EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
DATED AS OF JANUARY 20, 2003,
AMONG
XXXXXXXXX RESEARCH, INC.,
XXXXXXXX ACQUISITION CORP.
AND
GIGA INFORMATION GROUP, INC.
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TABLE OF CONTENTS
ARTICLE I The Offer and the Merger......................... 1
SECTION 1.01. The Offer.................................. 1
SECTION 1.02. Company Actions............................ 3
SECTION 1.03. The Merger................................. 3
SECTION 1.04. Closing.................................... 4
SECTION 1.05. Effective Time............................. 4
SECTION 1.06. Effects.................................... 4
SECTION 1.07. Certificate of Incorporation and By-laws... 4
SECTION 1.08. Directors.................................. 4
SECTION 1.09. Officers................................... 4
ARTICLE II Effect on the Capital Stock of the Constituent
Corporations; Exchange of Certificates.................... 4
SECTION 2.01. Effect on Capital Stock.................... 4
SECTION 2.02. Exchange of Certificates................... 5
ARTICLE III Representations and Warranties of the
Company................................................... 7
SECTION 3.01. Organization, Standing and Power........... 7
SECTION 3.02. Company Subsidiaries; Equity Interests..... 7
SECTION 3.03. Capital Structure.......................... 7
SECTION 3.04. Authority; Execution and Delivery;
Enforceability......................................... 8
SECTION 3.05. No Conflicts; Consents..................... 9
SECTION 3.06. SEC Documents; Undisclosed Liabilities..... 10
SECTION 3.07. Information Supplied....................... 10
SECTION 3.08. Absence of Certain Changes or Events....... 11
SECTION 3.09. Taxes...................................... 11
SECTION 3.10. Absence of Changes in Benefit Plans........ 12
SECTION 3.11. ERISA Compliance; Excess Parachute
Payments............................................... 13
SECTION 3.12. Litigation................................. 14
SECTION 3.13. Compliance with Applicable Laws............ 14
SECTION 3.14. Contracts; Debt Instruments................ 14
SECTION 3.15. Intellectual Property...................... 14
SECTION 3.16. Certain Notes Receivable................... 15
SECTION 3.17. Brokers; Schedule of Fees and Expenses..... 15
SECTION 3.18. Opinion of Financial Advisor............... 15
ARTICLE IV Representations and Warranties of Parent and
Sub....................................................... 15
SECTION 4.01. Organization, Standing and Power........... 15
SECTION 4.02. Sub........................................ 15
SECTION 4.03. Authority; Execution and Delivery;
Enforceability......................................... 16
SECTION 4.04. No Conflicts; Consents..................... 16
SECTION 4.05. Information Supplied....................... 16
SECTION 4.06. Brokers.................................... 17
SECTION 4.07. Financial Ability to Perform............... 17
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ARTICLE V Covenants Relating to Conduct of Business........ 17
SECTION 5.01. Conduct of Business........................ 17
SECTION 5.02. No Solicitation............................ 19
ARTICLE VI Additional Agreements........................... 20
SECTION 6.01. Preparation of Proxy Statement;
Stockholders Meeting................................... 20
SECTION 6.02. Access to Information; Confidentiality..... 21
SECTION 6.03. Reasonable Efforts; Notification........... 21
SECTION 6.04. Stock Options.............................. 22
SECTION 6.05. Benefit Plans.............................. 23
SECTION 6.06. Indemnification............................ 23
SECTION 6.07. Fees and Expenses.......................... 24
SECTION 6.08. Public Announcements....................... 25
SECTION 6.09. Transfer Taxes............................. 25
SECTION 6.10. Directors.................................. 25
SECTION 6.11. Rights Agreement; Consequences if Rights
Triggered.............................................. 25
SECTION 6.12. Stockholder Litigation..................... 26
ARTICLE VII Conditions Precedent........................... 26
SECTION 7.01. Conditions to Each Party's Obligation To
Effect The Merger...................................... 26
ARTICLE VIII Termination, Amendment and Waiver............. 26
SECTION 8.01. Termination................................ 26
SECTION 8.02. Effect of Termination...................... 27
SECTION 8.03. Amendment.................................. 28
SECTION 8.04. Extension; Waiver.......................... 28
SECTION 8.05. Procedure for Termination, Amendment,
Extension or Waiver.................................... 28
ARTICLE IX General Provisions.............................. 28
SECTION 9.01. Nonsurvival of Representations and
Warranties............................................. 28
SECTION 9.02. Notices.................................... 28
SECTION 9.03. Definitions................................ 29
SECTION 9.04. Interpretation; Disclosure Letters......... 30
SECTION 9.05. Severability............................... 30
SECTION 9.06. Counterparts............................... 30
SECTION 9.07. Entire Agreement; Third-Party
Beneficiaries.......................................... 30
SECTION 9.08. Governing Law.............................. 30
SECTION 9.09. Assignment................................. 30
SECTION 9.10. Enforcement................................ 30
SECTION 9.11. Consents................................... 31
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AGREEMENT AND PLAN OF MERGER dated as of January 20, 2003, among XXXXXXXXX
RESEARCH, INC., a
Delaware corporation ("Parent"), XXXXXXXX ACQUISITION CORP., a
Delaware corporation ("Sub") and a wholly owned subsidiary of Parent, and GIGA
INFORMATION GROUP, INC., a
Delaware corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the Company
have approved the acquisition of the Company by Parent on the terms and subject
to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause Sub
to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all the outstanding shares of
common stock, par value $0.001 per share, of the Company (the "Company Common
Stock"), including the associated Company Rights (as defined in Section 3.03),
at a price per share of Company Common Stock (including the associated Company
Right) of $4.75, net to the seller in cash, on the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to Parent entering into this Agreement, each
of Xxxxxx X. Xxxxxxx, X.X. Xxxxxxxxx + Co., LLC and X.X. Xxxxxxxxx + Co., Inc.
(collectively, the "Principal Shareholders") has entered into a tender and
voting agreement, dated as of the date hereof (collectively, the "Tender
Agreements"), pursuant to which, among other things, each of the Principal
Shareholders has agreed to tender its shares of Company Common Stock to Sub in
the Offer.
WHEREAS the respective Boards of Directors of Parent, Sub and the Company
have approved the merger (the "Merger") of Sub into the Company, or (at the
election of Parent) the Company into Sub, on the terms and subject to the
conditions set forth in this Agreement, whereby each issued share of Company
Common Stock not owned directly by Parent or the Company, other than Appraisal
Shares (as defined in Section 2.01(d)), shall be converted into the right to
receive the highest per share cash consideration paid pursuant to the Offer; and
WHEREAS Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Offer and the Merger
and also to prescribe various conditions to the Offer and the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
SECTION 1.01. The Offer.
(a) Commencement and Expiration of the Offer. Subject to the conditions of
this Agreement, as promptly as practicable after the date of this Agreement (but
in no event later than five business days after the public announcement of this
Agreement), Sub shall, and Parent shall cause Sub to, commence the Offer within
the meaning of the applicable rules and regulations of the Securities and
Exchange Commission (the "SEC"). The obligation of Sub to, and of Parent to
cause Sub to, commence the Offer and accept for payment, and pay for, any shares
of Company Common Stock tendered pursuant to the Offer are subject to the
conditions set forth in Exhibit A. The initial expiration date of the Offer
shall be the 20th business day following the commencement of the Offer
(determined using Rules 14d-1(g)(3) and 14d-2 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")). Sub expressly reserves
the right to waive any condition to the Offer or modify the terms of the Offer,
except that, without the consent of the Company, Sub shall not and Parent shall
not permit Sub to (i) reduce the number of shares of Company Common Stock
subject to the Offer, (ii) reduce the price per share of Company Common Stock to
be paid pursuant to the Offer, (iii) waive or change the Minimum Tender
Condition (as defined in Exhibit A), (iv) modify in any manner adverse to the
holders of Company Common Stock or add to the conditions set forth in Exhibit A,
(v) except as provided in Section 1.01(b), extend the Offer or (vi) change the
form of consideration payable in the Offer.
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(b) Sub's Ability to Extend the Offer. Notwithstanding the provisions of
Section 1.01(a), Sub may, without the consent of the Company, (A) if at the
scheduled or any extended expiration date of the Offer (whether extended
pursuant to this clause (A) or otherwise) any of the conditions to Sub's
obligation to purchase shares of Company Common Stock are not satisfied or
waived, extend the Offer for such period as Sub determines; provided that such
extension shall be in increments of not more than five business days if all of
the conditions set forth in Exhibit A other than the Minimum Tender Condition
have been satisfied or waived at such scheduled or extended expiration date, (B)
extend the Offer for any period required by any rule, regulation, interpretation
or position of the SEC or the staff thereof applicable to the Offer and (C) if
at the scheduled or any extended expiration date of the Offer all of the
conditions set forth in Exhibit A have been satisfied or waived, Sub may extend
the Offer pursuant to an amendment to the Offer providing for a "subsequent
offering period" not to exceed twenty (20) business days to the extent permitted
under, and in compliance with, Rule 14d-11 under the Exchange Act.
(c) Company's Ability to Extend the Offer.
(i) In the event that the Minimum Tender Condition has not been
satisfied or waived at the scheduled expiration date of the Offer, at the
request of the Company, Sub shall, and Parent shall cause Sub to, extend
the expiration date of the Offer in such increments as Sub may determine
until the earliest to occur of (w) the satisfaction or waiver of such
condition, (x) Parent reasonably determines, after March 31, 2003, that
such condition to the Offer is not capable of being satisfied on or prior
to the Outside Date (as defined in Section 8.01(b)(i)), (y) the termination
of this Agreement in accordance with its terms and (z) the Outside Date.
(ii) In the event that the waiting period under the HSR Act applicable
to the purchase of shares of the Company Common Stock pursuant to the Offer
shall not have expired or been terminated at the scheduled expiration date
of the Offer, at the request of the Company, Sub shall, and Parent shall
cause Sub to, extend the expiration date of the Offer in such increments as
Sub may determine until the earliest to occur of (a) the expiration or
termination of such waiting period, (b) the termination of this Agreement
in accordance with its terms and (c) the Outside Date.
(iii) In the event that a failure to satisfy the conditions in
subsection (f) of Exhibit A attached hereto shall exist and the cure period
described therein shall not have expired at the scheduled expiration date
of the Offer, at the request of the Company, Sub shall, and Parent shall
cause Sub to, extend the expiration date of the Offer in such increments as
Sub may determine until the earliest to occur of (w) the cure of such
failure, (x) the expiration of such cure period, (y) the termination of
this Agreement in accordance with its terms and (z) the Outside Date.
(iv) In the event a notice contemplated by Section 8.05(b)(iv) is
delivered to Parent within three business days of the initial expiration
date of the Offer, then Sub shall extend the Offer for a period of no less
than three business days.
(d) Payment Acceptance. On the terms and subject to the conditions of the
Offer and this Agreement, Parent shall cause Sub to accept for payment and pay
for all shares of Company Common Stock validly tendered and not withdrawn
pursuant to the Offer that Sub becomes obligated to purchase pursuant to the
Offer as soon as practicable after the expiration of the Offer.
(e) SEC Filings. On the date of commencement of the Offer, Parent and Sub
shall file with the SEC a Tender Offer Statement on Schedule TO with respect to
the Offer, which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule TO and the documents
included therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "Offer Documents"). Each of Parent, Sub
and the Company shall promptly correct any information provided by it for use in
the Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and each of Parent and Sub shall
take all steps necessary to amend or supplement the Offer Documents and to cause
the Offer Documents as so amended or supplemented to be filed with the SEC and
to be disseminated to the Company's stockholders, in each case as and to the
extent required by applicable Federal securities laws. Parent and Sub shall give
the Company and
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its counsel a reasonable opportunity to review and comment on the Offer
Documents prior to their being filed with the SEC or disseminated to the
stockholders of the Company. Parent and Sub shall provide the Company and its
counsel in writing with any comments Parent, Sub or their counsel may receive
from the SEC or its staff with respect to the Offer Documents promptly after the
receipt of such comments and shall provide the Company and its counsel with a
reasonable opportunity to participate in the response of Parent or Sub to such
comments.
(f) Funding Obligations. Prior to the expiration of the Offer, Parent
shall provide or cause to be provided to Sub on a timely basis the funds
necessary to purchase any shares of Company Common Stock that Sub becomes
obligated to purchase pursuant to the Offer.
SECTION 1.02. Company Actions.
(a) Subject to Section 5.02(b), the Company hereby approves of and consents
to the Offer, the Merger and the other transactions contemplated by this
Agreement (collectively, the "Transactions").
(b) On the date the Offer Documents are filed with the SEC, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 with respect to the Offer (such Schedule 14D-9, as amended and
supplemented from time to time, the "Schedule 14D-9"), describing the
recommendations referred to in Section 3.04(b), or any permitted withdrawal or
modification in accordance with Section 5.02(b), and shall mail the Schedule
14D-9 to the holders of Company Common Stock. Each of the Company, Parent and
Sub shall promptly correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect, and the Company shall take all
steps necessary to amend or supplement the Schedule 14D-9 and to cause the
Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to the Company's stockholders, in each case as and to the extent
required by applicable Federal securities laws. The Company shall provide Parent
and its counsel in writing with any comments the Company or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its transfer
agent to promptly furnish Sub with mailing labels containing the names and
addresses of the record holders of Company Common Stock as of a recent date and
of those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings and computer
files and all other information as Sub may reasonably request in the Company's
possession or control regarding the beneficial owners of Company Common Stock,
and shall furnish to Sub such information and assistance (including updated
lists of stockholders, security position listings and computer files) as Parent
may reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of applicable Law (as defined in Section 3.05), and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Transactions, Parent and Sub
shall hold in confidence pursuant to the Confidentiality Agreement (as defined
in Section 6.02) the information contained in any such labels, listings and
files, shall use such information only for the purpose of communicating the
Offer and disseminating any other documents necessary to consummate the Offer,
the Merger and the other Transactions and, if this Agreement shall be
terminated, shall, upon request, deliver to the Company all copies of such
information then in their possession.
SECTION 1.03. The Merger. On the terms and subject to the satisfaction or
waiver of the conditions set forth in this Agreement, and in accordance with the
Delaware General Corporation Law (the "DGCL"), Sub shall be merged with and into
the Company at the Effective Time (as defined in Section 1.05). At the Effective
Time, the separate corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation"). The
Surviving Corporation shall possess all the rights, privileges, immunities,
powers and franchises of the Company and Sub, and the Surviving Corporation
shall by operation of law become liable for all of the debts, liabilities and
duties of the Company and Sub. The name of the Surviving Corporation shall be
Giga Information Group, Inc. and the purpose thereof shall be as set forth in
Section 2 of the Certificate of Incorporation of the Surviving Corporation.
Notwithstanding the foregoing, Parent may elect at any time after the expiration
of the Offer and prior to the Merger, instead of
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merging Sub into the Company as provided above, to merge the Company with and
into Sub; provided, however, that the Company shall not be deemed to have
breached any of its representations, warranties or covenants set forth in this
Agreement solely by reason of such election. In such event, the parties shall
execute an appropriate amendment to this Agreement to reflect the foregoing. At
the election of Parent, any direct or indirect wholly owned subsidiary of Parent
may be substituted for Sub as a constituent corporation in the Merger. In such
event, the parties shall execute an appropriate amendment to this Agreement in
order to reflect the foregoing.
SECTION 1.04. Closing. The closing (the "Closing") of the Merger shall
take place at the offices of Ropes & Xxxx, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 at 10:00 a.m. on the second business day following the
satisfaction (or, to the extent permitted by Law, waiver by all parties) of the
conditions set forth in Article VII hereof, or at such other place, time and
date as shall be agreed in writing between Parent and the Company. The date on
which the Closing occurs is referred to in this Agreement as the "Closing Date".
SECTION 1.05. Effective Time. Prior to the Closing, Parent shall prepare
and give the Company and its counsel the opportunity to review, and on the
Closing Date or as soon as practicable thereafter Parent shall file with the
Secretary of State of the State of
Delaware, a certificate of merger or other
appropriate documents (in any such case, the "Certificate of Merger") executed
in accordance with the relevant provisions of the DGCL and shall make all other
filings or recordings required under the DGCL. The Merger shall become effective
at such time as the Certificate of Merger is duly filed with such Secretary of
State, or at such other time as Parent and the Company shall agree and specify
in the Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
SECTION 1.06. Effects. The Merger shall have the effects set forth in
Section 259(a) of the DGCL.
SECTION 1.07. Certificate of Incorporation and By-laws.
(a) The Certificate of Incorporation of Sub as in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable Law.
(b) The By-laws of Sub as in effect immediately prior to the Effective
Time shall be the By-laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable Law.
SECTION 1.08. Directors. At the Closing, Parent shall designate the
directors of the Surviving Corporation and such directors shall hold office
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.09. Officers. At the Closing, Parent shall designate the
officers of the Surviving Corporation and such officers shall hold office until
the earlier of their resignation or removal or until their respective successors
are duly elected or appointed and qualified, as the case may be.
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become a number of fully
paid and non-assessable shares of common stock, par value $0.01 per share,
of the Surviving Corporation ("Surviving Corporation Common Stock") equal
to (i) the number of shares of Company Common Stock outstanding immediately
prior to Effective Time (excluding any shares of Company Common Stock that
are owned by any subsidiary of the Company or Parent other than Sub)
divided by (ii) 1,000; provided, however, that if the aggregate number of
shares
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of Surviving Corporation Common Stock into which the capital stock of Sub
is to be converted pursuant to this Section 2.01(a) is not a whole number,
such number shall be rounded up to the next higher whole number.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share
of Company Common Stock that is owned directly by the Company, Parent or
Sub shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and no other consideration shall be
delivered or deliverable in exchange therefor. Each share of Company Common
Stock that is owned by any subsidiary of the Company or Parent (other than
Sub) shall automatically be converted into one fully paid and nonassessable
share of Surviving Corporation Common Stock.
(c) Conversion of Company Common Stock.
(i) Subject to Sections 2.01(b) and 2.01(d), each issued share of
Company Common Stock shall be converted into the right to receive in
cash the highest price per share of Company Common Stock paid pursuant
to the Offer.
(ii) The cash payable upon the conversion of shares of Company
Common Stock pursuant to this Section 2.01(c) is referred to
collectively as the "Merger Consideration". As of the Effective Time,
all such shares of Company Common Stock shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of
Company Common Stock shall cease to have any rights with respect
thereto, except the right to receive Merger Consideration upon surrender
of such certificate in accordance with Section 2.02, without interest.
(d) Appraisal Rights. Notwithstanding anything in this Agreement to
the contrary, shares (the "Appraisal Shares") of Company Common Stock that
are outstanding immediately prior to the Effective Time and that are held
by any person who is entitled to demand and properly demands appraisal of
such Appraisal Shares pursuant to, and who complies in all respects with,
Section 262 of the DGCL (the "Appraisal Provisions") shall not be converted
into Merger Consideration as provided in Section 2.01(c), but rather the
holders of Appraisal Shares shall be entitled to payment of the fair value
of such Appraisal Shares in accordance with the Appraisal Provisions;
provided, however, that if any such holder shall fail to perfect or
otherwise shall waive, withdraw or lose the right to appraisal under the
Appraisal Provisions, then the right of such holder to be paid the fair
value of such holder's Appraisal Shares shall cease and such Appraisal
Shares shall be deemed to have been converted as of the Effective Time
into, and to have become exchangeable solely for the right to receive,
Merger Consideration as provided in Section 2.01(c). The Company shall
serve prompt notice to Parent of any demands received by the Company for
appraisal of any shares of Company Common Stock, and Parent shall have the
right to participate in and direct all negotiations and proceedings with
respect to such demands. Prior to the Effective Time, the Company shall
not, without the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands, or agree to do
any of the foregoing.
SECTION 2.02. Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall select a bank
or trust company in the United States to act as paying agent (the "Paying
Agent") for the payment of the Merger Consideration upon surrender of
certificates representing Company Common Stock. Parent shall take all steps
necessary to enable and cause the Surviving Corporation to provide to the Paying
Agent on a timely basis, as and when needed after the Effective Time, cash
necessary to pay for the shares of Company Common Stock converted into the right
to receive cash pursuant to Section 2.01(c) (such cash being hereinafter
referred to as the "Exchange Fund"). If for any reason (including losses) the
Exchange Fund is inadequate to pay the amounts to which holders of shares of
Company Common Stock shall be entitled under this Section 2.02(a), Parent shall
take all steps necessary to enable or cause the Surviving Corporation promptly
to deposit in trust additional cash with the Paying Agent sufficient to make all
payments required under this Agreement, and Parent and the Surviving Corporation
shall in any event be liable for payment thereof. The Exchange Fund shall not be
used for any purpose except as expressly provided in this Agreement.
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(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, but in no event more than five (5) business days thereafter, the
Surviving Corporation shall cause the Paying Agent to mail to each holder of
record of a certificate or certificates (the "Certificates") that immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock whose shares were converted into the right to receive Merger Consideration
pursuant to Section 2.01, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
such form and have such other provisions as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor the amount of cash into which the shares of Company Common Stock
theretofore represented by such Certificate shall have been converted pursuant
to Section 2.01, and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Company Common Stock that is not
registered in the transfer records of the Company, payment may be made to a
person other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of such Certificate or establish to the satisfaction of
Parent that such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.02, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the shares of Company
Common Stock theretofore represented by such Certificate have been converted
pursuant to Section 2.01. If any holder of shares of Company Common Stock 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. No interest shall be paid or accrue
on the cash payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. The Merger
Consideration paid in accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock shall be deemed to have been
paid in full satisfaction of all rights pertaining to such shares of Company
Common Stock, and after the Effective Time there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of shares of Company Common Stock that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, any certificates
formerly representing shares of Company Common Stock are presented to the
Surviving Corporation or the Paying Agent for any reason, they shall be canceled
and exchanged as provided in this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of Company Common Stock for six months
after the Effective Time shall be delivered to Parent, upon demand, and any
holder of Company Common Stock who has not theretofore complied with this
Article II shall thereafter look only to Parent for payment of its claim for
Merger Consideration.
(e) No Liability. None of Parent, Sub, the Company or the Paying Agent
shall be liable to any person in respect of any cash from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Law. If any Certificate has not been surrendered prior to
five years after the Effective Time (or immediately prior to such earlier date
on which Merger Consideration in respect of such Certificate would otherwise
escheat to or become the property of any Governmental Entity (as defined in
Section 3.05)), any such shares, cash, dividends or distributions in respect of
such Certificate shall, to the extent permitted by applicable Law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
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(g) Withholding Rights. Parent shall be entitled to deduct and withhold
from the consideration otherwise payable to any holder of Company Common Stock
pursuant to this Agreement such amounts as may be required to be deducted and
withheld with respect to the making of such payment under the Code (as defined
in Section 3.11(b)), or under any provision of state, local or foreign tax Law.
(h) Charges and Expenses. The Surviving Corporation shall pay all charges
and expenses, including those of the Paying Agent, in connection with the
exchange of cash for shares of Company Common Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
SECTION 3.01. Organization, Standing and Power. Each of the Company and
each of its subsidiaries (the "Company Subsidiaries") is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has all requisite corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals, and
has made all filings, registrations and declarations, in each case whether
domestic or foreign, necessary to enable it to own, lease or otherwise hold its
properties and assets and to conduct its businesses as presently conducted, in
each case other than such franchises, licenses, permits, authorizations,
approvals, filings, registrations and declarations the lack of which,
individually or in the aggregate, has not had and would not reasonably be
expected to have a material adverse effect on the Company and the Company
Subsidiaries, taken as a whole, a material adverse effect on the ability of the
Company to perform its obligations under this Agreement or a material adverse
effect on the ability of the Company to consummate the Offer, the Merger and the
other Transactions (a "Company Material Adverse Effect"). The Company and each
Company Subsidiary is duly qualified to do business in each jurisdiction where
the nature of its business or their ownership or leasing of its properties make
such qualification necessary except where the failure to so qualify has not had
and would not reasonably be expected to have a Company Material Adverse Effect.
The Company has made available to Parent true and complete copies of the
certificate of incorporation of the Company, as amended to the date of this
Agreement (as so amended, the "Company Charter"), and the by-laws of the
Company, as amended to the date of this Agreement (as so amended, the "Company
By-laws"), and the comparable charter and organizational documents of each
Company Subsidiary, in each case as amended through the date of this Agreement.
SECTION 3.02. Company Subsidiaries; Equity Interests.
(a) The letter, dated as of the date of this Agreement, from the Company to
Parent and Sub (the "Company Disclosure Letter") lists each Company Subsidiary
and its jurisdiction of organization. All the outstanding shares of capital
stock of each Company Subsidiary have been validly issued and are fully paid and
nonassessable and, except as set forth in the Company Disclosure Letter, are
owned by the Company, by another Company Subsidiary or by the Company and
another Company Subsidiary, free and clear of all pledges, liens, charges,
mortgages, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens").
(b) Except for its interests in the Company Subsidiaries and except for the
ownership interests set forth in the Company Disclosure Letter, the Company does
not own, directly or indirectly, any capital stock, membership interest,
partnership interest, joint venture interest or other equity interest in any
person.
SECTION 3.03. Capital Structure. The authorized capital stock of the
Company consists of 60,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock, par value $0.001 per share (together with the Company
Common Stock, the "Company Capital Stock"). At the close of business on January
20, 2003, (i) 10,788,872 shares of Company Common Stock were issued and
outstanding, (ii) no shares of Company Common Stock were held by the Company in
its treasury, (iii) 4,306,387 shares of Company Common Stock were subject to
outstanding Company Stock Options (as defined in Section 6.04) and 1,186,627
additional shares of Company Common Stock were reserved for issuance pursuant to
the Company Stock Plans (as defined in Section 6.04), (iv) 490,859 shares of
Company Common Stock were
7
subject to outstanding warrants to purchase shares of Company Common Stock (the
"Company Warrants") and (v) 150,000 shares of Series A Junior Preferred Stock,
par value $0.001 per share, of the Company were reserved for issuance in
connection with the rights (the "Company Rights") issued pursuant to the Rights
Agreement dated as of February 18, 2000 (as amended from time to time, the
"Company Rights Agreement"), between the Company and American Stock Transfer &
Trust Co., as Rights Agent. Except as set forth above, at the close of business
on January 20, 2003, no shares of capital stock or other voting securities of
the Company were issued, reserved for issuance or outstanding. The Company Board
(as defined in Section 3.04(b)) has taken all action necessary under the 1996
Stock Option Plan and the 1999 Share Incentive Plan to deem the Offer and the
Merger as not constituting a Change in Control (as defined under each such plan)
for purposes of each such plan. Assuming completion of the Offer and the Merger
prior to April 30, 2003, Company Stock Options to purchase not more than
2,886,977 shares of Company Common Stock will be exercisable, at an exercise
price less than $4.75 per share of Company Common Stock, in connection with the
Offer and the Merger (the "Vested Company Stock Options"). There are no
outstanding stock appreciation rights linked to the price of Company Common
Stock and granted under any Company Stock Plan. All outstanding shares of
Company Capital Stock are, and all such shares that may be issued prior to the
Effective Time will be when issued, duly authorized, validly issued, fully paid
and nonassessable and not subject to or issued in violation of any purchase
option, call option, right of first refusal, preemptive right, subscription
right or any similar right under any provision of the DGCL, the Company Charter,
the Company By-laws or any Contract (as defined in Section 3.05) to which the
Company is a party or otherwise bound. There are not any bonds, debentures,
notes or other indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which holders of Company Common Stock may vote ("Voting Company
Debt"). Except as set forth above, as of the date of this Agreement, there are
not any options, warrants, rights, convertible or exchangeable securities,
"phantom" stock rights, stock appreciation rights, stock-based performance
units, commitments, Contracts, arrangements or undertakings of any kind to which
the Company or any Company Subsidiary is a party or by which any of them is
bound (i) obligating the Company or any Company Subsidiary to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity interests in, or any security convertible or exercisable
for or exchangeable into any capital stock of or other equity interest in, the
Company or of any Company Subsidiary or any Voting Company Debt, (ii) obligating
the Company or any Company Subsidiary to issue, grant, extend or enter into any
such option, warrant, call, right, security, commitment, Contract, arrangement
or undertaking or (iii) that give any person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
occurring to holders of Company Capital Stock. As of the date of this Agreement,
there are not any outstanding contractual obligations of the Company or any
Company Subsidiary to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or any Company Subsidiary. The Company has made
available to Parent a complete and correct copy of the Company Rights Agreement,
as amended to the date of this Agreement. The Company has provided Parent with a
complete and correct copy of all agreements, instruments and other documents
relating to the Company Warrants. The Company Disclosure Letter sets forth a
true and complete list of the outstanding Company Stock Options, the Vested
Company Stock Options and Company Warrants, together with the number of shares
of Company Common Stock subject thereto and the exercise price thereof.
SECTION 3.04. Authority; Execution and Delivery; Enforceability.
(a) The Company has all requisite corporate power and authority to execute
and deliver this Agreement and, subject to the Company Stockholder Approval (as
defined in Section 3.04(c)) with respect to the Merger if required by Law, to
consummate the Transactions. The execution and delivery by the Company of this
Agreement and the consummation by the Company of the Transactions have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of the Merger, to receipt of the Company Stockholder
Approval (if required by Law). The Company has duly executed and delivered this
Agreement, and this Agreement constitutes its legal, valid and binding
obligation (subject to the Company Stockholder Approval with respect to the
Merger if required by Law), enforceable against it in accordance with its terms,
except to the extent that enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws of general applicability relating to or affecting the
8
enforcement of creditors' rights and by the effect of the principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
(b) The Board of Directors of the Company (the "Company Board"), at a
meeting duly called and held, duly and unanimously adopted resolutions (i)
approving this Agreement, the Offer, the Merger and the other Transactions, (ii)
determining that the terms of the Offer and the Merger are fair, from a
financial point of view, to the Company and its stockholders and that the Merger
is advisable, (iii) recommending that the holders of Company Common Stock accept
the Offer and tender their shares of Company Common Stock pursuant to the Offer
and (iv) recommending that the Company's stockholders approve this Agreement.
Such resolutions are sufficient to render inapplicable to Parent and Sub and
this Agreement, the Offer, the Merger and the other Transactions the provisions
of Section 203 of the DGCL. No state takeover statute or similar statute or
regulation applies or purports to apply to the Company with respect to this
Agreement, the Tender Agreements, the Offer, the Merger or any other
Transaction. The Company has been advised by each of its directors and executive
officers that, as of the date of this Agreement, each such person intends to
tender all shares of Company Common Stock owned by such person pursuant to the
Offer, except to the extent of any restrictions created by Section 16(b) of the
Exchange Act.
(c) The only vote of holders of any class or series of Company Capital
Stock necessary to approve and adopt this Agreement and the Merger is the
approval of this Agreement by the holders of a majority of the outstanding
Company Common Stock (the "Company Stockholder Approval"). The affirmative vote
of the holders of Company Capital Stock, or any of them, is not necessary to
consummate the Offer or any Transaction other than the Merger.
SECTION 3.05. No Conflicts; Consents.
(a) Except as set forth in the Company Disclosure Letter, the execution and
delivery by the Company of this Agreement do not, and the consummation of the
Offer, the Merger and the other Transactions and compliance with the terms
hereof will not, result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or to increased, additional, accelerated or guaranteed rights or
entitlements of any person under, or result in the creation of any Lien upon any
of the properties or assets of the Company or any Company Subsidiary under, any
provision of (i) the Company Charter, the Company By-laws or the comparable
charter or organizational documents of any Company Subsidiary, (ii) any
contract, lease, license, indenture, note, bond, agreement, permit, concession,
franchise or other instrument (a "Contract") to which the Company or any Company
Subsidiary is a party or by which any of their respective properties or assets
is bound or (iii) subject to the filings and other matters referred to in
Section 3.05(b), any judgment, order, injunction or decree, domestic or foreign
("Judgment"), or statute, law (including common law), legislation,
interpretation, ordinance, rule or regulation, domestic or foreign ("Law"),
applicable to the Company or any Company Subsidiary or their respective
properties or assets, other than, in the case of clauses (ii) and (iii) above,
any such items that, individually or in the aggregate, have not had and would
not reasonably be expected to have a Company Material Adverse Effect.
(b) No consent, approval, license, permit, order or authorization
("Consent") of, or registration, declaration or filing with, any Federal, state,
local or foreign government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity") is required to be
obtained or made by or with respect to the Company or any Company Subsidiary in
connection with the execution, delivery and performance of this Agreement or the
consummation of the Transactions, other than (i) compliance with and filings
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (ii) the filing with the SEC of (A) the Schedule 14D-9, (B) if
required by Law, a proxy or information statement relating to the approval of
this Agreement by the Company's stockholders (the "Proxy Statement"), (C) any
information statement (the "Information Statement") required under Rule 14f-1 in
connection with the Offer and (D) such reports under Section 13 of the Exchange
Act as may be required in connection with this Agreement, the Offer, the Merger
and the other Transactions, (iii) the filing of the Certificate of Merger with
the Secretary of State of the State of
Delaware and appropriate documents with
the relevant authorities of the
9
other jurisdictions in which the Company is qualified to do business, (iv) such
filings as may be required in connection with the taxes described in Section
6.09 and (vi) such other items that, individually or in the aggregate, have not
had and would not reasonably be expected to have a Company Material Adverse
Effect.
(c) The Company and the Company Board have taken all action necessary to
(i) render the Company Rights inapplicable to this Agreement, the Offer, the
Merger and the other Transactions and (ii) ensure that (A) neither Parent nor
any of its stockholders, affiliates or associates is or will become an
"Acquiring Person" (as defined in the Company Rights Agreement) by reason of
this Agreement, the Offer, the Merger or any other Transaction), (B) a
"Distribution Date" (as defined in the Company Rights Agreement) shall not occur
by reason of this Agreement, the Offer, the Merger or any other Transaction and
(C) the Company Rights shall expire immediately prior to the Effective Time.
SECTION 3.06. SEC Documents; Undisclosed Liabilities. The Company has
filed all reports, schedules, forms, statements and other documents required to
be filed by the Company with the SEC since January 1, 2001 (the "Company SEC
Documents"). As of its respective date, each Company SEC Document complied in
all material respects with the requirements of the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act"), as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such Company SEC Document, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. As of the date of this Agreement,
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001 (filed on March 29, 2002 and amended on April 30, 2002) (the "2001 Form
10-K"), its definitive Proxy Statement with respect to its 2002 Annual Meeting
(filed on July 2, 2002), its Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2002 (filed on May 14, 2002), June 30, 2002 (filed on August 14,
2002) and September 30, 2002 (filed on November 1, 2002), and its Current
Reports on Form 8-K (filed on February 14, 2002, April 19, 2002, July 18, 2002,
September 3, 2002 and October 17, 2002) taken together do not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The consolidated
financial statements of the Company included in the Company SEC Documents comply
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles ("GAAP")
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). Except as set forth in the Filed Company SEC
Documents (as defined in Section 3.08), neither the Company nor any Company
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet of the Company and its consolidated subsidiaries or
in the notes thereto, other than liabilities or obligations incurred in the
ordinary course of business consistent with prior practice since the date of the
most recent financial statements included in the Filed Company SEC Documents.
Except as set forth in the Company Disclosure Letter, neither the Company nor
any Company Subsidiary is a party to any contract, arrangement or understanding
with an affiliate of such party that is not disclosed in the Filed Company SEC
Documents.
SECTION 3.07. Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in (i)
the Offer Documents, the Schedule 14D-9 or the Information Statement will, at
the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published, sent or given to the
Company's stockholders, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, or (ii) the Proxy Statement (if required
by Law) will, at the date it is first mailed to the Company's stockholders or at
the time of the Company Stockholders Meeting (as defined in Section 6.01),
contain any untrue statement of a material fact or omit to state any material
fact
10
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-9, the Information Statement and the Proxy
Statement (if required by Law) will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub for inclusion or incorporation by reference therein.
SECTION 3.08. Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Documents filed and publicly available prior to the date of
this Agreement (the "Filed Company SEC Documents") or in the Company Disclosure
Letter, from the date of the most recent audited financial statements included
in the Filed Company SEC Documents to the date of this Agreement, the Company
has conducted its business only in the ordinary course, and during such period
there has not been:
(i) any event, change, effect or development that, individually or in
the aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
Company Capital Stock or any repurchase for value by the Company of any
Company Capital Stock;
(iii) any split, combination or reclassification of any Company
Capital Stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of
Company Capital Stock;
(iv) (A) any granting by the Company or any Company Subsidiary to any
current or former director, officer or employee of the Company or any
Company Subsidiary of any increase in compensation, except to the extent
required under employment agreements in effect as of the date of the most
recent audited financial statements included in the Filed Company SEC
Documents, (B) any granting by the Company or any Company Subsidiary to any
such director, officer or employee of any material increase in severance or
termination pay, except as was required under any employment, severance or
termination policy, practice or agreements in effect as of the date of the
most recent audited financial statements included in the Filed Company SEC
Documents or (C) any entry by the Company or any Company Subsidiary into,
or any amendment of, any employment, severance or termination agreement
with any such director, officer or employee, except for such agreements or
amendments with employees (other than directors, officers or key employees)
that are entered into in the ordinary course of business consistent with
prior practice;
(v) any termination of employment or departure of any officer or other
key employee of the Company or any Company Subsidiary;
(vi) any change in accounting methods, principles or practices by the
Company or any Company Subsidiary materially affecting the consolidated
assets, liabilities or results of operations of the Company, except insofar
as may have been required by a change in GAAP; or
(vii) any material elections with respect to Taxes (as defined in
Section 3.09) by the Company or any Company Subsidiary or settlement or
compromise by the Company or any Company Subsidiary of any material Tax
liability or refund.
SECTION 3.09. Taxes.
(a) Each of the Company and each Company Subsidiary has timely filed, or
has caused to be timely filed on its behalf, all Tax Returns required to be
filed by it, and all such Tax Returns are true, complete and accurate, except to
the extent any failure to file or any inaccuracies in any filed Tax Returns,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect. All Taxes shown to be due on
such Tax Returns, or otherwise owed, have been timely paid, except to the extent
that any failure to pay, individually or in the aggregate, has not had and would
not reasonably be expected to have a Company Material Adverse Effect.
11
(b) The most recent financial statements contained in the Filed Company SEC
Documents reflect an adequate reserve (in accordance with GAAP) for all Taxes
payable by the Company and the Company Subsidiaries for all Taxable periods and
portions thereof through the date of such financial statements (in addition to
any reserve for deferred Taxes established to reflect timing differences between
book and tax income). No deficiency with respect to any Taxes has been proposed,
asserted or assessed against the Company or any Company Subsidiary, and no
requests for waivers of the time to assess any such Taxes are pending, except to
the extent any such deficiency or request for waiver, individually or in the
aggregate, has not had and would not reasonably be expected to have a Company
Material Adverse Effect.
(c) The Federal income Tax Returns of the Company and each Company
Subsidiary consolidated in such Returns have never been, (i) to the Company's
knowledge, examined by, or (ii) settled with, the United States Internal Revenue
Service. All material assessments for Taxes due with respect to such completed
and settled examinations or any concluded litigation have been fully paid.
(d) There are no material Liens for Taxes (other than for current Taxes not
yet due and payable) on the assets of the Company or any Company Subsidiary.
Neither the Company nor any Company Subsidiary is bound by any agreement with
respect to Taxes other than agreements between or among the Company and Company
Subsidiaries and no other person.
(e) Note 10 to the Company's consolidated financial statements included in
the 2001 Form 10-K has been prepared in accordance with GAAP.
(f) No claim has been made in the past five years by any authority in a
jurisdiction within which the Company or any Company Subsidiary does not file
Tax Returns that it is, or may be, subject to taxation by that jurisdiction.
(g) Neither the Company nor any Company Subsidiary has constituted either a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying or
intended to qualify for tax-free treatment under Section 355 of the Code (A) in
the two years prior to the date of this Agreement or (B) in a distribution that
could otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
Merger.
(h) For purposes of this Agreement:
"Taxes" includes all forms of taxation imposed by any Federal, state,
local, foreign or other Governmental Entity, including income, franchise,
property, sales, use, excise, employment, unemployment, payroll, social
security, estimated, value added, ad valorem, transfer, recapture,
withholding and other Taxes of any kind, including all interest, penalties
and additions thereto.
"Tax Return" means all Federal, state, local, provincial and foreign
Tax returns, declarations, statements, reports, schedules, forms and
information returns and any amended Tax return relating to Taxes.
SECTION 3.10. Absence of Changes in Benefit Plans. Except as disclosed in
the Filed Company SEC Documents or in the Company Disclosure Letter, from the
date of the most recent audited financial statements included in the Filed
Company SEC Documents to the date of this Agreement, there has not been any
adoption or amendment in any material respect by the Company or any Company
Subsidiary of any collective bargaining agreement or any bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan or arrangement
providing benefits to any current or former employee, officer or director of the
Company or any Company Subsidiary (collectively, "Company Benefit Plans").
Except as disclosed in the Filed Company SEC Documents or in the Company
Disclosure Letter, as of the date of this Agreement there are not any
employment, consulting, indemnification, severance or termination agreements or
arrangements in effect between the Company or any Company Subsidiary and any
current or former employee, officer or director of the Company or any Company
Subsidiary, nor does the Company or any Company Subsidiary have any general
severance plan or policy.
12
SECTION 3.11. ERISA Compliance; Excess Parachute Payments.
(a) The Company Disclosure Letter contains a list and brief description of
all material "employee pension benefit plans" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
(sometimes referred to herein as "Company Pension Plans"), "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) and all other Company
Benefit Plans maintained, or contributed to, by the Company or any Company
Subsidiary for the benefit of any current or former employees, officers or
directors of the Company or any Company Subsidiary. The Company has made
available to Parent true, complete and correct copies of (i) each Company
Benefit Plan (or, in the case of any unwritten Company Benefit Plan, a
description thereof), (ii) the most recent annual report on Form 5500 filed with
the Internal Revenue Service with respect to each Company Benefit Plan (if any
such report was required), (iii) the most recent summary plan description for
each Company Benefit Plan for which such summary plan description is required
and (iv) each trust agreement and group annuity contract relating to any Company
Benefit Plan, if any.
(b) All Company Benefit Plans are in compliance in all material respects
with applicable Law (including, where applicable, the Code and ERISA). All
Company Pension Plans which are intended to be tax-qualified under Section
401(a) of the Code have been the subject of determination letters from the
Internal Revenue Service to the effect that such Company Pension Plans are
qualified and their related trusts are exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code"), and no such determination letter has been revoked nor,
to the knowledge of the Company, has revocation been threatened. No such Company
Pension Plan been amended since the date of its most recent determination letter
or application therefor in any respect that would adversely affect its
qualification, nor has any such Company Pension Plan been amended since December
31, 2001 in any respect that would materially increase its costs.
(c) No Company Pension Plan is a "defined benefit plan" within the meaning
of Section 3(35) of ERISA or is subject to the minimum funding standards of
Section 412 of the Code or Section 302 of ERISA, and neither the Company nor any
Company Subsidiary has any actual or contingent liability under any defined
benefit plan which it (or any affiliate) previously maintained or contributed to
(or was obligated to maintain or contribute to). None of the Company, any
Company Subsidiary, any officer of the Company or any Company Subsidiary or any
of the Company Benefit Plans which are subject to ERISA, including the Company
Pension Plans, any trusts created thereunder or any trustee or administrator
thereof, has engaged in a "prohibited transaction" (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) or any other breach of
fiduciary responsibility that could subject the Company, any Company Subsidiary
or any officer of the Company or any Company Subsidiary to any material tax or
penalty on prohibited transactions imposed by such Section 4975 or to any
material liability under Section 502(i) or 502(l) of ERISA.
(d) With respect to any Company Benefit Plan that is an employee welfare
benefit plan, (i) all such Company Benefit Plans are unfunded and no such
Company Benefit Plan is funded through a "welfare benefits fund" (as such term
is defined in Section 419(e) of the Code), (ii) each such Company Benefit Plan
that is a "group health plan" (as such term is defined in Section 5000(b)(1) of
the Code), complies in all material respects with the applicable requirements of
Section 4980B(f) of the Code and (iii) each such Company Benefit Plan (including
any such Plan covering retirees or other former employees) may be amended or
terminated without material liability to the Company and the Company
Subsidiaries on or at any time after the Effective Time, except with respect to
contributions, premiums or benefit claims (actual or contingent) with respect to
the period from the Effective Time to such termination.
(e) Other than payments that may be made to the persons listed in the
Company Disclosure Letter (the "Primary Company Executives"), any amount that
could be received (whether in cash or property or the vesting of property) as a
result of the Offer, the Merger or any other Transaction by any employee,
officer or director of the Company or any of its affiliates who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, any other compensation arrangement or any Company Benefit Plan
currently in effect would not be characterized as an "excess parachute payment"
(as defined in Section 280G(b)(1) of the Code). Set forth
13
in the Company Disclosure Letter is (i) the estimated maximum amount that could
be paid to each Primary Company Executive as a result of the Offer, the Merger
and the other Transactions under all employment, severance and termination
agreements, other compensation arrangements and Company Benefit Plans currently
in effect and (ii) the "base amount" (as defined in Section 280G(b)(3) of the
Code) for each Primary Company Executive calculated as of the date of this
Agreement.
SECTION 3.12. Litigation. Except as disclosed in the Filed Company SEC
Documents or in the Company Disclosure Letter, there is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Company Subsidiary (and, as of the date of this
Agreement, the Company is not aware of any basis for any such suit, action or
proceeding) that, individually or in the aggregate, has had or would reasonably
be expected to have a Company Material Adverse Effect, nor is there any Judgment
outstanding against the Company or any Company Subsidiary that, individually or
in the aggregate, has had or would reasonably be expected to have a Company
Material Adverse Effect.
SECTION 3.13. Compliance with Applicable Laws. Except as disclosed in the
Filed Company SEC Documents or in the Company Disclosure Letter, the Company and
the Company Subsidiaries are in compliance with all applicable Laws, including
those relating to occupational health and safety and the environment, except for
instances of noncompliance that, individually or in the aggregate, have not had
and would not reasonably be expected to have a Company Material Adverse Effect.
Except as set forth in the Filed Company SEC Documents or in the Company
Disclosure Letter, neither the Company nor any Company Subsidiary has received
any written communication during the past two years from a Governmental Entity
that alleges that the Company or a Company Subsidiary is not in compliance in
any material respect with any applicable Law. This Section 3.13 does not relate
to matters with respect to Taxes, which are the subject of Section 3.09.
SECTION 3.14. Contracts; Debt Instruments. Except as disclosed in the
Filed SEC Documents or the Company Disclosure Letter, there are no contracts or
agreements that are material to the business, assets, condition (financial or
otherwise) or results of operations of the Company and the Company Subsidiaries
taken as a whole. Neither the Company nor any Company Subsidiary is in violation
of or in default under (nor does there exist any condition which upon the
passage of time or the giving of notice or both would cause such a violation of
or default under) any loan or credit agreement, note, bond, mortgage, indenture,
lease, permit, concession, franchise, license or any other contract, agreement,
arrangement or understanding, to which it is a party or by which it or any of
its properties or assets is bound, except for violations or defaults that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.15. Intellectual Property.
(a) The Company and the Company Subsidiaries own, or are validly licensed
or otherwise have the right to use, all patents, patent rights (including patent
applications and licenses), material inventions that have been identified as
active patent matters but for which applications have not yet been filed,
know-how, trade secrets, trademarks, trademark rights, trade names, trade name
rights, service marks, service xxxx rights, copyrights and other proprietary
intellectual property rights, databases and computer programs (collectively,
"Intellectual Property Rights") which are used in the conduct of the business of
the Company or the Company Subsidiaries as currently conducted and the
consummation of the Transactions will not breach, alter or impair any such
Intellectual Property Rights.
(b) The Company Disclosure Letter sets forth a description of all material
Intellectual Property Rights used by the Company or the Company Subsidiaries in
the conduct of their business as currently conducted, and the countries in which
each of the described rights is applicable.
(c) Except as set forth in the Company Disclosure Letter, no claims are
pending or, to the knowledge of the Company, threatened that (i) the Company or
any of the Company Subsidiaries is infringing or otherwise adversely affecting
the rights of any person with regard to any Intellectual Property Right or (ii)
assert that any Intellectual Property Rights owned by the Company or any Company
Subsidiary (the "Owned Intellectual
14
Property Rights") are invalid or unenforceable. To the knowledge of the Company,
except as set forth in the Company Disclosure Letter, no person is infringing
the rights of the Company or any of the Company Subsidiaries with respect to any
Owned Intellectual Property Right.
(d) The Company has timely paid, or caused to be timely paid, all
maintenance, renewal and other similar fees, and has timely met any applicable
working requirements with respect to all Owned Intellectual Property Rights,
except as set forth in the Company Disclosure Letter. With respect to
Intellectual Property Rights other than Owned Intellectual Property Rights
("Licensed Intellectual Property Rights") that are material to the Company or
the Company Subsidiaries, the Company is in compliance in all material respects
with any applicable license or similar agreement, including the payment of all
license, maintenance, renewal and other similar fees.
(e) All Owned Intellectual Property Rights are free and clear of any Liens
and may be freely transferred, assigned, licensed or sublicensed except as set
forth in the Company Disclosure letter. The Company's licenses with respect to
all Licensed Intellectual Property Rights are free and clear of any Liens except
as set forth in the Company Disclosure Letter.
SECTION 3.16. Certain Notes Receivable. There are no notes receivable of
the Company or any Company Subsidiary owing by any director, officer,
shareholder or employee of the Company or any Company Subsidiary.
SECTION 3.17. Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than Alliant
Partners, the fees and expenses of which will be paid by the Company, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Offer, the Merger and the other Transactions
based upon arrangements made by or on behalf of the Company. The estimated fees
and expenses incurred and to be incurred by the Company in connection with the
Offer, the Merger and the other Transactions (including the fees of Alliant
Partners and the fees of the Company's legal counsel) are set forth in the
Company Disclosure Letter.
SECTION 3.18. Opinion of Financial Advisor. The Company has received the
opinion of Alliant Partners dated the date of this Agreement, to the effect
that, as of such date, the consideration to be received in the Offer and the
Merger by the holders of Company Common Stock is fair to such holders from a
financial point of view and a copy of the signed opinion has been provided to
Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub, jointly and severally, represent and warrant to the Company
as follows:
SECTION 4.01. Organization, Standing and Power. Each of Parent and Sub is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has all requisite corporate power and
authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals in each case whether domestic or foreign necessary
to enable it to own, lease or otherwise hold its properties and assets and to
conduct its businesses as presently conducted, other than such franchises,
licenses, permits, authorizations and approvals the lack of which, individually
and in the aggregate, has not had and would not reasonably be expected to have a
material adverse effect on the ability of Parent or Sub to perform its
obligations under this Agreement or a material adverse effect on the ability of
Parent or Sub to consummate the Offer, the Merger and the other Transactions (a
"Parent Material Adverse Effect").
SECTION 4.02. Sub.
(a) Since the date of its incorporation, Sub has not carried on any
business or conducted any operations other than the execution of this Agreement,
the performance of its obligations hereunder and matters ancillary thereto. Sub
was incorporated solely for the purpose of consummating the Transactions.
15
(b) The authorized capital stock of Sub consists of 1,000 shares of common
stock, par value $0.01 per share, all of which have been validly issued, are
fully paid and nonassessable and are owned by Parent free and clear of any Lien.
SECTION 4.03. Authority; Execution and Delivery; Enforceability. Each of
Parent and Sub has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the Transactions. The execution and
delivery by each of Parent and Sub of this Agreement and the consummation by it
of the Transactions have been duly authorized by all necessary corporate action
on the part of Parent and Sub. Parent, as sole stockholder of Sub, has approved
this Agreement. Each of Parent and Sub has duly executed and delivered this
Agreement, and this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except to the
extent that enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of general
applicability relating to or affecting the enforcement of creditors' rights and
by the effect of the principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law).
SECTION 4.04. No Conflicts; Consents.
(a) The execution and delivery by each of Parent and Sub of this Agreement,
do not, and the consummation of the Offer, the Merger and the other Transactions
and compliance with the terms hereof will not, result in any violation of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any person under, or result in the creation
of any Lien upon any of the properties or assets of Parent or any of its
subsidiaries under, any provision of (i) the charter, by-laws or other
organizational documents of Parent or any of its subsidiaries, (ii) any Contract
to which Parent or any of its subsidiaries is a party or by which any of their
respective properties or assets is bound or (iii) subject to the filings and
other matters referred to in Section 4.04(b), any Judgment or Law applicable to
Parent or any of its subsidiaries or their respective properties or assets,
other than, in the case of clauses (ii) and (iii) above, any such items that,
individually and in the aggregate, have not had and would not reasonably be
expected to have a Parent Material Adverse Effect.
(b) No Consent of, or registration, declaration or filing with, any
Governmental Entity is required to be obtained or made by or with respect to
Parent or any of its subsidiaries in connection with the execution, delivery and
performance of this Agreement or the consummation of the Transactions, other
than (i) compliance with and filings under the HSR Act, (ii) the filing with the
SEC of (A) the Offer Documents and (B) such reports under the Exchange Act as
may be required in connection with this Agreement, the Offer, the Merger and the
other Transactions, (iii) the filing of the Certificate of Merger with the
Secretary of State of the State of
Delaware, (iv) such filings as may be
required in connection with the taxes described in Section 6.09 and (vi) such
other items that, individually and in the aggregate, have not had and would not
reasonably be expected to have a Parent Material Adverse Effect.
SECTION 4.05. Information Supplied. None of the information supplied or
to be supplied by Parent or Sub for inclusion or incorporation by reference in
(i) the Offer Documents, the Schedule 14D-9 or the Information Statement will,
at the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published, sent or given to the
Company's stockholders, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, or (ii) the Proxy Statement (if required
by Law) will, at the date it is first mailed to the Company's stockholders or at
the time of the Company Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Offer Documents
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied by the Company
for inclusion or incorporation by reference therein.
16
SECTION 4.06. Brokers. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Offer, the Merger and the other
Transactions based upon arrangements made by or on behalf of Parent.
SECTION 4.07. Financial Ability to Perform. Parent and Sub will have cash
funds sufficient as and when needed to pay all cash payments for shares of
Company Common Stock and options in the Offer and the Merger and to pay all
related fees and expenses.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. Conduct of Business.
(a) Conduct of Business by the Company. Except for matters set forth in
the Company Disclosure Letter, expressly agreed to in writing by Parent or
otherwise expressly permitted by this Agreement, from the date of this Agreement
to the earliest to occur of the date of the termination of this Agreement, the
date directors designated by Parent or Sub have been elected to and shall
constitute a majority of the Company Board (the "Control Date") or the Effective
Time, the Company shall, and shall cause each Company Subsidiary to, conduct the
business of the Company and the Company Subsidiaries taken as a whole in the
usual, regular and ordinary course in substantially the same manner as
previously conducted and use all reasonable efforts to preserve intact its
current business organization, keep available the services of its current
officers and employees and keep its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with them
to the end that its goodwill and ongoing business shall be unimpaired in all
material respects at the Effective Time. In addition, and without limiting the
generality of the foregoing, except for matters set forth in the Company
Disclosure Letter, expressly agreed to in writing by Parent or otherwise
expressly permitted by this Agreement, from the date of this Agreement to the
earliest to occur of the date of the termination of this Agreement, the Control
Date or the Effective Time, the Company shall not, and shall not permit any
Company Subsidiary to, do any of the following without the prior written consent
of Parent:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by a direct or indirect wholly owned subsidiary of the
Company to its parent, (B) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or (C)
purchase, redeem or otherwise acquire any shares of capital stock of the
Company or any Company Subsidiary or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell or grant (A) any shares of its capital
stock, (B) any Voting Company Debt or other voting securities, (C) any
securities convertible into or exchangeable for, or any options, warrants
or rights to acquire, any such shares, Voting Company Debt, voting
securities or convertible or exchangeable securities or (D) any "phantom"
stock, "phantom" stock rights, stock appreciation rights or stock-based
performance units, other than (1) the issuance of Company Common Stock (and
associated Company Rights) upon the exercise of Company Stock Options and
Company Warrants outstanding on the date of this Agreement and in
accordance with their present terms and (2) the issuance of Company Common
Stock upon the exercise of Company Rights;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or consolidating with,
or by purchasing a substantial equity interest in or portion of the assets
of, or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division
thereof or (B) any assets that are material, individually or in the
aggregate, to the Company and the Company Subsidiaries taken as a whole;
17
(v) (A) grant to any current or former director, officer or employee
of the Company or any Company Subsidiary any increase in compensation,
except to the extent required under employment agreements in effect as of
the date of the most recent audited financial statements included in the
Filed Company SEC Documents or, with respect to employees (other than
directors, officers or key employees) in the ordinary course of business
consistent with prior practice, (B) grant to any current or former
employee, officer or director of the Company or any Company Subsidiary any
increase in severance or termination pay, except to the extent required
under any agreement in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents, (C) enter
into any employment, consulting, indemnification, severance or termination
agreement with any such employee, officer or director, (D) establish,
adopt, enter into or amend in any material respect any collective
bargaining agreement or Company Benefit Plan or (E) take any action to
accelerate any rights or benefits, or make any material determinations not
in the ordinary course of business consistent with prior practice, under
any collective bargaining agreement or Company Benefit Plan;
(vi) make any change in accounting methods, principles or practices
materially affecting the reported consolidated assets, liabilities or
results of operations of the Company, except insofar as may have been
required by a change in GAAP;
(vii) sell, lease (as lessor), license or otherwise dispose of or
subject to any Lien any material properties or assets, except sales of
obsolete assets in the ordinary course of business consistent with past
practice;
(viii) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any Company Subsidiary, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, except for short-term
borrowings from persons that are not directors, officers or employees of
the Company or any Company Subsidiary incurred in the ordinary course of
business consistent with past practice, or (B) make any loans, advances or
capital contributions to, or investments in, any other person, other than
to or in the Company or any direct or indirect wholly owned subsidiary of
the Company;
(ix) make or agree to make any new capital expenditure or expenditures
that are in excess of $50,000 individually or $250,000 in the aggregate;
(x) make or change any material Tax election or settle or compromise
any material Tax liability or refund;
(xi) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) in excess of $25,000 individually or $250,000 in the aggregate,
other than the payment, discharge or satisfaction, in the ordinary course
of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by,
the most recent consolidated financial statements (or the notes thereto) of
the Company included in the Filed Company SEC Documents or incurred in the
ordinary course of business consistent with past practice, (B) cancel any
indebtedness in excess of $25,000 individually or $250,000 in the aggregate
or waive any claims or rights of substantial value or (C) waive the
benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which the Company or any Company
Subsidiary is a party;
(xii) enter into, renew, extend, amend, modify, waive any material
provision of, or terminate any lease or similar commitment, in each case
providing for payments in excess of $100,000 over the term of such lease or
commitment (or until the date on which such lease or commitment may be
terminated by the Company without penalty); or
(xiii) authorize, or commit or agree to take, any of the foregoing
actions.
18
(b) Other Actions. The Company and Parent shall not, and shall not permit
any of their respective subsidiaries to, take any action that would, or that
would reasonably be expected to, result in (i) any of the representations and
warranties of such party set forth in this Agreement that is qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
that is not so qualified becoming untrue in any material respect or (iii) any
condition to the Offer set forth in Exhibit A, or any condition to the Merger
set forth in Article VII, not being satisfied; provided, however, that the
obligations set forth in this Section 5.01(b) shall not be deemed to have been
breached as a result of actions by the Company expressly permitted under Section
5.02(b).
(c) Advice of Changes. The Company shall promptly advise Parent orally and
in writing of any change or event that has had or would reasonably be expected
to have a Company Material Adverse Effect.
SECTION 5.02. No Solicitation.
(a) The Company shall not, nor shall it authorize or permit any Company
Subsidiary to, nor shall it authorize or permit any officer, director or
employee of, or any investment banker, attorney or other advisor or
representative (collectively, "Representatives") of, the Company or any Company
Subsidiary to, (i) directly or indirectly solicit, initiate or encourage the
submission of, any Company Takeover Proposal (as defined in Section 5.02(e)),
(ii) enter into any agreement with respect to any Company Takeover Proposal or
(iii) directly or indirectly participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Company Takeover
Proposal; provided, however, that prior to the first acceptance for payment of
shares of Company Common Stock pursuant to the Offer the Company may, to the
extent necessary to act in a manner consistent with the fiduciary obligations of
the Company Board, as determined in good faith by it after consultation with
outside counsel and Alliant Partners or another nationally recognized
independent financial advisor, in response to a Company Takeover Proposal that
the Company Board determines, in good faith after consultation with outside
counsel, is reasonably likely to lead to a Superior Company Proposal (as defined
in Section 5.02(e)), that was not solicited by the Company and that did not
otherwise result from a breach or a deemed breach of this Section 5.02(a), and
subject to compliance with Section 5.02(c), (x) furnish information with respect
to the Company to the person making such Company Takeover Proposal and its
Representatives pursuant to a customary confidentiality agreement and (y)
participate in discussions or negotiations with such person and its
Representatives regarding such Company Takeover Proposal. Without limiting the
foregoing, it is agreed that any violation of the restrictions set forth in the
preceding sentence by any officer, director, investment banker, attorney or
other advisor or representative of the Company or any Company Subsidiary,
whether or not such person is purporting to act on behalf of the Company or any
Company Subsidiary or otherwise, shall be deemed to be a breach of this Section
5.02(a) by the Company.
(b) Unless the Company Board, after consultation with outside counsel,
determines in its good faith judgment that it is necessary to do so in order to
fulfill its fiduciary obligations under applicable Law, neither the Company
Board nor any committee thereof shall (i) withdraw or modify in a manner adverse
to Parent or Sub, or publicly propose to withdraw or modify in a manner adverse
to Parent or Sub, the approval or recommendation by the Company Board or any
such committee of this Agreement, the Offer or the Merger, (ii) approve any
letter of intent, agreement in principle, acquisition or similar agreement
relating to any Company Takeover Proposal or (iii) approve or recommend, or
publicly propose to approve or recommend, any Company Takeover Proposal. The
Company shall not take the actions set forth in clauses (ii) or (iii) of the
preceding sentence unless it has terminated or concurrently terminates this
Agreement pursuant to Section 8.01(e).
(c) The Company promptly shall advise Parent orally and, within two
business days, in writing of any Company Takeover Proposal or any inquiry with
respect to, or that could reasonably be expected to lead to, any Company
Takeover Proposal, the material terms and conditions of any such Company
Takeover Proposal (including any changes thereto) and the identity of the person
making any such Company Takeover Proposal or inquiry. The Company shall (i) keep
Parent fully informed of the status and details (including any change to the
terms thereof) of any such Company Takeover Proposal and (ii) provide to Parent
as soon as
19
practicable after receipt or delivery thereof with copies of all correspondence
and other written material sent or provided to the Company by any third party in
connection with any Company Takeover Proposal or sent or provided by the Company
to any third party in connection with any Company Takeover Proposal.
(d) Nothing contained in this Section 5.02 shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any required
disclosure to the Company's stockholders if, in the good faith judgment of the
Company Board, after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable law.
(e) For purposes of this Agreement:
"Company Takeover Proposal" means (i) any proposal or offer for a merger,
consolidation, dissolution, recapitalization or other business combination
involving the Company or any significant subsidiary of the Company (as defined
in Regulation S-X of the Federal securities laws), (ii) any proposal for the
issuance by the Company of over 15% of its equity securities as consideration
for the assets or securities of another person or (iii) any proposal or offer to
acquire in any manner, directly or indirectly, over 15% of the equity securities
or consolidated total assets of the Company, in each case other than pursuant to
the Transactions.
"Superior Company Proposal" means any proposal made by a third party to
acquire substantially all the equity securities or assets of the Company,
pursuant to a tender or exchange offer, a merger, a consolidation, a liquidation
or dissolution, a recapitalization or a sale of all or substantially all its
assets, (i) on terms which the Company Board determines in good faith to be
superior from a financial point of view to the holders of Company Common Stock
to the Transactions, taking into account all the terms and conditions of such
proposal and this Agreement (including any proposal by Parent to amend the terms
of the Transactions) and (ii) that is reasonably capable of being completed,
taking into account all financial, regulatory, legal and other aspects of such
proposal.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Preparation of Proxy Statement; Stockholders Meeting.
(a) Subject to the last sentence of Section 6.01(b), the Company shall, as
soon as practicable following the expiration of the Offer and the purchase of
the shares of Company Common Stock pursuant thereto, prepare and file with the
SEC the Proxy Statement in preliminary form, and each of the Company, Parent and
Sub shall use their best efforts to respond as promptly as practicable to any
comments of the SEC with respect thereto. The Company shall notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and shall supply Parent with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement. If at any time prior to receipt of the Company Stockholder Approval
there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly prepare and mail
to its stockholders such an amendment or supplement. The Company shall not mail
any Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects. The Company shall use its best efforts to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly as practicable
after filing with the SEC.
(b) The Company shall, as soon as practicable following the expiration of
the Offer and the purchase of the shares of Company Common Stock pursuant
thereto, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders Meeting") for the purpose of seeking the
Company Stockholder Approval. Subject to Section 5.02(b), the Company shall,
through the Company Board, recommend to its stockholders that they give the
Company Stockholder Approval. Without limiting the generality of the foregoing,
the Company agrees that its obligations pursuant to the first sentence of this
Section 6.01(b) shall not be affected by the commencement, public proposal,
public disclosure or communi-
20
cation to the Company of any Company Takeover Proposal. Notwithstanding the
foregoing, if Sub or any other subsidiary of Parent shall acquire at least 90%
of the outstanding shares of each series of Company Capital Stock, the parties
shall, at the request of Parent, take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after the expiration
of the Offer without a stockholders meeting in accordance with Section 253 of
the DGCL.
(c) Parent shall cause all shares of Company Common Stock purchased
pursuant to the Offer and all other shares of Company Common Stock owned by
Parent, Sub or any other subsidiary of Parent to be voted in favor of the
approval of this Agreement.
SECTION 6.02. Access to Information; Confidentiality. The Company shall,
and shall cause each of its subsidiaries to, afford to Parent, and to Parent's
officers, employees, accountants, counsel, financial advisors and other
representatives, upon reasonable notice, reasonable access during normal
business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, the Company shall, and shall cause each of its subsidiaries
to, furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of Federal or state securities laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request; provided, however, that the Company may withhold the documents and
information described in the Company Disclosure Letter to the extent required to
comply with the terms of a confidentiality agreement with a third party in
effect on the date of this Agreement; provided further, that the Company shall
use all reasonable efforts to obtain, as promptly as practicable, any consent
from such third party required to permit the Company to furnish such documents
and information to Parent. All information exchanged pursuant to this Section
6.02 shall be subject to the confidentiality agreement dated as of January 15,
2003 between the Company and Parent (the "Confidentiality Agreement").
SECTION 6.03. Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties hereto shall use all reasonable efforts to take,
or cause to be taken, all reasonable actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things
reasonably necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Offer, the Merger and the other
Transactions, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the Transactions, including,
when reasonable, seeking to have any stay or temporary restraining order entered
by any court or other Governmental Entity vacated or reversed and (iv) the
execution and delivery of any additional instruments necessary to consummate the
Transactions and to fully carry out the purposes of this Agreement. In
connection with and without limiting the foregoing, the Company and the Company
Board shall (i) take all action necessary to ensure that no state takeover
statute or similar statute or regulation is or becomes applicable to any
Transaction, this Agreement or the Tender Agreements and (ii) if any state
takeover statute or similar statute or regulation becomes applicable to this
Agreement or the Tender Agreements, take all action necessary to ensure that the
Offer, the Merger and the other Transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Offer, the Merger and
the other Transactions. Nothing in this Agreement shall be deemed to require any
party to waive any substantial rights or agree to any substantial limitation on
its operations or to dispose of any significant asset or collection of assets.
As promptly as practicable after the consummation of the Offer, the Company
shall use all reasonable efforts to notify Parent of any actions or nonactions
of, waivers, consents and approvals from, and registrations and filings with,
Governmental Entities, and any consents, approvals or waivers from third
parties, that would be required in connection with the consummation of the
Merger in the event that Parent elects pursuant to Section 1.03 to merge the
Company with and into Sub instead of merging Sub into the Company.
21
(b) The Company shall give prompt notice to Parent, and Parent or Sub shall
give prompt notice to the Company, of (i) any representation or warranty made by
it contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty that
is not so qualified becoming untrue or inaccurate in any material respect or
(ii) the failure by it to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
SECTION 6.04. Stock Options.
(a) As soon as practicable following the date of this Agreement, the
Company Board (or, if appropriate, any committee administering the Company Stock
Plans) shall adopt such resolutions or take such other actions as are required
to adjust the terms of all outstanding Company Stock Options heretofore granted
under any Company Stock Plan that, after giving effect to the actions taken by
the Company Board under the Company Stock Plans to deem the consummation of the
Offer not to constitute a change in control, will be exercisable at the time of
the first acceptance for payment of shares of Company Common Stock pursuant to
the Offer (the "Exercisable Options") to provide that each such Exercisable
Option outstanding at the time of the first acceptance for payment of shares of
Company Common Stock pursuant to the Offer shall be canceled in exchange for a
cash payment by the Company as soon as practicable following the first
acceptance for payment of shares of Company Common Stock pursuant to the Offer
of an amount equal to (i) the excess, if any, of (x) the highest price per share
of Company Common Stock to be paid pursuant to the Offer over (y) the exercise
price per share of Company Common Stock subject to such Exercisable Option,
multiplied by (ii) the number of shares of Company Common Stock for which such
Exercisable Option shall not theretofore have been exercised. The Company will
be responsible for any required reporting to Federal, state or local tax
authorities. Parent will advance such funds to the Company as the Company
requires in order to comply with the provisions of this Section 6.04(a) on terms
mutually acceptable to Parent and the Company.
(b) All amounts payable pursuant to Section 6.04(a) shall be subject to any
required withholding of Taxes or proof of eligibility of exemption therefrom and
shall be paid without interest by the Company as soon as practicable following
the first acceptance for payment of shares of Company Common Stock pursuant to
the Offer. The Company shall use its best efforts to obtain all consents of the
holders of Company Stock Options as shall be necessary to effectuate the
foregoing. Notwithstanding anything to the contrary contained in this Agreement,
payment shall, at Parent's request, be withheld in respect of any Company Stock
Option until all necessary consents with respect to such Company Stock Option
are obtained.
(c) Each outstanding option to purchase shares of Company Common Stock
under the Company ESPP shall be treated in accordance with the provisions of the
Company ESPP (including Section 19(c) thereof). As soon as practicable following
the date of this Agreement, the Company Board shall take all action necessary to
set a new Exercise Date (as defined in the Company ESPP) for the Purchase Period
(as defined in the Company ESPP) now in progress, which new Exercise Date shall
be on or prior to February 14, 2003 (the "New Exercise Date"). The Company shall
give any required notice to participants in the Company ESPP and each
participant shall have the right to exercise his or her outstanding option under
the Company ESPP in full based on the accumulated payroll deductions credited to
his or her account through the New Exercise Date. From and after the New
Exercise Date, no new payroll contributions shall be accepted by, or made to,
the Company ESPP. The Company agrees that, from the date of this Agreement
through the New Exercise Date, the Company ESPP shall be operated only in the
ordinary course and in a manner consistent with the previous operation of the
Company ESPP.
(d) The Company Stock Plans and the Company ESPP shall terminate as of the
Effective Time, and the provisions in any other Benefit Plan providing for the
issuance, transfer or grant of any capital stock of the Company or any interest
in respect of any capital stock of the Company shall be deleted as of the
Effective Time, and the Company shall ensure that following the Effective Time
no holder of a Company Stock Option or any participant in any Company Stock
Plan, the Company ESPP or other Company Benefit Plan shall have any right
thereunder to acquire any capital stock of the Company or the Surviving
Corporation.
22
(e) In this Agreement:
"Company Stock Option" means any option to purchase Company Common Stock
granted under any Company Stock Plan.
"Company Stock Plans" means the 1995 Stock Option/Stock Issuance Plan, the
1996 Stock Option Plan, the 1997 Director Option Plan and the 1999 Share
Incentive Plan and all agreements under which there are outstanding options to
purchase Company Common Stock granted to employees, consultants or any other
person.
"Company ESPP" shall mean the 1999 Employee Stock Purchase Plan.
SECTION 6.05. Benefit Plans.
(a) Except as set forth in Section 6.04, Parent agrees to cause the
Surviving Corporation to provide benefits (other than equity-based plans) to
each current employee of the Company and its subsidiaries that are not
materially less favorable in the aggregate to such employees than those benefits
in effect for such employees on the date of this Agreement.
(b) In addition to the agreement set forth in Section 6.05(a), from and
after the Control Date and from and after the Effective Time, Parent shall cause
the Company or the Surviving Corporation, as applicable, to honor in accordance
with their respective terms (as in effect on the date of this Agreement), all
the Company's employment, severance and termination agreements, plans and
policies disclosed in the Company Disclosure Letter, including any change in
control provisions contained therein.
(c) With respect to any "employee benefit plan", as defined in Section 3(3)
of ERISA, maintained by Parent or any of its subsidiaries (including any
severance plan), for all purposes, including determining eligibility to
participate and vesting, service with the Company or any Company Subsidiary
shall be treated as service with Parent or any of its subsidiaries; provided,
however, that such service need not be recognized to the extent that such
recognition would result in any duplication of benefits.
SECTION 6.06. Indemnification.
(a) Parent shall, to the fullest extent permitted by Law, cause the Company
(from and after the Control Date) and the Surviving Corporation (from and after
the Effective Time) to honor all the Company's obligations to indemnify, defend
and hold harmless (including any obligations to advance funds for expenses) the
current and former directors and officers of the Company and its subsidiaries
against all losses, claims, damages or liabilities arising out of acts or
omissions by any such directors and officers occurring prior to the Effective
Time to the maximum extent that such obligations of the Company exist on the
date of this Agreement, whether pursuant to the Company Charter, the Company
By-laws, the DGCL, individual indemnity agreements or otherwise, and such
obligations shall survive the Merger and shall continue in full force and effect
in accordance with the terms of the Company Charter, the Company By-laws, the
DGCL and such individual indemnity agreements from the Effective Time until the
expiration of the applicable statute of limitations with respect to any claims
against such directors or officers arising out of such acts or omissions. In the
event a current or former director or officer of the Company or any of its
subsidiaries is entitled to indemnification under this Section 6.06(a), such
director or officer shall be entitled to reimbursement from the Company (from
and after the Control Date) or the Surviving Corporation (from and after the
Effective Time) for reasonable attorney fees and expenses incurred by such
director or officer in pursuing such indemnification, including payment of such
fees and expenses by the Surviving Corporation or the Company, as applicable, in
advance of the final disposition of such action upon receipt of an undertaking
by such current or former director or officer to repay such payment if it shall
be adjudicated that such current or former director or officer was not entitled
to such payment.
(b) From and after the Control Date and for a period of six years after the
Effective Time, Parent shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by the
Company (provided that Parent may either (i) substitute therefor policies with
reputable and financially sound carriers or (ii) maintain self insurance or
similar arrangements through a financially sound insurance affiliate of Parent,
in each case of at least the same coverage and amounts containing terms and
conditions
23
which are no less advantageous) with respect to claims arising from or related
to facts or events which occurred at or before the Effective Time; provided,
however, that Parent shall not be obligated to make annual premium payments for
such insurance to the extent such premiums exceed 200% of the annual premiums
paid as of the date hereof by the Company for such insurance (such 200% amount,
the "Maximum Premium"). If such insurance coverage cannot be obtained at all, or
can only be obtained at an annual premium in excess of the Maximum Premium,
Parent shall maintain the most advantageous policies of directors' and officers'
insurance obtainable for an annual premium equal to the Maximum Premium. The
Company represents to Parent that the Maximum Premium is $558,480.
(c) The Company will maintain, through the Effective Time, the Company's
existing directors' and officers' insurance in full force and effect without
reduction of coverage.
(d) If the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
and the continuing or surviving entity does not assume the obligations of the
Surviving Corporation set forth in this Section 6.06, or (ii) transfers all or
substantially all of its properties and assets to any person, then, and in each
such case, proper provision shall be made so that the successors and assigns of
the Surviving Corporation assume, as a matter of law or otherwise, the
obligations set forth in this Section 6.06.
SECTION 6.07. Fees and Expenses.
(a) Except as provided below, all fees and expenses incurred in connection
with the Merger and the other Transactions shall be paid by the party incurring
such fees or expenses, whether or not the Merger is consummated.
(b) The Company shall pay to Parent a fee of $2.75 million if: (i) this
Agreement is terminated pursuant to Section 8.01(b)(iii) as a result of the
failure of the condition set forth in paragraph (d) of Exhibit A; (ii) the
Company terminates this Agreement pursuant to Section 8.01(e); (iii) Parent
terminates this Agreement pursuant to Section 8.01(d)(i) or 8.01(d)(ii) as a
result of a material breach of Section 5.02; (iv) after the date of this
Agreement, any person makes a Company Takeover Proposal and (A) the Offer shall
have remained open until the later of (1) the scheduled expiration date
immediately following the date such Company Takeover Proposal is made and (2)
ten days after the date such Company Takeover Proposal is made, (B) the Minimum
Tender Condition is not satisfied at such expiration date, (C) this Agreement is
terminated pursuant to Section 8.01(b)(i) or 8.01(b)(iii) (other than as a
result of the failure of the condition set forth in paragraph (d) of Exhibit A)
and (D) within 12 months of such termination the Company enters into a
definitive agreement to consummate, or consummates, the transactions
contemplated by such Company Takeover Proposal; or (v) subject to Section
6.07(c), (A) this Agreement is terminated pursuant to Section 8.01(c) as a
result of a willful breach by the Company, (B) after such termination, a Company
Takeover Proposal is made, and (C) within 12 months of such termination the
Company enters into a definitive agreement to consummate, or consummates, the
transactions contemplated by any Company Takeover Proposal. Any fee due under
this Section 6.07(b) shall be paid by wire transfer of same-day funds on the
date of termination of this Agreement (except that in the case of clause (iv) or
(v) above such payment shall be made on the date of execution of such definitive
agreement or, if earlier, consummation of such transactions).
(c) If the Company becomes obligated to pay a fee under Section 6.07(b) as
a result of a termination pursuant to Section 8.01(c), Parent may elect, within
six months of the date of such termination, not to receive the fee and, if such
election is made, may pursue any and all rights, claims and causes of action it
may have under Law with respect to the breach giving rise to such right of
termination. If Parent elects to receive the fee, and the Company pays the fee
as required by Section 6.07(b), the payment by the Company of such fee shall be
Parent's and Sub's sole remedy with respect to such breach and each of Parent
and Sub shall waive, to the fullest extent permitted by Law, any and all rights,
claims and causes of action (other than claims of, or causes of action arising
from, fraud) it may have against the Company with respect to such breach.
24
SECTION 6.08. Public Announcements. Parent and Sub, on the one hand, and
the Company, on the other hand, shall consult with each other before issuing,
and provide each other the opportunity to review and comment upon, any press
release or other public statements with respect to the Offer, the Merger and the
other Transactions and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by
applicable Law (including foreign regulations relating to competition), court
process or by obligations pursuant to any listing agreement with any national
securities exchange.
SECTION 6.09. Transfer Taxes. All stock transfer, real estate transfer,
documentary, stamp, recording and other similar Taxes (including interest,
penalties and additions to any such Taxes) ("Transfer Taxes") incurred in
connection with the Transactions shall be paid by the party upon whom the
primary burden for payment is placed by the applicable law. Each party shall
cooperate with the other in preparing, executing and filing any Tax Returns with
respect to such Transfer Taxes and shall use reasonable efforts to avail itself
of any available exemptions from such Transfer Taxes, and shall cooperate in
providing any information and documentation that may be necessary to obtain such
exemptions.
SECTION 6.10. Directors. Promptly upon the first acceptance for payment
of, and payment by Sub for, any shares of Company Common Stock pursuant to the
Offer, Sub shall be entitled to designate such number of directors on the
Company Board as will give Sub, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Company Board equal to at least that number
of directors, rounded up to the next whole number, which is the product of (a)
the total number of directors on the Company Board (giving effect to the
directors elected pursuant to this sentence) multiplied by (b) the percentage
that (i) such number of shares of Company Common Stock so accepted for payment
and paid for by Sub plus the number of shares of Company Common Stock otherwise
owned by Sub or any other subsidiary of Parent bears to (ii) the number of such
shares outstanding, and the Company shall, at such time, cause Sub's designees
to be so elected; provided, however, that in the event that Sub's designees are
appointed or elected to the Company Board, until the Effective Time the Company
Board shall have at least three directors who are directors on the date of this
Agreement and who are not officers of the Company (the "Independent Directors");
and provided further that, in such event, if the number of Independent Directors
shall be reduced below three for any reason whatsoever, any remaining
Independent Directors (or Independent Director, if there shall be only one
remaining) shall be entitled to designate persons to fill such vacancies who
shall be deemed to be Independent Directors for purposes of this Agreement or,
if no Independent Directors then remain, the other directors shall designate
three persons to fill such vacancies who are not officers, stockholders or
affiliates of the Company, Parent or Sub, and such persons shall be deemed to be
Independent Directors for purposes of this Agreement. Subject to applicable Law,
the Company shall take all action requested by Parent necessary to effect any
such election, including mailing to its stockholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company shall make such mailing with
the mailing of the Schedule 14D-9 (provided that Sub shall have provided to the
Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). In connection with the
foregoing, the Company shall promptly, at the option of Sub, either increase the
size of the Company Board or obtain the resignation of such number of its
current directors as is necessary to enable Sub's designees to be elected or
appointed to the Company Board as provided above.
SECTION 6.11. Rights Agreement; Consequences if Rights Triggered. The
Company Board shall take all action requested in writing by Parent in order to
render the Company Rights inapplicable to the Offer, the Merger and the other
Transactions. Except as approved in writing by Parent, the Company Board shall
not (i) amend the Company Rights Agreement, (ii) redeem the Company Rights or
(iii) take any action with respect to, or make any determination under, the
Company Rights Agreement, in each case in a manner adverse to Parent or Sub. If
any Distribution Date or Stock Acquisition Date occurs under the Company Rights
Agreement at any time during the period from the date of this Agreement to the
Effective Time, the Company and Parent shall make such adjustment to the Offer
Price as the Company and Parent shall mutually agree so as to preserve the
economic benefits that the Company and Parent each reasonably expected
25
on the date of this Agreement to receive as a result of the consummation of the
Offer, the Merger and the other Transactions.
SECTION 6.12. Stockholder Litigation. The Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors relating to any Transaction;
provided, however, that the Company shall not enter into any such settlement
without Parent's consent, which consent shall not be unreasonably withheld.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01. Conditions to Each Party's Obligation To Effect The
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Company shall have obtained the Company
Stockholder Approval, if required.
(b) Antitrust. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired. Any consents, approvals and filings under any other foreign antitrust
Law the absence of which would prohibit the consummation of Merger, shall have
been obtained or made.
(c) No Injunctions or Restraints. No statute, rule, regulation, executive
order, decree, temporary restraining order, preliminary or permanent injunction
or other order enacted, entered, promulgated, enforced or issued by any
Governmental Entity or other legal restraint or prohibition preventing the
consummation of the Merger or the other Transactions shall be in effect;
provided, however, that prior to asserting this condition each of the parties
shall have used all reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any such
injunction or other order that may be entered.
(d) Acceptance of Shares Pursuant to the Offer. Sub shall have accepted
shares of Company Common Stock for payment pursuant to the Offer; provided, that
the obligation of a party to effect the Merger shall not be conditioned on the
fulfillment of the condition set forth in this clause (d) if the failure of Sub
to accept shares of Company Common Stock for payment pursuant to the Offer shall
have constituted or resulted from a material breach of the Offer or this
Agreement by such party.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after receipt of Company
Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Offer is not consummated on or before April 30, 2003 (the
"Outside Date"), unless the failure to consummate the Offer is the result
of a willful and material breach of this Agreement by the party seeking to
terminate this Agreement;
(ii) if any Governmental Entity issues an order, decree or ruling or
takes any other action permanently enjoining, restraining or otherwise
prohibiting the acceptance for payment of, or payment for, shares of
Company Common Stock pursuant to the Offer or the Merger and such order,
decree, ruling or other action shall have become final and nonappealable;
or
(iii) if as the result of the failure of any of the conditions set
forth in Exhibit A to this Agreement, the Offer shall have terminated or
expired in accordance with its terms without Sub having accepted
26
shares of Company Common Stock for payment pursuant to the Offer; provided,
however, that the right to terminate this Agreement pursuant to this clause
(iii) shall not be available to any party whose failure to fulfill any of
its obligations under this Agreement results in the failure of any such
condition or if the failure of such condition results from facts or
circumstances that constitute a willful breach of any representation or
warranty under this Agreement by such party; or
(iv) if Sub fails to commence the Offer as provided in Section 1.01(a)
on or before March 1, 2003 due to the failure of the condition set forth in
paragraph (a) of Exhibit A; provided, however, that the right to terminate
this Agreement pursuant to this clause (iv) shall not be available to the
Company if its failure to fulfill any of its obligations under this
Agreement results in the failure of the condition described in paragraph
(a) of Exhibit A or if the failure of the condition described in paragraph
(a) of Exhibit A results from facts or circumstances that constitute a
willful breach of any representation or warranty under this Agreement by
the Company; or
(c) by Parent, if the Company breaches or fails to perform in any material
respect any of its representations, warranties or covenants contained in this
Agreement (other than a breach or failure to perform for which Parent has the
right to terminate this Agreement pursuant to Section 8.01(d)(ii)), which breach
or failure to perform (i) would give rise to the failure of a condition set
forth in Exhibit A, and (ii) cannot be or has not been cured within 30 days
after the giving of written notice to the Company of such breach (provided that
Parent is not then in material breach of any representation, warranty or
covenant contained in this Agreement); or
(d) by Parent prior to the first acceptance of shares of Company Common
Stock for payment pursuant to the Offer:
(i) if the Company Board or any committee thereof withdraws or
modifies in a manner adverse to Parent or Sub, or publicly proposes to
withdraw or modify in a manner adverse to Parent or Sub, its approval or
recommendation of this Agreement, the Offer or the Merger, fails to
recommend to the Company's stockholders that they accept the Offer and give
the Company Stockholder Approval or publicly approves or recommends, or
publicly proposes to approve or recommend, any Company Takeover Proposal;
or
(ii) if the Company or any of its officers, directors, representatives
or agents willfully takes any of the actions that would be proscribed by
Section 5.02 but for the exceptions therein allowing certain actions to be
taken pursuant to the proviso in the first sentence of Section 5.02(a); or
(e) by the Company prior to the first acceptance of shares of Company
Common Stock for payment pursuant to the Offer in accordance with Section
8.05(b); provided, however, that the Company shall have complied with all
provisions thereof, including the notice provisions therein; or
(f) by the Company prior to the first acceptance of shares of Company
Common Stock for payment pursuant to the Offer, if Parent breaches or fails to
perform in any material respect any of its representations, warranties or
covenants contained in this Agreement, which breach or failure to perform cannot
be or has not been cured within 30 days after the giving of written notice to
Parent of such breach (provided that the Company is not then in material breach
of any representation, warranty or covenant contained in this Agreement).
SECTION 8.02. Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect. Such termination shall
be without any liability or obligation on the part of Parent, Sub or the
Company, other than Section 3.17 (Brokers; Schedule of Fees and Expenses),
Section 4.06 (Brokers), the last sentence of Section 6.02 (Access to
Information; Confidentiality), Section 6.07 (Fees and Expenses), this Section
8.02 and Article IX (General Provisions), which provisions shall survive such
termination, and except to the extent that such termination results from the
willful and material breach by a party of any representation, warranty or
covenant set forth in this Agreement.
27
SECTION 8.03. Amendment. This Agreement may be amended by the parties at
any time before or after receipt of the Company Stockholder Approval; provided,
however, that after receipt of the Company Stockholder Approval, there shall be
made no amendment that by Law requires further approval by the stockholders of
the Company without the further approval of such stockholders; and provided,
further, that after Sub's purchase of shares in the Offer, no such amendment or
modification shall be made that reduces the amount or changes the form of Merger
Consideration or otherwise materially and adversely affects the rights of the
Company's stockholders hereunder, without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
SECTION 8.04. Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 8.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver.
(a) A termination of this Agreement pursuant to Section 8.01, an amendment
of this Agreement pursuant to Section 8.03 or an extension or waiver pursuant to
Section 8.04 shall, in order to be effective, require in the case of Parent, Sub
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors; provided, that in the case of the Company and in the
event the Offer has been consummated and the shares of Company Common Stock have
been purchased pursuant thereto, such action shall also require action by a
majority of the Independent Directors.
(b) The Company may terminate this Agreement pursuant to Section 8.01(e)
only if (i) the Company Board has received a Superior Company Proposal, (ii) in
light of such Superior Company Proposal the Company Board shall have determined
in good faith, after consultation with outside counsel, that it is necessary for
the Company Board to withdraw or modify its approval or recommendation of this
Agreement, the Offer or the Merger in order to act in a manner consistent with
its fiduciary duty under applicable Law, (iii) the Company has notified Parent
in writing of the determinations described in clause (ii) above, (iv) at least
three business days following receipt by Parent of the notice referred to in
clause (iii) above, and taking into account any revised proposal made by Parent
since receipt of the notice referred to in clause (iii) above, such Superior
Company Proposal remains a Superior Company Proposal and the Company Board has
again made the determinations referred to in clause (ii) above, (v) the Company
is in compliance with Section 5.02 (other than breaches that, individually or in
the aggregate, are not material and do not prejudice Parent's rights under this
Agreement), (vi) the Company has previously paid the fee due under Section 6.07
and (vii) the Company Board concurrently approves, and the Company concurrently
enters into, a definitive agreement providing for the implementation of such
Superior Company Proposal.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.01
(including any rights arising out of any breach of such representations and
warranties) shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 9.02. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given (i) seven days after mailing by certified mail, (ii) when delivered by
hand, (iii) upon confirmation of receipt by telecopy or (iv) one business day
after
28
sending by overnight delivery service, to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Xxxxxxxxx Research, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx, Esq.
Facsimile: 000-000-0000
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Xxx X. Xxxxxx, Esq.
Facsimile: 000-000-0000
(b) if to the Company, to
Giga Information Group, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Facsimile: 000-000-0000
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Esq.
Facsimile: 000-000-0000
SECTION 9.03. Definitions. For purposes of this Agreement:
An "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
A "key employee" means an employee of the Company or any Company Subsidiary
whose total annual compensation (including incentive compensation), after giving
effect to any increase after the date of this Agreement, exceeds $85,000.
A "material adverse effect" on a party means a material adverse effect on
the business, assets, condition (financial or otherwise), prospects or results
of operations of such party and its subsidiaries, taken as a whole, other than
effects due to (A) general economic, market or political conditions or (B)
matters generally affecting the industry in which such party operates. An
adverse change in the stock price of the Company Common Stock shall not, in and
of itself, be deemed to have a Company Material Adverse Effect.
29
A "person" means any individual, firm, corporation, partnership, company,
limited liability company, trust, joint venture, association, Governmental
Entity or other entity.
A "subsidiary" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person.
"to the knowledge" of any specified corporation means to the actual
knowledge of any director or officer of such corporation. "To the knowledge" of
the Company means the actual knowledge of the directors of the Company and each
of Xxxx X. Xxxxxxx, Xxxxxxxx X. Xxxxx and Xxxxxx Xxxxxxx.
SECTION 9.04. Interpretation; Disclosure Letters. When a reference is
made in this Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". Any matter disclosed in
any section of the Company Disclosure Letter shall be deemed disclosed for the
purposes of any Sections of this Agreement for which such disclosed matter would
apply to the extent the Parent is reasonably put on notice by the nature of such
disclosure.
SECTION 9.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 9.06. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.07. Entire Agreement; Third-Party Beneficiaries. This
Agreement, taken together with the Company Disclosure Letter and the
Confidentiality Agreement, (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the Transactions and (b) except for the provisions of
Article II, Section 6.04 and Section 6.06, are not intended to confer upon any
person other than the parties any rights or remedies.
SECTION 9.08. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of
Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.09. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations under
this Agreement. Any purported assignment without such consent shall be void.
Subject to the preceding sentences, this Agreement will be binding upon, inure
to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
SECTION 9.10. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in
30
any
Delaware state court or any Federal court located in the State of
Delaware,
this being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of any Delaware state court or any Federal court
located in the State of Delaware in the event any dispute arises out of this
Agreement or any Transaction, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (c) agrees that it will not bring any action relating to this
Agreement or any Transaction in any court other than any Delaware state court or
any Federal court sitting in the State of Delaware and (d) waives any right to
trial by jury with respect to any action related to or arising out of this
Agreement or any Transaction.
SECTION 9.11. Consents. Whenever this Agreement requires or permits
consent by or on behalf of any party hereto, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in Sections 8.04 and 8.05. Sub hereby agrees that any consent or
waiver of compliance given by Parent hereunder shall be conclusively binding
upon it, whether given expressly on its behalf or not.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
31
IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed this
Agreement, all as of the date first written above.
XXXXXXXXX RESEARCH, INC.
By: /s/ XXXXXX X. COLONY
------------------------------------
Name: Xxxxxx X. Colony
Title: Chairman and Chief
Executive Officer
XXXXXXXX ACQUISITION CORP.
By: /s/ XXX XXXXXXXX
------------------------------------
Name: Xxx Xxxxxxxx
Title: President
GIGA INFORMATION GROUP, INC.
By: /s/ XXXX X. XXXXXXX
------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
32
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating
to Sub's obligation to pay for or return tendered shares of Company Common Stock
promptly after the termination or withdrawal of the Offer), to pay for any
shares of Company Common Stock tendered pursuant to the Offer unless (i) there
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer that number of shares of Company Common Stock which, together with
that number of shares of Company Common Stock owned by Parent, Sub and Parent's
other subsidiaries, would represent more than fifty percent (50%) of the Fully
Diluted Shares (the "Minimum Tender Condition") and (ii) any waiting period
under the HSR Act applicable to the purchase of shares of Company Common Stock
pursuant to the Offer shall have expired or been terminated. The term "Fully
Diluted Shares" means all outstanding securities entitled generally to vote in
the election of directors of the Company on a fully diluted basis, after giving
effect to the exercise or conversion of all options, rights and securities
exercisable or convertible into such voting securities. Furthermore,
notwithstanding any other term of the Offer or this Agreement, Sub shall not be
required to accept for payment or, subject as aforesaid, to pay for any shares
of Company Common Stock not theretofore accepted for payment or paid for, and
may terminate or amend the Offer, (A) with the consent of the Company or (B)
without the consent of the Company at any time on or after the date of this
Agreement and before the first acceptance of such shares for payment or the
payment therefor when any of the following conditions exists:
(a) there shall be threatened or pending any suit, action or
proceeding (other than by Parent or Sub, a stockholder of Parent (that is
not also a stockholder of the Company) or Sub or any person affiliated with
Parent or Sub) which, in the reasonable judgment of Parent, has a
reasonable likelihood of success or would require the expenditure of funds
that are material in relation to the Company and its subsidiaries taken as
a whole to defend (i) challenging the acquisition by Parent or Sub of any
Company Common Stock, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger, or seeking to obtain from the
Company, Parent or Sub any damages that are material in relation to the
Company and its subsidiaries taken as a whole, (ii) seeking to prohibit or
limit the ownership or operation by the Company, Parent or any of their
respective subsidiaries of any material portion of the business or assets
of the Company and its subsidiaries taken as whole or Parent and its
subsidiaries taken as a whole, or to compel the Company, Parent or any of
their respective subsidiaries to dispose of or hold separate any material
portion of the business or assets of the Company and its subsidiaries taken
as whole or Parent and its subsidiaries taken as a whole, as a result of
the Offer or the Merger, (iii) seeking to impose material limitations on
the ability of Parent or Sub to acquire or hold, or exercise full rights of
ownership of, any shares of Company Common Stock, including the right to
vote the Company Common Stock acquired by it on all matters properly
presented to the stockholders of the Company or (iv) seeking to prohibit
Parent or any of its subsidiaries from effectively controlling in any
material respect the business or operations of the Company and the Company
Subsidiaries;
(b) any Law or Judgment enacted, entered, enforced, promulgated,
amended or issued with respect to, or deemed applicable to, or any required
consent or approval withheld with respect to, (i) Parent, the Company or
any of their respective subsidiaries or (ii) the Offer or the Merger, by
any Governmental Entity that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in paragraph (a) above;
(c) except as disclosed in the Company Disclosure Letter, since the
date of this Agreement there shall have occurred any event, change, effect
or development that, individually or in the aggregate, has had or would
reasonably be expected to have, a Company Material Adverse Effect;
(d) the Company Board or any committee thererof shall have withdrawn
or modified in a manner adverse to Parent or Sub, or publicly proposed to
withdraw or modify in a manner adverse to Parent or Sub, its approval or
recommendation of this Agreement, the Offer or the Merger, failed to
recommend to
the Company's stockholders that they accept the Offer or approved or
recommended, or publicly proposed to approve or recommend, any Company
Takeover Proposal;
(e) any of the representations and warranties of the Company contained
in the Agreement (as each such representation or warranty would read if all
qualifications as to materiality or knowledge were deleted therefrom) shall
not be true and correct when made or at any time prior to the consummation
of the Offer as if made at and as of such time except where the failure to
be so true and correct, individually or in the aggregate, has not had and
would not reasonably be expected to have, a Company Material Adverse
Effect;
(f) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement, which failure to perform or comply cannot be or has not been
cured within ten days after the giving of written notice to the Company of
such breach; or
(g) this Agreement shall have been terminated in accordance with its
terms;
which, in the sole and good faith judgment of Sub or Parent, in any such case,
and regardless of the circumstances giving rise to any such condition (including
any action or inaction by Parent or any of its affiliates), makes it inadvisable
to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Parent and,
subject to Section 1.01(a), may be asserted by Sub or Parent regardless of the
circumstances giving rise to such condition or may be waived by Sub and Parent
in whole or in part at any time and from time to time in their sole discretion
(subject to the terms of this Agreement). The failure by Parent, Sub or any
other affiliate of Parent at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts and circumstances and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
