, restricted stock, stock
appreciation right, holiday pay, vacation, severance, medical, dental, vision,
disability, death benefit, sick leave, fringe benefit, personnel policy,
insurance or other plan, arrangement or understanding, in each case established
or maintained by the Company or any of its Subsidiaries or ERISA Affiliates or
as to which the Company or any of its Subsidiaries or ERISA Affiliates has
contributed or otherwise may have any liability, (ii) "Company Multiemployer
---------------------
Plan" means a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA)
----
to which the Company or any of its Subsidiaries or ERISA Affiliates is or has
been obligated to contribute or otherwise may have any liability, and (iii)
"ERISA Affiliate" means any trade or business (whether or not incorporated)
----------------
which would be considered a single employer with the Company pursuant to Section
414(b), (c), (m) or (o) of the Code and the regulations promulgated under those
sections or pursuant to Section 4001(b) of ERISA and the regulations promulgated
thereunder.
(d) Section 4.12(d) of the Company Letter contains a list of all (i)
severance and employment agreements with employees of the Company and each
Subsidiary, (ii) severance programs and policies of the Company and each
Subsidiary with or relating to its employees and (iii) plans, programs,
agreements and other arrangements of the Company and each Subsidiary with or
relating to its employees containing change of control or similar provisions.
(e) Except as set forth in Section 4.12(e) of the Company Letter,
neither the Company nor any of its Subsidiaries is a party to any agreement,
contract or arrangement that could result, separately or in the aggregate, in
the payment of any "excess parachute payments" within the meaning of Section
-------------------------
280G of the Code.
(f) Except as set forth in Section 4.12(f) of the Company Letter,
with respect to each Company Plan not subject to United States law (a "Company
-------
Foreign Benefit Plan"), except as would not have a Material Adverse Effect on
--------------------
the Company, (i) the fair market value of the assets of each funded Company
Foreign Benefit Plan, the liability of each insurer for any Company Foreign
Benefit Plan funded through insurance or the reserve shown on the Company's
consolidated financial statements for any unfunded Company Foreign Benefit Plan,
together with any accrued contributions, is sufficient to procure or provide for
the benefit obligations, as of the Effective Time, with respect to all current
and former participants in such plan according reasonable, country specific
actuarial assumptions and valuations and no transaction contemplated by this
Agreement shall cause such assets or insurance obligations or book reserve to be
less than such benefit obligations; and (ii) each Company Foreign Benefit Plan
required to be registered has been registered and has been maintained in good
standing with the appropriate regulatory authorities.
-20-
Section 4.13 Compliance with Worker Safety Laws. The properties,
----------------------------------
assets and operations of the Company and its Subsidiaries are in compliance with
all applicable federal, state, local and foreign laws, rules and regulations,
orders, decrees, judgments, permits and licenses relating to public and worker
health and safety (collectively, "Worker Safety Laws"), except for any
------------------
violations that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. With respect to such properties, assets and
operations currently owned, leased or operated by the Company or any of its
Subsidiaries, and with respect to any properties, assets or operations
previously owned, leased or operated by the Company or any of its Subsidiaries,
to the Knowledge of the Company, during any time such properties, assets and
operations were owned, leased or operated by the Company or any of its
Subsidiaries, there are no past or present events, conditions, circumstances,
activities, practices, incidents, actions or plans of the Company or any of its
Subsidiaries that may interfere with or prevent compliance or continued
compliance with applicable Worker Safety Laws, other than any such interference
or prevention as would not, individually or in the aggregate with any such other
interference or prevention, have a Material Adverse Effect on the Company.
Section 4.14 Liabilities; Products. (a) Except as fully reflected or
---------------------
reserved against in the financial statements included in the Company SEC
Documents filed prior to the date hereof, or disclosed in the footnotes thereto,
since March 31, 1998 the Company and its Subsidiaries have incurred no
liabilities (including Tax liabilities) or obligations of any nature, absolute
or contingent, other than liabilities or obligations that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company
or that would be required by Generally Accepted Accounting Principles ("GAAP")
----
to be reflected or reserved in the financial statements of the Company or in the
footnotes thereto, prepared in accordance with GAAP consistent with past
practices, other than in the ordinary course of business and consistent with
past practices. As of the date hereof, the indebtedness for borrowed money of
the Company and its Subsidiaries does not exceed $22 million.
(b) Except as set forth in Section 4.14(b) of the Company Letter,
since March 31, 1998, to the Knowledge of the Company, neither the Company nor
any Subsidiary has received a material claim for or based upon breach of product
warranty (other than warranty service and repair claims in the ordinary course
of business not material in amount or significance), strict liability in tort,
negligent manufacture of product, negligent provision of services or any other
allegation of liability resulting in product recalls, arising from the
materials, design, testing, manufacture, packaging, labeling (including
instructions for use), or sale of its products or from the provision of
services; and, to the Knowledge of the Company, there is no basis for any such
claim which, if asserted, would likely have a Material Adverse Effect on the
Company. No product sold or delivered or service rendered by the Company or any
Subsidiary is subject to any guaranty, warranty or other indemnity beyond the
applicable standard terms and conditions of sale for products delivered and
services rendered by the Company or any Subsidiary, copies of which have
previously been delivered to Parent.
(c) The Company has provided to Parent a schedule of material
products in development and planned introductions, a copy of which is attached
to the Company Letter. The Company has no reason to believe that the goals set
forth therein will not be achieved in all
-21-
material respects, except for such deviations as would not have a Material
Adverse Effect on the Company. The product and service engineering,
development, manufacturing and quality control processes which have been and are
being followed by the Company are reasonably designed to produce products and
services which are consistent in all material respects with the claims made
about them in the Company's sales brochures and other statements made about them
by or on behalf of the Company.
Section 4.15 Labor Matters. Except as set forth in Section 4.15 of
-------------
the Company Letter, neither the Company nor any of its Subsidiaries is a party
to any collective bargaining agreement or labor contract with any union.
Neither the Company nor any of its Subsidiaries has engaged in any unfair labor
practice with respect to any persons employed by or otherwise performing
services primarily for the Company or any of its Subsidiaries (the "Company
-------
Business Personnel"), and there is no unfair labor practice complaint or
------------------
grievance against the Company or any of its Subsidiaries by any person pursuant
to the National Labor Relations Act or any comparable state or foreign law
pending or threatened in writing with respect to the Company Business Personnel,
except where such unfair labor practice, complaint or grievance would not have a
Material Adverse Effect on the Company. There is no labor strike, dispute,
slowdown or stoppage pending or, to the Knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries which may interfere
with the respective business activities of the Company or any of its
Subsidiaries, except where such dispute, strike or work stoppage would not have
a Material Adverse Effect on the Company.
Section 4.16 Intellectual Property; Year 2000. "Company Intellectual
-------------------------------- --------------------
Property" means all trademarks, trademark registrations, trademark rights and
--------
renewals thereof, trade names, trade name rights, patents, patent rights, patent
applications, industrial models, inventions, invention disclosures, designs,
utility models, inventor rights, software, computer programs, computer systems,
modules and related data and materials, copyrights, copyright registrations and
renewals thereof, servicemarks, servicemark registrations and renewals thereof,
servicemark rights, trade secrets, applications for trademark and servicemark
registrations, know-how, confidential information and other proprietary rights,
and any data and information of any nature or form used or held for use in
connection with the businesses of the Company and/or the Subsidiaries as
currently conducted or as currently contemplated by the Company, together with
all applications currently pending or in process for any of the foregoing.
Except as disclosed in the Company SEC Documents filed with the SEC prior to the
date hereof, the Company and the Subsidiaries own, or possess adequate licenses
or other valid rights to use (including the right to sublicense to customers,
suppliers or others as needed), all of the Company Intellectual Property that is
necessary, appropriate or desirable for the conduct or contemplated conduct of
the Company's or Subsidiaries' businesses, except where the failure to own,
license or have a right to use such Company Intellectual Property would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Section 4.16 of the Company Letter lists each material license or other material
agreement pursuant to which the Company or any Subsidiary has the right to use
Company Intellectual Property utilized in connection with any product of, or
service provided by, the Company and the Subsidiaries, the cancellation or
expiration of which would have a Material Adverse Effect on the Company (the
"Company Licenses"). There are no pending, or, to the Knowledge of the Company,
----------------
threatened interferences, re-examinations,
-22-
oppositions or cancellation proceedings involving any patents or patent rights,
trademarks or trademark rights, or applications therefor, of the Company or any
Subsidiary, except such as would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. There is no breach or violation by the
Company or by any Subsidiary under, and, to the Knowledge of the Company, there
is no breach or violation by any other party to, any Company License that is
reasonably likely to give rise to any termination or any loss of rights
thereunder. To the Knowledge of the Company, there has been no unauthorized
disclosure or use of confidential information, trade secret rights, processes
and formulas, research and development results and other know-how of the Company
or any Subsidiary, except where such disclosure or use of such information would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company. To the Knowledge of the Company, the conduct of the business of the
Company and the Subsidiaries as currently conducted or contemplated does not
infringe upon or conflict with, in any way, any license, trademark, trademark
right, trade name, trade name right, patent, patent right, industrial model,
invention, service xxxx, service xxxx right, copyright, trade secret or any
other intellectual property rights of any third party that, individually or in
the aggregate, would have a Material Adverse Effect on the Company. Except as
disclosed in the Company SEC Documents filed with the SEC prior to the date
hereof, to the Knowledge of the Company, there are no infringements of, or
conflicts with, any Company Intellectual Property which, individually or in the
aggregate, would have a Material Adverse Effect on the Company. Except as set
forth in Section 4.16 of the Company Letter, neither the Company nor any
Subsidiary has licensed or otherwise permitted the use by any third party of any
proprietary information or Company Intellectual Property on terms or in a manner
which, individually or in the aggregate, would have a Material Adverse Effect on
the Company. Except as set forth in Section 4.16 of the Company Letter, the
current and previously sold products of the Company and its Subsidiaries and
software, operations, systems and processes (including, to the Knowledge of the
Company, software, operations, systems and processes obtained from third
parties) used in the conduct of the business of the Company and its
Subsidiaries, are Year 2000 Compliant, except where the failure to be Year 2000
Compliant would not, individually or in the aggregate, have a Material Adverse
Effect on the Company, and the Company has delivered to Parent true and correct
copies of any consultant or other third-party reports prepared on behalf of the
Company with respect to such compliance. For purposes of this Agreement, "Year
----
2000 Compliant" means the ability to process (including calculate, compare,
--------------
sequence, display or store), transmit or receive data or data/time data from,
into and between the twentieth and twenty-first centuries, and the years 1999
and 2000, and leap year calculations without error or malfunction.
Section 4.17 Title to and Sufficiency of Assets. (a) As of the date
----------------------------------
hereof, the Company and the Subsidiaries own, and as of the Effective Time the
Company and the Subsidiaries will own, good and marketable title to all of their
assets (excluding, for purposes of this sentence, assets held under leases),
free and clear of any and all mortgages, liens, encumbrances, charges, claims,
restrictions, pledges, security interests or impositions (collectively,
"Liens"), except as set forth in the Company SEC Documents filed with the SEC
-----
prior to the date hereof or Section 4.17 of the Company Letter and except where
the failure to own such title would not, individually or in the aggregate, have
a Material Adverse Effect on the Company. Such assets, together with all assets
held by the Company and the Subsidiaries under leases, include all tangible and
intangible personal property, contracts and rights necessary or
-23-
required for the operation of the businesses of the Company as presently
conducted, except for such assets the failure to have would, individually or in
the aggregate, have a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries owns any Real
Estate. All Real Estate assets held by the Company and the Subsidiaries under
leases are adequate for the operation of the businesses of the Company as
presently conducted, except for such assets the failure to have would,
individually or in the aggregate, have a Material Adverse Effect. The leases to
all Real Estate occupied by the Company and the Subsidiaries which are material
to the operation of the businesses of the Company are in full force and effect
and no event has occurred which with the passage of time, the giving of notice,
or both, would constitute a default or event of default by the Company or any
Subsidiary or, to the Knowledge of the Company, any other person who is a party
signatory thereto, other than such defaults or events of default which,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. For purposes of this Agreement, "Real Estate" means, with respect
-----------
to the Company or any Subsidiary, as applicable, all of the fee or leasehold
ownership right, title and interest of such person, in and to all real estate
and improvement owned or leased by any such person and which is used by any such
person in connection with the operation of its business.
Section 4.18 State Takeover Statutes. The Board of Directors of the
-----------------------
Company has, to the extent such statutes are applicable, taken all action so to
render the provisions of Sections 7.85 and 11.75 of the IBCA inapplicable to the
Offer, the Merger, the Stock Option Agreement and the Shareholder Agreements and
the consummation of the transactions contemplated by this Agreement, the Stock
Option Agreement and the Shareholder Agreements. As of the date hereof, no other
state takeover statute or similar charter or bylaw provisions are applicable to
the Offer, the Merger, this Agreement, the Stock Option Agreement, the
Shareholder Agreements and the transactions contemplated hereby and thereby.
Section 4.19 Required Vote of Company Shareholders. The affirmative
-------------------------------------
vote of the holders of at least two-thirds of Shares entitled to vote is
required to adopt this Agreement. No other vote of the security holders of the
Company is required by law, the Company Charter or the Amended and Restated
Bylaws of the Company or otherwise in order for the Company to consummate the
Merger and the transactions contemplated hereby and in the Stock Option
Agreement.
Section 4.20 Accounts Receivable. All of the accounts and notes
-------------------
receivable of the Company and its Subsidiaries set forth on the books and
records of the Company (net of the applicable reserves reflected on the books
and records of the Company and in the financial statements included in the
Company SEC Documents) (i) represent sales actually made or transactions
actually effected in the ordinary course of business for goods or services
delivered or rendered to unaffiliated customers in bona fide arm's length
transactions, (ii) constitute valid claims, and (iii) are good and collectible
at the aggregate recorded amounts thereof (net of such reserves) without right
of recourse, defense, deduction, return of goods, counterclaim, or offset and
have been or will be collected in the ordinary course of business and consistent
with past
-24-
experience, except where the failure to collect such receivables in such manner
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
Section 4.21 Inventories. Except as set forth in Section 4.21 of the
-----------
Company Letter, all inventories of the Company and its Subsidiaries consist of
items of merchantable quality and quantity usable or salable in the ordinary
course of business, are salable at prevailing market prices that are not less
than the book value amounts thereof or the price customarily charged by the
Company or the applicable Subsidiary therefor, conform to the specifications
established therefor, and have been manufactured in accordance with applicable
regulatory requirements, except to the extent that the failure of such
inventories so to consist, be saleable, conform, or be manufactured would not
have a Material Adverse Effect on the Company. Except as set forth in Section
4.21 of the Company Letter, the quantities of all inventories, materials, and
supplies of the Company and each Subsidiary (net of the obsolescence reserves
therefor shown in the financial statements included in the Company SEC Documents
and determined in the ordinary course of business consistent with past practice)
are not obsolete, damaged, slow-moving, defective, or excessive, and are
reasonable and balanced in the circumstances of the Company and its
Subsidiaries, except to the extent that the failure of such inventories to be in
such conditions would not have a Material Adverse Effect on the Company.
Section 4.22 Environmental Matters.
---------------------
(a) For purposes of this Agreement, the following terms shall have
the following meanings: (i) "Hazardous Substances" means (A) petroleum and
--------------------
petroleum products, by-products or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls, and (B) any other
chemicals, materials or substances regulated as toxic or hazardous or as a
pollutant, contaminant or waste or for which liability or standards of care are
imposed under any applicable Environmental Law; (ii) "Environmental Law" means
-----------------
any law, past, present or future and as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, or common law, relating to pollution or
protection of the environment, health or safety or natural resources, including
those relating to the use, handling, transportation, treatment, storage,
disposal, release or discharge of Hazardous Substances; and (iii) "Environmental
-------------
Permit" means any permit, approval, identification number, license or other
------
authorization required under any applicable Environmental Law.
(b) Except as disclosed in Section 4.22 of the Company Letter, the
Company and the Subsidiaries are and have been in compliance with all applicable
Environmental Laws, have obtained all Environmental Permits and are in
compliance with their requirements, and have resolved all past non-compliance
with Environmental Laws and Environmental Permits without any pending, on-going
or future obligation, cost or liability, except in each case for the notices set
forth in Section 4.22 of the Company Letter or where such non-compliance would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
(c) Except as disclosed in Section 4.22 of the Company Letter,
neither the Company nor any of the Subsidiaries has (i) placed, held, located,
released, transported or
-25-
disposed of any Hazardous Substances on, under, from or at any of the Company's
or any of the Subsidiaries' properties or any other properties, nor caused any
facts or conditions that could give rise to an environmental claim, other than
in a manner that would not, in all such cases taken individually or in the
aggregate, result in a Material Adverse Effect on the Company, (ii) any
Knowledge or reason to know of the presence of any Hazardous Substances on,
under, emanating from, or at any of the Company's or any of the Subsidiaries'
properties or any other property but arising from the Company's or any of the
Subsidiaries' current or former properties or operations, other than in a manner
that would not result in a Material Adverse Effect on the Company, or (iii) any
Knowledge or reason to know, nor has it received any written notice since
January 1, 1993 (A) of any violation of or liability under any Environmental
Laws, (B) of the institution or pendency of any suit, action, claim, proceeding
or investigation by any Governmental Entity or any third party in connection
with any such violation or liability, (C) requiring the investigation of,
response to or remediation of Hazardous Substances at or arising from any of the
Company's or any of the Subsidiaries' current or former properties or operations
or any other properties, (D) alleging noncompliance by the Company or any of the
Subsidiaries with the terms of any Environmental Permit in any manner reasonably
likely to require material expenditures or to result in material liability or
(E) demanding payment for response to or remediation of Hazardous Substances at
or arising from any of the Company's or any of the Subsidiaries' current or
former properties or operations or any other properties, except in each case for
the notices set forth in Section 4.22 of the Company Letter.
(d) Except as disclosed in Section 4.22 of the Company Letter, no
Environmental Law imposes any obligation upon the Company or any of the
Subsidiaries arising out of or as a condition to any transaction contemplated by
this Agreement, including any requirement to modify or to transfer any permit or
license, any requirement to file any notice or other submission with any
Governmental Entity, the placement of any notice, acknowledgment or covenant in
any land records, or the modification of or provision of notice under any
agreement, consent order or consent decree.
(e) The Company and the Subsidiaries has provided or made available
to Parent copies of any Environmental assessment or audit report or other
similar studies or analyses currently in the possession of or available to the
Company or any of the Subsidiaries relating to any real property currently or
formerly owned, leased or occupied by the Company or any of the Subsidiaries.
Section 4.23 Suppliers, Customers and Employees. Except as set
----------------------------------
forth in Section 4.23 of the Company Letter, neither the Company nor any
Subsidiary has received any notice that (a) Digital Electronics Corporation
("DEC") or any other significant supplier will not sell raw materials, supplies,
-----
merchandise and other goods to the Company or any Subsidiary at any time after
the Effective Time on terms and conditions substantially similar to those used
in its current sales to the Company and the Subsidiaries, except where the
failure to sell would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, (b) any significant customer intends to terminate
or limit or alter its business relationship with the Company or any Subsidiary
where such termination, limitation or alteration would have a Material Adverse
Effect on the
-26-
Company, or (c) any Person included in the definition of Knowledge or Xxxxxx
Anger intends to terminate or has terminated his or their employment with the
Company or any Subsidiary.
Section 4.24 Insurance. The Company and its Subsidiaries carry or
---------
are entitled to the benefits of insurance as the Company believes are in such
character and amount at least equivalent to that carried by persons engaged in
similar businesses and subject to the same or similar perils or hazards, except
for any such failures to maintain insurance policies that, individually or in
the aggregate, would not have a Material Adverse Effect on the Company. The
Company and each Subsidiary have made any and all payments required to maintain
such policies in full force and effect, except where the failure to make such
payment would not have a Material Adverse Effect on the Company.
Section 4.25 Accuracy of Information. Neither this Agreement nor any
-----------------------
of the documents listed in or attached to Section 4.25 of the Company Letter,
contains an untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein not misleading.
Section 4.26 Transactions with Affiliates. (a) For purposes of this
----------------------------
Section 4.26, the term "Affiliated Person" means (i) any holder of 5% or more of
-----------------
the Company Common Stock, (ii) any director or officer of the Company or any
Subsidiary, (iii) any person, firm or corporation that directly or indirectly
controls, is controlled by, or is under common control with, any of the Company
or any Subsidiary or (iv) any member of the immediate family or any of such
persons.
(b) Except as set forth in Section 4.26 of the Company Letter or in
the Company SEC Reports filed with the SEC prior to the date hereof, since March
31, 1998, the Company and the Subsidiaries have not, in the ordinary course of
business or otherwise, (i) purchased, leased or otherwise acquired any material
property or assets or obtained any material services from, (ii) sold, leased or
otherwise disposed of any material property or assets or provided any material
services to (except with respect to remuneration for services rendered in the
ordinary course of business as director, officer or employee of the Company or
any Subsidiary), (iii) entered into or modified in any manner any contract with,
or (iv) borrowed any money from, or made or forgiven any loan or other advance
(other than expenses or similar advances made in the ordinary course of
business) to, any Affiliated Person.
(c) Except as set forth in Section 4.26 of the Company Letter or in
the Company SEC Reports filed with the SEC prior to the date hereof, (i) the
contracts of the Company and the Subsidiaries do not include any material
obligation or commitment between the Company or any Subsidiary and any
Affiliated Person, (ii) the assets of the Company or any Subsidiary do not
include any receivable or other obligation or commitment from an Affiliated
Person to the Company or any Subsidiary and (iii) the liabilities of the Company
and the Subsidiaries do not include any payable or other obligation or
commitment from the Company or any Subsidiary to any Affiliated Person.
(d) To the Knowledge of the Company and except as set forth in
Section 4.26 of the Company Letter or in the Company SEC Reports filed with the
SEC prior to the date
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hereof, no Affiliated Person of any of the Company or any Subsidiary is a party
to any contract with any customer or supplier of the Company or any Subsidiary
that affects in any material manner the business, financial condition or results
of operation of the Company or any Subsidiary.
Section 4.27. Brokers. No broker, investment banker or other person,
-------
other than Xxxxx, Xxxxxxxx & Xxxx, Inc. or Xxxxxxx Xxxxxxx & Associates, Inc.,
the fees and expenses of which will be paid by the Company (as reflected in an
agreement between Xxxxx, Xxxxxxxx & Xxxx, Inc. or Xxxxxxx Xxxxxxx & Associates,
Inc., and the Company, copies of which are attached to Section 4.27 of the
Company Letter), is entitled to any broker's, finder's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
and by the Stock Option Agreement based upon arrangements made by or on behalf
of the Company.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
Section 5.1 Conduct of Business by the Company Pending the Merger.
-----------------------------------------------------
Except as expressly permitted by clauses (i) through (xvii) of this Section 5.1,
during the period from the date of this Agreement through the Effective Time,
the Company shall, and shall cause each of its Subsidiaries to, in all material
respects carry on its business in the ordinary course of its business as
currently conducted and, to the extent consistent therewith, use reasonable best
efforts to preserve intact its current business organizations, keep available
the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it. Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated by this Agreement or as set forth in the Company Letter
(with specific reference to the applicable subsection below), the Company shall
not, and shall not permit any of its Subsidiaries to, without the prior written
consent of Parent (provided that with respect to clauses (v), (vi), (viii),
(ix), (xiii), (xiv) and (xv) below, such consent shall not be unreasonably
withheld or delayed):
(i) (A) other than dividends paid by wholly-owned Subsidiaries,
declare, set aside or pay any dividends on, or make any other actual,
constructive or deemed distributions in respect of, any of its capital
stock, or otherwise make any payments to its shareholders in their capacity
as such, (B) other than in the case of any Subsidiary, split, combine or
reclassify any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock or (C) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options (including options under the Company Stock Option Plans) to acquire
any such shares, voting securities, equity equivalent or
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convertible securities, other than (A) the issuance of shares of Company
Common Stock upon the exercise of Company Stock Options outstanding on the
date of this Agreement in accordance with their current terms, (B) the
issuance of shares of Company Common Stock contemplated by Section 1.2(d),
(C) the issuance of shares of Company Common Stock upon exercise of the
Xxxxxxxx Warrant, (D) the issuance of shares of Company Common Stock
pursuant to the Stock Option Agreement and (E) as set forth in Section
5.1(ii) of the Company Letter;
(iii) amend its charter or by-laws;
(iv) acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial portion of the assets of or equity in, or by
any other manner, any business or any corporation, limited liability
company, partnership, association or other business organization or
division thereof;
(v) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets, other than sales of inventory that
are in the ordinary course of business consistent with past practice and
sales of assets having an aggregate fair market value of up to $100,000;
(vi) incur any indebtedness for borrowed money, guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
other investments in, any other person, other than (A) in the ordinary
course of business consistent with past practices and, in the case of
indebtedness and guarantees, in an amount not to exceed $500,000 and (B)
indebtedness, loans, advances, capital contributions and investments
between the Company and any of its Subsidiaries or between any of such
Subsidiaries, in each case in the ordinary course of business consistent
with past practices;
(vii) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or ownership
of the Company or any Subsidiary;
(viii) except as provided in Section 5.1(viii) of the Company Letter
and Section 6.5 hereof, enter into or adopt any, or amend any existing,
severance plan, agreement or arrangement or enter into or amend any Company
Plan or employment or consulting agreement;
(ix) except as provided in Section 5.1(ix) of the Company Letter and
Section 6.5 hereof, increase the compensation payable or to become payable
to its directors, officers or employees (except for increases in the
ordinary course of business consistent with past practice in salaries or
wages of employees of the Company or any of its Subsidiaries who are not
officers of the Company or any of its Subsidiaries) or grant any severance
or termination pay to, or enter into any employment or severance agreement
with, any director or officer of the Company or any of its Subsidiaries, or
establish, adopt, enter into, or, except as may be required to comply with
applicable law, amend in any material respect or take action to enhance in
any material respect or accelerate any rights or
-29-
benefits under, any labor, collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee;
(x) knowingly violate or knowingly fail to perform any obligation
or duty imposed upon it or any Subsidiary by any applicable material
federal, state or local law, rule, regulation, guideline or ordinance;
(xi) make any change to accounting policies or procedures (other
than actions required to be taken by generally accepted accounting
principles);
(xii) prepare or file any Tax Return inconsistent with past practice
or, on any such Tax Return, take any position, make any election, or adopt
any method that is inconsistent with positions taken, elections made or
methods used in preparing or filing similar Tax Returns in prior periods;
(xiii) settle or compromise any federal, state, local or foreign
income tax dispute in excess of $100,000 or make any tax election;
(xiv) settle or compromise any claims or litigation in excess of
$100,000 or commence any litigation or proceedings;
(xv) enter into or amend any agreement or contract (i) having a
remaining term in excess of 12 months or (ii) which involves or is expected
to involve future payments of $500,000 or more during the term thereof; or
purchase any real property, or make or agree to make any new capital
expenditure or expenditures (other than the purchase of real property)
which in the aggregate are in excess of $500,000;
(xvi) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of any such
claims, liabilities or obligations, in the ordinary course of business
consistent with past practice or in accordance with their terms; or
(xvii) authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
Section 5.2 No Solicitation. (a) The Company shall not, nor shall it
---------------
permit any of its Subsidiaries to, nor shall it authorize or permit any officer,
director or employee of or any financial advisor, attorney or other advisor or
representative of, the Company or any of its Subsidiaries to, (i) solicit,
initiate or encourage the submission of, any Takeover Proposal (as hereafter
defined), (ii) enter into any agreement with respect to or approve or recommend
any Takeover Proposal or (iii) participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to the Company
or any Subsidiary in connection with, or
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take any other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Takeover
Proposal; provided, however, that nothing contained in this Section 5.2(a) shall
-------- -------
prohibit the Company or its directors from (i) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a tender or exchange offer or
(ii) referring a third party to this Section 5.2(a) or making a copy of this
Section 5.2(a) available to any third party; and provided, further, that prior
-------- -------
to the acceptance for payment of Shares pursuant to the Offer, if the Board of
Directors of the Company reasonably determines that a Takeover Proposal
constitutes a Superior Proposal (as defined below), then, to the extent required
by the fiduciary obligations of the Board of Directors of the Company, as
determined in good faith by a majority thereof after consultation with
independent counsel (who may be the Company's regularly engaged independent
counsel), the Company and its representatives may, in response to an unsolicited
request therefor, and subject to compliance with Section 5.2(b), furnish
information with respect to the Company and its Subsidiaries to any person
pursuant to a customary confidentiality statement (as determined by the
Company's independent counsel) and participate in discussions or negotiations
with such person. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any officer
or director of the Company or any of its Subsidiaries or any financial advisor,
attorney or other advisor or representative of the Company or any of its
Subsidiaries, whether or not such person is purporting to act on behalf of the
Company or any of its Subsidiaries or otherwise, shall be deemed to be a breach
of this Section 5.2(a) by the Company. For purposes of this Agreement,
"Takeover Proposal" means any proposal for a merger or other business
------------------
combination involving the Company or any of its Subsidiaries or any proposal or
offer to acquire in any manner, directly or indirectly, an equity interest in,
any voting securities of, or a substantial portion of the assets of the Company
or any of its Subsidiaries, other than the transactions contemplated by this
Agreement and the Stock Option Agreement, and "Superior Proposal" means a bona
-----------------
fide proposal made by a third party to acquire the Company pursuant to a tender
or exchange offer, a merger, a sale of all or substantially all its assets or
otherwise on terms which a majority of the disinterested members of the Board of
Directors of the Company determines, at a duly constituted meeting of the Board
of Directors or by unanimous written consent, in its reasonable good faith
judgment to be more favorable to the Company's shareholders than the Merger
(after consultation with the Company's independent financial advisor) and for
which financing, to the extent required, is then committed or which, in the
reasonable good faith judgment of a majority of such disinterested members, as
expressed in a resolution adopted at a duly constituted meeting of such members
(after consultation with the Company's independent financial advisor), is
reasonably capable of being obtained by such third party.
(b) The Company shall advise Parent orally and in writing of (i) any
Takeover Proposal or any inquiry with respect to or which could lead to any
Takeover Proposal received by any officer or director of the Company or, to the
Knowledge of the Company, any financial advisor, attorney or other advisor or
representative of the Company, (ii) the material terms of such Takeover Proposal
(including a copy of any written proposal), and (iii) the identity of the person
making any such Takeover Proposal or inquiry no later than 24 hours following
receipt of such Takeover Proposal or inquiry. If the Company intends to furnish
any Person with any information with respect to any Takeover Proposal in
accordance with Section 5.2(a), the Company shall advise Parent orally and in
writing of such intention not less than 24 hours in
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advance of providing such information. The Company will keep Parent fully
informed of the status and details of any such Takeover Proposal or inquiry.
Section 5.3 Third Party Standstill Agreements. During the period
---------------------------------
from the date of this Agreement through the Effective Time, the Company shall
not terminate, amend, modify or waive any provision of any standstill agreement
to which the Company or any of its Subsidiaries is a party (other than any
involving Parent). During such period, the Company agrees to enforce, to the
fullest extent permitted under applicable law, the provisions of any such
agreements, including, but not limited to, obtaining injunctions to prevent any
breaches of such agreements and to enforce specifically the terms and provisions
thereof in any court of the United States or any state thereof having
jurisdiction.
ARTICLE VI
ADDITIONAL AGREEMENTS
---------------------
Section 6.1 Shareholder Meeting. (a) If the Company Shareholder
-------------------
Approval is required by law, the Company will duly call, give notice of, convene
and hold a meeting of shareholders (the "Shareholder Meeting") for the purpose
-------------------
of considering the approval of this Agreement and at such meeting call for a
vote and cause proxies to be voted in respect of the approval and adoption of
this Agreement. The Shareholder Meeting shall be held as soon as practicable
following the purchase of Shares pursuant to the Offer, and the Company will,
through its Board of Directors, recommend to its shareholders the approval of
this Agreement, and shall not withdraw or modify such recommendation. The record
date for the Shareholder Meeting shall be a date subsequent to the date Parent
or Sub becomes a record holder of Company Common Stock pursuant to the Offer.
(b) If the Company Shareholder Approval is required by law, the
Company shall, at Parent's request, as soon as practicable following the
expiration of the Offer, prepare and file a preliminary Proxy Statement with the
SEC and shall use its reasonable best efforts to respond to any comments of the
SEC or its staff and to cause the Proxy Statement to be mailed to the Company's
shareholders as promptly as practicable after responding to all such comments to
the satisfaction of the staff. The Company shall notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement or the
Merger. If at any time prior to the Shareholder Meeting there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company shall promptly prepare and mail to its shareholders such
an amendment or supplement. The Company shall not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably objects. Parent
shall cooperate with the Company in the preparation of the Proxy Statement or
any amendment or supplement thereto.
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(c) Parent agrees to cause all Shares purchased pursuant to the Offer
and all other Shares owned by Parent or any subsidiary of Parent to be voted in
favor of approval of the Merger.
Section 6.2 Access to Information. Subject to currently existing
---------------------
contractual and legal restrictions applicable to the Company or any of its
Subsidiaries, the Company shall, and shall cause each of its Subsidiaries to,
afford to the accountants, counsel, financial advisors and other representatives
of Parent reasonable access to, and permit them to make such inspections as they
may reasonably require of, during the period from the date of this Agreement
through the Effective Time, all of their respective properties, books,
contracts, commitments and records (including engineering records and Tax
Returns and the work papers of independent accountants, if available and subject
to the consent of such independent accountants) and, during such period, the
Company shall, and shall cause each of its Subsidiaries to (i) furnish promptly
to Parent a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of federal
or state securities laws, (ii) furnish promptly to Parent all other information
concerning its business, properties and personnel as Parent may reasonably
request and (iii) promptly make available to Parent all personnel of the Company
and its Subsidiaries knowledgeable about matters relevant to such inspections.
No investigation pursuant to this Section 6.2 shall affect any representation or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto. All information obtained by Parent pursuant
to this Section 6.2 shall be kept confidential in accordance with the
Confidentiality Agreement dated September 24, 1998 between Parent and the
Company (the "Confidentiality Agreement").
-------------------------
Section 6.3. Directors. Promptly after such time as Sub purchases
----------
Shares pursuant to the Offer which represent at least the Minimum Condition, Sub
shall be entitled, to the fullest extent permitted by law, to designate at its
option up to that number of directors, rounded to the nearest whole number, of
the Company's Board of Directors, subject to compliance with Section 14(f) of
the Exchange Act, as will make the percentage of the Company's directors
designated by Sub equal to the percentage of the aggregate voting power of the
shares of Common Stock held by Parent or any of its Subsidiaries; provided,
--------
however, that in the event that Sub's designees are elected to the Board of
-------
Directors of the Company, until the Effective Time such Board of Directors shall
have at least three directors who are directors on the date of this Agreement
and who are not officers of the Company (the "Independent Directors"); and
---------------------
provided further that, in such event, if the number of Independent Directors
-------- -------
shall be reduced below three for any reason whatsoever, the remaining
Independent Directors or Director shall designate a person or persons to fill
such vacancy or vacancies, each of whom shall be deemed to be an Independent
Director for purposes of this Agreement or, if no Independent Directors then
remain, the other directors shall designate three persons to fill such vacancies
who shall not be officers or affiliates of the Company or any of its
subsidiaries, or officers or affiliates of Parent or any of its subsidiaries,
and such persons shall be deemed to be Independent Directors for purposes of
this Agreement. Following the election or appointment of Sub's designees
pursuant to this Section 6.3 and prior to the Effective Time, any amendment, or
waiver of any term or condition, of this Agreement or the Company Charter or the
Amended and Restated By-Laws of the Company, any termination of this Agreement
by the Company, any extension by the Company of
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the time for the performance of any of the obligations or other acts of Sub or
waiver or assertion of any of the Company's rights hereunder, and any other
consent or action by the Board of Directors of the Company with respect to this
Agreement, will require the concurrence of a majority of the Independent
Directors and no other action by the Company, including any action by and any
other director of the Company, shall be required for purposes of this Agreement.
To the fullest extent permitted by applicable law, the Company shall take all
action requested by Parent that is reasonably necessary to effect any such
election, including mailing to its shareholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing
with the mailing of the Schedule 14D-9 (provided that Sub shall have provided to
the Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). In connection with the
foregoing, the Company will promptly, at the option of Parent, to the fullest
extent permitted by law, either increase the size of the Company's Board of
Directors and/or obtain the resignation of such number of its current directors
as is necessary to enable Sub's designees to be elected or appointed to the
Company's Board of Directors as provided above.
Section 6.4 Fees and Expenses. (a) Except as provided in this
-----------------
Section 6.4, whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby, including the fees and disbursements of counsel, financial advisors and
accountants, shall be paid by the party incurring such costs and expenses.
(b) The Company shall pay, or cause to be paid, in same day funds
to Parent the following amounts under the circumstances and at the times set
forth as follows:
(i) if Parent or Sub terminates this Agreement under Section
8.1(d), the Company shall pay the Expenses (as defined below) of Parent and
the Termination Fee (as defined below) upon demand;
(ii) if the Company terminates this Agreement under Section 8.1(e),
the Company shall pay the Termination Fee within one business day following
such termination and the Expenses of Parent upon demand;
(iii) if Parent or Sub terminates this Agreement under Section 8.1(c)
and at the time of any such termination, a Takeover Proposal shall have
been made (other than a Takeover Proposal made prior to the date hereof),
(x) the Company shall pay the Expenses of Parent upon demand, and (y) if
concurrently therewith or within twelve months thereafter, (A) the Company
enters into a merger agreement, acquisition agreement or similar agreement
(including a letter of intent) with respect to a Takeover Proposal, or a
Takeover Proposal is consummated, involving any party (1) with whom the
Company had any discussions with respect to a Takeover Proposal, (2) to
whom the Company furnished information with respect to or with a view to a
Takeover Proposal or (3) who had submitted a proposal or expressed any
interest publicly in a Takeover Proposal, in the case of each of clauses
(1), (2) and (3), prior to such termination, or (B)
-34-
the Company enters into a merger agreement, acquisition agreement or
similar agreement (including a letter of intent) with respect to a Superior
Proposal, or a Superior Proposal is consummated, then, in the case of
either (A) or (B) above, the Company shall pay the Termination Fee upon the
earlier of the execution of such agreement or upon consummation of such
Takeover Proposal or Superior Proposal.
(c) Parent shall pay, or cause to be paid, in same day funds to the
Company, the Expenses of the Company if the Company terminates this Agreement
under Section 8.1(f) or Section 8.1(g).
(d) "Expenses" means with respect to Parent or the Company, as the
--------
case may be, documented out-of-pocket fees and expenses incurred or paid by or
on behalf of Parent or the Company, as the case may be, in connection with the
Offer, the Merger or the consummation of any of the transactions contemplated by
this Agreement, including all fees and expenses of law firms, commercial banks,
investment banking firms, accountants, experts and consultants to Parent or the
Company, as the case may be; provided that the Expenses of Parent payable by the
--------
Company under this Section 6.4 shall not exceed $1 million and the Expenses of
the Company payable by Parent under this Section 6.4 shall not exceed $1
million; and "Termination Fee" means $4 million; provided, however, that the
--------------- -------- -------
aggregate amount of the Termination Fee and Expenses payable to Parent shall be
reduced to an amount not less than zero by subtracting from the aggregate amount
otherwise payable to Parent the amount realized or anticipated to be realizable
(based on the facts as they exist on the date such aggregate amount shall become
due) by Parent under the Stock Option Agreement; provided further that if such
-------- -------
aggregate amount shall be so reduced by an amount realizable by Parent and
thereafter the Stock Option Agreement shall terminate without receipt by Parent
of such amount, then, to the extent Parent is entitled to receive such aggregate
amount, an additional payment shall be made to Parent in such amount promptly
following such termination.
Section 6.5. Stock Options. (a) Prior to the consummation of the
-------------
Offer, the Board of Directors of the Company (or, if appropriate, any committee
thereof) shall adopt appropriate resolutions and take all other actions
necessary or appropriate to (i) cause each Company Stock Option that is
outstanding as of the date hereof to vest and to be exercisable immediately
prior to the consummation of the Offer and (ii) cause each Company Stock Option
that is outstanding upon the consummation of the Offer to be cancelled as of the
consummation of the Offer, in consideration for which the holder thereof (an
"Option Holder") shall be entitled to receive from the Company an amount equal
--------------
to (A) the product of (1) the number of shares of Company Common Stock subject
to such Option and (2) the excess, if any, of the Offer Price over the exercise
price per share for the purchase of the Company Common Stock subject to such
Option, minus (B) all applicable federal, state and local Taxes required to be
withheld in respect of such payment. The amounts payable pursuant to clause
(ii) of the first sentence of this Section 6.5 shall be paid as soon as
reasonably practicable following the acceptance for payment by Sub pursuant to
the Offer. The amount payable to any Option Holder pursuant to clause (ii) of
the first sentence of this Section 6.5 shall be reduced to the extent necessary
to prevent such payment, together with any other amounts payable to such Option
Holder by the Company, from constituting a "parachute payment," within the
meaning of section 280G of the Code. The
-35-
surrender of an Option in exchange for the consideration contemplated by clause
(ii) of the first sentence of this Section 6.5 shall be deemed a release of any
and all rights the Option Holder had or may have had in respect thereof.
(b) The Company shall take all actions necessary to ensure that: (i)
the Purchase Period (as defined in the Company Stock Purchase Plan) applicable
to the options outstanding under the Company Stock Purchase Plan (each, a
"Purchase Plan Option") is shortened so as to have an Exercise Date (as defined
---------------------
in the Company Stock Purchase Plan) that occurs before the acceptance for
payment by Sub of Shares pursuant to the Offer; (ii) no new Purchase Period
shall begin from and after the date hereof; and (iii) no holder of a Purchase
Plan Option is permitted to increase his or her rate of payroll deduction under
the Company Stock Purchase Plan from and after the date hereof.
(c) The Company shall take all actions necessary to provide that,
effective as of acceptance for payment by Sub of Shares pursuant to the Offer,
(i) each of the Company Stock Option Plans and any similar plan or agreement of
the Company shall be terminated, (ii) any rights under any other plan, program,
agreement or arrangement to the issuance or grant of any other interest in
respect of the capital stock of the Company or any of its Subsidiaries shall be
terminated, and (iii) no Option Holder will have any right to receive any shares
of capital stock of the Company or, if applicable, the Surviving Corporation,
upon exercise of any Company Stock Option.
(d) The Company represents and warrants that it has the power and
authority under the terms of the Company Stock Purchase Plan and each of the
applicable Company Stock Option Plans to comply with this Section 6.5 without
the consent of any Option Holder.
Section 6.6 Reasonable Best Efforts. (a) Upon the terms and subject
-----------------------
to the conditions set forth in this Agreement, each of the parties agrees to use
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer, the Merger and
the other transactions contemplated by this Agreement, including: (i) the
obtaining of all necessary actions or non-actions, waivers, consents and
approvals from all Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by, any Governmental Entity
(including those in connection with the HSR Act and State Takeover Approvals),
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement, the Stock Option
Agreement or the consummation of the transactions contemplated hereby and
thereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed, and (iv)
the execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by this Agreement. No party to this Agreement
shall consent to any voluntary delay of the consummation of the Offer, the
Merger at the behest of any
-36-
Governmental Entity without the consent of the other parties to this Agreement,
which consent shall not be unreasonably withheld.
(b) Each party shall use all reasonable best efforts to not take any
action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or result
in a breach of any covenant made by it in this Agreement.
(c) Notwithstanding anything to the contrary contained in this
Agreement, in connection with any filing or submission required or action to be
taken by either Parent or the Company to effect the Offer, the Merger and to
consummate the other transactions contemplated hereby, the Company shall not,
without Parent's prior written consent, commit to any divestiture transaction,
and neither Parent nor any of its Affiliates shall be required to divest or hold
separate or otherwise take or commit to take any action that limits its freedom
of action with respect to, or its ability to retain, the Company or any of the
businesses, product lines or assets of Parent or any of its Subsidiaries or that
otherwise would have a Material Adverse Effect on Parent.
Section 6.7 Public Announcements. Parent and the Company will not
--------------------
issue any press release with respect to the transactions contemplated by this
Agreement or otherwise issue any written public statements with respect to such
transactions without prior consultation with the other party, except as may be
required by applicable law or by obligations pursuant to any listing agreement
with any national securities exchange.
Section 6.8 DEC Letter; Termination of Stock Rights. (a) Prior to
---------------------------------------
the acceptance for payment of any Shares by Sub pursuant to the Offer, the
Company and Parent will enter into the agreements contemplated by the letter
agreement dated November 21, 1998 among the Company, Parent and DEC, and prior
to the Effective Time, the Company will purchase the shares of common stock of
Xxxxxx owned by DEC as contemplated by such letter agreement.
(b) Prior to the acceptance for payment of any Shares by Sub pursuant
to the Offer, the Company will obtain the consent, in form and substance
reasonably satisfactory to Parent, of the holders of the Xxxxxxxx Warrant so
that after the Company's obtaining such consent the holders thereof will have no
right to purchase shares of Company Common Stock.
(c) Prior to the acceptance for payment of any Shares by Sub pursuant
to the Offer, the Company will obtain the consent, in form and substance
reasonably satisfactory to Parent, of the other parties to the Contingent
Payment Agreements so that after the Company's obtaining such consent the other
parties to such agreements will have no right to receive shares of Company
Common Stock as payment of any contingent amounts thereunder.
(d) Upon the acceptance for payment of Shares pursuant to the Offer,
the Company will be the holder of all of the issued and outstanding capital
stock of Xxxxxx other than the Common Stock of Xxxxxx owned by DEC and there
shall be no options, warrants, calls, rights or agreements to which the Company
or Xxxxxx is a party, or by which any of them is bound obligating the Company or
Xxxxxx to issue, sell, or cause to be issued, delivered or sold, additional
-37-
shares of capital stock of Xxxxxx or to xxxxx, extend or enter into any such
option, warrant, call, right or agreement.
Section 6.9 State Takeover Laws. If any "fair price," "business
-------------------
combination" or "control share acquisition" statute or other similar statute or
regulation shall become applicable to the transactions contemplated hereby or in
the Stock Option Agreement or the Shareholder Agreements, Parent and the Company
and their respective Boards of Directors shall use their reasonable best efforts
to grant such approvals and take such actions as are necessary so that the
transactions contemplated hereby and thereby may be consummated as promptly as
practicable on the terms contemplated hereby and thereby and otherwise act to
minimize the effects of any such statute or regulation on the transactions
contemplated hereby and thereby.
Section 6.10 Indemnification; Directors and Officers Insurance. (a)
-------------------------------------------------
From and after the Effective Time, Parent shall cause the Surviving Corporation
to indemnify and hold harmless all past and present officers and directors of
the Company and of its Subsidiaries to the same extent and in the same manner
such persons are indemnified as of the date of this Agreement by the Company
pursuant to the IBCA, the Company Charter or the Company's Amended and Restated
Bylaws for acts or omissions occurring at or prior to the Effective Time.
(b) Parent shall cause the Surviving Corporation to provide, for an
aggregate period of not less than three years from the Effective Time, the
Company's current directors and officers an insurance and indemnification policy
that provides coverage for events occurring prior to the Effective Time (the
"D&O Insurance") that is substantially similar to the Company's existing policy
--------------
or, if substantially equivalent insurance coverage is unavailable, the best
available coverage; provided, however, that the Surviving Corporation shall not
-------- -------
be required to pay an annual premium for the D&O Insurance in excess of the last
annual premiums paid prior to the date hereof but in such case shall purchase as
much coverage as possible for such amount.
(c) Parent hereby agrees that, effective at the Effective Time,
Parent will guarantee the obligations of the Surviving Corporation under Section
6.10(a) and (b).
Section 6.11 Notification of Certain Matters. Parent shall use its
-------------------------------
reasonable best efforts to give prompt notice to the Company, and the Company
shall use its reasonable best efforts to give prompt notice to Parent, of: (i)
the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which it is aware and which would be reasonably likely to cause
(x) any representation or warranty contained in this Agreement and made by it to
be untrue or inaccurate in any material respect or (y) any covenant, condition
or agreement contained in this Agreement and made by it not to be complied with
or satisfied in all material respects, (ii) any failure of Parent or the
Company, as the case may be, to comply in a timely manner with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder or (iii) any change or event which would be reasonably likely to have
a Material Adverse Effect on the Company; provided, however, that the delivery
-------- -------
of any notice pursuant to this Section 6.11 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
-38-
ARTICLE VII
CONDITIONS PRECEDENT TO THE MERGER
----------------------------------
Section 7.1 Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Merger. The respective obligations of each party to effect the Merger shall be
------
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Shareholder Approval. If required by applicable law, the Company
--------------------
Shareholder Approval shall have been obtained.
(b) Purchase of Shares. Sub shall have previously accepted for
------------------
payment and paid for Shares pursuant to the Offer.
(c) No Order. No court or other Governmental Entity having
--------
jurisdiction over the Company or Parent, or any of their respective
Subsidiaries, shall have enacted, issued, promulgated, enforced or entered any
law, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and has
the effect of making the Merger illegal.
Section 7.2 Conditions to Obligations of Parent and Sub to Effect
-----------------------------------------------------
the Merger. The obligations of Parent and Sub to effect the Merger shall be
----------
subject to the fulfillment at or prior to the Effective Time of the following
additional conditions:
(a) Performance of Obligations; Representations and Warranties. The
----------------------------------------------------------
Company shall have performed in all material respects each of its agreements
contained in this Agreement required to be performed on or prior to the
Effective Time, and the representations and warranties of the Company contained
in this Agreement shall be true and correct on and as of the Effective Time as
if made on and as of such date, except where the failure to be so true and
correct would not have a Material Adverse Effect on the Company, and Parent
shall have received a certificate signed on behalf of the Company by its Chief
Executive Officer and its Chief Financial Officer to such effect.
(b) Consents. (i) The Company shall have obtained the consent or
--------
approval of each person or Governmental Entity whose consent or approval shall
be required in connection with the transactions contemplated hereby under any
loan or credit agreement, note, mortgage, indenture, lease or other agreement or
instrument, except as to which the failure to obtain such consents and approvals
would not, in the reasonable opinion of Parent, individually or in the
aggregate, have a Material Adverse Effect on the Company or Parent or upon the
consummation of the transactions contemplated in this Agreement, the Stock
Option Agreement or the Shareholder Agreements.
(ii) In obtaining any approval or consent required to consummate any
of the transactions contemplated herein, in the Stock Option Agreement or the
Shareholder Agreements, no Governmental Entity shall have imposed or shall have
sought to impose any condition, penalty
-39-
or requirement which, in the reasonable opinion of Parent, individually or in
aggregate would have a Material Adverse Effect on the Company or Parent.
(c) Material Adverse Change. Since the date of this Agreement, there
-----------------------
shall have been no Material Adverse Change with respect to the Company. Parent
shall have received a certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company to such effect.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 8.1. Termination. This Agreement may be terminated at any
------------
time prior to the Effective Time, whether before or after approval of this
Agreement by the shareholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions the Offer shall have terminated or expired in accordance
with its terms without Sub having accepted for payment any Shares
pursuant to the Offer or (y) Sub shall not have accepted for payment
any Shares pursuant to the Offer prior to March 31, 1999; provided,
--------
however, that the right to terminate this Agreement pursuant to this
-------
Section 8.1(b)(i) shall not be available to any party whose failure to
perform any of its obligations under this Agreement results in the
failure of any such condition or if the failure of such condition
results from facts or circumstances that constitute a breach of any
representation or warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or
payment for, Shares pursuant to the Offer and such order, decree or
ruling or other action shall have become final and nonappealable;
(c) by Parent or Sub prior to the purchase of Shares pursuant to the
Offer in the event of a breach by the Company of any representation,
warranty, covenant or other agreement contained in this Agreement which (i)
would give rise to the failure of a condition set forth in paragraph (e) or
(f) of Exhibit C and (ii) cannot be or has not been cured within 30 days
---------
after the giving of written notice to the Company;
-40-
(d) by Parent or Sub if either Parent or Sub is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraph
(d) of Exhibit C to this Agreement;
---------
(e) by the Company if the Board of Directors of the Company
reasonably determines that a Takeover Proposal constitutes a Superior
Proposal and a majority of the members of the Board of Directors
determines, in its reasonable good faith judgment, after consultation with
independent counsel, that failing to terminate this Agreement would
constitute a breach of such Board's fiduciary duties under applicable law,
provided that the Company has complied with all provisions of Section 5.2,
including the notice provisions therein, and that it has complied with the
requirements of Section 6.4(b) relating to the payment (including the
timing of any payment) of the Expenses and the Termination Fee to the
extent required by Section 6.4(b); and provided further that the Company
may not terminate this Agreement pursuant to this Section 8.1(e) unless and
until 72 hours have elapsed following delivery to Parent of a written
notice of such determination by the Board of Directors of the Company;
(f) by the Company, if (i) any of the representations or warranties
of Parent or Sub set forth in this Agreement that are qualified as to
materiality shall not be true and correct in any respect or any such
representations or warranties that are not so qualified shall not be true
and correct in any material respect, or (ii) Parent or Sub shall have
failed to perform in any material respect any material obligation or to
comply in any material respect with any material agreement or covenant of
Parent or Sub to be performed or complied with by it under this Agreement
and such untruth, incorrectness or failure cannot be or has not been cured
within 30 days after the giving of written notice to Parent or Sub, as
applicable; or
(g) by the Company, if the Offer has not been timely commenced in
accordance with Section 1.1.
The right of any party hereto to terminate this Agreement pursuant to
this Section 8.1 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
Section 8.2 Effect of Termination. In the event of termination of
---------------------
this Agreement by either Parent or the Company, as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent, Sub or their respective officers or
directors (except for the last sentence of Section 6.2 and the entirety of
Section 6.4, which shall survive the termination); provided, however, that
-------- -------
nothing contained in this Section 8.2 shall relieve any party hereto from any
liability for any willful breach of a representation or warranty contained in
this Agreement or the breach of any covenant contained in this Agreement.
-41-
Section 8.3 Amendment. Subject to Section 6.3, this Agreement may be
---------
amended by the parties hereto, by or pursuant to action taken by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the shareholders of the
Company, but, after any such approval, no amendment shall be made which by law
requires further approval by such shareholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 8.4 Waiver. At any time prior to the Effective Time, subject
------
to Section 6.3, the parties hereto may (i) extend the time for the performance
of any of the obligations or other acts of the other parties hereto, (ii) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (iii) waive compliance with any of
the agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE IX
GENERAL PROVISIONS
------------------
Section 9.1 Non-Survival of Representations and Warranties. The
----------------------------------------------
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall terminate at the Effective Time.
Section 9.2 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given when delivered personally, one day
after being delivered to an overnight courier or when telecopied (with a
confirmatory copy sent by overnight courier) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to:
GE Fanuc Automation North America, Inc.
X.X. Xxx 0000
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Attention: President and CEO
Facsimile No.: 000-000-0000
for overnight courier deliveries, to:
GE Fanuc Automation North America, Inc.
Xxxxx 00 Xxxxx xxx Xxxxx 000
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Senior Vice President and General Counsel
-42-
with copies to:
GE Fanuc Automation North America, Inc.
X.X. Xxx 0000
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Senior Vice President and General Counsel
Facsimile No.: 000-000-0000
and
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Xxxxxx X. Xxxxxxx
Facsimile No.: 312-853-7036
(b) if to the Company, to:
Total Control Products, Inc.
000 X. Xxxxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxx
Facsimile No.: 000-000-0000
with a copy to:
X'Xxxxxx & Xxxxxx
00 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Facsimile No.: 000-000-0000
Section 9.3 Interpretation. (a) When a reference is made in this
--------------
Agreement to a Section, such reference shall be to a Section of 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 deemed to be
followed by the words "without limitation."
(b) "Subsidiary" means any corporation, partnership, limited
----------
liability company, joint venture or other legal entity of which Parent or the
Company, as the case may be (either alone or through or together with any other
Subsidiary), owns, directly or indirectly, 50% or more of the stock or other
equity interests the holders of which are generally entitled to vote for the
-43-
election of the board of directors or other governing body of such corporation,
partnership, limited liability company, joint venture or other legal entity.
(c) "Material Adverse Change" or "Material Adverse Effect" means,
----------------------- -----------------------
when used with respect to the Company or Parent, as the case may be, any change
or effect that is or could reasonably be expected (as far as can be foreseen at
the time) to be materially adverse to the business, operations, assets,
liabilities, employee relationships, customer or supplier relationships,
earnings or results of operations, or the business prospects and condition
(financial or otherwise), of the Company and its Subsidiaries, taken as a whole
(other than such changes or effects as are described in Section 9.3(c) of the
Company Letter), or Parent and its Subsidiaries, taken as a whole, as the case
may be.
Section 9.4 Counterparts. This Agreement may be executed in
------------
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 9.5 Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement, except for the Stock Option Agreement and as provided in the last
sentence of Section 6.2, constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof. This Agreement, except for the
provisions of Section 6.10, is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
Section 9.6 Governing Law. Except to the extent that the laws of the
-------------
State of Illinois are mandatorily applicable to the Merger, this Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
Section 9.7 Assignment. Subject to Section 2.1, neither this
----------
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties.
Section 9.8 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 terms, conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated by this Agreement
may be consummated as originally contemplated to the fullest extent possible.
-44-
Section 9.9 Enforcement of this Agreement. The parties hereto agree
-----------------------------
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific wording or
were otherwise breached. It is accordingly agreed that the parties hereto shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof (but any
such proceeding shall be brought exclusively in the U.S. District Court for the
Northern District of Illinois), such remedy being in addition to any other
remedy to which any party is entitled at law or in equity. Each party hereto
waives any right to a trial by jury in connection with any such action, suit or
proceeding and waives any objection based on forum non conveniens or any other
objection to venue thereof.
-45-
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
GE FANUC AUTOMATION NORTH AMERICA, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and CEO
ORION MERGER CORP.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and CEO
TOTAL CONTROL PRODUCTS, INC.
By: /s/ Xxxxxxxx Xxxx
------------------------------------
Name: Xxxxxxxx Xxxx
Title: President and CEO
-46-
EXHIBIT A
---------
STOCK OPTION AGREEMENT
----------------------
STOCK OPTION AGREEMENT, dated as of November 22, 1998 (the "Agreement"),
between GE Fanuc Automation North America, Inc., a Delaware corporation
("Parent"), and Total Control Products, Inc., an Illinois corporation (the
------
"Company").
-------
W I T N E S S E T H:
WHEREAS, simultaneously with the execution and delivery of this Agreement,
Parent, Orion Merger Corp., a newly formed Illinois corporation and a wholly
owned subsidiary of Parent ("Sub"), and the Company are entering into an
---
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
------
Agreement"), which provides for the merger of Sub with and into the Company;
---------
WHEREAS, as a condition to Parent's willingness to enter into the Merger
Agreement, Parent has requested that the Company grant to Parent an option to
purchase up to 1,598,530 authorized and unissued shares of Company Common Stock,
upon the terms and subject to the conditions hereof; and
WHEREAS, in order to induce Parent to enter into the Merger Agreement, the
Company has agreed to grant Parent the requested option.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
1. The Option; Exercise; Adjustments. The Company hereby grants to Parent
---------------------------------
an irrevocable option (the "Option") to purchase from time to time up to
------
1,598,530 authorized and unissued Common Shares, no par value, of the Company
(the "Company Common Stock"), upon the terms and subject to the conditions set
--------------------
forth herein (the "Optioned Shares"). Subject to the conditions set forth in
---------------
Section 2, the Option may be exercised by Parent in whole or from time to time
in part, at any time after the date hereof and prior to the termination of the
Option in accordance with Section 19. In the event Parent wishes to exercise
the Option, after the satisfaction of the conditions set forth in Section 2
Parent shall send a written notice to the Company (the "Stock Exercise Notice")
---------------------
specifying the total number of Optioned Shares it wishes to purchase and a date
(not later than 10 business days and not earlier than two business days from the
date such notice is given) for the closing of such purchase (the "Closing
-------
Date"). Parent may revoke an exercise of the Option at any time prior to the
----
Closing Date by written notice to the Company. In the event of any change in
the number of issued and outstanding shares of Company Common Stock by reason of
any stock dividend, stock split, split-up, recapitalization, merger or other
change in the corporate or capital structure of the Company, the number of
Optioned Shares subject to the Option and the Exercise Price (as hereinafter
defined) per Optioned Share shall be appropriately adjusted. In the event that
any additional shares of Company Common Stock are issued after the date of this
Agreement (other than pursuant to an
event described in the preceding sentence or pursuant to this Agreement), the
number of Optioned Shares subject to the Option shall be adjusted so that, after
such issuance, it equals (but does not exceed) 19.9% of the number of shares of
Company Common Stock then issued and outstanding and 19.9% of the voting power
of shares of capital stock of the Company then issued and outstanding, after
reduction, to the extent necessary to comply with the exception to the
shareholder approval requirements of the Nasdaq National Market ("NASDAQ"), for
------
any shares issued pursuant to the Option.
2. Conditions to Exercise of Option and Delivery of Optioned Shares.
----------------------------------------------------------------
(a) Parent's right to exercise the Option is subject to the following
conditions:
(i) Neither Parent nor Sub shall have breached any of its material
obligations under the Merger Agreement;
(ii) No preliminary or permanent injunction or other order issued by
any federal or state court of competent jurisdiction in the United States
invalidating the grant or prohibiting the exercise of the Option shall be
in effect; and
(iii) One or more of the following events shall have occurred on or
after the date hereof: (A) any person, corporation, partnership, limited
liability company or other entity or group (such person, corporation,
partnership, limited liability company or other entity or group being
referred to hereinafter, singularly or collectively, as a "Person"),
------
acquires or becomes the beneficial owner of 20% or more of the outstanding
shares of Company Common Stock (other than a person who, as of the date
hereof, is the beneficial owner of 20% or more of the outstanding shares of
Company Common Stock (a "20% Holder")); (B) any 20% Holder increases his
----------
beneficial ownership of Company Common Stock by more than 1%; (C) any
group (other than a group which includes or may reasonably be deemed to
include Parent or any of its affiliates) is formed which beneficially owns
20% or more of the outstanding shares of Company Common Stock; (D) any
Person (other than Parent or its affiliates) shall have commenced a tender
or exchange offer for 20% or more of the then outstanding shares of Company
Common Stock or publicly proposed any bona fide merger, consolidation or
acquisition of all or substantially all the assets of the Company, or other
similar business combination involving the Company; (E) the Company enters
into, or announces that it proposes to enter into, an agreement, including,
without limitation, an agreement in principle, providing for a merger or
other business combination involving the Company or a "significant
subsidiary" (as defined in Rule 1.02(v) of Regulation S-X as promulgated by
the Securities and Exchange Commission (the "SEC")) of the Company or the
---
acquisition of a substantial interest in, or a substantial portion of the
assets, business or operations of, the Company or a significant subsidiary
(other than the transactions contemplated by the Merger Agreement); (F) any
Person (other than Parent or its affiliates) is granted any option or
right, conditional or otherwise, to acquire or otherwise become the
beneficial owner of shares of Company Common Stock which, together with all
shares of Company Common Stock beneficially owned by such Person, results
or would result in such Person being the beneficial owner of 20% or more of
the outstanding shares of Company Common Stock; or (G) there is a public
announcement
-2-
with respect to a plan or intention by the Company, other than Parent or
its affiliates, to effect any of the foregoing transactions. For purposes
of this subparagraph (iii), the terms "group" and "beneficial owner" shall
be defined by reference to Section 13(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations
------------
promulgated thereunder.
(b) Parent's obligation to purchase the Optioned Shares following
the exercise of the Option, and the Company's obligation to deliver the Optioned
Shares, are subject to the conditions that:
(i) No preliminary or permanent injunction or other order issued by
any federal or state court of competent jurisdiction in the United States
prohibiting the delivery of the Optioned Shares shall be in effect;
(ii) The purchase of the Optioned Shares will not violate Rule 10b-
13 promulgated under the Exchange Act; and
(iii) All applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall have
-------
expired or been terminated.
3. Exercise Price for Optioned Shares. At any Closing Date, the
----------------------------------
Company will deliver to Parent a certificate or certificates representing the
Optioned Shares in the denominations designated by Parent in its Stock Exercise
Notice and Parent will purchase the Optioned Shares from the Company at a price
per Optioned Share equal to $11.00 (the "Exercise Price"), payable in cash.
--------------
Payment made by Parent to the Company pursuant to this Agreement shall be made
by wire transfer of federal funds to a bank designated by the Company or a check
payable in immediately available funds. After payment of the Exercise Price for
the Optioned Shares covered by the Stock Exercise Notice, the Option shall be
deemed exercised to the extent of the Optioned Shares specified in the Stock
Exercise Notice as of the date such Stock Exercise Notice is given to the
Company.
4. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to Parent that (a) the execution and delivery of this
Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company and this Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms; (b) the
Company has taken all necessary corporate action to authorize and reserve the
Optioned Shares for issuance upon exercise of the Option, and the Optioned
Shares, when issued and delivered by the Company to Parent upon exercise of the
Option, will be duly authorized, validly issued, fully paid and nonassessable
and free of preemptive rights; (c) except as otherwise required by the HSR Act,
except for routine filings and subject to Section 7, the execution and delivery
of this Agreement by the Company and the consummation by it of the transactions
contemplated hereby do not require the consent, approval or authorization of, or
filing with, any person or public authority
-3-
and will not violate or conflict with the Company's Amended and Restated
Articles of Incorporation, as amended, or Amended and Restated Bylaws, or result
in the acceleration or termination of, or constitute a default under, any
indenture, license, approval, agreement, understanding or other instrument, or
any statute, rule, regulation, judgment, order or other restriction binding upon
or applicable to the Company or any of its subsidiaries or any of their
respective properties or assets; (d) the Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois and has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby;
and (e) the Board of Directors of the Company has, to the extent such statutes
are applicable, taken all action so that prior to the execution hereof, the
Board of Directors has approved the Merger and the execution of this Agreement
and the consummation of the transaction contemplated hereby so that the higher
vote requirement for certain business combinations set forth in Section 7.85 of
the Business Corporation Law of the State of Illinois, as amended (the "IBCA"),
----
and the restrictions on certain business combinations set forth in Section 11.75
of the IBCA will not apply with respect thereto or as a result thereof.
5. Representations and Warranties of Parent. Parent represents and
----------------------------------------
warrants to the Company that (a) the execution and delivery of this Agreement by
Parent and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Parent and
this Agreement has been duly executed and delivered by Parent and constitutes a
valid and binding agreement of Parent; and (b) Parent is acquiring the Option
and, if and when it exercises the Option, will be acquiring the Optioned Shares
issuable upon the exercise thereof, for its own account and not with a view to
distribution or resale in any manner which would be in violation of the
Securities Act of 1933, as amended (the "Securities Act"), and will not sell or
--------------
otherwise dispose of the Optioned Shares except pursuant to an effective
registration statement under the Securities Act or a valid exemption from
registration under the Securities Act.
6. The Closing. Any closing hereunder shall take place on the
-----------
Closing Date specified by Parent in its Stock Exercise Notice pursuant to
Section 1 at 10:00 A.M., local time, or the first business day thereafter on
which all of the conditions in Section 2 are met, at the principal executive
office of the Company, or at such other time and place as the parties hereto may
agree.
7. Filings Related to Optioned Shares. The Company will make such
----------------------------------
filings with the SEC as are required by the Exchange Act, and will use its best
efforts to effect all necessary filings by the Company under the HSR Act and to
have the Optioned Shares approved for quotation on NASDAQ.
8. Registration Rights. (a) If the Company effects any
-------------------
registration or registrations of shares of Company Common Stock under the
Securities Act for its own account or for any other stockholder of the Company
at any time after the exercise of the Option (other than a registration on Form
X-0, Xxxx X-0 or any successor forms), it will allow Parent to participate in
such registration or registrations with respect to any or all of the Optioned
Shares acquired upon the exercise of the Option; provided, however, that any
-------- -------
request of Parent pursuant
-4-
to this Section 8(a) shall be with respect to at least 100,000 Optioned Shares
and provided, further, that if the managing underwriters in such offering advise
-------- -------
the Company that, in their written opinion, the number of Optioned Shares
requested by Parent to be included in such registration exceeds the number of
shares of Company Common Stock which can be sold in such offering, the Company
may exclude from such registration all or a portion, as may be appropriate, of
the Optioned Shares requested for inclusion by Parent.
(b) At any time after the exercise of the Option, upon the request of
Parent, the Company will as promptly as practicable file and use its best
efforts to cause to be declared effective a registration statement under the
Securities Act (and applicable Blue Sky statutes) with respect to any or all of
the Optioned Shares acquired upon the exercise of the Option; provided, however,
-------- -------
that any request of Parent pursuant to this Section 8(b) shall be with respect
to at least 100,000 Optioned Shares and provided, further, that the Company
-------- -------
shall not be required to have declared effective more than two registration
statements hereunder and shall be entitled to delay the effectiveness of each
such registration statement, for a period not to exceed 90 days in the
aggregate, if the commencement of such offering would, in the reasonable good
faith judgment of the Board of Directors of the Company, require premature
disclosure of any material corporate development or otherwise materially
interfere with or materially adversely affect any pending or proposed offering
of securities of the Company. In connection with any such registration
requested by Parent, the costs of such registration shall be borne by the
Company, and the Company and Parent each shall provide the other and any
underwriters with customary indemnification and contribution agreements.
9. Optional Put; Optional Repurchase. (a) Prior to the termination
---------------------------------
of the Option in accordance with Section 19, if a Put Event has occurred, Parent
shall have the right, upon three business days' prior written notice to the
Company, to require the Company to purchase the Option from Parent (the "Put
---
Right") at a cash purchase price (the "Put Price") equal to the product
----- ---------
determined by multiplying (A) the number of Optioned Shares as to which the
Option has not yet been exercised by (B) the Spread (as defined below). As used
herein, "Put Event" means the occurrence on or after the date hereof of any of
---------
the following: (i) any Person (other than Parent or its affiliates) acquires or
becomes the beneficial owner of 50% or more of the outstanding shares of Company
Common Stock or (ii) the Company consummates a merger or other business
combination involving the Company or a "significant subsidiary" (as defined in
Rule 1.02(v) of Regulation S-X as promulgated by the SEC) of the Company or the
acquisition of a substantial interest in, or a substantial portion of the
assets, business or operations of, the Company or a significant subsidiary
(other than the transactions contemplated by the Merger Agreement). As used
herein, the term "Spread" shall mean the excess, if any, of (i) the greater of
------
(x) the highest price (in cash or fair market value of securities or other
property) per share of Company Common Stock paid or to be paid within 12 months
preceding the date of exercise of the Put Right for any shares of Company Common
Stock beneficially owned by any Person who shall have acquired or become the
beneficial owner of 20% or more of the outstanding shares of Company Common
Stock after the date hereof or (y) the average of the last reported sales prices
quoted on NASDAQ of the Company Common Stock during the five trading days
immediately preceding the written notice of exercise of the Put Right over (ii)
the Exercise Price.
-5-
(b) At any time after the termination of the Option granted hereunder
pursuant to Section 19 and for a period of 90 days thereafter, the Company shall
have the right, upon three business days' prior written notice, to repurchase
from Parent (the "Repurchase Right"), all (but not less than all) of the
----------------
Optioned Shares acquired by the Company hereby and with respect to which the
Company then has beneficial ownership (as defined in Rule 13d-3 under the
Exchange Act) at a price per share equal to the greater of (i) the average of
the last reported sales price quoted on NASDAQ of the Company Common Stock
during the five trading days immediately preceding the written notice of
exercise of the Repurchase Right and (ii) the Exercise Price, plus interest at a
rate per annum equal to the costs of funds to Parent at the time of exercise of
the Repurchase Right.
10. Expenses. Each party hereto shall pay its own expenses incurred
--------
in connection with this Agreement, except as otherwise provided in Section 8 or
as specified in the Merger Agreement.
11. Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state thereof having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity. Each party hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court for the Northern District of Illinois in any action, suit or proceeding
arising in connection with this Agreement, and agrees that any such action, suit
or proceeding shall be brought only in such courts (and waives any objection
based on forum non conveniens or any other objection to venue therein). Each
party hereto waives any right to a trial by jury in connection with any such
action, suit or proceeding.
12. Notice. All notices, requests, demands and other communications
------
hereunder shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended or if sent by
telex or telecopier (and also confirmed in writing) to the person at the address
set forth below, or such other address as may be designated in writing
hereafter, in the same manner, by such person:
-6-
(a) if to Parent, to:
GE Fanuc Automation North America, Inc.
X.X. Xxx 0000
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Attention: President and CEO
Facsimile No.: 000-000-0000
for overnight courier deliveries, to:
GE Fanuc Automation North America, Inc.
Xxxxx 00 Xxxxx xxx Xxxxx 000
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Senior Vice President and General Counsel
with copies to:
GE Fanuc Automation North America, Inc.
X.X. Xxx 0000
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Senior Vice President and General Counsel
Facsimile No.: 000-000-0000
and
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Xxxxxx X. Xxxxxxx
Facsimile No.: 312- 853-7036
(b) if to the Company, to:
Total Control Products, Inc.
000 X. Xxxxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxx
Attention: Xxxxxxxx Xxxx
Facsimile No.: 000-000-0000
-7-
with a copy to:
X'Xxxxxx & Xxxxxx
00 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
Facsimile No.: 000-000-0000
13. Parties in Interest. This Agreement shall inure to the benefit
-------------------
of and be binding upon the parties named herein and their respective successors
and assigns. Nothing in this Agreement, expressed or implied, is intended to
confer upon any Person other than Parent or the Company, or their permitted
successors or assigns, any rights or remedies under or by reason of this
Agreement.
14. Entire Agreement; Amendments. This Agreement, together with the
----------------------------
Merger Agreement and the other documents referred to therein, contains the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
15. Assignment. No party to this Agreement may assign any of its
----------
rights or delegate any of its obligations under this Agreement (whether by
operation of law or otherwise) without the prior written consent of the other
party hereto, except that Parent may, without a written consent, assign its
rights and delegate its obligations hereunder in whole or in part to one or more
of its direct or indirect wholly owned subsidiaries.
16. Headings. The section headings herein are for convenience only
--------
and shall not affect the construction of this Agreement.
17. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
18. Governing Law. Except to the extent that the laws of the State
-------------
of Illinois are mandatorily applicable to the Merger, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
19. Termination. This Agreement and the Option shall terminate upon
-----------
the earlier of (i) the Effective Time and (ii) the termination of the Merger
Agreement in accordance with its terms; provided, however, the Option shall not
-------- -------
terminate until 120 days after a termination pursuant to clause (ii) immediately
above if (A) the Merger Agreement is terminated by Parent or
-8-
Sub pursuant to Section 8.1(d) thereof, (B) the Merger Agreement is terminated
by the Company pursuant to Section 8.1(e) thereof or (C) unless the Company has
terminated the Merger Agreement pursuant to Section 8.1(f) or Section 8.1(g)
thereof, prior to the termination, a Takeover Proposal (as defined in the Merger
Agreement) shall have been commenced or the Company shall have entered into an
agreement with respect to, approved or recommended or taken any action to
facilitate, a Takeover Proposal; provided, further, that this Agreement shall
-------- -------
not terminate with respect to the Repurchase Right set forth in Section 9(b)
until 90 days after the termination of the Option pursuant to the foregoing
proviso. Notwithstanding the foregoing, the provisions of Section 8 shall
survive the termination of this Agreement until such time as Parent or any of
its affiliates ceases to beneficially own at least 100,000 of the Optioned
Shares.
20. Capitalized Terms. Capitalized terms not otherwise defined in
-----------------
this Agreement shall have the meanings set forth in the Merger Agreement.
21. Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated hereby are not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in order that
the transactions contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
-9-
IN WITNESS WHEREOF, Parent and the Company have caused this Agreement
to be duly executed and delivered on the day and year first above written.
GE FANUC AUTOMATION NORTH
AMERICA, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and CEO
TOTAL CONTROL PRODUCTS, INC.
By: /s/ Xxxxxxxx Xxxx
-----------------------------------
Name: Xxxxxxxx Xxxx
Title: President and CEO
-10-
EXHIBIT B
---------
SHAREHOLDER AGREEMENT
---------------------
SHAREHOLDER AGREEMENT (this "Agreement"), dated as of November 22,
---------
1998, among GE Fanuc Automation North America, Inc., a Delaware corporation
("Parent"), Orion Merger Corp., an Illinois corporation and a wholly owned
------
subsidiary of Parent ("Sub"), and the undersigned shareholder (the
---
"Shareholder") of Total Control Products, Inc., an Illinois corporation (the
-----------
"Company").
-------
WHEREAS, Parent, Sub and the Company, propose to enter into an
Agreement and Plan of Merger dated as of even date herewith (as the same may be
amended or supplemented, the "Merger Agreement") to provide for the making of a
----------------
cash tender offer (as such offer may be amended from time to time, the "Offer")
-----
by Sub for any and all Common Shares, no par value, of the Company (the "Common
------
Stock") at the Offer Price (as defined in the Merger Agreement) and the merger
-----
of the Company and Sub (the "Merger");
------
WHEREAS, the Shareholder legally and/or beneficially owns that number
of shares of Common Stock appearing on the signature page hereof (such shares,
as they may be adjusted by any stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company (each, an "Adjustment Event")
----------------
being referred to herein as the "Subject Shares"); and
--------------
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub have requested that the Shareholder enter into this
Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
-------------------------------------------------
Shareholder hereby represents and warrants to Parent and Sub as follows:
(a) Authority. The Shareholder has all requisite power and authority
---------
to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by the Shareholder and constitutes a valid and binding obligation
of the Shareholder enforceable in accordance with its terms. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will
not, conflict with, or result in any violation of, or default (with or
without
notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to the Shareholder or to the Shareholder's property
or assets. Except for the expiration or termination of the waiting period
under the HSR Act and informational filings with the SEC, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to the Shareholder in connection with the
execution and delivery of this Agreement or the consummation by the
Shareholder of the transactions contemplated hereby.
(b) The Shares. The Shareholder has good and marketable title to the
----------
Subject Shares, free and clear of any claims, liens, encumbrances and
security interests whatsoever. The Shareholder owns no shares of Common
Stock other than the Subject Shares.
2. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.
------------------------------------------------
(a) Authority. Parent and Sub hereby represent and warrant to the
---------
Shareholder that each of Parent and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms.
3. COVENANTS OF THE SHAREHOLDER. The Shareholder agrees as follows:
----------------------------
(a) At any meeting of shareholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval with
respect to the Merger and the Merger Agreement is sought, the Shareholder
shall vote (or cause to be voted) the Subject Shares in favor of the
Merger, the approval of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have
been amended to adversely affect the Shareholder.
(b) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Shareholder's vote, consent or other approval is sought, the Shareholder
shall vote (or cause to be voted) the Subject Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the
-2-
Merger), consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding up of
or by the Company or any other Takeover Proposal or (ii) any amendment of
the Company's articles of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement.
(c) The Shareholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement (including any profit sharing arrangement) with respect to the
sale, transfer, pledge, assignment or other disposition of, the Subject
Shares to any person other than Sub or Sub's designee or (ii) enter into
any voting arrangement, whether by proxy, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal.
(d) The Shareholder shall not, nor shall the Shareholder permit any
investment banker, attorney or other adviser or representative of the
Shareholder to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or indirectly
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal.
(e) So long as the Merger Agreement has not been terminated, the
Shareholder shall tender pursuant to the Offer, and not withdraw, all of
the Subject Shares.
4. FURTHER ASSURANCES. The Shareholder will, from time to time,
------------------
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Sub may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement.
5. ASSIGNMENT. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns and, in the case of the Shareholder, the
heirs, executors and administrators of the Shareholder.
6. TERMINATION. Except as provided otherwise herein, this Agreement
-----------
shall terminate upon the earlier of (i) the Effective Time (as defined in the
Merger Agreement) and (ii) the termination of the Merger Agreement in accordance
with its terms; provided, however, that this Agreement will not terminate until
-------- -------
120 days after termination pursuant to clause (ii) immediately above if (A) the
Merger Agreement is terminated by Parent or Sub pursuant to
-3-
Section 8.1(d) thereof, (B) the Merger Agreement is terminated by the Company
pursuant to Section 8.1(e) thereof or (C) unless the Company has terminated the
Merger Agreement pursuant to Section 8.1(f) or Section 8.1(g) thereof, prior to
the termination, a Takeover Proposal (as defined in the Merger Agreement) shall
have been commenced or the Company shall have entered into an agreement with
respect to, approved or recommended or taken any action to facilitate, a
Takeover Proposal.
7. GENERAL PROVISIONS.
------------------
(a) Expenses. Each party hereto shall pay its own expenses incurred
--------
in connection with this Agreement, except as specified in the Merger
Agreement.
(b) Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction,
this being in addition to any other remedy to which they are entitled at
law or in equity. Each party hereby irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Northern District
of Illinois in any action, suit or proceeding arising in connection with
this Agreement, and agrees that any such action, suit or proceeding shall
be brought only in such courts (and waives any objection based on forum non
conveniens or any other objection to venue therein). Each party hereto
waives any right to a trial by jury in connection with any such action,
suit or proceeding.
(c) Notice. All notices, requests, demands and other communications
------
hereunder shall be deemed to have been duly given and made if in writing
and if served by personal delivery upon the party for whom it is intended
or if sent by telex or telecopier (and also confirmed in writing) to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
(i) if to Parent or Sub, to:
GE Fanuc Automation North America, Inc.
Xxxxx 00 xxx Xxxxx 000
Xxxxxxxxxxxxxxxx, Xxxxxxxx 00000
Attention: President and CEO
Facsimile No.: 000-000-0000
-4-
for overnight courier deliveries, to:
GE Fanuc Automation North America, Inc.
Xxxxx 00 Xxxxx xxx Xxxxx 000
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Senior Vice President and General Counsel
with copies to:
GE Fanuc Automation North America, Inc.
X.X. Xxx 0000
Xxxxxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Senior Vice President and General Counsel
Facsimile No.: 000-000-0000
and
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Xxxxxx X. Xxxxxxx
Facsimile No.: 312- 853-7036
(ii) if to the Shareholder, to:
with a copy to:
(d) Parties in Interest. This Agreement shall inure to the benefit
-------------------
of and be binding upon the parties named herein and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person other than Parent, Sub or the
Shareholder, or their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
-5-
(e) Entire Agreement; Amendments. This Agreement contains the entire
----------------------------
agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
(f) Headings. The section headings herein are for convenience only
--------
and shall not affect the construction of this Agreement.
(g) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall constitute one and the same
document.
(h) Governing Law. Except to the extent that the laws of the State of
-------------
Illinois are mandatorily applicable to the Merger, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
(i) Capitalized Terms. Capitalized terms not otherwise defined in
-----------------
this Agreement shall have the meanings set forth in the Merger Agreement.
(j) Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.
8. NO LIMITATIONS ON ACTIONS OF THE SHAREHOLDER AS A DIRECTOR.
----------------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, nothing in this
Agreement is intended or shall be construed to require the Shareholder to take
or in any way limit any action that the Shareholder may take to discharge the
Shareholder's fiduciary duties as a director of the Company.
-6-
IN WITNESS WHEREOF, each of Parent, Sub and the Shareholder has caused
this Agreement to be signed by its officer thereunto duly authorized and the
Shareholder has signed this Agreement, all as of the date first written above.
GE FANUC AUTOMATION NORTH
AMERICA, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------
Name: Xxxxxx X. Xxxxx
Title: President and CEO
ORION MERGER CORP.
By: /s/ Xxxxxx X. Xxxx
--------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
-7-
SHAREHOLDER
___________________________________
Number of shares of Common Stock owned by the
Shareholder on the date hereof:
_________
-8-
EXHIBIT C
---------
CONDITIONS OF THE OFFER
-----------------------
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered pursuant
to the Offer unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer such number of Shares that would constitute
at least two-thirds of the Shares that in the aggregate are outstanding
determined on a fully diluted basis (assuming the exercise of all options to
purchase Company Common Stock, and the conversion or exchange of all securities
convertible or exchangeable into, Shares outstanding upon the expiration of the
Offer) ("Minimum Condition") and (ii) any waiting period under the HSR Act
-----------------
applicable to the purchase of Shares pursuant to the Offer shall have expired or
been terminated, and any other applicable filing or approval requirement of any
nation or region applicable to the purchase of Shares pursuant to the Offer
shall have been satisfied, prior to the expiration date of the Offer (the "HSR
---
Condition"). Furthermore, notwithstanding any other term of the Offer or this
---------
Agreement, Sub shall not be required to accept for payment or, subject as
aforesaid, to pay for any Shares not theretofore accepted for payment or paid
for, and may terminate the Offer if, at any time on or after the date of this
Agreement and before the acceptance of such Shares for payment or the payment
therefor, any of the following conditions exists (other than as a result of any
action or inaction of Parent or any of its subsidiaries that constitutes a
breach of this Agreement):
(a) there shall be threatened or pending by any Governmental Entity
any suit, action or proceeding (i) challenging the acquisition by Parent or
Sub of any Shares under the Offer, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the performance of any
of the other transactions contemplated by this Agreement or the Shareholder
Agreements (including the voting provisions thereunder), or seeking to
obtain from the Company, Parent or Sub any damages that would have a
Material Adverse Effect on the Company, (ii) seeking to prohibit or
materially limit the ownership or operation by the Company, Parent or any
of their respective subsidiaries of a material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or Parent and
its subsidiaries, taken as a whole, or to compel the Company or Parent to
dispose of or hold separate any material portion of the business or assets
of the Company and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, as a result of the Offer or any of the
other transactions contemplated by this Agreement or the Shareholder
Agreements, (iii) seeking to impose material limitations on the ability of
Parent or Sub to acquire or hold, or exercise full rights of ownership of,
any Shares to be accepted for payment pursuant to the Offer, including the
right to vote such Shares on all matters properly presented to the
shareholders of the Company, (iv) seeking to prohibit Parent or any of its
subsidiaries from effectively controlling in any material respect any
material portion of the business or operations of the Company or its
subsidiaries or (v) which otherwise is reasonably likely to have a Material
Adverse Effect on the Company; or there shall be pending by any other
person any suit, action or proceeding which is reasonably likely to have a
Material Adverse Effect on the Company.
(b) there shall be enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger by any Governmental Entity any
statute, rule, regulation, judgment, order or injunction, other than the
application to the Offer or the Merger of applicable waiting periods under
the HSR Act, that is reasonably likely to result, directly or indirectly,
in any of the consequences referred to in clauses (i) through (v) of
paragraph (a) above;
(c) there shall have occurred any Material Adverse Change with
respect to the Company;
(d) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or
Sub its approval or recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any Takeover Proposal or (ii) the
Board of Directors of the Company or any committee thereof shall have
resolved to take any of the foregoing actions;
(e) any of the representations and warranties of the Company set
forth in this Agreement (other than Sections 4.2, 4.3, 4.18 and 4.19) shall
not be true and correct, in each case at the date of this Agreement and at
the scheduled or extended expiration of the Offer, except where the failure
of such representations, individually or in the aggregate, to be so true
and correct would not have a Material Adverse Effect on the Company, and
any of the representations and warranties of the Company set forth in
Sections 4.2, 4.3, 4.18 and 4.19 shall not be true and correct in any
material respect in each case at the date of this Agreement and at the
scheduled or extended expiration of the Offer;
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or covenant of the Company to be performed or complied
with by it under this Agreement;
(g) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on a
national securities exchange in the United States (excluding any
coordinated trading halt triggered solely as a result of a specified
decrease in a market index), (ii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States or
(iii) any limitation (whether or not mandatory) by any Governmental Entity
on the extension of credit by banks or other lending institutions which, in
the reasonable judgment of Parent, makes it inadvisable to proceed with the
Offer or the Merger;
(h) the Shareholder Agreements shall not be in full force and effect
or any Shareholder (as defined therein) that is a party thereto shall be in
material breach thereof or have indicated such Shareholder's intention not
to perform such Shareholder's obligations thereunder; or
(i) this Agreement shall have been terminated in accordance with its
terms.
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The foregoing conditions are for the sole benefit of Parent and Sub
and may, subject to the terms of this Agreement, be waived by Parent and Sub in
whole or in part at any time and from time to time in their sole discretion.
The failure by Parent or Sub at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and 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.
Terms used but not defined herein shall have the meanings assigned to such terms
in the Agreement to which this Exhibit C is a part.
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