Exhibit 2
Execution Copy
MERGER AGREEMENT
AMONG
T ACQUISITION L.P., T ACQUISITION CO.
AND
TAB PRODUCTS CO.
As of July 29, 2002
TABLE OF CONTENTS
1. Definitions...............................................................................................1
2. Basic Transaction.........................................................................................7
(a) The Merger.........................................................................................7
(b) The Closing........................................................................................7
(c) Actions at the Closing.............................................................................7
(d) Effect of Merger...................................................................................8
(e) Procedure for Payment..............................................................................9
(f) Stock Option Plans and Warrants...................................................................10
(g) Closing of Transfer Records.......................................................................11
(h) Dissenting Shares.................................................................................11
3. Representations And Warranties Of The Company............................................................11
(a) Organization, Qualification, and Corporate Power..................................................11
(b) Capitalization....................................................................................12
(c) Subsidiaries......................................................................................13
(d) Authorization of Transaction......................................................................13
(e) SEC Documents; Financial Statements; Undisclosed Liabilities......................................14
(f) Noncontravention..................................................................................15
(g) Brokers' Fees; Schedule of Transaction Fees.......................................................15
(h) Title to Assets...................................................................................16
(i) Events Subsequent to Most Recent Fiscal Year End..................................................16
(j) Legal Compliance..................................................................................18
(k) Taxes.............................................................................................18
(l) Real Property.....................................................................................19
(m) Intellectual Property.............................................................................21
(n) Contracts.........................................................................................23
(o) Insurance.........................................................................................24
(p) Litigation........................................................................................25
(q) Employees.........................................................................................25
(r) Employee Benefits.................................................................................25
(s) Environmental Matters.............................................................................27
(t) Certain Business Relationships With Company and Its Subsidiaries..................................27
(u) Rights Agreement; Section 203 of the Delaware General Corporation Law.............................28
(v) Disclosure........................................................................................28
4. Representations And Warranties Of The Buyer And The Transitory Subsidiary................................28
(a) Organization......................................................................................28
(b) Financing.........................................................................................29
(c) Authorization of Transaction......................................................................29
(d) Noncontravention..................................................................................29
(e) Brokers' Fees.....................................................................................30
i
(f) Disclosure........................................................................................30
(g) Financial Statements; Undisclosed Liabilities.....................................................30
(h) Absence of Litigation.............................................................................30
(i) Transitory Subsidiary.............................................................................31
5. Covenants................................................................................................31
(a) General...........................................................................................31
(b) Notices and Consents..............................................................................31
(c) Regulatory Matters and Approvals..................................................................31
(d) Fairness Opinion..................................................................................32
(e) Financing.........................................................................................32
(f) Operation of Business.............................................................................32
(g) Access............................................................................................34
(h) Notice of Developments............................................................................35
(i) No Solicitation...................................................................................35
(j) Indemnification and Insurance.....................................................................36
(k) Employment Matters................................................................................37
(l) Guaranties........................................................................................38
(m) Proxy Solicitations...............................................................................38
(n) Solvency Opinion..................................................................................38
(o) Intentionally omitted ............................................................................38
6. Conditions To Obligation To Close........................................................................38
(a) Conditions to Obligation of the Buyer and the Transitory Subsidiary...............................38
(b) Conditions to Obligation of the Company...........................................................40
7. Termination..............................................................................................41
(a) Termination of Agreement..........................................................................41
(b) Effect of Termination.............................................................................42
8. Miscellaneous............................................................................................44
(a) Survival..........................................................................................44
(b) Press Releases and Public Announcements...........................................................44
(c) No Third-Party Beneficiaries......................................................................44
(d) Entire Agreement..................................................................................44
(e) Succession and Assignment.........................................................................45
(f) Counterparts......................................................................................45
(g) Headings..........................................................................................45
(h) Notices...........................................................................................45
(i) Governing Law.....................................................................................46
(j) Amendments and Waivers............................................................................46
(k) Severability......................................................................................46
(l) Expenses..........................................................................................47
(m) Construction......................................................................................47
(n) Incorporation of Exhibits and Schedules...........................................................47
ii
Exhibits and Schedules
Exhibit A - Form of Certificate of Merger
Exhibit B - Form of Certificate of Incorporation
Exhibit C - Form of Bylaws
Exhibit D - Intentionally Omitted
Exhibit E - Permitted Investments
Exhibit F - Comprehensive Schedule of Options
Exhibit G - Form of Opinion of Counsel to the Company
Exhibit H - Form of Opinion of Counsel to the Buyer and the Transitory
Subsidiary
Exhibit I - Form of Guaranties
Exhibit J - Financing Commitments
Disclosure Schedule - Exceptions to Representations and Warranties
iii
MERGER AGREEMENT
THIS
MERGER AGREEMENT ("AGREEMENT") is entered into as of the 29th
day of July 2002 among T ACQUISITION, L.P., a
Delaware limited partnership
(the "BUYER"), T ACQUISITION CO, a
Delaware corporation and a wholly-owned
Subsidiary of the Buyer (the "TRANSITORY SUBSIDIARY"), and
TAB PRODUCTS CO.,
a
Delaware corporation (the "COMPANY"). The Buyer, the Transitory Subsidiary
and the Company are referred to collectively herein as the "PARTIES."
This Agreement contemplates a transaction in which the Buyer will
acquire all of the outstanding capital stock of the Company for cash through a
reverse subsidiary merger of the Transitory Subsidiary with and into the
Company.
In connection herewith, each of the directors of the Company, who are
stockholders of Company, and Steel Partners II, L.P. and certain Affiliates and
Xxxxx Investment Trust, L.P. and certain Affiliates, have simultaneously with
the execution and delivery of this Agreement entered into Voting/Support
Agreements with the Buyer pursuant to which such stockholders have agreed to
vote their respective Company Shares in favor of the transactions contemplated
hereby ("VOTING/SUPPORT AGREEMENTS").
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"ACQUISITION PROPOSAL" means a proposal or offer (including, without
limitation, any proposal or offer to its shareholders) with respect to a merger,
acquisition, tender offer, exchange offer, consolidation, sale of assets or
similar transaction involving all or any significant portion of the assets or
equity securities of the Company or any of the Company's Subsidiaries, other
than the transactions contemplated by this Agreement.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"AMPULSKI AGREEMENT" has the meaning set forth in Section 3(b)(i)
below.
"BREAK-UP FEE" has the meaning set forth in Section 7(b)(ii) below.
"BUYER" has the meaning set forth in the preface above.
"BUYER BREAK-UP FEE" has the meaning set forth in Section 7(b)(iii)
below.
"BUYER-OWNED SHARE" means any Company Share that the Buyer, the
Transitory Subsidiary or any of their Affiliates beneficially owns.
"CAPITAL EXPENDITURE BUDGET" has the meaning set forth in Section
3(i)(v) below.
"CERTIFICATE OF MERGER" has the meaning set forth in Section 2(c)
below.
"CLOSING" has the meaning set forth in Section 2(b) below.
"CLOSING DATE" has the meaning set forth in Section 2(b) below.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning set forth in the preface above.
"COMPANY SHARE" means any share of the Common Stock, $.01 par value
per share, of the Company, including the associated Rights.
"COMPANY STOCKHOLDER" means any Person who or which holds any Company
Shares.
"CONFIDENTIALITY AGREEMENT" has the meaning set forth in
Section 5(g) below.
"DEFINITIVE FINANCING AGREEMENTS" has the meaning set forth in
Section 5(e) below.
"DEFINITIVE PROXY MATERIALS" means the definitive proxy materials
relating to the Special Meeting.
"
DELAWARE GENERAL CORPORATION LAW" means the General Corporation Law
of the State of
Delaware, as amended.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 3 below.
"DISSENTING SHARE" means any Company Share which any stockholder who
or which has properly exercised and properly perfected his, her or its
appraisal rights under the
Delaware General Corporation Law holds of record.
"EFFECTIVE TIME" has the meaning set forth in Section 2(d)(i) below.
"EMPLOYEE BENEFIT PLAN" means an Employee Pension Benefit Plan and an
Employee Welfare Benefit Plan.
"EMPLOYEE PENSION BENEFIT PLAN" means a plan defined in Section 3(2) of
ERISA.
"EMPLOYEE WELFARE BENEFIT PLAN" means a plan defined in Section 3(1) of
ERISA.
"ENVIRONMENTAL LAWS" means all applicable federal, state, local and
foreign statutes, regulations and ordinances, all applicable final judicial and
administrative orders and determinations, all contractual obligations and all
applicable common law concerning pollution or protection of the environment,
including without limitation all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control or cleanup of any
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hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as
amended and as now or hereafter in effect.
"EQUITY INCENTIVE PLANS" means the
Tab Products Co. 2001 Stock Option
Plan, the
Tab Products Co. 2001 Nonstatutory Stock Option Plan, the
Tab Products
Co. 1996 Outside Directors Stock Option Plan, the
Tab Products Co. 1991 Stock
Option Plan, and any other plan, program, agreement or arrangement providing for
the issuance or grant of any interest in respect of capital stock of the Company
and disclosed on the Disclosure Schedule.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
"ERISA AFFILIATE" means an entity or trade or business (whether or not
incorporated) that is a member of a "controlled group" of which the Company is a
member or under "common control" with the Company (within the meaning of Section
414(b) and (c) of the Code).
"FACILITIES" has the meaning set forth in Section 4(b) below.
"FAIRNESS OPINION" has the meaning set forth in Section 3(d) below.
"FINANCING COMMITMENTS" means (a) the financing commitment letter dated
June 6, 2002, between LaSalle Bank National Association and XX Xxxxxx Limited
Partnership, (b) the financing commitment letter dated June 25, 2002, among Banc
One Mezzanine Corporation, XX Xxxxxx L.P., Workstream, Xxxxxxxx Sorter Co., Inc.
and New Maverick Desk, Inc., (c) the Commitment Term Sheet regarding the $3.5
million Senior Note to be issued by XX Xxxxxx Limited Partnership to Workstream,
(d) the letter dated June 25, 2002 from Xxxxxx Xxxxxx & Co. to Workstream
regarding MS TP Limited Partnership, and (e) the letter dated June 26, 2002 from
Workstream to XX Xxxxxx Limited Partnership regarding the repayment of a $3.5
million 10% Junior Subordinated Note, all as attached hereto as EXHIBIT J.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, consistently applied.
"HEALTH AND SAFETY LAWS" means all federal, state, local and foreign
statutes, regulations and ordinances, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety and workers or occupational health and safety.
"IMPROVEMENTS" has the meaning set forth in Section 3(k)(iv) below.
"INTELLECTUAL PROPERTY" means all of the following in any jurisdiction
throughout the world: (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, Internet domain names and rights in telephone numbers,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill
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associated therewith and all applications, registrations and renewals in
connection therewith, (c) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith, (d) all mask
works and all applications, registrations and renewals in connection therewith,
(e) all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information and
business and marketing plans and proposals), (f) all computer software
(including source code, executable code, data, databases and related
documentation), other than off-the-shelf computer software, (g) all advertising
and promotional materials, (h) all other proprietary rights, and (i) all copies
and tangible embodiments thereof (in whatever form or medium).
"IRS" means the United States Internal Revenue Service.
"KNOWLEDGE" means actual knowledge after reasonable investigation under
the circumstances (a) with respect to Company, of Xxxx Xxxxxxxx and Xxxxxx Xxxx
and (b) with respect to Buyer or Transitory Subsidiary, of any of Xxxxxxxx
Xxxxxxxxxxx, Xxxxxx Ean Xxxxx, and Xxxx Xxxxxxxx.
"LEASED REAL PROPERTY" has the meaning set forth in Section 3(l)(ii)
below.
"LIENS" means any mortgage, pledge, lien, encumbrance, charge, or other
security interest, OTHER THAN Permitted Encumbrances.
"MATERIAL ADVERSE EFFECT" means, with respect to any party, any events,
changes or effects which, individually or in the aggregate, would have, or would
be reasonably likely to have, a material adverse effect on the business,
operations, assets, condition (financial or otherwise), results of operations or
liabilities of such party and its Subsidiaries, taken as a whole; provided,
however, that in determining whether there has been a Material Adverse Effect,
any adverse effect principally attributable to any of the following shall be
disregarded: (i) general economic, business or financial market conditions; (ii)
in the case of determining a Material Adverse Effect on Company, conditions in
the industries in which Company operates, which conditions do not materially
disproportionately affect Company, (iii) the taking of any action required by
this Agreement; (iv) the announcement or pendency of this Agreement and/or the
Merger, including any shareholder "strike" suits, actions or similar proceedings
arising in connection with the Merger; (v) any attrition among the sales
employees or other distribution agents of Company and its Subsidiaries resulting
from the announcement or pendency of this Agreement and/or the Merger and any
resulting effects on sales and other financial results of Company and its
Subsidiaries; (vi) in the case of determining a Material Adverse Effect on
Company, the breach of this Agreement by Buyer or Transitory Subsidiary; (vii)
in the case of determining a Material Adverse Effect on Buyer, the breach of
this Agreement by Company and (viii) in the case of determining a Material
Adverse Effect on the Company, any breach of the Confidentiality Agreement
arising after the date hereof.
"MERGER" has the meaning set forth in Section 2(a) below.
"MERGER CONSIDERATION" has the meaning set forth in Section 2(d)(v)
below.
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"MULTIEMPLOYER PLAN" means a plan defined in Section 3(37) or Section
4001(a)(3) of ERISA.
"NON-U.S. SUBSIDIARY" means a Subsidiary organized under the laws of a
jurisdiction located outside of the United States.
"OPTION" has the meaning set forth in Section 2(f)(i) below.
"OPTION CONSIDERATION" has the meaning set forth in Section 2(f)(i)
below.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"OWNED REAL PROPERTY" has the meaning set forth in Section 3(l)(i)
below.
"PARTY" has the meaning set forth in the preface above.
"PAYING AGENT" has the meaning set forth in Section 2(e) below.
"PAYMENT FUND" has the meaning set forth in Section 2(e) below.
"PBGC" means the Pension Benefit Guaranty Corporation, described in
ERISA Section 4002.
"PERMITTED ENCUMBRANCES" means (a) mechanic's, materialman's, and
similar liens relating to obligations not yet due and payable; (b) liens for
Taxes, assessments or governmental charges or levies not yet due and payable
or for Taxes, assessments or governmental charges or levies that the taxpayer
is contesting in good faith through appropriate proceedings; (c) purchase
money liens and liens securing rental payments under capital lease
arrangements disclosed on the Disclosure Schedule; (d) recorded easements,
restrictive covenants, rights of way and other similar imperfections of title
not materially adversely affecting the Buyer's or the Surviving Corporation's
use of the assets affected; (e) zoning, building and other similar
restrictions; and (f) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, a limited
liability company, an unincorporated organization or a governmental entity
(or any department, agency or political subdivision thereof) or any other
entity.
"PROHIBITED TRANSACTION" means a transaction within the meaning of
Section 4975 of the Code or Section 406 of ERISA.
"REAL PROPERTY" has the meaning set forth in Section 3(l)(iii) below.
"REAL PROPERTY LAWS" has the meaning set forth in Section 3(l)(vi)
below.
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"REQUISITE STOCKHOLDER APPROVAL" means the affirmative vote of the
holders of a majority of the then-outstanding Company Shares in favor of this
Agreement and the Merger.
"RIGHTS" means the Common Stock purchase rights pursuant to the Rights
Agreement.
"RIGHTS AGREEMENT" means the Rights Agreement dated as of October 24,
1996, between Company and Mellon Investor Services, L.L.C. (f/k/a ChaseMellon
Shareholder Services, L.L.C.), as amended.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SPECIAL MEETING" has the meaning set forth in Section 5(c)(ii) below.
"SUBSIDIARY" means any Person with respect to which a specified Person
(or a Subsidiary thereof) owns, directly or indirectly, a majority of the common
stock or other equity interests or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
"SUPERIOR ACQUISITION PROPOSAL" means a bona fide Acquisition Proposal
made by a Person other than Buyer, which a majority of the members of the
Company's Board of Directors determines, after consultation with its financial
advisors and Company's outside legal counsel, in good faith (i) to be more
favorable to the Company Stockholders from a financial point of view than the
Merger; and (ii) to be reasonably capable of being consummated.
"SURVIVING CORPORATION" has the meaning set forth in Section 2(a)
below.
"TAX" or "TAXES" means all taxes, however, denominated, including
any interest, penalties or other additions to tax that may become payable in
respect thereof, imposed by any federal, territorial, state, local or foreign
government or any agency or political subdivision of any such government,
which taxes shall include, but not be limited to, any federal, state, local,
or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Code Sec. 59A), custom duties, capital stock,
franchise, profits, withholding (employment, backup, foreign, or otherwise),
social security (or similar), unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, other tax of any kind whatsoever,
or other obligations of the same or of a similar nature to any of the
foregoing, which are required to be paid, withheld, or collected and whether
disputed or not.
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"TERMINATION DATE" has the meaning set forth in Section 7(ii) below.
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"TRANSITORY SUBSIDIARY" has the meaning set forth in the preface above.
"U.S. SUBSIDIARY" means a Subsidiary organized under the laws of a
jurisdiction located within the United States.
"VOTING/SUPPORT AGREEMENTS" has the meaning set forth in the preface
above.
"WARRANT" means the
Tab Products Co. Common Stock Purchase Warrant
issued to SpencerStuart and exercisable for the purchase of 13,000 Company
Shares, as amended, a copy of which has been provided to Buyer.
"WORKSTREAM FINANCIAL STATEMENTS" has the meaning set forth in
Section 4(g) below.
"WORKSTREAM" means Workstream Inc., a
Delaware corporation and an
Affiliate of Buyer and Subsidiary.
2. BASIC TRANSACTION.
(a) THE MERGER. On and subject to the terms and conditions of this
Agreement and in accordance with the
Delaware General Corporation Law, the
Transitory Subsidiary will merge with and into the Company (the "MERGER") at
the Effective Time. The Company shall be the corporation surviving the Merger
(in this capacity, the "SURVIVING CORPORATION").
(b) THE CLOSING. The closing of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at the offices of Barack
Xxxxxxxxxx Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx LLC, 000 X. Xxxxxx Xxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000, commencing at 9:00 a.m. local time on the
second business day following the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
will take at the Closing itself) or such other date as the Parties may
mutually determine (the "CLOSING DATE").
(c) ACTIONS AT THE CLOSING. At the Closing: (i) the Company will
deliver to the Buyer and the Transitory Subsidiary the various certificates,
instruments and documents referred to in Section 6(a) below; (ii) the Buyer
and the Transitory Subsidiary will deliver to the Company the various
certificates, instruments and documents referred to in Section 6(b) below;
(iii) the Company and the Transitory Subsidiary will file with the Secretary
of State of the State of
Delaware a Certificate of Merger in the form
attached hereto as EXHIBIT A (the "CERTIFICATE OF MERGER"); and (iv) the
Buyer will cause the Surviving Corporation to deliver the Payment Fund to the
Paying Agent in the manner provided below in this Section 2.
(d) EFFECT OF MERGER.
(i) GENERAL. The Merger shall become effective at the time
(the "EFFECTIVE TIME") the Company and the Transitory Subsidiary file
the Certificate of Merger with the Secretary of State of the State of
Delaware. The Merger shall have the effect set forth in the Delaware
General Corporation Law. The Surviving Corporation may, at any time
after the Effective Time, take any action (including executing and
delivering any
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document) in the name and on behalf of either the Company or the
Transitory Subsidiary in order to carry out and effectuate the
transactions contemplated by this Agreement.
(ii) CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Surviving Corporation shall be amended in its
entirety at and as of the Effective Time in the form attached hereto as
EXHIBIT B.
(iii) BYLAWS. The Bylaws of the Surviving Corporation shall be
amended and restated at and as of the Effective Time in the form
attached hereto as EXHIBIT C.
(iv) DIRECTORS AND OFFICERS. The directors of the Transitory
Subsidiary shall become the directors of the Surviving Corporation at
and as of the Effective Time (retaining their respective positions and
terms of office). Except as otherwise requested in writing by the
Buyer, the officers of the Company shall become the officers of the
Surviving Corporation at and as of the Effective Time (retaining their
respective positions and being subject to removal by action of the
Surviving Corporation's Board of Directors).
(v) CONVERSION OF COMPANY SHARES. At and as of the Effective
Time, (A) each Company Share issued and outstanding immediately prior
to the Effective Time (other than any Dissenting Share or Buyer-owned
Share) shall be converted into the right to receive an amount (the
"MERGER CONSIDERATION") equal to $5.85 in cash (without interest), (B)
each Dissenting Share shall be converted into the right to receive
payment from the Surviving Corporation with respect thereto in
accordance with the provisions of the Delaware General Corporation Law
as provided in Section 2(h) below, (C) each Buyer-owned Share shall be
canceled, and (D) each Company Share owned by Company or any of its
Subsidiaries shall be canceled; PROVIDED, HOWEVER, that the Merger
Consideration shall be subject to equitable adjustment in the event of
any stock split, stock dividend, reverse stock split, or other change
in the number of Company Shares outstanding. No Company Share shall be
deemed to be outstanding or to have any rights other than those set
forth above in this Section 2(d)(v) after the Effective Time.
(vi) CONVERSION OF CAPITAL STOCK OF THE TRANSITORY SUBSIDIARY.
At and as of the Effective Time, each share of Common Stock, $.01 par
value per share, of the Transitory Subsidiary issued and outstanding
immediately prior to the Effective Time shall be converted into one
share of Common Stock, $.01 par value per share, of the Surviving
Corporation.
(e) PROCEDURE FOR PAYMENT.
(i) Simultaneously with and as a condition to the Effective
Time: (A) the Buyer will furnish, or will cause the Surviving
Corporation to furnish, to a commercial bank or trust company or
similar financial institution mutually acceptable to Buyer and the
Company (the "PAYING AGENT") a corpus (the "PAYMENT FUND") consisting
of cash sufficient in the aggregate for the Paying Agent to make full
payment of the Merger Consideration to the holders of all of the
outstanding Company Shares (other than any Dissenting Shares and
Buyer-owned Shares); and (B) the Buyer will cause the Paying
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Agent to mail a letter of transmittal (with instructions for its use)
in form reasonably acceptable to each of the Company and the Buyer to
each record holder of outstanding Company Shares for the holder to use
in surrendering the certificates which represented his, her or its
Company Shares against payment of the Merger Consideration. No interest
will accrue or be paid to the holder of any outstanding Company Shares.
(ii) The Paying Agent shall, pursuant to irrevocable
instructions, pay the Merger Consideration out of the Payment Fund as
soon as practicable after the Effective Time. Upon surrender of a
certificate representing Company Shares for cancellation to the Paying
Agent together with a letter of transmittal, duly executed, or an
"agents message" in the case of a book entry transfer, and such other
customary documents as may be required pursuant to such instructions,
the holder of such certificate shall be entitled to receive in respect
thereof cash in an amount equal to the product of (1) the number of
Company Shares formerly represented by such certificate, multiplied by
(2) $5.85. If any holder of a certificate shall be unable to surrender
such holder's certificates because such certificates have been lost,
mutilated or destroyed, such holder may deliver in lieu thereof an
affidavit and indemnity bond in form and substance and with surety
reasonably satisfactory to the Surviving Corporation.
(iii) The Buyer may cause the Paying Agent to invest the cash
included in the Payment Fund in one or more of the permitted
investments set forth on EXHIBIT E attached hereto; PROVIDED, HOWEVER,
that the terms and conditions of the investments shall be such as to
permit the Paying Agent to make prompt payment of the Merger
Consideration as necessary. The Buyer may cause the Paying Agent to pay
over to the Surviving Corporation any net earnings with respect to the
investments, and the Buyer will replace, or will cause the Surviving
Corporation to replace, promptly any portion of the Payment Fund which
the Paying Agent loses through investments.
(iv) The Buyer may cause the Paying Agent to pay over to the
Surviving Corporation any portion of the Payment Fund (including any
earnings thereon) remaining 180 days after the Effective Time, and
thereafter all former stockholders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat, and
other similar laws) as general creditors thereof with respect to the
cash payable upon surrender of their certificates.
(v) The Buyer shall cause the Surviving Corporation to pay all
charges and expenses of the Paying Agent.
(f) STOCK OPTION PLANS AND WARRANTS.
(i) The Company shall take all actions necessary to provide
that, immediately prior to the Effective Time, (A) each then
outstanding option (each, an "OPTION" and collectively, the "OPTIONS")
to purchase or acquire Company Shares under any of the Equity Incentive
Plans and pursuant to the Ampulski Agreement, whether or not then
exercisable or vested, shall become fully exercisable and vested (a
correct and complete schedule of all such Options being attached hereto
as EXHIBIT F), (B) each Option that is then outstanding shall be
canceled as of the Effective Time and (C) in consideration of
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such cancellation, (x) each Option with a per share exercise price of
less than $5.85 shall, as of the Effective Time, represent for all
purposes only the right to receive an amount in cash equal to the
difference between $5.85 and the per share exercise price of such
Option, multiplied by the number of Company Shares subject to such
Option (such amount in cash as described above being hereinafter
referred to as the "OPTION CONSIDERATION"), payable as provided
in Section 2(f)(ii) but in each case net of all applicable federal,
state and local withholding Taxes and similar deductions and (y)
each Option with a per share exercise price of $5.85 or above shall
be deemed not to have any rights after the Effective Time.
(ii) Upon the Effective Time, Buyer shall, or shall cause the
Surviving Corporation to, pay to each holder of an Option the Option
Consideration in respect thereof (net of all applicable withholding
Taxes and similar deductions); provided, however, that with respect to
any Person subject to Section 16(a) of the Securities Exchange Act, any
such Option Consideration shall not be payable until the first date
payment can be made without liability to such Person under Section
16(b) of the Securities Exchange Act, but shall be paid as soon as
practicable thereafter. No interest shall be paid or accrued on the
Option Consideration. Until settled in accordance with the provisions
of this Section 2(f), each Option shall be deemed at any time after the
Effective Time to represent for all purposes only the right to receive
the Option Consideration.
(iii) At the Effective Time, the Warrant, pursuant to the
terms thereof, shall be canceled and in consideration of such
cancellation, the Warrant shall represent for all purposes only the
right to receive an amount in cash equal to the difference between
$5.85 and the per share exercise price of the Warrant multiplied by the
number of Company Shares subject to the Warrant.
(iv) Prior to the Effective Time, the Company shall take all
action necessary (including causing the Board of Directors of the
Company or any Subsidiary (or any respective committees thereof) to
take such actions as are allowed by the Equity Incentive Plans) to
ensure that (A) following the Effective Time, no holder of an Option
nor any party to or participant in any of the Equity Incentive Plans
shall have any right thereunder to acquire equity securities of the
Company, the Surviving Corporation or any Subsidiary thereof and (B)
the Equity Incentive Plans shall terminate as of the Effective Time.
The Company represents and warrants that no such action shall require
the vote or consent of the holders of Company Shares.
(g) CLOSING OF TRANSFER RECORDS. After the close of business on the
Closing Date, transfers of Company Shares outstanding prior to the Effective
Time shall not be made on the stock transfer books of the Surviving Corporation.
(h) DISSENTING SHARES. Notwithstanding any other provisions of this
Agreement to the contrary, Dissenting Shares shall not be converted into or
represent the right to receive the Merger Consideration. Company Stockholders
holding Dissenting Shares instead shall be entitled to receive payment of the
appraised value of such Dissenting Shares held by them in accordance with the
provisions of Section 262 of the Delaware General Corporation Law, except that
all Dissenting Shares held by Company Stockholders who shall have failed to
properly
- 10 -
perfect or who effectively shall have withdrawn or otherwise lost their rights
to appraisal of such Company Shares under Section 262 of the Delaware General
Corporation Law shall thereupon be deemed to have been converted into and to
have become exchangeable for, as of the Effective Time, the right to receive the
Merger Consideration. The Company shall not take (or permit to be taken) any
action with respect to any holder of Company Shares who or that has demanded
appraisal of his, her or its Company Shares, including (without limitation)
compromising or entering into a settlement with respect to such demand, without
the express prior written consent of the Buyer.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to the Buyer and the Transitory Subsidiary that the statements
contained in this Section 3 are true and correct as of the date of this
Agreement and will be true and correct as of the Closing Date (as though made
then and as though the closing date were substituted for the date of this
Agreement throughout this Section 3), except for those representations and
warranties that relate to a particular date, which representations and
warranties shall be true and correct as of such date and except as set forth
in the disclosure schedule accompanying this Agreement and initialed by the
Parties (the "DISCLOSURE SCHEDULE"). The Disclosure Schedule will be arranged
in paragraphs corresponding to the lettered and numbered paragraphs contained
in this Section 3.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Each of
Company and its Subsidiaries is a corporation or other entity duly organized,
validly existing, and in good standing under the laws of the jurisdiction of
its organization. Each of Company and its Subsidiaries is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, other than in such jurisdictions where
the failure to be so authorized or be in good standing would not have a
Material Adverse Effect on Company. Each of Company and its Subsidiaries has
full corporate power and authority to carry on the businesses in which it is
engaged and to own and use the properties owned and used by it. Section 3(a)
of the Disclosure Schedule lists the directors and officers of each of
Company and its Subsidiaries.
(b) CAPITALIZATION.
(i) As of the date hereof, the authorized shares of capital
stock of Company consist of: (A) 25,000,000 shares of Common Stock, par
value $.01 per share, of which 5,123,915 Company Shares are issued and
outstanding and 2,678,469 Company Shares are held by Company in its
treasury; and (B) 500,000 shares of preferred stock, 200,000 of which
have been designated as Series A Preferred Stock and none of which are
issued and outstanding. As of the date hereof, 927,750 Company Shares
were reserved for issuance but not issued under the Equity Incentive
Plans, 13,000 Company Shares were reserved for issuance but not issued
in connection with the Warrant, and 250,000 Company Shares were
reserved for issuance but not issued in connection with options granted
to Xxxx Xxxxxxxx effective as of December 14, 2000 pursuant to a
Nonqualified Stock Option Agreement (the "AMPULSKI AGREEMENT"). As of
the date hereof, except as set forth in this Section 3(b)(i) and except
pursuant to the Rights Agreement, no Company Shares or other securities
of Company were issued, reserved for issuance or outstanding.
- 11 -
(ii) EXHIBIT F is a true and complete list as of the date
hereof of each outstanding stock option and warrant of any nature,
incentive, nonqualified or otherwise outstanding under the Equity
Incentive Plans (including the Options), the Warrant and the Ampulski
Agreement and a total thereof, including the exercise prices thereof,
all agreements to issue restricted Company Shares and the amount and
terms of all outstanding restricted Company Shares issued by Company.
(iii) All outstanding Company Shares are duly authorized,
validly issued, fully paid and nonassessable and not subject to, and
were not issued in violation of, any preemptive rights and were not
issued in violation of federal or applicable state securities laws and
regulations. There are no bonds, debentures, notes or other
indebtedness of Company or of any other entity convertible into or
exchangeable for Company Shares.
(iv) Except as set forth in Section 3(b) of the Disclosure
Schedule and other than the Rights Agreement, as of the date of this
Agreement there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which Company or any Company Subsidiary is a party or
by which such entity is bound, obligating Company or any Company
Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock, voting
securities or other ownership interests of Company or any Company
Subsidiary or obligating Company or any Company Subsidiary to issue,
grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking.
(v) Except as set forth in Section 3(b) of the Disclosure
Schedule, all dividends or distributions on Company Shares which
have been authorized or declared prior to the date of this Agreement
have been paid in full.
(vi) Except as set forth in Section 3(b) of the Disclosure
Schedule, there are no outstanding or authorized stock appreciation,
phantom stock, profit participation or similar rights with respect to
Company or any Company Subsidiary. Except as set forth in
Section 3(b) of the Disclosure Schedule, there are no voting trusts,
proxies or other agreements or understandings with respect to the
voting of the capital stock of Company.
(c) SUBSIDIARIES. Section 3(c) of the Disclosure Schedule sets forth
for each Subsidiary of Company: (i) its name and jurisdiction of organization
and (ii) the number of shares of authorized capital stock of each class of
its capital stock or other equity interests. All of the issued and
outstanding shares of capital stock or other equity interests of each
Subsidiary of Company have been duly authorized and are validly issued, fully
paid, and nonassessable and are owned by the Company, except for the issued
and outstanding shares of each of Tab Products Pty Ltd. and Tab Products
Australia Pty Limited, all of which are owned by Tab Products of Canada
Limited. Company and/or one or more of its Subsidiaries holds of record and
owns beneficially all of the outstanding shares of each Subsidiary of
Company, free and clear of any restrictions on transfer (other than
restrictions under the Securities Act and state securities laws), Taxes,
Liens, options, warrants, purchase rights, contracts, commitments, equities,
claims, and demands. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require
- 12 -
any of Company and its Subsidiaries to sell, transfer, or otherwise dispose
of any capital stock of any of its Subsidiaries or that could require any
Subsidiary of Company to issue, sell, or otherwise cause to become
outstanding any of its own capital stock. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or
similar rights with respect to any Subsidiary of Company. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of any capital stock of any Subsidiary of Company. None of Company and
its Subsidiaries controls directly or indirectly or has any direct or
indirect equity participation in any corporation, partnership, trust, or
other business association which is not a Subsidiary of Company. Except for
the Subsidiaries set forth in Section 3(c) of the Disclosure Schedule,
neither Company nor any of its Subsidiaries owns or has any right to acquire,
directly or indirectly, any outstanding capital stock of, or other equity
interests in, any Person.
(d) AUTHORIZATION OF TRANSACTION. This Agreement and the Merger have
been approved by the unanimous vote of the Company's Board of Directors,
after receipt of a fairness opinion from the Company's financial adviser (the
"FAIRNESS OPINION"), a copy of which has been provided to Buyer. The Company
Board of Directors have unanimously recommended to the holders of the Company
Shares that they vote in favor of this Agreement and the Merger. The Company
has full power and authority (including full corporate power and authority)
to execute and deliver this Agreement and to perform its obligations
hereunder; PROVIDED, HOWEVER, that the Company cannot consummate the Merger
unless and until it receives the Requisite Stockholder Approval. This
Agreement constitutes the valid and legally binding obligation of the
Company, enforceable in accordance with its terms and conditions, subject to
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
the rights of creditors generally and the availability of equitable remedies.
(e) SEC DOCUMENTS; FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(i) Company has filed or, as applicable, will file, all
required reports, schedules, forms, statements and other documents with
the SEC since June 1, 2000, (the "COMPANY SEC DOCUMENTS"). Except as
set forth on Section 3(e)(i) of the Disclosure Schedule, all of the
Company SEC documents (other than preliminary material), as of their
respective filings dates or as of the date of the last amendment
thereof (if amended after filing), and, in the case of any
registration statement under the Securities Act, its effective date,
complied or will comply as to form in all material respects with all
applicable requirements of the Securities Act and the Securities
Exchange Act and, in each case, the rules and regulations
promulgated thereunder applicable to such Company SEC Documents.
None of the Company SEC Documents at the time of filing contained or
will contain any untrue statement of a material fact or omitted or
will omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except
to the extent such statements have been modified or superceded by
later Company SEC Documents filed on a non-confidential basis.
(ii) The consolidated financial statements of Company included
in the Company SEC Documents, when filed, complied as to form, as of
their respective filing dates, and the audited consolidated financial
statements of Company for the fiscal year ended May 31, 2002, when
filed, will comply as to form, as of their filing date, in all
- 13 -
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto,
have been or will be prepared in accordance with GAAP (except, in
the case of unaudited statements, as permitted by the applicable
rules and regulations 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 or will fairly represent,
in accordance with the applicable requirements of GAAP and the
applicable rules and regulations of the SEC in all material
respects, the consolidated financial position of Company and its
Subsidiaries, taken as a whole, as of the dates thereof and the
consolidated results of operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments, any other adjustments described therein
and the fact that certain information and notes have been condensed
or omitted in accordance with the Exchange Act). The audited
consolidated financial statements of Company for the fiscal year
ended May 31, 2002 (including the footnotes thereto), when filed,
will not differ in any material respect from the draft unaudited
consolidated financial statements of the Company for the fiscal year
ended May 31, 2002 provided to Buyer and attached hereto as
Section 3(e)(ii) of the Disclosure Schedule. Section 3(e)(ii) of the
Disclosure Schedule sets forth all Company Subsidiaries which are
not consolidated for accounting purposes as of the date hereof.
(iii) Except for liabilities and obligations set forth in the
Company SEC Documents or in Section 3(e)(iii) of the Disclosure
Schedule, neither Company nor any of the Company Subsidiaries has
any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) other than (i) liabilities and
obligations under this Agreement relating to or in connection with
the Merger, (ii) liabilities and obligations incurred in the
Ordinary Course of Business since June 1, 2002 or (iii) liabilities
and obligations that would not reasonably be expected to have a
Material Adverse Effect on Company.
(f) NONCONTRAVENTION. Except as set forth on Section 3(f) of the
Disclosure Schedule, neither the execution and the delivery of this Agreement
by Company, nor the consummation by Company of the transactions contemplated
hereby, will: (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other restriction of
any government, governmental agency or court to which any of Company and its
U.S. Subsidiaries and, to the Knowledge of Company, its Non-U.S.
Subsidiaries, is subject or any provision of the charter or bylaws of any of
Company and its Subsidiaries; or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument or other
arrangement to which any of Company and its Subsidiaries is a party or by
which it is bound or to which any of its assets is subject (or result in the
imposition of any Liens upon any of its assets), except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice or Liens would not have a Material
Adverse Effect on Company. Other than in connection with the provisions of
the Delaware General Corporation Law, the Securities Exchange Act, the
Securities Act and the state securities laws and the notice required under
the Investment Canada Act, none of Company and its U.S. Subsidiaries and, to
the Knowledge of Company, its Non-U.S. Subsidiaries, needs to give any notice
to, make any filing with, or obtain any authorization, consent, or approval
of any government or governmental agency in order for the Parties to
consummate the transactions
- 14 -
contemplated by this Agreement, except where the failure to give notice, to
file, or to obtain any authorization, consent, or approval would not have a
Material Adverse Effect on Company.
(g) BROKERS' FEES; SCHEDULE OF TRANSACTION FEES. Except for fees
payable to TM Capital Corp., pursuant to the letter agreement dated
September 27, 2000 between the Company and TM Capital Corp. (a true, complete
and correct copy of which has been provided to the Buyer), none of Company and
its Subsidiaries has any liability or obligation to pay any fees or
commissions to any broker, finder, or similar agent with respect to the
transactions contemplated by this Agreement. Section 3(g) of the Disclosure
Schedule sets forth the Company's good faith estimate of all fees and
expenses incurred or to be incurred by or on behalf of the Company in
connection with the transactions contemplated by this Agreement.
(h) TITLE TO ASSETS. Except as set forth on Section 3(h) of the
Disclosure Schedule, Company and its Subsidiaries have good and marketable
title to, or a valid leasehold interest in, the properties and assets used by
them, located on their premises, or shown in the Company SEC Documents or
acquired after the date thereof, free and clear of all Liens, except for
properties and assets disposed of in the Ordinary Course of Business since
June 1, 2002.
(i) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Except as set
forth on Section 3(i) of the Disclosure Schedule, and except in connection
with the negotiation and execution and delivery of this Agreement and the
consummation of the Merger, since June 1, 2002 and through the date hereof,
(i) each of the Company and its Subsidiaries has conducted its respective
business, in all material respects, only in the Ordinary Course of Business,
and (ii) there has not been any event or events (whether or not covered by
insurance), that have had, or would be reasonably expected to have, a
Material Adverse Effect on the Company, impair the ability of the Company to
perform its obligations under this Agreement and/or prevent the consummation
of the Merger. Except as set forth on Section 3(i) of the Disclosure
Schedule, without limiting the generality of the foregoing, since June 1,
2002 and through the date hereof,
(i) none of Company and its Subsidiaries has sold, leased,
transferred, or assigned any material assets, tangible or intangible,
outside the Ordinary Course of Business;
(ii) none of Company and its Subsidiaries has entered into any
material agreement, contract, lease, or license outside the Ordinary
Course of Business;
(iii) no party (including any of Company and its Subsidiaries)
has accelerated, terminated, made material modifications to, or
canceled any material agreement, contract, lease, or license to which
any of Company and its Subsidiaries is a party or by which any of them
is bound;
(iv) none of Company and its Subsidiaries has imposed any Lien
upon any of its assets, tangible or intangible;
(v) none of Company and its Subsidiaries has made any capital
expenditures in excess of the capital expenditure budget for the first
fiscal quarter of 2003 as set forth in the capital expenditure budget
for fiscal year 2003 previously provided to the Buyer and attached
hereto as Schedule 3(i)(v) (the "CAPITAL EXPENDITURE BUDGET");
- 15 -
(vi) none of Company and its Subsidiaries has made any
material capital investment in, or any material loan to, any other
Person outside the Ordinary Course of Business;
(vii) Company and its Subsidiaries have not created, incurred,
assumed, or guaranteed more than $25,000 in aggregate indebtedness for
borrowed money and capitalized lease obligations;
(viii) none of Company and its Subsidiaries has transferred,
assigned, or granted any license or sublicense of any material rights
under or with respect to any Intellectual Property;
(ix) there has been no change made or authorized in the
charter or bylaws of any of Company and its Subsidiaries;
(x) none of Company and its Subsidiaries has issued, sold, or
otherwise disposed of any of its capital stock or other securities, or
granted any options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its capital
stock or other securities;
(xi) none of Company and its Subsidiaries has declared, set
aside, or paid any dividend or made any distribution with respect to
its capital stock (whether in cash or in kind) or redeemed, purchased,
or otherwise acquired any of its capital stock (other than in
connection with the
TAB Products Co. Tax Deferred Savings Plan in the
Ordinary Course of Business);
(xii) none of Company and its Subsidiaries has experienced any
material damage, destruction, or loss (whether or not covered by
insurance) to its property;
(xiii) none of Company and its Subsidiaries has made any loan
to, or entered into any other transaction with, any of its directors,
officers, and employees outside the Ordinary Course of Business;
(xiv) none of Company and its Subsidiaries has entered into
any employment contract providing for annual compensation in excess of
$100,000 or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xv) none of Company and its Subsidiaries has granted any
increase in the base compensation of any of its directors, officers,
and employees outside the Ordinary Course of Business;
(xvi) none of Company and its Subsidiaries has adopted,
amended, modified, or terminated any bonus, profit sharing, incentive,
severance, or other plan, contract, or commitment for the benefit of
any of its directors, officers, and employees (or taken any such action
with respect to any other Employee Benefit Plan);
- 16 -
(xvii) none of Company and its Subsidiaries has made any other
material change in employment terms for any of its directors, officers,
and employees outside the Ordinary Course of Business;
(xviii) none of Company and its Subsidiaries has made any
loans or advances of money in each case in excess of $10,000; and,
(xix) none of Company and its Subsidiaries has committed to
any of the foregoing.
(j) LEGAL COMPLIANCE. Each of Company and its Subsidiaries has complied
in all material respects with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder, including the Foreign Corrupt Practices Act, 15 U.S.C. 78dd-1,
et. seq., the Truth in Negotiations Act, 10 U.S.C. Section 2306(a) et seq., 41
U.S.C. Section 254(b) et seq. and other federal and state laws pertaining to
government procurement) of federal, state, local, and foreign governments (and
all agencies thereof), and all Health and Safety Laws, and no material action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or
notice has been filed or commenced against any of them alleging any failure so
to comply.
(k) TAXES. Except as set forth in the Company SEC Documents or
on Section 3(k) of the Disclosure Schedule:
(i) Company and its Subsidiaries have, as of the date hereof,
and will prior to the Effective Time have, timely and accurately filed
all Tax Returns required to be filed by them prior to such dates and
have timely paid, or will prior to the Effective Time timely pay, all
Taxes shown on such returns as owed for the periods of such returns,
including all withholding or other payroll related Taxes shown on such
returns. Neither Company nor any Subsidiary is, nor will any of them
become, subject to any material additional Taxes, interest, penalties
or other similar charges with respect to the Tax Returns referred to in
the first sentence of this Section 3(k). No assessments or notices of
deficiency or other communications have been received by Company, nor,
to the Knowledge of Company, have any been threatened, with respect to
any such Tax Return that has not been paid, discharged or fully
reserved for by Company, and no amendments or applications for refund
have been filed or are planned with respect to any such return. Company
does not have any material liabilities for Taxes that have not been
accrued for or reserved for by Company, whether asserted or unasserted,
contingent or otherwise.
(ii) There are no agreements between Company or any Subsidiary
and any taxing authority, including, without limitation, the IRS,
waiving or extending any statute of limitations with respect to any Tax
Return, and neither Company nor any of its Subsidiaries has filed any
consent or election under the Code, including, without limitation, any
election under Section 341(f) of the Code.
(iii) Neither Company nor any of its Subsidiaries has made any
payments and none of them is obligated to make any payments, and none
of them is a party to any agreement that under certain circumstances
could obligate it, or any successor in interest,
- 17 -
to make any parachute payments that will not be deductible under
Section 280G of the Code.
(iv) Company and its Subsidiaries (A) have withheld proper and
accurate amounts in compliance with the tax withholding provisions of
all applicable laws for all compensation paid to the officers and
employees of Company and its Subsidiaries, (B) have correctly and
properly prepared and duly and timely filed all Tax Returns relating to
those amounts withheld from their officers and employees and to their
employer liability for employment Taxes under the Code and applicable
state and local laws and (C) have duly and timely paid and remitted to
the appropriate taxing authorities the amounts withheld from their
officers and employees and any additional amounts that represent their
employer liability under applicable law for employment Taxes.
(v) Section 3(k) of the Disclosure Schedule sets forth a
complete and correct list of all currently ongoing audits and
examinations of the Tax Returns of, and all pending ruling requests
by, the Company or any of its Subsidiaries as well as a complete and
correct list of all material, unresolved Tax-related reports and
statements of deficiencies received by the Company or any of its
Subsidiaries since June 1, 1999. The Company has given the Buyer
access to complete and correct copies of all federal corporate
income tax returns filed by the Company or any of its Subsidiaries
with respect to years 1999, 2000 and 2001. The Company has not
changed its Tax-related principles or practices from those reflected
in the federal corporate tax returns filed by the Company and its
Subsidiaries with respect to fiscal year 2001.
(vi) Neither Company nor any of its Subsidiaries is a "United
States real property holding corporation" as defined in Section
897(c)(2) of the Code.
(l) REAL PROPERTY.
(i) Section 3(l)(i) of the Disclosure Schedule sets forth the
address and description of each parcel of real property the fee
interest in which is owned by Company or a Company Subsidiary ("OWNED
REAL PROPERTY"). With respect to each parcel of Owned Real Property:
(a) Company or one of its Subsidiaries has fee simple
title, free and clear of all Liens;
(b) except as set forth in Section 3(l)(i)(B) of the
Disclosure Schedule, none of Company or its Subsidiaries
currently leases or otherwise has granted to any Person the
right to use or occupy such Owned Real Property or any portion
thereof; and
(c) there are no outstanding options, rights of first
offer or rights of first refusal to purchase such Owned Real
Property or any portion thereof or material interest therein.
(ii) Section 3(l)(ii) of the Disclosure Schedule sets forth
the address of each parcel of real property leased by Company or a
Company Subsidiary ("LEASED REAL PROPERTY"),
- 18 -
and a correct and complete list of all leases for each such Leased Real
Property (including the date and name of the parties to such lease
document). Company has delivered to Buyer a correct and complete copy
of each such lease document, and in the case of any oral lease, a
written summary of the material terms of such lease. Except as set
forth in Section 3(l)(ii) of the Disclosure Schedule, with respect to
each of the leases:
(a) such lease is legal, valid, binding and
enforceable on Company or its applicable Subsidiary and is in
full force and effect;
(b) the transaction contemplated by this Agreement
does not require the consent of any other party to such lease,
will not result in a breach of or default under such lease,
and will not otherwise cause such lease to cease to be legal,
valid, binding and enforceable on Company or its applicable
Subsidiary and in full force and effect on identical terms
following the Closing;
(c) None of Company, its Subsidiaries or, to the
Knowledge of the Company, any other party to the lease is in
breach or default under such lease, and, to the Knowledge of
Company, no event has occurred or circumstance exists which,
with the delivery of notice, the passage of time or both,
would constitute such a breach or default, or permit the
termination, modification or acceleration of rent under such
lease;
(iii) The Owned Real Property identified in Section 3(l)(i)
of the Disclosure Schedule, and the Leased Real Property identified in
Section 3(l)(ii) of the Disclosure Schedule (collectively, the "REAL
PROPERTY") comprise all of the real property used or intended to be
used in the business of Company and its Subsidiaries; and none of
Company or its Subsidiaries is a party to any agreement or option to
purchase any real property or interest therein.
(iv) All buildings, structures, fixtures, building systems and
equipment, and all components thereof, included in the Real Property
(the "IMPROVEMENTS") are in good condition and repair and sufficient
for the operation of the business of Company and its Subsidiaries.
There are no facts or conditions affecting any of the Improvements
which would, individually or in the aggregate, interfere in any
material respect with the use or occupancy of the Improvements or any
portion thereof in the operation of the business of Company and its
Subsidiaries as currently conducted thereon.
(v) None of the Company or its Subsidiaries has received
written notice of any condemnation or other proceeding in eminent
domain affecting any material portion of any parcel of Owned Real
Property. There is no injunction, decree, order, writ or judgment
outstanding, nor any material claims, litigation, administrative
actions or similar proceedings, pending or, to the Knowledge of
Company, threatened, relating to the ownership, lease, use or occupancy
of the Owned Real Property or any material portion thereof, or the
operation of the business of Company and its Subsidiaries as currently
conducted thereon.
- 19 -
(vi) To the Knowledge of Company, the Real Property is in
material compliance with all applicable building, zoning, subdivision,
health and safety and other land use laws, including the Americans with
Disabilities Act of 1990, as amended, affecting the Real Property
(collectively the "REAL PROPERTY Laws"). None of Company or its
Subsidiaries has received any notice of any material violation of any
Real Property Law, and to the Knowledge of the Company, there is no
basis for the issuance of any such notice.
(vii) To the Knowledge of Company, Company's and its
Subsidiaries' use or occupancy of the Real Property or any portion
thereof and the operation of the business of Company and its
Subsidiaries as currently conducted thereon is not dependent on a
"permitted on-conforming use" or "permitted non-conforming structure"
or similar variance, exemption or approval from any governmental
authority.
(m) INTELLECTUAL PROPERTY.
(i) None of Company and its Subsidiaries has interfered with,
infringed upon, misappropriated, or violated any material Intellectual
Property rights of third parties in any material respect, and none of
Company and its Subsidiaries has received any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that any of Company
and its Subsidiaries must license or refrain from using any
Intellectual Property rights of any third party). Without limiting the
generality of the foregoing, none of the Company or any of the
Subsidiaries has failed to make any required seat license or other
license, royalty or other payment to the owners or licensor of software
or other Intellectual Property. To the Knowledge of Company, no third
party has interfered with, infringed upon, misappropriated, or violated
any material Intellectual Property rights of any of Company and its
Subsidiaries in any material respect.
(ii) Section 3(m)(ii) of the Disclosure Schedule identifies
each patent or registration which has been issued to any of Company and
its Subsidiaries with respect to any of its Intellectual Property,
identifies each pending patent application or application for
registration which any of Company and its Subsidiaries has made with
respect to any of its Intellectual Property, and identifies each
material license, sublicense, agreement, or other permission which any
of Company and its Subsidiaries has granted to any third party with
respect to any of its Intellectual Property (together with any
exceptions). Company has made available to Buyer correct and complete
copies of all such patents, registrations, applications, licenses,
sublicenses, agreements, and permissions (as amended to
date). Section 3(m)(ii) of the Disclosure Schedule also identifies each
material trade name or unregistered trademark, service xxxx, corporate
name, Internet domain name, copyright and material computer software
item (other than off-the-shelf computer software) used by any of
Company and its Subsidiaries in connection with any of its businesses.
With respect to each item of Intellectual Property required to be
identified in Section 3(m)(ii) of the Disclosure Schedule:
(a) Company and its Subsidiaries possess all right,
title, and interest in and to the item, free and clear of any
Lien, license, or other restriction;
- 20 -
(b) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(c) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or, to the Knowledge of Company, is threatened, that
challenges the legality, validity, enforceability, use, or
ownership of the item; and
(d) except as described on Section 3(m)(ii) of the
Disclosure Schedule, none of Company and its Subsidiaries has
ever agreed to indemnify any Person for or against any
interference, infringement, misappropriation, or other
conflict with respect to the item.
(iii) Section 3(m)(iii) of the Disclosure Schedule identifies
each material item of Intellectual Property that any third party owns
and that any of Company and its Subsidiaries uses pursuant to license,
sublicense, agreement, or permission. Company has delivered to Buyer
correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to each
item of Intellectual Property required to be identified in
Section 3(m)(iii) of the Disclosure Schedule:
(a) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding and enforceable on
Company or its Subsidiaries, as applicable, and in full force
and effect in all material respects;
(b) neither Company nor any of its Subsidiaries nor,
to the Knowledge of Company, any other party to the license,
sublicense, agreement, or permission, is in material breach or
default, and no event has occurred which with notice or lapse
of time would constitute a material breach or default or
permit termination, modification, or acceleration thereunder;
(c) no party to the license, sublicense, agreement,
or permission has repudiated any material provision thereof;
(d) except as described on Section 3(m)(iii) of the
Disclosure Schedule, none of Company and its Subsidiaries has
granted any sublicense or similar right with respect to the
license, sublicense, agreement, or permission; and
(e) no loss or expiration of any material item is
threatened, pending, or reasonably foreseeable, except for
patents expiring at the end of their statutory terms (and not
as a result of any act or omission by Company or its
Subsidiaries, including without limitation, a failure by
Company or its Subsidiaries to pay any required maintenance
fees).
(n) CONTRACTS. Section 3(n) of the Disclosure Schedule lists the
following contracts and other agreements to which any of Company and its
Subsidiaries is a party as of the date hereof:
(i) any agreement entered into since January 1, 1999, for the
purchase or other acquisition by Company of all or any material portion
of the assets or equity
- 21 -
securities of any Person or for the sale, transfer or other disposition
by Company of all or any material portion of its assets or equity
securities;
(ii) any agreement (or group of related agreements or series
of agreements with a common lessor or lessee) for the lease of personal
property to or from any Person providing for lease payments in each
case in excess of $20,000 per annum;
(iii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of more than one
year;
(iv) other than sales of products, inventory and other
personal property or the furnishing or receipt of services by the
Company in the Ordinary Course of Business and purchases by the Company
of raw materials, commodities, supplies, products or other personal
property in the Ordinary Course of Business not involving performance
that will extend over a period of more than one year, any agreement (or
group of related agreements) for the purchase or sale of raw materials,
commodities, supplies, products, or other personal property, or for the
furnishing or receipt of services involving consideration in each case
in excess of $25,000;
(v) any agreement concerning a partnership or joint venture;
(vi) any agreement (or group of related agreements or series
of agreements with a common lessor or lender) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money or other liabilities, or any capitalized lease obligation, in
each case in excess of $25,000 or under which it has imposed a Lien on
any of its assets, tangible or intangible;
(vii) any material agreement primarily concerning
confidentiality or noncompetition;
(viii) any material agreement with any of the Affiliates of
Company (other than Company and its Subsidiaries);
(ix) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan
or arrangement for the benefit of its current or former directors,
officers, and employees;
(x) any collective bargaining agreement;
(xi) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in each case in excess of $50,000 or providing material
severance benefits;
(xii) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the
Ordinary Course of Business;
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(xiii) any agreement under which it has granted any Person
any registration rights (including, without limitation, demand and
piggyback registration rights);
(xiv) any agreement under which Company or any of its
Subsidiaries has advanced or loaned any other Person amounts currently
outstanding in the aggregate exceeding $20,000;
(xv) any other agreement (or group of related agreements)
outside the Ordinary Course of Business the performance of which
involves consideration in each case in excess of $100,000; or
(xvi) any agreement providing primarily for indemnification by
the Company or any Subsidiary of any director, officer, employee or
agent of the Company, or any Subsidiary.
Except as otherwise indicated on Section 3(n) of the Disclosure
Schedule, Company has made available to Buyer a correct and complete copy of
each written agreement listed in Section 3(n) of the Disclosure Schedule (as
amended to date) and a written summary setting forth the material terms and
conditions of each oral agreement referred to in Section 3(n) of the
Disclosure Schedule. With respect to each such agreement: (A) the agreement
is the legal, valid and binding obligation of Company or a Company
Subsidiary, enforceable against Company or such Subsidiary in accordance with
its terms, and in full force and effect in all material respects; (B) neither
the Company nor any of its Subsidiaries nor, to the Knowledge of Company, any
other Party thereto is in material breach or default, and no event has
occurred which with notice or lapse of time would constitute a material
breach or default, or permit termination, modification, or acceleration,
under the agreement; and (C) neither the Company nor any of its Subsidiaries
nor, to the Knowledge of Company, any other Party thereto has repudiated any
material provision of the agreement.
(o) INSURANCE. Each of Company and its Subsidiaries has insurance
policies in full force and effect for such amounts as are customary for
Persons conducting businesses and owning assets similar in nature and scope
to those of the Company and the Company Subsidiaries. Section 3(o) of the
Disclosure Schedule lists each such insurance policy, the insurer, the policy
term and scope and amount of coverage. The Company will make available to
Buyer correct and complete copies of each such insurance policy promptly upon
the Company's receipt thereof. Section 3(o) of the Disclosure Schedule
describes in reasonable detail any material self-insurance arrangements
affecting any of Company and its Subsidiaries.
(p) LITIGATION. Section 3(p) of the Disclosure Schedule sets forth
each instance in which any of Company and its Subsidiaries (i) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge, or
(ii) is a party or, to the Knowledge of Company, is threatened to be made a
party to any action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator.
(q) EMPLOYEES. Except as the result of the announcement of or pendency
of this Agreement, to the Knowledge of Company, no executive, key employee, or
significant group of
- 23 -
employees plans to terminate employment with any of Company and its
Subsidiaries during the 12 months period following the date hereof. None of
Company and its Subsidiaries is a party to or bound by any collective
bargaining agreement, nor has any of them experienced any strike or material
grievance, claim of unfair labor practices, or other collective bargaining
dispute within the past three years. Company does not have any Knowledge of
any organizational effort presently being made or threatened by or on behalf
of any labor union with respect to employees of any of Company and its
Subsidiaries.
(r) EMPLOYEE BENEFITS.
(i) Section 3(r) of the Disclosure Schedule lists each
Employee Benefit Plan that any of Company and its Subsidiaries
maintains or to which any of Company and its Subsidiaries contributes
or has any obligation to contribute.
(a) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) has been maintained,
funded and administered in material accordance with the terms
of such Employee Benefit Plan and complies in form and in
operation in all material respects with the applicable
requirements of ERISA, the Code, and other applicable laws.
(b) All required IRS Forms 5500 and all required
material reports and descriptions, summary annual reports, and
summary plan descriptions have been timely filed and/or
distributed in accordance with the applicable requirements of
ERISA and the Code with respect to each such Employee Benefit
Plan. The requirements of COBRA have been met in all material
respects with respect to each such Employee Benefit Plan which
is an Employee Welfare Benefit Plan subject to COBRA.
(c) All contributions (including all employer
contributions and employee salary reduction contributions)
have been made within the time periods prescribed by ERISA and
the Code to each such Employee Benefit Plan that is an
Employee Pension Benefit Plan and all contributions for any
period ending on or before the Closing Date that are not yet
due have been made to each such Employee Pension Benefit Plan
or accrued in accordance with the past custom and practice of
Company and its Subsidiaries. All premiums or other payments
for all periods ending on or before the Closing Date have been
paid with respect to each such Employee Benefit Plan that is
an Employee Welfare Benefit Plan.
(d) Each such Employee Benefit Plan which is intended
to meet the requirements of a "qualified plan" under Code
Section 401(a) has received a determination from the Internal
Revenue Service that such Employee Benefit Plan is so
qualified, and the Company is not aware of any facts or
circumstances that could adversely affect the qualified status
of any such Employee Benefit Plan.
(e) Company has delivered to Buyer correct and
complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received
from the Internal Revenue Service, the most recent annual
report
- 24 -
(IRS Form 5500, with all applicable attachments), and all
related trust agreements, insurance contracts, and other
funding arrangements which implement each such Employee
Benefit Plan.
(ii) With respect to each Employee Benefit Plan that any of
Company, its Subsidiaries, and any ERISA Affiliate maintains, to which
any of them contributes, or has any obligation to contribute, or with
respect to which any of them has any material liability or material
potential liability:
(a) No proceeding by the PBGC to terminate any such
Employee Pension Benefit Plan (other than any Multiemployer
Plan) has been instituted or, to the Knowledge of Company,
threatened.
(b) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. Neither Company nor
any Subsidiaries have any liability for material breach of
fiduciary duty or any other material failure to act or comply
in connection with the administration or investment of the
assets of any such Employee Benefit Plan. No action, suit,
proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such
Employee Benefit Plan (other than routine claims for benefits)
is pending or, to the Knowledge of Company and its
Subsidiaries, threatened.
(c) To the Knowledge of Company, no event has
occurred which creates, and no circumstances exist pursuant to
which Company or its Subsidiaries would reasonably be expected
to incur, material liability for a violation by Company of
ERISA, the Code, PBGC and COBRA. Company has not received any
notice asserting any such material liability.
(iii) None of Company, its Subsidiaries, and any ERISA
Affiliate contributes to, has any obligation to contribute to, or has
any material liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to
become due), including any withdrawal liability (as defined in ERISA
Section 4201), under or with respect to any Multiemployer Plan.
(iv) Except as set forth on Section 3(r) of the Disclosure
Schedule, none of the Company or its Subsidiaries maintains,
contributes to or has an obligation to contribute to, or has any
liability or potential liability with respect to, any Employee Welfare
Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated
employees of the Company or any of its Subsidiaries (or any spouse or
other dependent thereof) other than in accordance with COBRA.
(s) ENVIRONMENTAL MATTERS.
(i) Each of Company, its Subsidiaries, and their respective
Affiliates has complied and is in compliance, in each case in all
material respects, with all Environmental Laws.
- 25 -
(ii) Without limiting the generality of the foregoing, each of
Company, its Subsidiaries, and their respective Affiliates, has
obtained, has complied, and is in compliance with, in each case in all
material respects, all material permits, licenses and other
authorizations that are required pursuant to Environmental Laws for the
occupation of its facilities and the operation of its business; a list
of all such material permits, licenses and other authorizations is set
forth on Section 3(s) of the Disclosure Schedule.
(iii) None of Company or its Subsidiaries has received any
written or oral notice, report or other information regarding any
actual or alleged material violation of Environmental Laws, or any
material liabilities or potential material liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise), including
any material investigatory, remedial or corrective obligations,
relating to any of them or its facilities arising under Environmental
Laws.
(iv) None of Company, its Subsidiaries, or any of their
respective predecessor or Affiliates has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or
released any hazardous substance regulated under Environmental Laws, or
owned or operated any property or facility in violation of any
Environmental Law.
(t) CERTAIN BUSINESS RELATIONSHIPS WITH COMPANY AND ITS
SUBSIDIARIES. None of Company's and its Subsidiaries' directors, officers,
employees, and shareholders have been involved in any material business
arrangement or relationship with any of Company or its Subsidiaries within
the past 12 months, and none of Company's and its Subsidiaries' directors,
officers, employees, and shareholders owns any material asset, tangible or
intangible, which is used in the business of any of Company or its
Subsidiaries.
(u) RIGHTS AGREEMENT; SECTION 203 OF THE DELAWARE GENERAL
CORPORATION LAW. The Company has taken all action that may be necessary
(including amending the Rights Agreement, a complete and correct copy of
which amendment has been delivered to the Buyer) so that (i) neither the
execution and delivery of this Agreement and the Voting/Support Agreements,
nor any amendments thereto approved by the Board of Directors of Company
prior to the termination of this Agreement, nor the consummation of the
transactions contemplated hereby or thereby, including the Merger, shall
cause (A) Buyer or Transitory Subsidiary to become an Acquiring Person (as
defined in the Rights Agreement), (B) the occurrence of a Distribution Date
(as defined in the Rights Agreement), (C) the occurrence of a Flip-In Event
(as defined in the Rights Agreement) or (D) the occurrence of a Stock
Acquisition Date (as defined in the Rights Agreement); and (ii) the Rights
shall expire upon the Effective Time. The Company has taken all actions that
may be necessary to approve this Agreement and the Voting/Support Agreements
and the transactions contemplated hereby and thereby in accordance with
Section 203(a)(1) of the Delaware General Corporation Law. The Company's
Continuing Directors (as defined in the Company's Certificate of
Incorporation) have taken all actions that may be necessary to approve the
Business Combination (as defined in the Company's Certificate of
Incorporation) contemplated by this Agreement in accordance with Article
Seventh of the Company's Certificate of Incorporation.
- 26 -
(v) DISCLOSURE. The Definitive Proxy Materials will comply as to form
with the Securities Exchange Act in all material respects. None of the
information that the Company will supply specifically for use in the Definitive
Proxy Materials will, at the time supplied, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statement made therein, in the light of the circumstances under which they will
be made, not misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information that the Buyer or the
Transitory Subsidiary will supply specifically for use in the Definitive Proxy
Statement.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE TRANSITORY SUBSIDIARY.
Each of the Buyer and the Transitory Subsidiary represents and warrants to
the Company that the statements contained in this Section 4 are true and
correct as of the date of this Agreement and will be true and correct as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this agreement throughout this Section 4), except
for those representations and warranties that relate to a particular date,
which representations and warranties shall be true and correct as of such
date and except as set forth in the Disclosure Schedule. The Disclosure
Schedule will be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Section 4.
(a) ORGANIZATION. Buyer is a limited partnership, duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its formation. Transitory Subsidiary is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each of Buyer and its Subsidiaries, including the Transitory
Subsidiary, is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required.
Each of Buyer and its Subsidiaries, including Transitory Subsidiary, has full
corporate, partnership or other entity power and authority to carry on the
business in which it is engaged and to own and use the properties owned and
used by it. Immediately prior to the Merger, all of the issued and
outstanding capital stock of Transitory Subsidiary will be owned directly by
Buyer free and clear of any Liens, other than Liens arising in connection
with the Definitive Financing Agreements. A majority of the partnership
interests of Buyer will be owned directly by MS TP Limited Partnership and XX
Xxxxxx Limited Partnership free and clear of any Liens, other than Liens
arising in connection with the Definitive Financing Agreements. Buyer and
Transitory Subsidiary have heretofore made available to the Company true,
complete and correct copies of their respective limited partnership agreement
and certificate of incorporation and bylaws.
(b) FINANCING. The Buyer has furnished to the Company correct and
complete copies of the Financing Commitments committing to provide the Buyer
and the Transitory Subsidiary with the financing (the "FACILITIES") they will
require in order to consummate the Merger and fund the working capital needs
of the Surviving Corporation and its Subsidiaries after the Closing. Assuming
that the Company and its Subsidiaries possess not less than $8 million in
cash accessible in the United States and Canada at the Closing Date, Buyer,
together with such cash at the Company and its Subsidiaries, will have at the
Effective Time, sufficient cash and available funds to enable it to pay the
Merger Consideration payable hereunder and to pay all fees and expenses in
connection therewith.
- 27 -
(c) AUTHORIZATION OF TRANSACTION. Each of the Buyer and the Transitory
Subsidiary has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of each of the Buyer and the Transitory Subsidiary, enforceable in accordance
with its terms and conditions, subject to bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the rights of creditors generally and
the availability of equitable remedies.
(d) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will: (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which either the Buyer or the
Transitory Subsidiary is subject or any provision of the charter or bylaws of
either the Buyer or the Transitory Subsidiary; or (ii) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which either the Buyer or the Transitory Subsidiary
is a party or by which it is bound or to which any of its assets is subject,
except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, or failure to give notice would not
have a Material Adverse Effect on Buyer or Transitory Subsidiary or on the
ability of the Parties to consummate the transactions contemplated by this
Agreement. Other than in connection with the provisions of the Delaware
General Corporation Law, the Securities Exchange Act, the Securities Act and
the state securities laws, neither the Buyer nor the Transitory Subsidiary
needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency
in order for the Parties to consummate the transactions contemplated by this
Agreement, except where the failure to give notice, to file, or to obtain any
authorization, consent, or approval would not have a Material Adverse Effect
on Buyer or Transitory Subsidiary or the ability of the Parties to consummate
the transactions contemplated by this Agreement.
(e) BROKERS' FEES. Neither the Buyer nor Transitory Subsidiary has
any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement for which any of the Company and its Subsidiaries could become
liable or obligated.
(f) DISCLOSURE. None of the information that the Buyer and the
Transitory Subsidiary will supply specifically for use in the Definitive
Proxy Materials will, at the time supplied, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they
will be made, not misleading. Notwithstanding the foregoing, the Buyer and
the Transitory Subsidiary make no representation or warranty with respect to
any information that the Company will supply specifically for use in the
Definitive Proxy Statement.
(g) FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. Prior to the date
hereof, Buyer has provided to the Company correct and complete copies of the
audited consolidated financial statements for the years ended March 31, 2002
and 2001 and unaudited financial statements for the quarter ended June 30,
2002 of Workstream (the "WORKSTREAM FINANCIAL STATEMENTS"). The
- 28 -
Workstream Financial Statements have been prepared in accordance with GAAP
and fairly present in all material respects the consolidated financial
position of Workstream and its Subsidiaries taken as a whole, as of the dates
thereof and the consolidated results of operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). Except for liabilities and obligations set forth
in the Workstream Financial Statements, neither Workstream nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) other than (i) liabilities and
obligations under this Agreement relating to or in connection with the
Merger, (ii) liabilities and obligations incurred in the Ordinary Course of
Business since March 31, 2002 or (iii) liabilities and obligations that would
not reasonably be expected to have a Material Adverse Effect on Workstream
and its Subsidiaries, taken as a whole.
(h) ABSENCE OF LITIGATION. There are no material claims, actions,
suits or proceedings that have a reasonable likelihood of success on the
merits pending or, to the Knowledge of Buyer, threatened (or to the Knowledge
of Buyer, any governmental or regulatory investigation pending or threatened)
against Buyer or any property or rights of Buyer or any of its Subsidiaries,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, except for those claims, actions,
suits or proceedings which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Buyer.
(i) TRANSITORY SUBSIDIARY. Transitory Subsidiary was formed solely
for the purpose of engaging in the Merger and has not engaged in any business
activities or conducted any operations other than in connection with the
transactions contemplated by this Agreement, including the Merger.
5. COVENANTS. The parties agree as follows with respect to the period from
and after the execution of this Agreement.
(a) GENERAL. Each of the Parties will use its best efforts to take
all actions and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
as expeditiously as possible (including satisfaction, but not waiver, of the
closing conditions set forth in Section 6 below).
(b) NOTICES AND CONSENTS. The Company will give any notices (and
will cause each of its Subsidiaries to give any notices) to third parties,
and will use its reasonable best efforts to obtain (and will cause each of
its Subsidiaries to use its reasonable best efforts to obtain) any third
party consents required in connection with the Merger that the Buyer
reasonably may request.
(c) REGULATORY MATTERS AND APPROVALS. Each of the Parties will (and
the Company will cause each of its Subsidiaries to) give any notices to, make
any filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in Section 5(b) above.
Without limiting the generality of the foregoing:
- 29 -
(i) SECURITIES EXCHANGE ACT AND STATE SECURITIES LAWS. The
Company will prepare and file with the SEC preliminary proxy materials
under the Securities Exchange Act relating to the Special Meeting. The
Company will use its reasonable best efforts to respond to the comments
of the SEC thereon and will make any further filings (including
amendments and supplements) in connection therewith that may be
necessary, proper, or advisable. The Buyer will provide the Company,
with whatever information and assistance in connection with the
foregoing filings that the Company reasonably may request. All filings
with the SEC and all mailings to the Company Stockholders prepared by
Company in connection with the Merger, including the proxy statement,
shall be subject to the prior review and comment of the Buyer.
(ii) STOCKHOLDERS MEETING. Company shall take all action in
accordance with the United States federal securities laws, the Delaware
General Corporate Law and the Company's Certificate of Incorporation
and By-laws necessary to duly call, give notice of, convene and hold a
special meeting of the Company Stockholders (the "SPECIAL MEETING") to
be held on the earliest practicable date determined in consultation
with Buyer to consider and vote upon approval of this Agreement.
Company shall, except as provided in this Section 5(c)(ii), through the
Board of Directors of Company, recommend to the Company Stockholders
approval of this Agreement and include such recommendation in the
Definitive Proxy Statement, and, except as expressly permitted by this
Agreement, shall not withdraw, amend or modify in a manner adverse to
Buyer its recommendation. However, the Board of Directors of Company
shall be permitted to (i) not recommend to the Company Stockholders
that they approve the Agreement or (ii) withdraw, modify or change the
recommendation of Company's Board in a manner adverse to Buyer, and, in
such event, not solicit votes in favor of such approval, if the Board
of Directors of Company believes in good faith, after consultation with
outside legal counsel, that the failure to so withhold, withdraw or
modify its recommendation would reasonably be expected to cause a
failure to comply with its fiduciary duties under applicable laws.
Unless and until this Agreement is terminated, Company shall ensure
that the Special Meeting is called, noticed, convened, held and
conducted, and that all proxies solicited in connection with the
Special Meeting are solicited, in compliance in all material respects
with all applicable laws.
(iii) BUYER-OWNED SHARES. Buyer shall cause the holders of
Buyer-owned Shares to agree to vote all of their respective Buyer-owned
Shares in favor of the Merger at the Special Meeting, and shall obtain
the agreement of such holders of Buyer-owned Shares not to exercise any
appraisal rights under the Delaware General Corporation Law.
(iv) Intentionally omitted.
(d) FAIRNESS OPINION. Buyer and Transitory Subsidiary acknowledge that
the Fairness Opinion has been rendered for the benefit of the Special Committee
and Board of Directors of the Company and may not be relied upon by Buyer,
Transitory Subsidiary or any of their Affiliates.
(e) FINANCING. The Buyer and the Transitory Subsidiary (and their
Affiliates, as applicable) will enter into definitive agreements (the
"DEFINITIVE FINANCING AGREEMENTS") as
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soon as practicable on terms and conditions substantially in accordance with the
Financing Commitments attached hereto as EXHIBIT J, or with replacement or
alternative financing commitments reasonably acceptable to the Company, but in
any event no later than 50 calendar days from the date hereof. The Buyer will
furnish correct and complete copies of the Definitive Financing Agreements to
the Company. In the event any or all of the Facilities become unavailable for
any reason or alternative financing sources, reasonably acceptable to Company,
become available, the Buyer and the Transitory Subsidiary will obtain
replacement financing on substantially equivalent terms and conditions from
alternative sources, but in any event no later than 50 calendar days from the
date hereof. The Company covenants that it shall (and shall cause its
Subsidiaries to) cooperate and promptly after the Buyer's request take all
actions reasonably necessary or appropriate to assist the Buyer in entering into
the Definitive Financing Agreements no later than 50 calendar days from the date
hereof. Any provision of this Agreement to the contrary notwithstanding, the
Company will not have any obligation to mail the Definitive Proxy Statement to
the Company Stockholders until the Buyer has delivered fully-executed copies of
the Definitive Financing Agreements to the Company.
(f) OPERATION OF BUSINESS. During the period from the date of this
Agreement and continuing until the Closing Date or the earlier termination of
this Agreement, the Company will not (and will not cause or permit any of its
Subsidiaries to), except as expressly contemplated or permitted by this
Agreement or to the extent Buyer shall otherwise consent in writing, which
consent shall not be unreasonably withheld or delayed, engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business. For the avoidance of doubt, in the Ordinary Course of Business,
Company will use commercially reasonable efforts to maximize available cash
balances and working capital levels. Without limiting the generality of the
foregoing, except as expressly contemplated or permitted by this Agreement or to
the extent Buyer shall otherwise consent in writing:
(i) none of the Company and its Subsidiaries will authorize or
effect any change in its charter or bylaws, or except as contemplated
in Section 3(u), in the Rights Agreement (including as such a change
any redemption of the rights thereunder);
(ii) none of the Company and its Subsidiaries will grant any
options, warrants, or other rights to purchase or obtain any of its
capital stock or other securities or issue, sell, or otherwise dispose
of any of its capital stock or other securities (except upon the
conversion or exercise of options, warrants, and other rights currently
outstanding and disclosed on EXHIBIT F);
(iii) none of the Company and its Subsidiaries will declare,
set aside, or pay any dividend or distribution with respect to its
capital stock (whether in cash or in kind), or redeem, repurchase, or
otherwise acquire any of its capital stock (other than acquisitions in
connection with the
TAB Products Co. Tax Deferred Savings Plan in the
Ordinary Course of Business);
(iv) except as set forth on Section 5(f)(iv), none of the
Company and its Subsidiaries will issue any note, bond, or other debt
security or create, incur, assume, or guarantee any indebtedness for
borrowed money or other liabilities or capitalized lease obligation;
- 31 -
(v) none of the Company and its Subsidiaries will: (A) impose
any Lien upon any of its assets or (B) sell, lease, transfer or dispose
of any of its assets outside the Ordinary Course of Business, except as
set forth on Section 5(f)(v) of the Disclosure Schedules;
(vi) except as set forth on Section 5(f)(vi), none of the
Company and its Subsidiaries will make any capital investment in, make
any loan to, or acquire the securities or assets of any other Person;
(vii) except as set forth on Section 5(f)(vii) of the
Disclosure Schedule, none of the Company and its Subsidiaries will
alter or modify in any material respect, any of its dealer agreements,
sales commission structures, agreements with channel partners,
territorial arrangements with dealers or others or product offerings;
(viii) except as set forth on Section 5(f)(viii) of the
Disclosure Schedule, none of the Company and its Subsidiaries will
enter into any employment or consulting agreement that provides for
aggregate annual compensation in excess of $100,000 or any
collective bargaining agreement, or make any material change in
employment terms outside of the Ordinary Course of Business, or will
grant, enter into, amend, modify or terminate any agreements or
arrangements for any severance or golden parachute payments, for any
of its directors, officers, and employees.
(ix) other than in connection with the replacement of a
material piece or pieces of equipment necessary to maintain the
operation of the Company's or any of its Subsidiaries' business as a
result of the material damage or destruction of such equipment, none of
the Company and its Subsidiaries will make any capital expenditures in
any fiscal quarter that would be reasonably likely to cause Company to
exceed the capital expenditure budget for such fiscal quarter set forth
in the Capital Expenditure Budget by more than $100,000 in the
aggregate, provided, however, that the total amount of capital
expenditures in excess of the Capital Expenditure Budget for fiscal
2003 shall not exceed $100,000;
(x) none of the Company and its Subsidiaries will cause any
insurance coverage to lapse or terminate unless the coverage is
replaced by substantially similar insurance coverage;
(xi) none of the Company and its Subsidiaries will change or
modify its accounting principles or practices or change or modify its
Tax-related principles or practices other than actions in the Ordinary
Course of Business and as advised by Company's regular independent
accountants;
(xii) none of the Company and its Subsidiaries will settle or
compromise any pending or threatened litigation or other proceedings
involving money damages in excess of $25,000, individually or $100,000
in the aggregate, except for claims asserted by Company or its
Subsidiaries;
(xiii) none of the Company and its Subsidiaries will take (or
permit to be taken) any action that would violate or result in a breach
of Section 3 hereof in any material respect; and,
- 32 -
(xiv) none of the Company and its Subsidiaries will commit to
any of the foregoing.
(g) ACCESS. The Company will (and will cause each of its
Subsidiaries to) permit representatives of the Buyer (including, without
limitation, representatives of the institutions providing financing to the
Buyer), to have reasonable access upon reasonable prior notice to Company and
during normal business hours to all premises, properties, executive officers,
employees, dealers, books, records (including tax records), contracts, and
documents of or pertaining to each of the Company and its Subsidiaries;
provided, however, that the Company may restrict the foregoing access to the
extent that (i) any law or governmental order requires Company or its
Subsidiaries to restrict or prohibit access to any such properties or
information, (ii) the information is subject to confidentiality obligations
to a third party or (iii) the information is subject to the attorney-client
privilege. Without limiting the generality of the foregoing, the Company
shall, reasonably promptly after the execution of this Agreement, arrange for
meetings of Buyer representatives with each of: (A) Messrs. Perez, Beattie,
Xxxxx and Xxxxxxxx; (B) the Company's dealers; and (C) the Company's branch
employees, sales executives and managers; PROVIDED, HOWEVER, that with
respect to the meetings referred to in clauses (B) and (C), Buyer shall
consult with Xx. Xxxx Xxxxxxxx in advance of the holding of such meetings
and, at the Company's election, a representative of the Company shall be
present at such meetings. Each of the Buyer and the Transitory Subsidiary
will, and will cause its representatives, counsel and agents to, treat and
hold as confidential any information it receives from any of the Company and
its Subsidiaries in the course of the reviews contemplated by this Section
5(g), will not use any of such information except in connection with this
Agreement, and such information shall otherwise be subject to the provisions
of the confidentiality letter, dated February 14, 2002, between Company and
Xxxxxxxx Sorter Co., Inc. (the "CONFIDENTIALITY AGREEMENT"), which
Confidentiality Agreement shall continue in full force and effect after the
date hereof in accordance with its terms.
(h) NOTICE OF DEVELOPMENTS. Each Party will give prompt written
notice to the others of (i) any material adverse development causing any of
its own representations and warranties in Section 3 and Section 4 above to be
untrue or inaccurate at any time from the date hereof until the Closing Date,
and (ii) the failure of such Party to comply with or satisfy in any material
respect any consent, condition or agreement to be complied with or satisfied
by it hereunder. No disclosure by any Party pursuant to this Section 5(h),
however, shall be deemed to amend or supplement the Disclosure Schedule or to
prevent or cure any misrepresentation, breach of warranty, or breach of
covenant.
(i) NO SOLICITATION. Company agrees that, during the term of this
Agreement, it shall not, and shall not authorize and will use best efforts
not to permit any of its Subsidiaries or any of its or its Subsidiaries'
directors, officers, employees, agents or representatives, directly or
indirectly, to solicit, initiate, encourage or facilitate, or furnish or
disclose nonpublic information in furtherance of, any inquiries with respect
to or the making of any Acquisition Proposal, or negotiate, explore or
otherwise engage in discussions with any person (other than Buyer or its
respective directors, officers, employees, agents and representatives) with
respect to any Acquisition Proposal or enter into any agreement, arrangement
or understanding requiring it to abandon, terminate or fail to consummate the
Merger or any other transactions contemplated by this Agreement; PROVIDED
that, at any time prior to the approval of this Agreement by the
- 33 -
Company Stockholders, Company may (i) furnish information to, and negotiate
or otherwise engage in discussions with, any person that delivers a written
Acquisition Proposal, or (ii) recommend to the Company Stockholders, an
Acquisition Proposal that was not solicited or encouraged, except to the
extent explicitly permitted by this Section 5(i), after the date of this
Agreement if and so long as the Board of Directors of Company believes in
good faith as determined by a majority vote, after consultation with its
outside legal counsel, that failing to take such action would reasonably be
expected to constitute a breach of its fiduciary duties under applicable laws
and believes in good faith, after consulting with its financial advisors and
Company's outside legal counsel, that such proposal is a Superior Acquisition
Proposal; PROVIDED, FURTHER, that, prior to furnishing any information to
such person, Company shall enter into a confidentiality agreement that is no
less restrictive, in any material respect, than the Confidentiality
Agreement. Company will immediately cease all existing activities,
discussions and negotiations with any persons conducted prior to the date of
this Agreement with respect to any Acquisition Proposal and request the
return of all confidential information regarding Company provided to any such
persons prior to the date of this Agreement pursuant to the terms of any
confidentiality agreements or otherwise. In the event that, prior to the
approval of this Agreement by the Company Stockholders, the Board of
Directors of Company receives a Superior Acquisition Proposal that was not
solicited or encouraged, except to the extent permitted by this Section 5(i),
and the Board of Directors of Company believes in good faith based upon the
advice of its outside legal counsel that failure to take such action would
reasonably be expected to constitute a breach of the fiduciary duties of the
Board of Directors of Company, the Board of Directors of Company may (subject
to this Section 5(i) and Section 5(c)(ii)) withdraw, modify or change, in a
manner adverse to Buyer, the Company's recommendation of the Agreement and/or
comply with Rule 14e-2 under the Exchange Act with respect to such Superior
Acquisition Proposal, PROVIDED that Company gives Buyer three days' prior
written notice of its intention to do so (PROVIDED that the foregoing shall
in no way limit or otherwise affect any party's right to terminate this
Agreement pursuant to Section 7 hereof). Simultaneously with any termination
of this Agreement by the Company pursuant to Section 7(a)(vi), Company shall
pay Buyer the Break-up Fee contemplated by Section 7(b) hereof. From and
after the execution of this Agreement, Company shall promptly (but in any
event within 48 hours) advise Buyer in writing of the receipt, directly or
indirectly, of any inquiries or proposals or the participation by or on
behalf of Company in any discussions or negotiations, relating to an
Acquisition Proposal (including, in each case, the specific terms and status
thereof and the identity of the other person or persons involved) and
promptly furnish to Buyer a copy of any such written proposal in addition to
any information provided to or by any third party relating thereto. The
Company will keep Buyer informed on a current basis of the status of such
discussions and negotiations. In addition, Company shall promptly advise
Buyer, in writing, if the Board of Directors of Company shall make any
determination as to any Acquisition Proposal as contemplated by the proviso
to the first sentence of this Section 5(i).
(j) INDEMNIFICATION AND INSURANCE.
(i) For six years after the Effective Time, the Surviving
Corporation shall not, and Buyer shall cause the Surviving Corporation
not to, (A) amend or otherwise modify in a manner adverse to the
directors and officers, and the Buyer and the Surviving Corporation
shall cause to remain in full force and effect, Article VIII of the
Bylaws of the Surviving Corporation in the form attached hereto as
EXHIBIT C, with respect to the
- 34 -
indemnification of, and advancement of expenses to, past and present
directors and officers of the Company and its Subsidiaries and (B)
amend or otherwise modify in a manner adverse to the directors,
officers or employees party thereto any indemnification agreements in
effect as of the date hereof between the Company and any of its
directors, officers and employees.
(ii) For six years after the Effective Time, the Surviving
Corporation shall, and Buyer shall cause the Surviving Corporation
to, maintain in effect the Company's current directors' and
officers' liability insurance or a tail policy covering acts or
omissions occurring at or prior to the Effective Time with respect
to those persons who are currently covered by the Company's
directors' and officers' liability insurance policy on terms with
respect to such coverage and amount substantially similar to those
of such policy in effect on the date hereof; provided that the
Surviving Corporation may substitute therefor policies containing
terms with respect to coverage and amount no less favorable to such
directors or officers; provided, further, that in no event shall the
Surviving Corporation be required to pay aggregate annual premiums
for insurance under this Section 5(j) in excess of 200% of the
aggregate premiums paid by the Company in fiscal 2002 for such
purpose; provided, further, that if the annual premiums of such
insurance coverage exceed such amount, the Surviving Corporation
shall be obligated to obtain a policy with the greatest coverage
available for a cost not exceeding such amount. Buyer agrees, and
will cause the Surviving Corporation, not to take any action that
would have the effect of limiting the aggregate amount of insurance
coverage required to be maintained for the individuals referred to
in this Section 5(j).
(iii) The provisions of this Section 5(j) are intended to be
for the benefit of, and will be enforceable by, each indemnified party,
his or her heirs and his or her representatives and are in addition
to, and not in substitution for, any other rights to indemnification
or contribution that any such individuals may have by contract or
otherwise. The obligations of the Surviving Corporation under this
Section 5(j) shall not be terminated or modified in such a manner as
to adversely affect any indemnitees to whom this Section 5(j)
applies without the consent of such affected indemnitee.
(iv) In the event that after the Effective Time the Surviving
Corporation (A) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (B) transfers all or substantially all of
its assets to any Person, then, and in each such case, proper provision
shall be made so that any successor or assign of the Surviving
Corporation shall assume the obligations set forth in this
Section 5(j).
(k) EMPLOYMENT MATTERS.
(i) For not less than one year following the Effective Time,
the Surviving Corporation shall, and Buyer shall cause the Surviving
Corporation to, maintain and provide health and welfare benefits, such
as medical, dental and hospitalization insurance, disability benefits
and life insurance, and a 401(k) plan for employees and retired
employees of the Company and its Subsidiaries that, in the aggregate,
are reasonably comparable to the health and welfare benefits and 401(k)
plan (other than any
- 35 -
matching provisions) generally available to employees and retired
employees of the Company as of the date hereof. For not less than one
year following the Effective Time, employees of the Company or any
Subsidiary shall receive full credit for purposes of eligibility to
participate and vesting (but not for benefit accruals) under any
employee benefit plan or arrangement established or maintained by the
Surviving Corporation or any of its Subsidiaries for service accrued or
deemed accrued prior to the Effective Time with the Company or any
Subsidiary; provided, however, that such crediting of service shall not
operate to duplicate any benefit or the funding of such benefit. In
addition, for not less than one year following the Effective Time, the
Surviving Corporation shall waive, or cause to be waived, any
limitations on benefits relating to any pre-existing conditions to the
same extent such limitations are waived under any comparable plan of
Buyer or its Affiliates and recognize, for purposes of annual
deductible and out-of-pocket limits under its medical and dental plans,
deductible and out-of-pocket expenses paid by employees of the Company
and its Subsidiaries in the calendar year in which the Effective Time
occurs.
(ii) The Surviving Corporation shall, and Buyer shall cause
the Surviving Corporation to, comply with the terms of any employment
agreement (including, without limitation, with respect to any payments
due upon termination of any such agreement), severance agreement,
termination agreement, change of control agreement or "golden
parachute" agreement to which the Company or any of its Subsidiaries is
a party on the date hereof.
(l) GUARANTIES. Simultaneously with the execution of this Agreement,
the Buyer shall provide to the Company unconditional guaranties from each of MS
TP Limited Partnership and XX Xxxxxx Limited Partnership, of the Buyer's and the
Transitory Subsidiary's obligations under this Agreement in the form attached
hereto as EXHIBIT I.
(m) PROXY SOLICITATIONS. During the term of this Agreement and for a
period of six months following any termination of this Agreement pursuant to
Section 7(a)(iv) Buyer and Transitory Subsidiary shall not, and Buyer and
Transitory Subsidiary shall cause its Affiliates not to, engage in any
"solicitation" of "proxies" (as such terms are used in the proxy rules
promulgated under the Securities Exchange Act) or otherwise engage in any
proxy contest or otherwise seek or propose to influence or control the Board
of Directors, management or policies of Company and its Subsidiaries;
PROVIDED, HOWEVER, that during such six-month period following any such
termination of this Agreement pursuant to Section 7(a)(iv), Buyer and
Transitory Subsidiary and their Affiliates may engage in any such
solicitation of proxies or other proxy contest for the purpose of challenging
or competing with any Acquisition Proposal (other than the Merger). Unless
otherwise required by any court of competent jurisdiction, as long as this
Agreement is in effect, Company agrees not to convene its annual meeting of
stockholders.
(n) SOLVENCY OPINION. At the Buyer's request, the Company shall (and
shall cause its Subsidiaries to) cooperate and take all actions reasonably
necessary and appropriate to assist the Buyer in obtaining, on or prior to the
Closing Date, a solvency opinion with respect to the Surviving Corporation.
(o) Intentionally omitted.
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6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF THE BUYER AND THE TRANSITORY
SUBSIDIARY. The obligation of each of the Buyer and the Transitory Subsidiary to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) this Agreement and the Merger shall have received the
Requisite Stockholder Approval, and the number of Dissenting Shares
excluding any Buyer-owned Shares that are also Dissenting Shares, shall
not exceed ten percent (10%) of the number of outstanding Company
Shares;
(ii) the Company and its Subsidiaries shall have procured all
of the third party consents specified in Section 5(b) above;
(iii) the representations and warranties set forth in
Section 3 above shall be true and correct in all material respects at
and as of the Closing Date, except for those representations and
warranties that relate to a particular date, which representations
and warranties shall be true and correct as of such date;
(iv) the Company shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(v) no Material Adverse Effect shall have occurred from the
date of this Agreement to the Closing Date;
(vi) as of the Closing Date, the Company and its Subsidiaries
shall have cash accessible in the United States and Canada in the
amount of $8 million;
(vii) as of the Closing Date, trade accounts payable days of
the Company and its Subsidiaries (computed as total trade accounts
payable at Closing DIVIDED by the latest 12 months' cost of revenues
MULTIPLIED by 365) shall not exceed 60;
(viii) no temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other governmental authority or other legal restraint
or prohibition preventing the consummation of the Merger shall be in
effect;
(ix) the Company shall have delivered to the Buyer and the
Transitory Subsidiary a certificate to the effect that each of the
conditions specified above in Section 6(a)(i)-(viii) is satisfied in
all respects;
(x) Intentionally omitted.
(xi) the Buyer and the Transitory Subsidiary shall have
received from counsel to the Company an opinion in form and substance
as set forth in EXHIBIT G attached hereto, addressed to the Buyer and
the Transitory Subsidiary, and dated as of the Closing Date;
- 37 -
(xii) the Buyer and the Transitory Subsidiary shall have
received the resignations, effective as of the Effective Time, of each
director of the Company and its Subsidiaries and also of each officer
of the Company and its Subsidiaries whom the Buyer shall have specified
in writing at least five business days prior to the Closing, PROVIDED
that notwithstanding his or her resignation, each resigning officer
shall be paid the amount due under any employment or change of control
agreement that would be paid upon an involuntary termination
immediately following the Closing;
(xiii) None of the following shall have occurred and be
continuing (i) any general suspension of trading in securities on any
national securities exchange or in the over-the-counter market or
material adverse decline by at least 25% over any five consecutive
trading days in the value of the Dow Xxxxx Industrial Average, (ii) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory) or any
material disruption in commercial banking services or any limit on the
extension of credit generally by banks or other financial institutions,
or (iii) the commencement of a war by the United States, other than the
current "war on terrorism", in each case, where the occurrence of each
such event has a material adverse effect on the Buyer's ability to draw
down its financing; and
(xiv) the Company and its Subsidiaries shall not have
outstanding, due or payable more than a total of $900,000 in fees,
costs and expenses from services rendered by or on behalf of any of its
brokers, accountants, investment bankers, attorneys or other
representatives retained or used by the Company and its Subsidiaries in
connection with the negotiation of this Agreement and the consummation
of the transaction contemplated hereby.
The Buyer and the Transitory Subsidiary may waive any condition
specified in this Section 6(a) if they execute a writing so stating at or prior
to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) Intentionally omitted.
(ii) Buyer and the Transitory Subsidiary (and their
Affiliates, as applicable) shall have entered into the Definitive
Financing Agreements and obtained all of the financing they will
require in order to consummate the Merger and fund the working capital
needs of the Surviving Corporation and its Subsidiaries after the
Closing on terms and conditions substantially in accordance with the
Financing Commitments;
(iii) the representations and warranties set forth in
Section 4 above shall be true and correct in all material respects at
and as of the Closing Date, except for those representations and
warranties that relate to a particular date, which representations
and warranties shall be true and correct as of such date;
(iv) each of the Buyer and the Transitory Subsidiary shall
have performed and complied with all of its covenants hereunder in all
material respects through the Closing;
- 38 -
(v) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction
or other governmental authority or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect;
(vi) each of the Buyer and the Transitory Subsidiary shall
have delivered to the Company a certificate to the effect that each of
the conditions specified above in Section 6(b)(i)-(v) is satisfied in
all respects;
(vii) this Agreement and the Merger shall have received the
Requisite Stockholder Approval; and
(viii) the Company shall have received from counsel to the
Buyer and the Transitory Subsidiary an opinion in form and substance as
set forth in EXHIBIT H attached hereto, addressed to the Company, and
dated as of the Closing Date.
The Company may waive any condition specified in this Section 6(b) if
it executes a writing so stating at or prior to the Closing.
7. TERMINATION.
(a) TERMINATION OF AGREEMENT. Any of the Parties may terminate this
Agreement with the prior authorization of its board of directors (whether before
or after stockholder approval) as provided below:
(i) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Effective Time;
(ii) either the Buyer or the Company may terminate this
Agreement by giving written notice to the other at any time prior to
the Effective Time, if the Effective Time shall not have occurred on or
before January 15, 2003 (the "TERMINATION DATE"), provided, however,
that the right to terminate this Agreement under this Section 7(a)(ii)
shall not be available to any Party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in,
or primarily contributed to, the failure of the Effective Time to occur
on or before the Termination Date;
(iii) Buyer may terminate this Agreement, if there has been
any inaccuracy in or breach of any of the Company's representations
or warranties, or the Company shall have breached or failed to
perform any of its covenants or other agreements contained in this
Agreement, in each case such that the conditions set forth in
Section 6(a) are not capable of being satisfied on or before the
Termination Date; provided, however, that before Buyer may terminate
this Agreement under this Section 7(a)(iii), it shall deliver
written notice to the Company specifying such breach in reasonable
detail and shall give the Company a period of 30 days following
receipt of such notice in which to cure such breach, regardless of
whether such 30-day period extends beyond the Termination Date;
(iv) Company may terminate this Agreement, if (A) there has
been any inaccuracy in or breach of any of Buyer's or Transitory
Subsidiary's representations or
- 39 -
warranties, (B) Buyer or Transitory Subsidiary shall have breached or
failed to perform any of its covenants or other agreements contained
in this Agreement, in each case such that the conditions set forth
in Section 6(b) are not capable of being satisfied on or before the
Termination Date, or (C) at any time after the 50-day period
referenced in Section 5(e), any of the Definitive Financing
Agreements is terminated or any of the financing available
thereunder is otherwise withdrawn; provided, however, that before
the Company may terminate this Agreement under this Section
7(a)(iv), it shall deliver written notice to Buyer specifying such
breach in reasonable detail and shall give Buyer a period of 30 days
following receipt of such notice in which to cure such breach,
regardless of whether such 30-day period extends beyond the
Termination Date; and provided further, however, that
notwithstanding the foregoing, no such 30-day cure period shall
apply to, and the Company may immediately terminate this Agreement
upon, any misrepresentation or omission in the representation set
forth in Section 4(b), the breach of the covenants contained in
Section 5(e) or any such termination or withdrawal described in
clause (C) of this Section 7(a)(iv).
(v) either Buyer or Company may terminate this Agreement by
giving written notice to the other at any time after the Special
Meeting in the event this Agreement and the Merger fail to receive the
Requisite Stockholder Approval;
(vi) the Company may terminate this Agreement by giving
written notice to the Buyer prior to the tabulation of votes from the
Special Meeting if the Company's Board of Directors shall have
withdrawn or modified its recommendation of the Merger or this
Agreement in accordance with Section 5(c)(ii) or Section 5(i), or
approved, recommended or entered into, a Superior Acquisition Proposal;
or
(vii) Buyer may terminate this Agreement by giving written
notice to the Company if (A) prior to the Special Meeting, the
Company's Board of Directors shall have withdrawn or modified in any
manner adverse to Buyer its recommendation of the Merger or this
Agreement or shall have approved, recommended or entered into, a
Superior Acquisition Proposal, or (B) the Company shall have entered
into a definitive agreement with respect to any Acquisition Proposal.
(b) EFFECT OF TERMINATION.
(i) If the Parties terminate this Agreement pursuant to
Section 7(a) above, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party;
PROVIDED, HOWEVER, that the confidentiality provisions contained in
Section 5(g) above and the provisions of this Section 7(b) and
Section 8 shall survive any such termination.
(ii) If the Agreement is terminated pursuant to
Section 7(a)(vi) or Section 7(a)(vii) above, or if the Buyer terminates
this Agreement pursuant to Section 7(a)(iii) and, within six months
from the date of such termination, the Company shall enter into a
definitive agreement with respect to an Acquisition Proposal, or if
this Agreement is terminated pursuant to Section 7(a)(v) and, prior
to the Special Meeting, an Acquisition Proposal shall have been
publicly announced, then the Company shall pay the Buyer, as a
termination fee, a sum equal to $1,500,000 (the "BREAK-UP FEE");
provided, however, that, notwithstanding the
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foregoing, such amount shall not be payable if Buyer or
Transitory Subsidiary is in material breach of this Agreement at the
time of such termination.
(iii) If Company shall terminate this Agreement pursuant
to Section 7(a)(iv) on account of any misrepresentation or omission
in the representation of the Buyer and the Transitory Subsidiary set
forth in Section 4(b), the breach of the covenants of the Buyer and
the Transitory Subsidiary contained in Section 5(e), the failure of
the conditions set forth in Section 6(b)(ii) to be satisfied (while
the condition set forth in Section 6(a)(xiii) is satisfied), or a
termination or withdrawal described in Section 7(a)(iv)(C), then
Buyer shall pay to Company, as a termination fee, a sum equal to
$1,500,000 (the "BUYER BREAK-UP FEE"); provided, however, that,
notwithstanding the foregoing, such Buyer Break-up Fee shall not be
payable if the Company is in material breach of this Agreement at
the time of such termination.
(iv) If Buyer shall terminate this Agreement pursuant
to Section 7(a)(iii), Company shall promptly reimburse Buyer for
the amount of all documented out-of-pocket costs, fees and expenses
reasonably incurred by Buyer or Transitory Subsidiary in connection
with this Agreement and the Merger; PROVIDED, that, the Company's
aggregate reimbursements pursuant to this Section 7(b)(iv) shall in
no event exceed $500,000. If Company shall terminate this Agreement
pursuant to Section 7(a)(iv), unless a Buyer Break-up Fee is then
due, Buyer shall promptly reimburse Company for the amount of all
documented out-of-pocket costs, fees and expenses reasonably
incurred by Company in connection with this Agreement and the
Merger; PROVIDED, that, the Buyer's aggregate reimbursements
pursuant to this Section 7(b)(iv) shall in no event exceed $500,000.
(v) The Parties agree that the actual damages accruing from a
termination of the Agreement pursuant to the subsections of Section
7(a) with respect to which the provisions of Section 7(b) provide
for the payment of damages are incapable of precise estimation and
would be difficult to prove, that the payment to the Buyer of the
Break-up Fee and the payment of the Buyer Break-up Fee to Company
shall constitute liquidated damages, that the rights to the Break-up
Fee or the Buyer Break-up Fee, stipulated in this Section 7(b) bear
a reasonable relationship to the potential injury likely to be
sustained in the event of such a termination and that such
stipulated rights to liquidated damages are intended by the Parties
to provide just compensation in the event of such a termination and
are not intended to compel performance or to constitute a penalty
for nonperformance. Other than as set forth herein, payment of the
Break-up Fee by Company shall terminate all of the Buyer's rights
and remedies at law or in equity against Company in respect of a
termination of this Agreement pursuant to the subsections of Section
7(a) with respect to which the provisions of Section 7(b) provide
for the payment of damages. Other than as set forth herein, payment
of the Buyer Break-up Fee by the Buyer shall terminate all of the
Company's rights and remedies at law or in equity against the Buyer
or the Transitory Subsidiary or their Affiliates in respect of a
termination of this Agreement pursuant to the subsections of Section
7(a) with respect to which the provisions of Section 7(b) provide
for the payment of damages. Except as otherwise provided in Section
5(i), the Break-up Fee shall be paid by Company to Buyer in
immediately available funds within three days after the date of the
event giving rise to the obligation to make such payment occurred
and interest at the prime rate, published in Midwest Edition of THE
WALL STREET JOURNAL, shall accrue on the Break-up Fee thereafter.
The Buyer Break-up Fee shall be paid by Buyer to
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Company in immediately available funds within three days after the date
of the event giving rise to the obligation to make such payment
occurred and interest at the prime rate, published in Midwest Edition
of THE WALL STREET JOURNAL, shall accrue on the Buyer Break-up Fee
thereafter.
8. MISCELLANEOUS.
(a) SURVIVAL. None of the representations, warranties, and covenants
of the Parties (other than the provisions in Section 2 above concerning
payment of the Merger Consideration and the provisions in Section 5(j) above
concerning insurance and indemnification and Section 5(k) concerning
employment matters) will survive the Effective Time.
(b) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue
any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the other
Parties; PROVIDED, HOWEVER, that any Party may make, after consultation with
the other Parties to give them a reasonable opportunity to comment on the
disclosure, any public disclosure it believes in good faith after
consultation with counsel is required by applicable law or any listing or
trading agreement concerning its publicly-traded securities.
(c) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns; PROVIDED, HOWEVER, that (i) the
provisions in Section 2 above concerning payment of the Merger Consideration
are intended for the benefit of the Company Stockholders and (ii) the
provisions in Section 5(j) above concerning insurance and indemnification and
Section 5(k)(ii) concerning employment matters are intended for the benefit
of the individuals specified therein and their respective legal
representatives.
(d) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein and the Exhibits and Schedules attached hereto)
constitutes the entire agreement among the Parties and supersedes any prior
understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they relate in any way to the subject matter
hereof, other than the Confidentiality Agreement.
(e) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement
or any of its rights, interests, or obligations hereunder without the prior
written approval of the other Parties.
(f) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
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(h) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and
then two business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
IF TO THE COMPANY: WITH A REQUIRED COPY TO (WHICH SHALL NOT CONSTITUTE
Tab Products Co. NOTICE):
000 Xxxxxxxx Xxxxxxx Barack Xxxxxxxxxx Xxxxxxxxxx
Suite 195 Xxxxxxx & Xxxxxxxxx LLC
Xxxxxx Xxxxx, XX 00000 000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx: Xx. Xxxxx X. Xxxxx Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000 Attention: Xxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
IF TO THE BUYER OR THE TRANSITORY SUBSIDIARY: WITH A REQUIRED COPY TO (WHICH SHALL NOT CONSTITUTE
Workstream Inc. NOTICE):
608 Mercantile Center Xxxxxx Xxxxxx & Co., Inc.
000 Xxxxxx Xxxxxx 00xx Xxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000 000 Xxxx Xxxxxx
Xxxxxxxxx: Xx. Xxxxxxxx Xxxxxxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000 Attention: X. Xxxx Xxxxxx, III, Esq.
Telecopy: (000) 000-0000
AND
Skadden, Arps, Slate, Xxxxxxx & Xxxx
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
AND
Xxxxxxx, Xxxxxxxx & Klekamp, PLL
1400 Provident Tower
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited courier,
messenger service, telecopy, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests,
demands, claims, and other
- 43 -
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF DELAWARE WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION
OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
(j) AMENDMENTS AND WAIVERS. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; PROVIDED,
HOWEVER, that any amendment effected subsequent to stockholder approval will
be subject to the restrictions contained in the Delaware General Corporation
Law. No amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by all of the Parties. No waiver by
any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
(k) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction.
(l) EXPENSES. Except as otherwise provided in this Agreement, each
of the Parties will bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.
(m) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
otherwise requires. The word "INCLUDING" shall mean including without
limitation.
(n) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
(REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date and year first above written.
T ACQUISITION L.P.
BY: MSTP, LLC, Its General Partner
By:
-----------------------------
Xxxxxxxx X. Xxxxxxxxxxx
President
T ACQUISITION CO.
By:
--------------------------------
Xxxxxxxx X. Xxxxxxxxxxx
Its President
TAB PRODUCTS CO.
By:
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Title:
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