Exhibit 99.1
AGREEMENT AND PLAN OF MERGER, dated as of June 29, 2003 (the "Agreement"),
by and among Xxxx Foods Company, a Delaware corporation (the "Parent"),
Capricorn Acquisition Sub, Inc., a Delaware corporation and a direct wholly
owned Subsidiary of the Parent ("Merger Sub"), and Horizon Organic Holding
Corporation, a Delaware corporation (the "Company").
RECITALS
The respective boards of directors of each of the Parent, Merger Sub and
the Company (and, in the case of the Company, upon recommendation of a special
committee of its board of directors) have approved and declared advisable this
Agreement, the transactions contemplated hereby and the merger of Merger Sub
with and into the Company (the "Merger"), upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of common stock, par value $.001 per share, of the Company (the "Company
Common Stock"), other than shares owned by the Parent, Merger Sub or the Company
and Dissenting Shares (as defined in Section 2.4), will be converted into the
right to receive Cash Consideration (as defined in Section 2.2).
AGREEMENT
In consideration of the foregoing and the mutual covenants and agreements
in this Agreement, the parties, intending to be legally bound, agree as follows:
ARTICLE 1: THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the General Corporation Law of
the State of Delaware (the "DGCL"), Merger Sub shall be merged with and into the
Company at the Effective Time. Following the Effective Time, the Company shall
be the surviving corporation (the "Surviving Corporation") and shall succeed to
and assume all the rights and obligations of the Company in accordance with the
DGCL.
SECTION 1.2 THE CLOSING. The closing of the Merger (the "Closing") will
take place at 9:00 a.m. on a date to be specified by the parties (the "Closing
Date"), which shall be no later than the second Business Day after satisfaction
or waiver of the conditions set forth in Article 6 (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those conditions), unless another time or date is
agreed to by the parties. The Closing will be held at the offices of Xxxxxx &
Xxxx, LLP, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 or such other place
as is agreed to by the parties.
SECTION 1.3 EFFECTIVE TIME. Subject to the provisions of this Agreement,
as soon as practicable on the Closing Date, the parties shall file 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 the Secretary of State of the State of Delaware, or at such subsequent date
or time as the Parent and the Company shall agree and specify in the Certificate
of Merger (the date and time the Merger becomes effective being hereinafter
referred to as the "Effective Time").
SECTION 1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in Section 259 of the DGCL.
SECTION 1.5 CERTIFICATE OF INCORPORATION AND BYLAWS.
(a) The certificate of incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended as of the Effective
Time so that such certificate of incorporation is identical to the certificate
of incorporation of Merger Sub immediately prior to the Effective Time, except
that the Company's name shall be the name of the Surviving Corporation, and, as
so amended, such certificate of incorporation shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
(b) The bylaws of the Company, as in effect immediately prior to the
Effective Time, shall be amended as of the Effective Time so that such bylaws
are identical to the bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, except that the Company's name shall be the name of the
Surviving Corporation, and, as so amended, such bylaws shall be the bylaws of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
SECTION 1.6 BOARD OF DIRECTORS AND OFFICERS.
(a) The directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation until the earlier of
their death, disability, resignation or removal or until their respective
successors are duly elected and qualified.
(b) The officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, until the earlier of
their death, disability, resignation or removal or until their respective
successors are duly elected and qualified.
ARTICLE 2: EFFECT OF THE MERGER ON THE
CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES FOR
CASH CONSIDERATION
SECTION 2.1 EFFECT ON CAPITAL STOCK. As of 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 Merger Sub:
(a) Each share of capital stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
fully paid and nonassessable share of Common Stock, par value $.001 per share,
of the Surviving Corporation.
(b) Each share of Company Common Stock that is owned by the Company,
Merger Sub or the Parent shall automatically be cancelled and shall cease to
exist, and no consideration shall be delivered or deliverable in exchange
therefor.
(c) Subject to the provisions of this Article 2, each share of
Company Common Stock issued and outstanding immediately prior to the Effective
Time (other than
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shares to be cancelled pursuant to Section 2.1(b) and Dissenting Shares) shall
be converted into the right to receive Cash Consideration.
(d) As of the Effective Time, all shares of Company Common Stock
issued and outstanding immediately prior to the Effective Time shall no longer
be outstanding and shall automatically be cancelled and shall cease to exist,
and, subject to Section 2.4, each holder thereof shall cease to have any rights
with respect thereto, except the right to receive Cash Consideration.
SECTION 2.2 CASH CONSIDERATION.
(a) The sole consideration to be paid by the Parent for the benefit
of the Company's shareholders in connection with the Merger shall be immediately
collectible cash funds in the aggregate amount of $24.00 US per share of Company
Common Stock issued and outstanding immediately prior to the Effective Time and
which shall hereinafter be referred to as the "Cash Consideration".
(b) The Cash Consideration may be adjusted as provided herein
below or by mutual agreement.
SECTION 2.3 EXCHANGE OF CERTIFICATES FOR CASH.
(a) The Parent shall enter into an agreement with the Exchange Agent
which shall provide that the Parent shall deposit with the Exchange Agent at the
Effective Time, for the benefit of the holders of shares of Company Common Stock
issued and outstanding immediately prior to the Effective Time, an amount equal
to the Cash Consideration multiplied by the number of shares of Company Common
Stock issued and outstanding immediately prior to the Effective Time other than
shares to be cancelled pursuant to Section 2.1(b) and Dissenting Shares (being
hereinafter referred to as the "Exchange Fund") payable pursuant to Section 2.2
in exchange for certificates representing ownership of such shares.
("Certificates").
(b) Any portion of the Exchange Fund that remains undistributed to
the holders of the Certificates for six months after the Effective Time shall be
delivered to the Parent, and any such holders who have not theretofore complied
with this Article 2 shall thereafter look only to the Parent for payment of
their claim for Cash Consideration with respect to the Company Common Stock and
any cash in lieu of fractional shares of Company Common Stock.
(c) None of the Parent, Merger Sub, the Company or the Exchange
Agent shall be liable to any Person in respect of any shares of Company Common
Stock, any cash in lieu of fractional shares of Company Common Stock or any cash
from the Exchange Fund, in each case delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificate
shall not have been surrendered prior to the date on which any amounts payable
pursuant to this Article 2 would otherwise escheat to or become the property of
any Governmental Entity, any such amounts 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.
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(d) The Exchange Agent shall invest any cash included in the
Exchange Fund, as directed by the Parent, on a daily basis. Any interest and
other income resulting from such investments shall be paid to the Parent. Any
losses resulting from such investments shall not reduce the right of any holder
of a Certificate to receive the amounts otherwise payable pursuant to this
Article 2.
(e) If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and, if required by the Parent, the
posting by such Person of a bond in such reasonable amount as the Parent may
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Certificate the Cash Consideration with respect thereto and,
if applicable, any unpaid dividends and distributions on shares of Company
Common Stock deliverable in respect thereof and any cash in lieu of fractional
shares, in each case pursuant to this Agreement.
(f) The Parent, the Surviving Corporation and the Exchange Agent
shall be entitled to deduct and withhold from the amounts otherwise payable to a
holder of shares of Company Common Stock pursuant to this Article 2 such amounts
as any of them reasonably determines to be required to be deducted and withheld
under the Internal Revenue Code of 1986 (the "Code") or provisions of other Tax
law. To the extent that such amounts are so withheld, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
former holder of shares of Company Common Stock in respect of which such
deduction and withholding was made by the Parent, the Surviving Corporation or
the Exchange Agent.
SECTION 2.4 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary,
any shares of Company Common Stock as to which the holder thereof has demanded
and properly perfected appraisal in accordance with Section 262 of the DGCL and
has neither effectively withdrawn nor lost the right to such appraisal
("Dissenting Shares") shall not be converted into or represent a right to
receive Cash Consideration, but the holder thereof shall be entitled to only
such rights as are granted by the DGCL.
(b) Notwithstanding the provisions of Section 2.4(a), if any holder
of shares of Company Common Stock who demands appraisal of shares of Company
Common Stock under the DGCL effectively withdraws or loses (through failure to
perfect or otherwise) the right to appraisal, then as of the Effective Time or
the occurrence of such event, whichever later occurs, such holder's shares of
Company Common Stock shall automatically be converted into and represent only
the right to receive Cash Consideration as provided in Sections 2.2 and 2.3,
without interest, upon surrender of the Certificates representing such shares of
Company Common Stock pursuant to Section 2.3.
(c) The Company shall give the Parent (i) prompt notice of any
written demands for appraisal or payment of the fair value of any shares of
Company Common Stock, withdrawals of such demands and any other instruments
related to Dissenting Shares received by the Company or any of its directors or
officers and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the DGCL. Except with the prior
written consent of the Parent, the Company shall not voluntarily make any
payment, admissions
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or statements against interest with respect to any demands for appraisal, or
settle or offer to settle any such demands.
SECTION 2.5 COMPANY STOCK OPTIONS; ESPP; RESTRICTED SHARES.
(a) At the Effective Time, the Parent shall assume all
then-outstanding Company Stock Options (as defined in Section 3.3(b)) or other
rights to acquire Company Common Stock and shall substitute similar rights to
acquire ("Parent Stock Options") shares of the Common Stock, $.01 par value, of
the Parent ("Parent Common Stock") as follows: As soon as practicable following
the date of this Agreement, the board of directors of the Company (or, if
appropriate, any committee thereof administering the Company Stock Plans) shall
adopt such resolutions or take such other actions as may be required to effect
this Section 2.5 as of the Effective Time. The assumption and substitution will
be in accordance with Section 424 of the Code and Treasury Regulation 1.425-1 so
that no modification of the Company Stock Options will occur as a result of the
assumption and substitution.
(b) Prior to the Effective Time, the Company shall deliver to the
holders of Company Stock Options notices, in a form satisfactory to the Parent,
setting forth such holders' rights pursuant to the respective Company Stock
Plans and the agreements evidencing the grants of such Company Stock Options and
how such options may be exchanged for Parent Stock Options by following
procedures to be communicated in the notice including without limitation federal
withholding tax information, if any withholding tax is applicable.
(c) At the Effective Time, the Parent shall assume all
then-outstanding stock options under the Company's 1998 Equity Incentive Plan
and shall substitute Parent Stock Options therefor, and the Company's Employee
Stock Purchase Plan shall be terminated.
ARTICLE 3: REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
Except as disclosed in the disclosure letter delivered by the Company to
the Parent concurrently with the execution of this Agreement (the "Company
Disclosure Letter"), each Section of which shall be deemed to modify all other
Sections thereof, the Company represents and warrants to the Parent and Merger
Sub as follows:
SECTION 3.1 ORGANIZATION, STANDING AND CORPORATE POWER. As set forth in
Section 3.1 of the Company Disclosure Letter, the Company and each of its
Subsidiaries is a corporation or other legal entity duly organized, validly
existing and in good standing (with respect to jurisdictions which recognize
such concept) under the laws of the jurisdiction in which it is organized and,
further, each such corporation has all requisite corporate or other power, as
the case may be, and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted, except for those
jurisdictions where the failure to be so organized, existing or in good
standing, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Company. Each of the Company and its
Subsidiaries is duly qualified or licensed to do business and is in good
standing (with respect to jurisdictions which recognize such concept) in each
such jurisdiction in which the nature of its business or the ownership, leasing,
licensing, or operation of its assets makes such qualification or licensing
necessary, except for those jurisdictions where the failure to be so qualified
or licensed or to be in good standing, individually or in the aggregate, would
not reasonably be expected to have a
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Material Adverse Effect on the Company. The Company has provided to the Parent
prior to the execution of this Agreement complete and correct copies of its
certificate of incorporation and bylaws, as amended to the date of this
Agreement. The Company is not in violation of any of the provisions of its
charter or bylaws, as amended to the date of this Agreement.
SECTION 3.2 TITLE TO ASSETS; SUBSIDIARIES.
(a) The Company and its Subsidiaries have good and marketable title
to, or the right to use, the assets and properties owned by them or used in
their respective businesses, free and clear of all pledges, claims, liens,
charges, encumbrances, mortgages and security interests of any kind or nature
whatsoever (collectively, "Liens"), except for (i) Liens securing indebtedness
disclosed in the Company Financial Statements and/or Company Disclosure Letter,
(ii) purchase money security interests arising by operation of law with respect
to assets acquired in the ordinary course of business subsequent to December 31,
2002, (iii) any (A) mechanics', carriers', workers' and other similar Liens
arising in the ordinary course of business which are not delinquent and which in
the aggregate are not material in amount, and do not interfere with the present
use of the assets of the Company or any of its Subsidiaries to which they apply;
(B) Liens for current Taxes not yet due and payable; (C) Liens that have arisen
in the ordinary course of business and that do not (individually or in the
aggregate) materially impair the operations of the Company or any of its
Subsidiaries; and (iv) with respect to any asset of the Company or any of its
Subsidiaries which consists of a leasehold or other possessory interest in real
property, all Liens, covenants, imperfections in title, easements, restrictions
and other title matters (whether or not the same are recorded) not known to the
Company or such Subsidiary to which the underlying fee estate in such real
property is subject which were not created by or incurred by the Company or its
Subsidiaries so long as all such Liens, covenants, imperfections in title,
easements, restrictions and other title matters do not (individually or in the
aggregate) materially impair the operations of the Company or any of its
Subsidiaries (the Liens referred to in clauses (i) through (iv) are
collectively, "Permitted Liens").
(b) SECTION 3.2 of the Company Disclosure Letter sets forth a true
and complete list of each of the Company's Subsidiaries. Other than such
Subsidiaries, the Company has no subsidiaries or affiliated companies and does
not otherwise own or control, directly or indirectly, any equity interest in any
corporation, association or business entity. All the outstanding shares of
capital stock of, or other equity interests in, each Subsidiary of the Company
have been validly issued, are fully paid and nonassessable and are owned,
directly or indirectly, by the Company, free and clear of all Liens and free of
any restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests, except restrictions arising under applicable
securities laws.
SECTION 3.3 CAPITAL STRUCTURE.
(a) Effective as of the Closing, the authorized capital stock of the
Company shall consist of 30,000,000 shares of Common Stock and 5,000,000 shares
of Preferred Stock $.001 par value per share. As of June 26, 2003, the number of
shares of Common Stock issued and outstanding is 10,354,325 (excluding any
shares issued upon exercise of Company Stock Options after June 19, 2003), and
no shares of Preferred Stock are issued or outstanding. The outstanding shares
have been duly authorized and validly issued and are fully paid and
non-assessable. Except as disclosed in the Company Disclosure Letter, there are
no options, warrants or other rights to purchase any of the Company's authorized
and unissued capital stock and,
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further, there are no preemptive rights or rights of first refusal with respect
to the Company's capital stock or agreements which, through anti-dilution
protection or otherwise, obligate the Company to issue its capital stock.
(b) Concurrently with the delivery of this Agreement, the Company is
delivering to the Parent a complete and correct list, as of the date of this
Agreement, of each holder of outstanding stock options or other rights to
purchase or receive Company Common Stock (collectively, the "Company Stock
Options"), the number of shares of Company Common Stock subject to such Company
Stock Option, the name of the Company Stock Plan pursuant to which such Company
Stock Option was granted, the exercise price of such Company Stock Option, the
vesting schedule of such Company Stock Option, the extent to which such Company
Stock Option is vested, the Tax status under Section 422 of the Code of such
Company Stock Option, the term of such Company Stock Option and the events
(including the Merger, the Closing, the performance of any duties or
transactions required hereunder or termination of service following the Merger)
which could accelerate the vesting of such Company Stock Option.
(c) All outstanding shares of Company Common Stock are, and all
shares which may be issued by the Company before the Effective Time will be,
when issued, duly authorized, validly issued, fully paid and nonassessable and
will be delivered free and clear of all Liens (other than Liens created by or
imposed upon the holders thereof) and not subject to preemptive rights. Except
as set forth in this Section 3.3 (including pursuant to the conversion or
exercise of the securities referred to above) and except pursuant to Company
Stock Options issued as expressly permitted by the terms of Section 5.1(b), (i)
there are not issued, reserved for issuance or outstanding (A) any shares of
capital stock or other voting securities of the Company or any of its
Subsidiaries (other than shares of capital stock or other voting securities of
such Subsidiaries that are directly or indirectly owned by the Company free and
clear of Liens), (B) any securities of the Company or any of its Subsidiaries
convertible into or exchangeable or exercisable for shares of capital stock or
other voting securities of, or other ownership interests in, the Company or any
of its Subsidiaries, or (C) any warrants, calls, options or other rights to
acquire from the Company or any of its Subsidiaries, and no obligation of the
Company or any of its Subsidiaries to issue, any capital stock or other voting
securities of, or other ownership interests in, or any securities convertible
into or exchangeable or exercisable for any capital stock or other voting
securities of, or other ownership interests in, the Company or any of its
Subsidiaries and (ii) there are no outstanding obligations of the Company or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver or sell, or cause to be issued, delivered or
sold, any such securities. Neither the Company nor any of its Subsidiaries is a
party to any voting trust, proxy or other agreement with respect to the voting
of any such securities (not including any such agreement with the Parent).
SECTION 3.4 AUTHORITY; NONCONTRAVENTION.
(a) The Company has all requisite corporate power and authority to
enter into this Agreement, to perform its obligations hereunder and, subject to
receipt of the Company Stockholder Approval, to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement by
the Company and the consummation of the transactions contemplated by this
Agreement by the Company have been duly authorized by all necessary corporate
action on the part of the Company, and no other corporate proceedings on
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the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby, subject, in the case of the
Merger, to receipt of the Company Stockholder Approval. This Agreement has been
duly executed and delivered by the Company and, assuming the due authorization,
execution and delivery by the Parent and Merger Sub, constitutes a legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as subject to laws of general application
related to bankruptcy, insolvency and the relief of debtors and the rules of law
governing specific performance, injunctive relief or other equitable remedies.
(b) The execution and delivery of this Agreement, and the
consummation of the transactions provided herein and compliance with the
provisions of this Agreement do not and will not, conflict with, or result in
any violation of, breach or default (with or without notice or lapse of time, or
both) under, or give rise to a right of amendment, termination, cancellation or
acceleration of any obligation or to the loss of a benefit under or increase of
obligation under, or require payment under, or result in the creation of any
Lien upon any of the properties or assets owned by, licensed to, or leased by
the Company or any of its Subsidiaries under, (i) the certificate of
incorporation or bylaws of the Company or the comparable organizational
documents of any of its Subsidiaries, (ii) except as disclosed in Section 3.4(b)
of the Company Disclosure Letter, any Contract, commitment, arrangement,
understanding, instrument, permit, concession, franchise or similar
authorization applicable to the Company or any of its Subsidiaries or their
respective assets or (iii) subject to the governmental filings and other matters
referred to in Section 3.4(c), (A) any judgment, order or decree or (B) any
statute, law, ordinance, rule or regulation, in each case applicable to the
Company or any of its Subsidiaries or their respective properties or assets,
other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in the
aggregate would not reasonably be expected to (x) have a Material Adverse Effect
on the Company, (y) impair the ability of the Company to perform its obligations
under this Agreement or (z) prevent or materially delay the consummation of the
transactions provided herein.
(c) No consent, approval, order or authorization of, action by or in
respect of, or registration, recordation, declaration or filing with, any
federal, state, local or foreign government, any court, administrative,
regulatory or other governmental agency, commission or authority or any
non-governmental self-regulatory agency, commission or authority (each a
"Governmental Entity") is required by or with respect to the Company or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions provided
herein, except for (i) the filing with the Securities and Exchange Commission
(the "SEC") of (A) a proxy statement relating to the Company stockholders
meeting called for the purpose of obtaining Company Stockholder Approval (such
proxy statement, as amended or supplemented from time to time, the "Proxy
Statement") and (B) such reports under Section 13(a), 13(d), 15(d) or 16(a) of
the Securities Exchange Act of 1934 (the "Exchange Act") as may be required in
connection with this Agreement, and the transactions provided herein; (ii) 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 other states
in which the Company is qualified to do business and such filings with
Governmental Entities to satisfy the applicable requirements of state securities
or "blue sky" laws; (iii) all applicable filings, and the termination or
expiration of all applicable waiting periods, under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (xxx
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"XXX Xxx"), as may be required in connection with this Agreement (the "HSR
Compliance") and (iv) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be made or
obtained individually or in the aggregate would not reasonably be expected to
(x) have a Material Adverse Effect on the Company, (y) impair the ability of the
Company to perform its obligations under this Agreement or (z) prevent or
materially delay the consummation of the transactions provided herein.
SECTION 3.5 SEC DOCUMENTS; UNDISCLOSED LIABILITIES.
(a) The Company has filed all required reports, schedules, forms,
statements and other documents (including exhibits and all other information
incorporated therein) with the SEC since December 31, 2002 (the "Company SEC
Documents"). As of their respective dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act of 1933 (the
"Securities Act") or the Exchange Act, as the case may be, and none of the
Company SEC Documents when filed (unless amended or superseded in a Company SEC
Document, then on the date of such later filing) contained any untrue statement
of a material fact or omitted 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. Except to the extent
that information contained in a Company SEC Document has been revised or
superseded in a subsequently filed Company SEC Document, none of the Company SEC
Documents contains any untrue statement of a material fact or omits 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.
(b) The financial statements of the Company included in the Company
SEC Documents comply as to form, as of their respective dates of filing with the
SEC, in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto (the "Accounting
Rules"), 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,
in all material respects, 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 recurring non-material year-end
audit adjustments).
(c) Section 3.5(c) of the Company Disclosure Letter contains the
audited consolidated financial statements of the Company as of December 31,
2002, and such financial statements have been prepared in accordance with GAAP
applied on a consistent basis and present fairly, in all material respects, the
financial position of the Company and its consolidated Subsidiaries as of
December 31, 2002 and their consolidated results of operations and cash flows
for the year then ended (except for the omission of the notes thereto and
subject to non-material year-end audit adjustments).
(d) Except (i) as reflected in the most recent financial statements
included in the Company SEC Documents or in the notes thereto or (ii) for
liabilities incurred in connection with this Agreement, neither the Company nor
any of its Subsidiaries has any material liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise).
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SECTION 3.6 INTELLECTUAL PROPERTY.
(a) The Company and each of its Subsidiaries (i) owns or has the
right to use, free and clear of all liens, claims and restrictions, all patents,
trademarks, service marks, trade names, copyrights, licenses and rights with
respect to the foregoing (the "Company Intellectual Property") used in the
conduct of its business as now conducted or as proposed to be conducted without
infringing upon or otherwise acting adversely to the right or claimed right of
any person under or with respect to any of the foregoing, and (ii) is not
obligated or under any liability whatsoever to make any payments by way of
royalties, fees or otherwise to any owner of, licensor of, or other claimant to,
any patent, trademark, trade name, copyright or other intangible asset, with
respect to the use thereof or in connection with the conduct of its business or
otherwise. All patents, registered trademarks and registered copyrights (or
applications therefor) owned by the Company and each of its Subsidiaries are
listed in the Company Disclosure Letter.
(b) The Company and each of its Subsidiaries owns or has the
unrestricted right to use all trade secrets required for or incident to the
development, processing and sale of all products sold by the Company and each of
its Subsidiaries, free and clear of any rights, liens or claims of others,
including without limitation, former employers of all employees of the Company.
(c) No claim has been asserted by any Person against the Company or
any of its Subsidiaries regarding the ownership of or the right to use any
Company Intellectual Property or challenging the rights of the Company or any of
its Subsidiaries with respect to any of the Company Intellectual Property.
(d) No Person has asserted any claim that any product, activity or
operation of the Company or any of its Subsidiaries infringes upon or involves,
or has resulted in the infringement of, any proprietary right of such Person,
and no proceedings have been instituted, are pending or, to the Company's
Knowledge, are threatened which challenge the rights of the Company or any of
its Subsidiaries with respect thereto.
SECTION 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as contemplated
by this Agreement or as disclosed in Section 3.7 of the Company Disclosure
Letter (including those actions not prohibited under Section 5.1) and except for
changes disclosed in the Company SEC Documents filed prior to the execution of
this Agreement, the Company and its Subsidiaries have conducted their business
only in the ordinary course and consistent with past practice, and since
December 31, 2002 there has not been (a) any events or occurrences that
individually or in the aggregate would reasonably be expected to have a Material
Adverse Effect on the Company, (b) any declaration, setting aside or payment of
any dividend or other distribution (whether in cash, stock or property) with
respect to any of the Company's capital stock (other than as expressly permitted
by the terms of Section 5.1(a)), (c) any purchase, redemption or other
acquisition of any shares of capital stock or any other securities of the
Company or any of its Subsidiaries or any options, warrants, calls or rights to
acquire such shares or other securities, (d) any split, combination or
reclassification of any of the Company's 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 the Company's capital stock, (e)(i) any
granting by the Company or any of its Subsidiaries to any current or former
director, officer or other employee of the Company or its Subsidiaries of any
increase in compensation, bonus or other benefits, except for normal annual
10
merit increases in cash compensation to non-officer employees in the ordinary
course of business consistent with past practice or as was required under any
employment agreements in effect as of the date of the most recent financial
statements included in the Company SEC Documents and other than as expressly
permitted by the terms of Section 5.1(k), (ii) any granting by the Company or
any of its Subsidiaries to any such current or former director, officer or
employee of any increase in severance or termination pay, except to non-officer
employees in the ordinary course of business consistent with past practice,
(iii) any entry by the Company or any of its Subsidiaries into, or any
amendments of, any Benefit Plan with any current or former director, officer or
employee, except with non-key employees in the ordinary course of business
consistent with past practice, (iv) any amendment to, or modification of, any
Company Stock Option, (v) except insofar as may have been required by a change
in GAAP, any change in accounting methods, principles or practices by the
Company or any of its Subsidiaries materially affecting their respective assets,
liabilities, results of operations or businesses, (vi) any Tax election that,
individually or in the aggregate, would reasonably be expected to adversely
affect in any material respect the Tax liability or Tax attributes of the
Company or any of its Subsidiaries, (vii) any settlement or compromise of any
material income Tax liability, (viii) any acquisition, sale or transfer of any
material asset of the Company or any of its Subsidiaries other than in the
ordinary course of business consistent with past practice, (ix) any entering
into by the Company or any of its Subsidiaries of any material contract or
agreement, or material amendment or termination of any material contract or
agreement (other than in the ordinary course of business) or default by the
Company or any of its Subsidiaries under, any material contract to which the
Company or any of its Subsidiaries is a party or by which it is bound (or to the
Knowledge of the Company, by any other party thereto), (x) any revaluation by
the Company or any of its Subsidiaries of any of their respective material
assets or (xi) except as would not individually or in the aggregate reasonably
be expected to have a Material Adverse Effect on the Company, any lapse,
reversion, termination or expiration of any Company Intellectual Property, (f)
any damage, destruction or loss (whether or not covered by insurance) with
respect to any assets of the Company or any of its Subsidiaries that would
reasonably be expected to have a Material Adverse Effect on the Company or (g)
any acquisition or divestiture of, or investment in, the equity or debt
securities of any Person.
SECTION 3.8 LITIGATION. Except as disclosed in Section 3.8 of the Company
Disclosure Letter, there is no suit, arbitration, action, proceeding,
investigation, audit or claim of any kind, at law or in equity (including
actions or proceedings seeking injunctive relief) ("Litigation") pending or, to
the Knowledge of the Company, threatened against or affecting the Company or any
of its Subsidiaries that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company, nor is there any
judgment, decree, settlement agreement, investigation, writ, award, injunction,
rule or order of any Governmental Entity or arbitrator outstanding against the
Company or any of its Subsidiaries, having, or which would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company. Section 3.8 of the Company Disclosure Letter sets forth, as of the
date of this Agreement, a complete list of all suits, arbitrations, actions,
investigations, audits, claims or proceedings of any kind to which the Company,
or any of its Subsidiaries or any of their assets are, or could reasonably be
expected to be, a party or bound.
SECTION 3.9 CERTAIN CONTRACTS. All material contracts, agreements and
instruments to which the Company or any of its Subsidiaries is a party or
otherwise bound (collectively, the
11
"Company Material Contracts") are valid, binding and in full force and effect in
all material respects, and are valid, binding and enforceable by the Company in
accordance with their respective terms. Neither the Company nor any of its
Subsidiaries has violated any provision of, or committed or failed to perform
any act which, with or without notice, lapse of time or both, would constitute a
default under the provisions of, any Company Material Contract, except in each
case for those violations and defaults that would not reasonably be expected to
result in a Material Adverse Effect on the Company. Each such Company Material
Contract is listed in the Company Disclosure Letter.
SECTION 3.10 COMPANY PERMITS, COMPLIANCE WITH APPLICABLE LAWS, OTHER
INSTRUMENTS, NONE BURDENSOME.
(a) Each of the Company and its Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own, lease
and operate its properties and to carry on its business as it is now being
conducted (collectively, the "Company Permits"), and there is no Litigation
pending or, to the Company's Knowledge, threatened relating to the suspension or
cancellation of any of the Company Permits, other than such failure to so
possess or Litigation which would not reasonably be expected to have a Material
Adverse Effect on the Company. Neither the Company nor any of its Subsidiaries
is in conflict with, or in default (nor has there occurred any event that with
notice or lapse of time or both would become a default) or violation of (a) any
law applicable to the Company or any of its Subsidiaries or by or to which any
of their assets is bound or subject or (b) any of the Company Permits, except
for such conflicts, defaults or violations as would not reasonably be expected
to have a Material Adverse Effect on the Company.
(b) The Company and its Subsidiaries are not in violation of any material
term or provision of any material mortgage, indebtedness, indenture, contract,
agreement, instrument, judgment or decree, and they are not in violation of any
order, statute, rule, law or regulation applicable to the Company and its
Subsidiaries, the violation of which would reasonably be expected to have a
Material Adverse Effect on the Company or its operations. The execution,
delivery and performance of and compliance with this Agreement have not resulted
and will not result in any violation of, or conflict with, or constitute a
default under, any of the terms of any corporate restriction or of any
indenture, mortgage, deed of trust, pledge, bank loan or credit agreement,
corporate charter, bylaw or any instrument, document or agreement by which the
Company, any of its Subsidiaries or any of their properties may be bound or
affected, or result in the creation of any mortgage, pledge, lien, encumbrance
or charge upon any of the properties or assets of the Company or any of its
Subsidiaries.
SECTION 3.11 BENEFIT PLANS.
(a) Section 3.11(a) of the Company Disclosure Letter lists (i) each
individual employment, termination or severance agreement with employees or
former employees of the Company or any of its Subsidiaries, (ii) all employee
benefit plans as that term is defined in Section 3(3) of the Employee Retirement
and Income Security Act of 1974 ("ERISA") and (iii) all other plans or
compensation arrangements, maintained or contributed to by the Company or any of
its Subsidiaries for the benefit of their employees (or former employees) and/or
their
12
beneficiaries ("Benefit Plans"). An arrangement will not fail to be a Benefit
Plan simply because it only covers one individual.
(b) The Company has delivered or made available to the Parent a true
and complete copy of the following documents (to the extent that they are
applicable): (i) each Benefit Plan and any related funding agreements, including
all amendments (and Section 3.11(b) of the Company Disclosure Letter includes a
description of any such amendment that is not in writing), (ii) the two most
recent Form 5500s (including all applicable schedules and the opinions of the
independent accountants) that were filed on behalf of any Benefit Plan, (iii)
the most recent favorable determination letter, if any, with respect to each
Benefit Plan, and (iv) the most recently disseminated summary plan description
and an explanation of any material plan modifications made after the date
thereof.
(c) To the Knowledge of the Company, each Benefit Plan at all times
has been operated in accordance with its terms, and complies currently, and has
complied in the past, both in form and in operation, with all applicable laws,
including ERISA and the Code.
(d) The Company does not maintain any Benefit Plan that provides (or
will provide) medical, death, or other fringe benefits to former employees or
independent contractors (including retirees), other than benefits that are
required to be provided pursuant to Section 4980B of the Code or state law
continuation coverage or conversion rights.
(e) Except as provided in Section 3.11(e) of the Company Disclosure
Letter, none of the Benefit Plans provide any benefits that would result in
excess parachute payments (within the meaning of Section 280G of the Code),
either (i) solely as a result of the performance of the terms and conditions of
this Agreement or (ii) any actions taken after the Closing. Furthermore, the
closing of this Agreement and the performance of the transactions provided
herein will not require the funding, whether formal or informal, of the benefits
under any Benefit Plan (e.g., contributions to a Rabbi Trust).
(f) No Benefit Plan is subject to Title IV of ERISA.
(g) Except as would not, individually or in the aggregate reasonably
be expected to have a Material Adverse Effect on the Company, none of the
Persons performing services for the Company have been improperly classified as
being independent contractors, leased employees or as being exempt from the
payment of wages for overtime.
(h) Other than routine claims for benefits under the Benefit Plan
and those relating to qualified domestic relations orders, there are no (i)
pending or (ii) to the Knowledge of the Company, threatened lawsuits or other
claims against or involving any Benefit Plan, or any Fiduciary (within the
meaning of Section 3(21)(A) of ERISA) of such Benefit Plan brought on behalf of
any participant, beneficiary, or Fiduciary thereunder, nor is there any
reasonable basis for any such claim.
(i) Except as disclosed in Section 3.11(i) of the Company Disclosure
Letter, the Company has no intention or commitment, whether legally binding or
not, to create any additional Benefit Plan, or to modify any existing Benefit
Plan so as to increase benefits to participants or the cost of maintaining the
Benefit Plan. The benefits under all Benefit Plans are as represented, and have
not been, and will not be, increased subsequent to the date of this
13
Agreement. No statement, either oral or written, has been made by the Company
(or any agent of the Company) to any Person regarding any Benefit Plan that is
not in accordance with such Benefit Plan that could have adverse economic
consequences to the Parent or the Surviving Corporation.
(j) To the Knowledge of the Company, all costs of administering and
contributions required to be made to each Benefit Plan under the terms of that
Benefit Plan, ERISA, the Code, or any other applicable law have been timely
made, and are fully deductible in the year for which they were paid, and all
other amounts that should be accrued to date as liabilities of the Company under
or with respect to each Benefit Plan (including administrative expenses and
incurred but not reported claims) for the current plan year of the Benefit Plan
have been recorded on the books of the Company.
(k) For purposes of this Section 3.11 only, the term the "Company"
shall include any entity that is aggregated with the Company under Section
414(b), (c), (m), or (o) of the Code.
(l) Section 3.11(l) of the Company Disclosure Letter contains a
complete listing of all employees of the Company as of the date of this
Agreement. Except as set forth in Section 3.11(l) of the Company Disclosure
Letter, the Company does not have collective bargaining, union or labor
agreements, contracts or other arrangements with any group of employees, labor
union or employee representative and, to the Knowledge of the Company, there is
no organizational effort currently being made or threatened by or on behalf of
any labor union with respect to employees of the Company.
SECTION 3.12 TAXES. The Company has timely filed, or has obtained
extensions with respect to, all tax returns and reports ("Tax Returns") that are
required to have been filed by or with respect to the Company and each of its
Subsidiaries with the appropriate federal, state, county and local governmental
agencies and instrumentalities. Except as disclosed in Section 3.12 of the
Company Disclosure Letter, the Company and each of its Subsidiaries has paid all
Taxes that are due from or with respect to it. The Company has paid or
established reserves for all income, franchise, payroll and other taxes due as
reflected on those returns. The Company has withheld and paid all Taxes required
by all applicable laws to be withheld or paid in connection with any amounts
paid or owing to any employee, creditor, independent contractor or other third
party. There is no pending dispute with any taxing authority relating to any of
the Company's returns, and except as disclosed in Section 3.12 of the Company
Disclosure Letter, no claim has been made by a taxing authority in a
jurisdiction in which the Company does not file Tax Returns that the Company is
required to file Tax Returns in such jurisdictions. No assessment of any
deficiency or material liability for any tax is proposed to be imposed upon the
Company, any of its Subsidiaries or any of their properties or assets for which
there is not an adequate reserve reflected in the Financial Statements. Except
as disclosed in Section 3.12 of the Company Disclosure Letter, no federal or
state income or sales Tax Returns of the Company have been audited. There are no
outstanding agreements, waivers or arrangements extending the statutory period
of limitation applicable to any claim for, or the period for the collection or
assessment of, Taxes due from or with respect to the Company or any of its
Subsidiaries for any taxable period. Except as disclosed in Section 3.12 of the
Company Disclosure Letter, no audit, action, proceeding, investigation, dispute
or claim by any court, governmental or regulatory authority or similar person is
being conducted or is pending or, to the Company's Knowledge,
14
threatened in regard to any Taxes due from or with respect to the Company or any
of its Subsidiaries or any Tax Return filed by or with respect to the Company or
any of its Subsidiaries. Neither the Company nor any of its Subsidiaries has any
obligation or liability for the payment of Taxes of any other Person arising as
a result of any obligation to indemnify another Person or as a result of the
Company or any of its Subsidiaries assuming or succeeding to the Tax liability
of any other Person as a successor, transferee or otherwise. All Taxes accrued
but not yet due and all contingent liabilities for Taxes are adequately
reflected in the reserves for Taxes in the financial statements referred to in
this Agreement. None of the Company or any of its Subsidiaries has been a party
to any distribution occurring during the last two years in which the parties to
such distribution treated the distribution as one to which Section 355 of the
Code is applicable.
SECTION 3.13 INFORMATION SUPPLIED. None of the information supplied or to
be supplied by the Company specifically for inclusion or incorporation by
reference in the Proxy Statement 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 Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act. No representation or warranty is made
by the Company with respect to statements made or incorporated by reference
therein based on information supplied by the Parent specifically for inclusion
or incorporation by reference in the Proxy Statement.
SECTION 3.14 VOTING REQUIREMENTS.
(a) The board of directors of the Company at a meeting duly called and
held (i) determined that the Merger is advisable, fair to and in the best
interests of the Company and its stockholders; (ii) approved the Merger, this
Agreement and the transactions contemplated by this Agreement; (iii) recommended
approval of this Agreement and the Merger by the Company's stockholders and (iv)
directed that the Merger be submitted for consideration by the Company's
stockholders.
(b) The affirmative vote of the holders of a majority of the voting power
of all outstanding shares of Company Common Stock, as of the record date for the
Company Stockholders Meeting, adopting this Agreement (the "Company Stockholder
Approval") is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve and adopt this Agreement or perform
any of the transactions provided herein.
SECTION 3.15 STATE TAKEOVER STATUTES. The board of directors of the
Company, either directly or through action of a duly authorized committee
thereof has taken all necessary action to ensure that the provisions of Section
203 of the DGCL do not apply to the Parent or Merger Sub in connection with the
Merger, the Closing, and the due performance of any other transactions provided
herein. No other state takeover statute or similar statute or regulation is
applicable to the Merger or the other Transactions.
SECTION 3.16 BROKERS. No broker, investment banker, financial advisor or
other Person, other than RBC Xxxx Xxxxxxxx, Inc., a member company of RBC
Capital Markets ("RBC Xxxx Xxxxxxxx, Inc.") 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
15
connection with the Merger, the Closing and any other transactions provided
herein, based upon arrangements made by or on behalf of the Company. The Company
has furnished to the Parent true and complete copies of all agreements under
which any such fees or expenses are payable and all indemnification and other
agreements related to the engagement of the Persons to whom such fees are
payable.
SECTION 3.17 OPINION OF FINANCIAL ADVISOR. The Company has received the
written opinion of RBC Xxxx Xxxxxxxx, Inc., dated June 29, 2003, to the effect
that, as of such date, the consideration is fair, from a financial point of
view, to the stockholders of the Company, a signed copy of which opinion has
been or promptly will be delivered to the Parent.
SECTION 3.18 ABSENCE OF QUESTIONABLE PAYMENTS. Neither the Company nor any
of its Subsidiaries nor any director, officer, agent, employee or other Person
acting on behalf of the Company or any of its Subsidiaries, has used any
corporate or other funds for unlawful contributions, payments, gifts, or
entertainment, or made any unlawful expenditures relating to political activity
to any foreign or domestic government officials, employees or others or to any
foreign or domestic political parties or campaigns or established or maintained
any unlawful or unrecorded funds in violation of Section 30A of the Exchange Act
or violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended, or made any other unlawful payment. Neither the Company nor any of its
Subsidiaries nor any current director, officer, agent, employee or other Person
acting on behalf of the Company or any of its Subsidiaries, has accepted or
received any unlawful contributions, payments, gifts or entertainment. The
Company and each of its Subsidiaries that is required to file reports pursuant
to Section 12 or 15(d) of the Exchange Act is in compliance with the provisions
of Section 13(b) of the Exchange Act.
SECTION 3.19 INSIDER INTERESTS. No officer or director of the Company or
any of its Subsidiaries has any material interest in any property, real or
personal, tangible or intangible, including inventions, patents, trademarks or
trade names, used in or pertaining to the business of the Company or any of its
Subsidiaries.
SECTION 3.20 COMPANY TRANSACTIONS WITH ITS OFFICERS, DIRECTORS OR
STOCKHOLDERS. Neither the Company nor any of its Subsidiaries is indebted,
either directly or indirectly, to any of its officers, directors or stockholders
or any Affiliate thereof or to their respective spouses or children, in any
amount whatsoever, other than for payment of salary for services rendered and
reasonable expenses. Except as set forth in Section 3.20 of the Company
Disclosure Letter, none of the Company's officers, directors or stockholders or
any Affiliate thereof or any members of their immediate families is indebted to
the Company, nor do any of the officers or directors or any Affiliate thereof
or, to the Knowledge of the Company, stockholders or any of their Affiliates
have any direct or indirect ownership interests in any firm or corporation which
controls, is controlled by or under common control with the Company or which
competes with the Company, or with which the Company has a material supplier or
customer relationship, except with respect to any aggregate interest in less
than five percent (5%) of the stock of any corporation whose stock is publicly
traded. No officer, director or stockholder or any Affiliate thereof or any
member of their immediate families is, directly or indirectly, interested in any
material contract with the Company. Neither the Company nor any of its
Subsidiaries is a guarantor or indemnitor of any indebtedness of any other
Person.
16
SECTION 3.21 ENVIRONMENTAL LAWS. The properties, operations and activities
of the Company and its Subsidiaries are in compliance in all material respects
with all applicable Environmental Laws (as defined below), which compliance
includes the possession by the Company and its Subsidiaries of all permits,
licenses, and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof,
including without limitation those relating to the treatment, storage, disposal
or release of Materials of Environmental Concern. The Company and its
Subsidiaries have not received any notice or other communication that alleges
that the Company and its Subsidiaries are not in compliance with any
Environmental Law. The Company and its Subsidiaries and the properties and
operations of the Company and its Subsidiaries are not subject to any existing,
pending or, to the Company's Knowledge, threatened action, suit, claim,
investigation, inquiry or proceeding by or before any Governmental Entity under
any Environmental Law, other than such actions, suits, claims, investigations,
inquiries or proceedings as would not reasonably be expected to have a Material
Adverse Effect on the Company. The Company and its Subsidiaries have satisfied
and are currently in compliance with all financial responsibility requirements
applicable to their operations and imposed by any Governmental Entity under any
Environmental Law, and the Company and its Subsidiaries have not received any
notice of noncompliance with any such financial responsibility requirements,
other than any such failure to satisfy or noncompliance as would not reasonably
be expected to have a Material Adverse Effect on the Company. Except as
disclosed in Section 3.21 of the Company Disclosure Letter, there are no
environmental conditions existing on any property of the Company or its
Subsidiaries or resulting from the Company's or any such Subsidiaries'
operations or activities, past or present, at any location, that would give rise
to any on-site or off-site remedial obligations imposed on the Company or any of
its Subsidiaries under any Environmental Laws or that would impact the soil,
groundwater, surface water or human health, other than any such conditions as
would not reasonably be expected to have a Material Adverse Effect on the
Company. Neither the Company nor any of its Subsidiaries has disposed of,
emitted, discharged, handled, stored, transported, used or released any
Materials of Environmental Concern (as defined below) so as to give rise to any
material claim, liability or material corrective or remedial obligation under
any Environmental Laws. "ENVIRONMENTAL LAW" means any federal, state or local
law relating to pollution or protection of human health or the environment,
including any law or regulation relating to emissions, discharges, releases or
threatened release of Materials of Environmental Concern, or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern, including without
limitation, the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Hazardous & Solid Waste Amendments Act
of 1984, as amended, the Superfund Amendments and Reauthorization Act of 1986,
as amended, any state laws implementing the foregoing federal laws, and all
other environmental conservation or protection laws. "MATERIALS OF ENVIRONMENTAL
CONCERN" include chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products or any derivative or by-product thereof, radon,
radioactive material, asbestos or asbestos containing material, urea
formaldehyde, foam insulation, lead or polychlorinated biphenyls, and any other
substance that is regulated by any Environmental Law.
17
SECTION 3.22 INSURANCE. The Company and each of its Subsidiaries is
currently insured, and has been insured, for reasonable amounts against such
risks as companies engaged in a similar business and similarly situated would,
in accordance with good business practice, customarily be insured.
SECTION 3.23 PRINCIPAL CUSTOMERS. Set forth in Section 3.23 of the Company
Disclosure Letter, the Company has made available to the Parent a list of the
ten largest customers by approximate dollar volume of the Company and its
Subsidiaries (the "Largest Customers") with the amount of revenues or payments
attributable to each such customer for the Company's 2002 fiscal year and the
first three months of its 2003 fiscal year. None of the Largest Customers has
terminated or materially altered its relationship with the Company since the
beginning of the Company's 2003 fiscal year, or, to the Company's Knowledge,
threatened to do so or otherwise notified the Company of any intention to do so.
ARTICLE 4: REPRESENTATIONS OF
THE PARENT AND MERGER SUB
The Parent and Merger Sub represent and warrant to the Company as follows:
SECTION 4.1 ORGANIZATION, STANDING AND CORPORATE POWER. Each of the Parent
and Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
all requisite corporate power and authority to carry on its business as it is
now being conducted. Each of the Parent and Merger Sub is duly qualified or
licensed to do business and is in good standing (with respect to jurisdictions
which recognize such concept) in each jurisdiction in which the nature of its
business or the ownership, leasing, licensing or operation of its assets makes
such qualification or licensing necessary, except for those jurisdictions where
the failure to be so qualified or licensed or to be in good standing,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Parent. The Parent has made available to the
Company prior to the execution of this Agreement complete and correct copies of
its certificate of incorporation and bylaws and the certificate of incorporation
and bylaws of Merger Sub, in each case as amended to the date of this Agreement.
Neither the Parent nor Merger Sub is in violation of any of the provisions of
its respective charter or bylaws, as amended to the date of this Agreement.
SECTION 4.2 AUTHORITY; NONCONTRAVENTION.
(a) Each of the Parent and Merger Sub has all requisite corporate
power and authority to enter into this Agreement, to perform its obligations
hereunder, to complete the Merger and to perform any of the duties or consummate
any of the transactions provided herein. The execution and delivery of this
Agreement by the Parent and Merger Sub and the performance by the Parent and
Merger Sub of any duties or transactions provided herein have been duly
authorized by all necessary corporate action on the part of the Parent and
Merger Sub, as applicable, and no other corporate proceedings on the part of the
Parent or Merger Sub are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Parent and Merger Sub and, assuming the due authorization,
execution and delivery by each of the other parties hereto,
18
constitutes a legal, valid and binding obligation of the Parent and Merger Sub,
enforceable against each of them in accordance with its terms.
(b) The execution and delivery of this Agreement do not, compliance
with the provisions of this Agreement, and the performance of any duties or
transactions provided herein, will not, conflict with, or result in any
violation of, breach or default (with or without notice or lapse of time, or
both) under, or give rise to a right of amendment, termination, cancellation or
acceleration of any obligation or loss of a benefit under or increase of any
obligation under, or require payment under, or result in the creation of any
Lien upon any of the properties or assets of the Parent or Merger Sub under, (i)
the certificate of incorporation or bylaws of the Parent or Merger Sub, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
contract, agreement, obligation, commitment, arrangement, understanding,
instrument, permit, concession, franchise, license or similar authorization
applicable to the Parent or Merger Sub or their respective properties or assets
or (iii) subject to the governmental filings and other matters referred to in
Section 4.2(c), (A) any judgment, order or decree or (B) any statute, law,
ordinance, rule or regulation, in each case, applicable to the Parent or Merger
Sub or their respective properties or assets, other than, in the case of clauses
(ii) and (iii), any such conflicts, violations, defaults, rights, losses or
Liens that individually or in the aggregate would not reasonably be expected to
(x) have a Material Adverse Effect on the Parent, (y) impair the ability of the
Parent or Merger Sub to perform its obligations under this Agreement or (z)
prevent or materially delay the Closing of this Agreement or the performance of
any duties or transactions required hereunder.
(c) No consent, approval, order or authorization of, action by, or
in respect of, or registration, recordation, declaration or filing with, any
Governmental Entity is required by or with respect to the Parent or Merger Sub
in connection with the execution and delivery of this Agreement by the Parent
and Merger Sub, the consummation by the Parent and Merger Sub of the Merger and
performance of any duties or transactions provided herein, except for (i)
notifying the SEC of such under Section 13(a), 13(d), 15(d) or 16(a) of the
Exchange Act as may be required in connection with this Agreement, the Merger
and the Closing; (ii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware and such filings with Governmental Entities to
satisfy the applicable requirements of state securities or "blue sky" laws;
(iii) all applicable filings, and the termination or expiration of all
applicable waiting periods for HSR Compliance; and (iv) such other consents,
approvals, orders, authorizations, registrations, declarations and filings the
failure of which to be made or obtained individually or in the aggregate would
not reasonably be expected to (x) have a Material Adverse Effect on the Parent,
(y) impair the ability of the Parent or Merger Sub to perform its obligations
under this Agreement or (z) prevent or materially delay the Closing of this
Agreement or the performance of any duties or transactions required hereunder.
SECTION 4.3 SEC DOCUMENTS; UNDISCLOSED LIABILITIES.
(a) The Parent has filed all required reports, schedules, forms,
statements and other documents (including exhibits and all other information
incorporated therein) with the SEC since December 31, 2002 (the "Parent SEC
Documents"). As of their respective dates, the Parent SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and none of the Parent SEC Documents when
filed (and if amended or superseded in a Parent SEC Document, then on the date
of such filing) contained
19
any untrue statement of a material fact or omitted 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. Except to the extent that information contained in a Parent SEC
Document has been revised or superseded in a Parent SEC Document, none of the
Parent SEC Documents contains any untrue statement of a material fact or omits
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.
(b) The financial statements of the Parent included in the Parent
SEC Documents comply as to form, as of their respective dates of filing with the
SEC, in all material respects with the Accounting Rules, have been prepared in
accordance with 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 in
all material respects the consolidated financial position of the Parent 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 non-material recurring year-end audit
adjustments).
(c) Except (i) as reflected in the financial statements included in
the Parent SEC Documents or in the notes thereto or (ii) for liabilities
incurred in connection with this Agreement, the Merger or the performance of
duties and transactions provided herein, neither the Parent nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect on the Parent.
SECTION 4.4 INFORMATION SUPPLIED. None of the information supplied or to
be supplied by the Parent specifically for inclusion or incorporation by
reference in the Proxy Statement 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.
SECTION 4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities
incurred in connection with this Agreement, the Merger or the performance of
duties and transactions provided herein and except as disclosed in the Parent
SEC Documents, since March 31, 2003, the Parent and its Subsidiaries have
conducted their business only in the ordinary course, and since such date there
has not been any Material Adverse Change in the Parent.
SECTION 4.6 VOTING REQUIREMENTS. No vote of any class or series of capital
stock of the Parent is necessary to approve and adopt this Agreement, the Merger
or the performance of duties and transactions provided herein.
SECTION 4.7 OPERATIONS OF MERGER SUB. Merger Sub has engaged in no
business activities except as contemplated pursuant hereto and as set forth in
the other Transaction Documents and has conducted its operations as contemplated
hereby.
SECTION 4.8 LITIGATION. There is no Litigation pending, or to the
Knowledge of the Parent, threatened against or affecting the Parent or any of
its Subsidiaries nor is there any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding
20
against the Parent or any of its Subsidiaries having, or which would reasonably
be expected to (a) have, individually or in the aggregate, a Material Adverse
Effect on the Parent, (b) impair the ability of the Parent or Merger Sub to
perform its obligations under this Agreement or (c) prevent or materially delay
the Closing of this Agreement or the performance of any duties or transactions
required hereunder.
SECTION 4.9 ABSENCE OF QUESTIONABLE PAYMENTS. Neither the Parent nor any
of its Subsidiaries nor any director, officer, agent, employee or other Person
acting on behalf of the Parent or any of its Subsidiaries, has used any
corporate or other funds for unlawful contributions, payments, gifts, or
entertainment, or made any unlawful expenditures relating to political activity
to any foreign or domestic government officials, employees or others or to any
foreign or domestic political parties or campaigns or established or maintained
any unlawful or unrecorded funds in violation of Section 30A of the Exchange Act
or violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended, or made any unlawful payment. Neither the Parent nor any of its
Subsidiaries nor any current director, officer, agent, employee or other Person
acting on behalf of the Parent or any of its Subsidiaries, has accepted or
received any unlawful contributions, payments, gifts or entertainment. The
Parent and each of its Subsidiaries which is required to file reports pursuant
to Section 12 or 15(d) of the Exchange Act is in compliance with the provisions
of Section 13(b) of the Exchange Act.
ARTICLE 5: COVENANTS
SECTION 5.1 CONDUCT OF THE COMPANY'S BUSINESS. Except as set forth in
Section 5.1 of the Company Disclosure Letter, as otherwise expressly
contemplated by this Agreement or as consented to in writing by the Parent,
during the period from the date of this Agreement to the Effective Time, the
Company shall, and shall cause each of its Subsidiaries to, (i) carry on their
respective businesses in the ordinary course consistent with past practice, (ii)
use commercially reasonable efforts to preserve intact their business, (iii) use
commercially reasonable efforts to maintain their Company Material Contracts,
(iv) maintain their Company Permits and Company Intellectual Property and other
material rights, (v) maintain and keep their assets in good repair and
condition, ordinary wear and tear excepted, (vi) maintain supplies and
inventories in quantities consistent with their customary business practice,
(vii) use commercially reasonably efforts to retain the services of their
respective officers and key employees and (viii) use commercially reasonable
efforts to maintain their relationships with their customers and suppliers and
others having business dealings with them to the end that their goodwill and
ongoing businesses shall not be impaired in any material respect at the
Effective Time. Without limiting the generality of the foregoing (but subject to
the above exceptions), during the period from the date of this Agreement to the
Effective Time, the Company shall not, and shall not permit any of its
Subsidiaries, without the written consent of the Parent to:
(a) other than dividends and distributions (including liquidating
distributions) by a direct or indirect wholly-owned Subsidiary of the Company to
its parent, (i) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock, property or otherwise) in respect of, any
of its capital stock, (ii) 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, (iii) adopt a plan
with respect to or effect any liquidation, dissolution, restructuring,
reorganization or recapitalization of the Company or (iv) purchase, redeem or
otherwise acquire, or agree to purchase, redeem or otherwise acquire,
21
directly or indirectly, any shares of capital stock of the Company or any of its
Subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities, (other than pursuant to the
exercise of existing stock repurchase rights listed in SECTION 3.3 of the
Company Disclosure Letter);
(b) issue, deliver, sell, pledge or otherwise encumber or subject to
any Lien any shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities or convertible securities, other than (i) the
issuance of Company Stock Options granted consistent with past practice to new
employees (other than officers) of the Company; provided that each such Company
Stock Option shall have an exercise price per share equal to the closing price
per share of Company Common Stock on the grant date, shall have standard vesting
provisions in conformity with customary practice and shall not have any
provisions which accelerate in whole or in part the vesting or exercisability of
such option in connection with the Closing of this Agreement or the performance
of any duties or transactions required hereunder or any termination of service
at or at any time following the Merger, (ii) the issuance of Company Common
Stock upon the exercise of the Company Stock Options, outstanding as of the date
hereof in accordance with their present terms, or upon the exercise of the
Company Stock Options referred to in clause (i) in accordance with their terms,
or (ii) the issuance of shares of Company Common Stock pursuant to the Company
Stock Plans in accordance with its present terms and not in violation of this
Agreement;
(c) amend its certificate of incorporation, bylaws or other
comparable organizational documents;
(d) acquire or agree to acquire by merging or consolidating with, by
purchasing all or substantially all of the assets of, by purchasing equity
interests in or a portion of the assets of, by forming a partnership or joint
venture, or by any other manner, any business or any Person or any division
thereof;
(e) sell, lease, exchange, license, pledge, transfer, sell and
leaseback, mortgage or otherwise encumber or subject to any Lien (other than
Permitted Liens) or otherwise dispose of, or agree to sell, lease, exchange,
license, pledge, transfer, sell and leaseback, mortgage or otherwise encumber or
subject to any Lien (other than Permitted Liens) or otherwise dispose of, any of
its properties or assets (including securitizations), other than in the ordinary
course of business consistent with past practice, and provided further that the
Company shall not sell its raw land located in California, milk production
operations located in Maryland or milk production operations and related land
located in Idaho (all of which land and operations are referred to herein as the
"Company Sale Properties") without the prior written consent of the Parent;
(f) (i) purchase, prepay or 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 of its Subsidiaries, guarantee any debt securities of another
Person, enter into any "keep well" or other Contract to maintain any financial
statement condition of another Person or enter into any Contract having the
economic effect of any of the foregoing, except for intercompany indebtedness
between the
22
Company and any of its wholly-owned Subsidiaries or between such Subsidiaries or
(ii) make any loans, advances or capital contributions to, or investments in,
any other Person;
(g) make or agree to make any new capital expenditures which,
individually, are in excess of $100,000 or, in the aggregate, are in excess of
$500,000 or enter into any commitment for the purchase, lease or use of any real
property;
(h) make any Tax election that, individually or in the aggregate,
would reasonably be expected to adversely affect in any material respect the Tax
liability or Tax attributes of the Company or any of its Subsidiaries or settle
or compromise any material income Tax liability;
(i) (A) pay, discharge, settle or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), or Litigation (whether or not commenced prior to the
date of this Agreement) other than (1) the payment of an aggregate of $100,000
in connection with Litigation, or (2) the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, of liabilities recognized or disclosed in the
most recent financial statements included in the Company SEC Documents or
incurred in the ordinary course of business consistent with past practices since
the date of such financial statements, or (B) waive the benefits of, agree to
modify in any manner, terminate, release any Person from or fail to enforce any
confidentiality, standstill or similar Contract to which the Company or any of
its Subsidiaries is a party or of which the Company or any of its Subsidiaries
is a beneficiary in any material respect;
(j) except as required by law or contemplated hereby, enter into,
establish, adopt or amend or terminate any Benefit Plan or any other Contract,
plan or policy involving the Company or any of its Subsidiaries, and one or more
of its directors, officers or employees, or change the manner in which
contributions to any Benefit Plan are made or the basis on which such
contributions are determined;
(k) except for normal increases relating to non-officer employees in
the ordinary course of business consistent with past practice or as required by
the terms of any employment agreement (which does not constitute a violation of
this Agreement), (i) increase the compensation, deferred compensation or
termination pay payable to or to become payable to any director, officer, other
employee, agent or consultant or pay any benefit or amount not required by a
Benefit Plan as in effect on the date of this Agreement to any such Person other
than increases resulting from the operation of compensation arrangements in
effect prior to the date hereof or (ii) grant any severance (other than in the
ordinary course and consistent with past practice pursuant to the normal
severance policy as in effect on the date of this Agreement) to, or enter into
or amend any employment or severance agreement with, any director, officer,
employee, agent or consultant of the Company or any of its Subsidiaries;
(l) enter into any material operating lease or incur (other than in
the ordinary course of business consistent with past practice) any material
liability or material obligation not required by GAAP to be recorded on the
Company's consolidated balance sheet at the time of incurrence;
(m) manage its cash, cash equivalents and working capital except in
accordance with past practices (which practices include applying commercially
reasonable
23
efforts to collect receivables and not paying liabilities or other obligations
until they become due and payable);
(n) transfer or license to any Person or entity or otherwise extend,
amend or modify any rights to the Company Intellectual Property of the Company
or its Subsidiaries, and in no event shall the Company or any of its
Subsidiaries license on an exclusive basis or sell any Company Intellectual
Property;
(o) enter into or amend any Contract pursuant to which any Person is
granted a material exclusive marketing, manufacturing or other rights with
respect to any product, service, process or technology of the Company or its
Subsidiaries;
(p) enter into any arrangement, agreement or contract (i) that
could, after the Effective Time, restrict the Parent or any of its Affiliates or
any successor thereto, from engaging or competing in any line of business or in
any geographic area; (ii) that has a term exceeding one year or (iii) that would
be a Company Material Contract had such contract been in existence on the date
hereof;
(q) enter into any Contract which, if it were in existence on the
date of this Agreement, would be required to be disclosed pursuant to Section
3.9; or
(r) authorize, commit or agree to take any of the foregoing actions.
SECTION 5.2 ADVICE OF CHANGES. The Company and the Parent shall promptly
advise the other party orally and in writing to the extent it has Knowledge of
(a) any representation or warranty made by it (and, in the case of the Parent,
made by Merger Sub) contained in this Agreement becoming untrue or inaccurate
such that the condition set forth in Section 6.2(a) or Section 6.3(a),
respectively, would not be satisfied, (b) the failure by it (and, in the case of
the Parent, by Merger Sub) 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 or (c) any change or event causing, or which is reasonably likely
to cause, any of the conditions set forth in Article 6 not to be satisfied;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties (or remedies with respect
thereto) or the conditions to the obligations of the parties under this
Agreement.
SECTION 5.3 NO SOLICITATION BY THE COMPANY.
(a) Without limitation on the Company's other obligations under this
Agreement, the Company shall not, nor shall it permit any of its Subsidiaries
to, nor shall it authorize or permit any of its or its Subsidiaries' directors,
officers or employees or any investment banker, financial advisor, attorney,
accountant or other representative retained by it or any of its Subsidiaries,
directly or indirectly through any other Person (which for purposes of this
Section 5.3 shall include any "group" as such term is defined in Section 13(d)
of the Exchange Act) to:
(i) solicit, initiate, facilitate or encourage (including by
way of furnishing or disclosing non-public information) the making of or any
effort or attempt to make any Takeover Proposal,
24
(ii) participate in, continue or resume any discussions or
negotiations relating to any Takeover Proposal, or
(iii) enter into any Acquisition Agreement or approve or
recommend, or publicly propose to approve or recommend, any Takeover
Proposal;
provided, however, that if, at any time prior to the date of the Company
Stockholders Meeting (the "Applicable Period"), the board of directors of the
Company (or the special committee thereof) determines in its good faith
judgment, after consultation with outside legal counsel, that the failure to
furnish such information or participate in such negotiations or discussions
would likely result in a breach of its obligations under applicable law, the
Company and its representatives may, only in response to a Takeover Proposal
that if consummated would likely result in a Superior Proposal that was not
solicited in violation of this Section 5.3(a), and subject to providing prior
written notice of its decision to take such action to the Parent and compliance
with this Section 5.3(a),
(x) furnish information with respect to the Company and its
Subsidiaries to any Person making a Takeover Proposal that if consummated would
likely result in a Superior Proposal pursuant to a customary confidentiality
agreement on terms at least as restrictive as the Confidentiality Agreement with
the Parent,
(y) concurrently provide to the Parent any material non-public
information relating to the Company and its Subsidiaries provided to any Person
whether or not previously provided to the Parent, and
(z) participate in discussions or negotiations relating to
such Takeover Proposal.
The Company agrees that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any Person or Persons
conducted heretofore with respect to any Takeover Proposal and that it will take
all necessary steps to promptly inform any such Persons of the Company's
obligations under this Section 5.3 and in the Confidentiality Agreement. The
Company agrees that it will notify the Parent promptly (and in no event later
than 24 hours after receipt) if any inquiry, proposal or offer is received by,
any such information is requested from, or any such discussions or negotiations
are sought to be initiated, continued or resumed with, any of the Company's
representatives indicating, in connection with such notice, the name of each
such Person and the terms and conditions of any proposals or offers and
thereafter shall keep the Parent fully informed, on a current basis, of the
status and terms of any such proposals or offers, and any changes thereto from
time to time, and the status of any such discussions or negotiations. The
Company also agrees that it will promptly request each Person that has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring the Company or any of its Subsidiaries to return all
confidential information heretofore furnished to such Person by or on behalf of
it or any of its Subsidiaries or to destroy all such information and to provide
a certification or other proof thereof in accordance with the terms of any such
confidentiality agreement. For purposes of this Agreement, "Takeover Proposal"
means any inquiry, proposal or offer from any Person relating to any direct or
indirect
25
acquisition or purchase of 15% or more of the assets of the Company and its
Subsidiaries, taken as a whole (other than any acquisition or purchase of the
Company Sale Properties permitted under Section 5.1(e)), or 15% or more of any
class or series of equity securities of the Company or any of its Subsidiaries,
any tender offer or exchange offer that if consummated would result in any
Person beneficially owning 15% or more of any class or series of equity
securities of the Company, or any merger, reorganization, share exchange,
consolidation, business combination, recapitalization, liquidation, dissolution,
extraordinary dividend or similar transaction or the sale or other transfer of
all or substantially all assets involving the Company or any of its
Subsidiaries, other than as provided under this Agreement.
(b) Except as set forth herein, neither the board of directors of
the Company nor any committee thereof shall:
(i) approve or recommend, or propose publicly to approve or
recommend, any Takeover Proposal, or
(ii) approve or recommend, or propose to approve or recommend,
or execute or enter into, any letter of intent, agreement in principle, merger
agreement, acquisition agreement, option agreement or other similar agreement or
propose publicly or agree to do any of the foregoing (each, an "Acquisition
Agreement") related to any Takeover Proposal, other than any such agreement
entered into concurrently with a termination pursuant to Section 5.3(c) in order
to facilitate such action.
Notwithstanding the foregoing, during the Applicable Period and only in response
to a Superior Proposal, the board of directors of the Company (or the special
committee thereof) may (subject to this and the following sentence) recommend
such Superior Proposal (and cause the Company to enter into any Acquisition
Agreement with respect to any Superior Proposal), but, in each case, only at a
time that is during the Applicable Period and is three Business Days following
the Company's delivery to the Parent of written notice advising the Parent that
the board of directors of the Company (or the special committee thereof) has
received a Superior Proposal, specifying the terms and conditions of such
Superior Proposal and identifying the Person making such Superior Proposal;
provided, however, that the Company shall not enter into an agreement with
respect to a Superior Proposal unless the Company complies with Section 5.3(c).
For purposes of this Agreement, a "Superior Proposal" means any proposal or
offer made by a third party to engage in a Takeover Proposal which the board of
directors (or special committee thereof) determines in its good faith judgment
(x) if consummated would likely result in a transaction delivering to the
Company's stockholders superior value, from a financial point of view, to the
Merger if accepted, (y) is likely to be completed and (z) is not subject to a
financing contingency.
(c) The Company may terminate this Agreement and enter into an
Acquisition Agreement with respect to a Superior Proposal, provided that, prior
to any such termination,
(i) the Company has provided the Parent with a written notice
that it intends to terminate this Agreement pursuant to this Section 5.3(c),
identifying the Superior Proposal then determined to be more favorable and the
parties thereto and delivering to the
26
Parent a copy of the Acquisition Agreement for such Superior Proposal in the
form to be entered into,
(ii) within a period of three Business Days following the
delivery of the notice referred to in clause (i) above, the Parent does not
propose adjustments in the terms and conditions of this Agreement and the
Company shall have caused its financial and legal advisors to negotiate with the
Parent in good faith such proposed adjustments to the terms and conditions of
this Agreement which the Company's board of directors (or the special committee
hereof) determines in its good faith judgment (after receiving the advice of its
financial advisor) to be as favorable to the Company's stockholders as such
Superior Proposal, and
(iii) at least three full Business Days after the Company has
provided the notice referred to in clause (i) above, the Company delivers to the
Parent (A) a written notice of termination of this Agreement pursuant to this
Section 5.3(c), and (B) a wire transfer of immediately available funds in the
amount of the Termination Fee (as defined in Section 5.9(b)).
(d) Nothing contained in this Agreement shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if, in the good faith judgment of the board of directors
of the Company (after consultation with outside legal counsel), failure so to
disclose would likely constitute a breach of its obligations under applicable
law.
SECTION 5.4 THE PROXY STATEMENT; THE STOCKHOLDERS MEETING.
(a) As soon as practicable following the date of this Agreement, the
Company shall prepare and file with the SEC, the Proxy Statement. The Company
shall use commercially reasonable efforts (including the preparation of
amendments to such documents and the provision of supplemental information in
response to SEC comments) to have the Proxy Statement cleared under the
Securities Act as promptly as practicable after such filing. The Company will
cause the Proxy Statement to be mailed to its stockholders as promptly as
practicable thereafter. If at any time prior to the Effective Time any
information relating to the Company or the Parent, or any of their respective
affiliates, officers or directors, should be discovered by the Company which
should be set forth in an amendment or supplement to the Proxy Statement, so
that the Proxy Statement would not include any misstatement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, as
applicable, the Company shall promptly prepare and file an appropriate amendment
or supplement describing such information with the SEC and, to the extent
required by law, disseminate such amendment to the stockholders of the Company.
No filing of, or amendment or supplement to, the Proxy Statement, correspondence
to the SEC or its staff with respect to the Proxy Statement (including documents
incorporated therein by reference) or Schedule 13E-3 will be made by either the
Parent or the Company without providing the other party a reasonable opportunity
to review and comment thereon, and the Company agrees that prior to any filing
it shall accept any comments of the Parent with respect to such documents so
long as such acceptance would not be unreasonable for the Company. The Company
will advise the Parent, promptly after it receives notice thereof, of any
request by the SEC for the amendment of the Proxy Statement or comments thereon
and responses thereto or requests by the SEC for additional information.
27
(b) The Company shall, as soon as reasonably practicable following
the date of this Agreement, establish a record date (which will be as soon as
practicable following the date of this Agreement) for, duly call, give notice
of, convene and hold the a meeting of its stockholders (the "Company
Stockholders Meeting") solely for the purpose of obtaining the Company
Stockholder Approval. Subject to Section 5.3(d), the Company shall, through its
board of directors, recommend to its stockholders the adoption of this
Agreement. Without limiting the generality of the foregoing but subject to its
right to terminate this Agreement pursuant to Section 5.3(c), the Company agrees
that its obligations pursuant to the first sentence of this Section 5.4(b) shall
not be affected by the commencement, public proposal, public disclosure or
communication to the Company of any Takeover Proposal.
(c) The Company, the Parent and Merger Sub shall promptly prepare to
file with the SEC a Joint Transaction Statement on Schedule 13E-3 (the "Schedule
13E-3"); and shall file such Schedule 13E-3 and comply with the requirements of
Rule 13e-3 under the Exchange Act unless the Parent advises the Company in
writing prior to the mailing of the Proxy Statement that the Parent has
concluded, after consultation with the staff of the SEC, that such filing and
compliance is not required. Thereafter, the Company, the Parent and Merger Sub
shall promptly prepare and file with the SEC any amendments or further
amendments required by the Exchange Act.
(d) The Parent agrees, as to the Schedule 13E-3 (insofar as it
relates to information furnished by the Parent expressly for inclusion or
incorporation therein) and the Company agrees, as to the Proxy Statement and the
Schedule 13E-3 (excluding any information furnished by the Parent expressly for
inclusion or incorporation therein), that such documents shall, in all material
respects, comply with the requirements of the Exchange Act and the rules and
regulations thereunder and other applicable laws.
SECTION 5.5 ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable notice
and subject to the Confidentiality Agreement between the Parent and the Company
(the "Confidentiality Agreement"), the Company shall, and shall cause each of
its Subsidiaries to, afford to the Parent and to its officers, employees,
accountants, counsel, financial advisors and other representatives, reasonable
access during normal business hours during the period prior to the Effective
Time to all its 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 the 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 the
Parent may reasonably request (including the Company's outside accountants work
papers and the Company's monthly financial statements). The Company shall not be
required to provide access to or disclose information where such access or
disclosure would contravene any law, rule, regulation, order or decree. No
review pursuant to this Section 5.5 shall limit the Parent's or Merger Sub's
reliance on or the enforceability of any representation or warranty made by the
Company herein. The Parent will hold, and will cause its officers, employees,
accountants, counsel, financial advisors and other representatives and
affiliates to hold, any nonpublic information in accordance with the terms of
the Confidentiality Agreement.
28
Notwithstanding the foregoing and any provisions of the Confidentiality
Agreement to the contrary, the parties to this Agreement (and any employee,
representative or any agent of any party) may disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of the
transaction contemplated hereby (the "Transaction"), beginning on the earlier of
(i) the date of public announcement of discussion relating to the Transaction,
(ii) the date of public announcement of the Transaction or (iii) the date of the
execution of this Agreement; provided, however, none of the parties (nor any
employee, representative or any agent thereof) may disclose any information to
the extent that such disclosure could result in a violation of any federal or
state securities law.
SECTION 5.6 COMMERCIALLY REASONABLE EFFORTS.
(a) Prior to the Closing, upon the terms and subject to the
conditions of this Agreement, each of the parties agrees to use commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable (subject to any
applicable laws) to consummate the Merger and make effective the Merger as
promptly as practicable including, (i) the preparation and filing of all forms,
registrations and notices required to be filed to consummate the Merger and the
taking of such actions as are necessary to obtain any requisite approvals,
consents, orders, exemptions or waivers by any third party or Governmental
Entity, including the HSR Compliance and (ii) the satisfaction of the other
parties' conditions to Closing. Notwithstanding any other provision of this
Agreement, neither the Company nor any of its Subsidiaries shall be entitled to
(nor shall the Parent or any of its Subsidiaries be required to) divest or hold
separate or otherwise take or commit to take any action that limits the Parent's
or the Surviving Corporation's freedom of action with respect to, or ability to
retain, the Parent or any of its Subsidiaries or the Company or any of its
Subsidiaries or any material portions thereof or any of the businesses, product
lines, properties or assets of the Parent or any of its Subsidiaries or the
Company or any of its Subsidiaries. Nothing in this Agreement shall require the
Parent to commence Litigation to remove any Restraint issued under any antitrust
law.
(b) Prior to the Closing, each party shall promptly consult with the
other parties to this Agreement with respect to, provide any necessary
information with respect to, and provide the other parties (or their respective
counsel) with copies of, all filings made by such party with any Governmental
Entity or any other information supplied by such party to a Governmental Entity
in connection with this Agreement, the Merger and the Closing of this Agreement
or the performance of any duties or transactions required hereunder. Each party
hereto shall promptly inform the other of any communication from any
Governmental Entity regarding any of the Merger, the Closing of this Agreement
or the performance of any duties or transactions required hereunder. If, in
connection herewith, any party hereto or affiliate thereof receives a request
for additional information or documentary material from any such Governmental
Entity, then such party shall endeavor in good faith to make, or cause to be
made, as soon as reasonably practicable and after consultation with the other
parties, an appropriate response in compliance with such request. To the extent
that transfers, amendments or modifications of any Company permits are required
as a result of the execution of this Agreement, the Merger, the Closing or the
performance of any duties or transactions required hereunder, the Company shall,
and shall cause the Company Subsidiaries to, use commercially reasonable efforts
to effect such transfers, amendments or modifications.
29
(c) In connection with and without limiting the foregoing, the
Parent, the Company and their respective boards of directors shall (i) take all
action necessary to ensure that no takeover statute or similar statute or
regulation is or becomes applicable to this Agreement, the Merger, the Closing
of this Agreement or the performance of any duties or transactions required
hereunder, and (ii) if any takeover statute or similar statute becomes so
applicable, take all action necessary to ensure the Merger and the Closing are
completed as soon as practicable.
(d) Unless the statute of limitations will bar the bringing of such
claim after the termination of this Agreement, no party shall, directly or
indirectly, bring or initiate (including by counterclaim or inter-pleader) any
litigation or other action before a Governmental Entity or arbitration against
another party or involving or affecting their assets.
(e) If at any time after the Effective Time, any reasonable further
action is necessary or desirable to carry out the purposes of this Agreement,
including the execution of additional instruments, the proper officers and
directors of each party to this Agreement shall take all such necessary
reasonable action.
SECTION 5.7 EMPLOYEE MATTERS.
(a) As soon as practicable after the Closing Date (the "Benefits
Date"), the Parent shall provide, or cause to be provided, employee benefit
plans, programs and arrangements to employees of the Company that are
substantially comparable to those made generally available to similarly situated
non-represented employees of the Parent who are hired by the Parent after
January 1, 2003. From the Effective Time to the Benefits Date (which the parties
acknowledge may occur on different dates with respect to different plans,
programs or arrangements of the Parent), the Parent shall provide, or cause to
be provided, the employee benefit plans, programs and arrangements of the
Company (other than equity-based plans, programs and arrangements) provided to
employees of the Company as of the date hereof. The provisions of this Section
5.7(a) will not create in any current or former employee of the Company or any
of its Subsidiaries any rights to employment or continued employment with the
Parent, the Company or any of their respective Subsidiaries, or any right to
specific terms or conditions of employment.
(b) With respect to each benefit plan, program, practice, policy or
arrangement maintained by the Parent (the "Parent Plans") in which employees of
the Company participate on the Benefits Date, (i) service with the Company and
its Subsidiaries (or their respective predecessors) prior to the Effective Time
shall be credited against all service and waiting period requirements under the
Parent Plans, (ii) the Parent Plans shall not provide any pre-existing condition
exclusions and (iii) the deductibles, co-payments and out-of-pocket maximums in
effect under the Parent Plans shall be reduced by any deductibles, co-payments
and out-of-pocket maximums paid by such individuals under the Company Benefit
Plans for the plan year in which the Effective Time occurs. The Company shall
take all action necessary to terminate, or cause to terminate, before the
Effective Time, any Benefit Plan that is a 401(k) plan or other defined
contribution retirement plan unless the Parent agrees to assume any such plan or
to offer an opportunity to the participants in any such plans to rollover their
accounts to a similar plan or plans of the Parent.
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(c) Within a reasonable period of time after the last business day
of each month after the date hereof and on the Closing Date, the Company shall,
as and to the extent necessary, deliver to the Parent any additional information
which Company reasonably believes would affect the determination of each person
who the Company reasonably believes is a "disqualified individual" (within the
meaning of Section 280G of the Code).
(d) Employees of the Company who transfer to the employment of the
Parent or the Surviving Corporation after the Effective Time and meet the
eligibility requirements for participation in the Parent Employee Stock Purchase
Plan (the "Parent ESPP") shall be eligible to begin payroll deductions under
that plan as soon as practicable after the Effective Time.
(e) Notwithstanding anything in this Agreement to the contrary and
subject to the provisions of Section 5.7(a), from and after the Closing Date,
the Surviving Corporation will have sole discretion over the hiring, promotion,
retention, termination and other terms and conditions of the employment of the
employees of the Company and its Subsidiaries. Subject to the provisions of
Section 5.7(a), nothing herein will prevent the Parent, the Company or any of
their respective Subsidiaries from amending or terminating any Benefit Plan
maintained by the Company or any of its Subsidiaries or other employee benefit
or fringe benefit plans of the Parent in accordance with its terms.
SECTION 5.8 INDEMNIFICATION, EXCULPATION AND INSURANCE.
(a) The Parent and Merger Sub agree that all rights to
indemnification and exculpation from liabilities for acts or omissions occurring
at or prior to the Effective Time now existing in favor of the current or former
directors or officers of the Company and its Subsidiaries as provided in their
respective certificate of incorporation or bylaws (or comparable organizational
documents) and any indemnification agreements of the Company (as each is in
effect on the date hereof), the existence of which has been disclosed in the
Company Disclosure Letter, shall be assumed by the Parent and the Surviving
Corporation, without further action, as of the Effective Time and shall survive
the Merger and shall continue in full force and effect in accordance with their
terms, and the Parent shall cause the Surviving Corporation to honor all such
rights.
(b) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other Person and is not the continuing
or surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and assets to
any Person, or otherwise dissolves the Surviving Corporation, then, and in each
such case, the Parent shall cause proper provision to be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this Section 5.8.
(c) The Parent shall for a period of not less than six years after
the Effective Time, either (i) maintain the Company's current directors' and
officers' liability insurance covering acts or omissions occurring prior to the
Effective Time ("D&O Insurance") with respect to those Persons who are currently
covered by the Company's directors' and officers' liability insurance policy on
terms with respect to such coverage and amount substantially similar to those in
effect on the date hereof or (ii) cause to be provided by a reputable insurance
company coverage substantially similar with respect to coverage and amount and
to such officers and
31
directors as the D&O Insurance, so long as the aggregate premium therefor would
not be in excess of 200% of the current policy per annum premiums (such amount
the "Maximum Premium"). If the existing or substituted directors' and officers'
liability insurance expires, is terminated or cancelled during such six-year
period, the Parent will obtain as much D&O Insurance as can be obtained for the
remainder of such period for an aggregate premium not in excess of the Maximum
Premium.
(d) The provisions of this Section 5.8 (i) are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such Person may have by contract or otherwise.
SECTION 5.9 FEES AND EXPENSES.
(a) Except as provided hereinafter in this Section 5.9, all fees and
expenses incurred in connection with the Merger, this Agreement, the Closing or
the performance of any duties or transactions required hereunder shall be paid
by the party incurring such fees or expenses, whether or not the Merger is
consummated.
(b) If this Agreement is terminated pursuant to:
(i) Section 7.1(d), the Company shall, within two Business
Days of such termination, pay to the Parent $10 million (the "Termination Fee")
by wire transfer of immediately available funds; or
(ii) Section 7.1(f), the Company shall, prior to such
termination, pay to the Parent the Termination Fee by wire transfer of
immediately available funds; or
(iii) Section 7.1(b)(i), and (x) at the time of such
termination there shall be outstanding a Takeover Proposal, and (y) within 12
months following such termination, a definitive agreement with respect to such
Takeover Proposal, as the same may be modified from time to time, shall have
been executed by the Company, then the Company shall pay to the Parent on the
date the definitive agreement is executed and delivered, the Termination Fee.
(c) Upon the occurrence of any event that requires the Company to
pay the Termination Fee to the Parent and its Affiliates, the Company shall also
reimburse the Parent and its Affiliates (not later than one Business Day after
submission of statements by the Parent to the Company together with reasonable
documentation therefor) for their expenses relating to the transactions
contemplated by this Agreement, which expenses shall include all out-of-pocket
expenses (including, without limitation, financing commitment fees and all fees
and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its Affiliates) incurred by the Parent, its
Affiliates or on their behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of this
Agreement and the transactions contemplated hereby and thereby, and all other
matters related to the transactions contemplated hereby or thereby, provided,
however, that such aggregate reimbursement shall not exceed $2 million.
The Company acknowledges that the agreements contained in this Section
5.9(b) are an integral part of the transactions provided herein, and that
without these agreements the Parent
32
would not enter into this Agreement; accordingly, if the Company fails promptly
to pay the amount due pursuant to this Section 5.9(b), and, in order to obtain
such payment, the Parent commences a suit which results in a judgment against
the Company for the fee set forth in this Section 5.9(b), the Company shall pay
to the Parent its costs and expenses (including reasonable attorneys' fees and
expenses) in connection with such suit, together with interest on the amount of
the fee at the prime rate of Citibank, N.A. in effect on the date such payment
was required to be made. The parties agree that any remedy or amount payable
pursuant to this Section 5.9 will not preclude any other remedy or amount
payable hereunder and will not be an exclusive remedy for any breach of any
representation, warranty, covenant or agreement contained in this Agreement.
SECTION 5.10 PUBLIC ANNOUNCEMENTS. The Parent and the Company will consult
with each other before issuing, and provide each other the opportunity to
review, comment upon and concur with, any press release or other public
statements with respect to the Agreement, the Merger, the Closing or the
performance of any duties or transactions required hereunder, except as
otherwise required by applicable law or applicable stock exchange rules. The
parties agree that the initial press release to be issued with respect to this
Agreement or matters pertaining to the transactions provided herein shall be in
the form heretofore agreed to by all parties.
SECTION 5.11 LITIGATION. The Company shall give the Parent the opportunity
to participate in the defense of any litigation against the Company and/or its
directors relating to this Agreement, the Merger, the Closing of this Agreement
or the performance of any duties or transactions required hereunder.
SECTION 5.12 OBLIGATIONS OF MERGER SUB; VOTING OF SHARES.
(a) The Parent shall cause Merger Sub to perform all of its
obligations under this Agreement and in connection with the Merger, the Closing
of this Agreement or the performance of any duties or transactions required
hereunder.
(b) The Parent shall vote, or cause to be voted, in favor of
adoption of this Agreement, all shares of Company Common Stock owned by the
Parent or any of its Subsidiaries as of the record date (the "Record Date") for
the meeting at which Company Stockholder Approval is considered.
ARTICLE 6: CONDITIONS PRECEDENT
SECTION 6.1 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) The Company Stockholder Approval shall have been obtained.
(b) No judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any court or
other Governmental Entity of competent jurisdiction or other legal restraint or
prohibition (collectively, "Restraints") shall be in effect, and there shall not
be pending or threatened any suit, action or proceeding by any Governmental
Entity (i) preventing the consummation of the Merger, (ii) prohibiting or
limiting the ownership or operation by the Company or the Parent and their
respective Subsidiaries of any
33
material portion of the business or assets of the Company or the Parent and
their respective Subsidiaries taken as a whole, or compelling the Company or the
Parent and their respective Subsidiaries to dispose of or hold separate any
material portion of the business or assets of the Company or the Parent and
their respective Subsidiaries, taken as a whole, as a result of the Merger or
the Closing of this Agreement or the performance of any duties or transactions
required hereunder or (iii) which otherwise would reasonably be expected to have
a Material Adverse Effect on the Company or the Parent, as applicable; provided,
however, that each of the parties shall have used commercially reasonable
efforts to prevent the entry of any such Restraints and to appeal as promptly as
possible any such Restraints that may be entered.
(c) The HSR Compliance shall have been obtained.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF THE PARENT AND MERGER SUB. The
obligation of the Parent and Merger Sub to effect the Merger is further subject
to satisfaction or waiver of the following conditions:
(a) The representations and warranties of the Company set forth
herein shall be true and correct as of the date hereof and as of the Effective
Time, with the same effect as if made at and as of such time (except to the
extent expressly made as of an earlier date, in which case as of such date),
except where the failure of such representations and warranties to be so true
and correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) does not have, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. The Parent shall have received a certificate
signed on behalf of the Company by the chief executive officer of the Company to
such effect.
(b) The Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date. The Parent shall have received a certificate signed on behalf
of the Company by the chief executive officer of the Company to such effect.
(c) There shall have been no Material Adverse Change in the Company
since the date of this Agreement that shall not have been cured by the Closing
Date, and the Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer and the chief financial officer of the
Company to such effect.
(d) The Company shall have obtained the consents and approvals set
forth in Section 6.2(d) to the Company Disclosure Letter.
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of
the Company to effect the Merger is further subject to satisfaction or waiver of
the following conditions:
(a) The representations and warranties of the Parent and Merger Sub
set forth herein shall be true and correct as of the date hereof and as of the
Effective Time, with the same effect as if made at and as of such time (except
to the extent expressly made as of an earlier date, in which case as of such
date), except where the failure of such representations and warranties to be so
true and correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) does not have, and would not
reasonably be expected to have,
34
individually or in the aggregate, a Material Adverse Effect on the Parent. The
Company shall have received a certificate signed on behalf of the Parent by an
authorized signatory of the Parent to such effect.
(b) The Parent and Merger Sub shall have performed in all material
respects all obligations required to be performed by them under this Agreement
at or prior to the Closing Date. The Company shall have received a certificate
signed on behalf of the Parent by an authorized signatory of the Parent to such
effect.
(c) There shall have been no Material Adverse Change in the Parent
since the date of this Agreement that shall not have been cured by the Closing
Date, and the Company shall have received a certificate signed on behalf of the
Company by an authorized signatory of the Parent to such effect.
ARTICLE 7: TERMINATION
SECTION 7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Stockholder
Approval:
(a) by mutual written consent of the Parent, Merger Sub and the
Company;
(b) by either the Parent or the Company:
(i) if the Merger shall not have been consummated by December
15, 2003, but the right to terminate this Agreement pursuant to this Section
7.1(b)(i) shall not be available to any party whose failure to perform any of
its obligations under this Agreement results in the failure of the Merger to be
consummated by such time;
(ii) if the Company Stockholder Approval shall not have been
obtained at the Company stockholders meeting duly convened therefor (including
at any adjournment or postponement thereof);
(iii) if any Restraint having any of the effects set forth in
Section 6.1(b) shall be in effect and shall have become final and nonappealable,
but the party seeking to terminate this Agreement pursuant to this Section
7.1(b)(iii) shall have used commercially reasonable efforts to prevent the entry
of and to remove such Restraint;
(c) by the Parent, if the Company shall have breached or failed to
perform in any material respect or upon the inaccuracy of any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach, failure to perform or inaccuracy (i) would give rise to
the failure of a condition set forth in Section 6.2(a) or 6.2(b), and (ii) is
incapable of being or has not been cured by the Company within 10 calendar days
following its receipt of written notice from the Parent of such breach or
failure to perform;
(d) by the Parent, if (i) the Company shall have breached Section
5.3 or (ii) the Company's board of directors (or any committee thereof) shall
have (whether or not permitted by this Agreement) (A) modified, withdrawn or
supplemented their recommendation of this Agreement, the Merger, the Closing or
the performance of any duties or transactions required hereunder in a manner
adverse to the Parent; (B) recommended any Takeover Proposal other than the
Parent's proposal, or (C) failed to affirm its recommendation of this Agreement
and the transactions contemplated hereby within five days of a request to do so
by the Parent.
35
(e) by the Company, if the Parent shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (i) would give rise to the failure of a condition set forth
in Section 6.3(a) or 6.3(b), and (ii) is incapable of being or has not been
cured by the Parent within 30 calendar days following its receipt of written
notice from the Company of such breach or failure to perform; or
(f) by the Company in accordance with Section 5.3(c); provided that,
in order for the termination of this Agreement pursuant to this Section 7.1(f)
to be deemed effective, the Company shall have complied with all provisions of
Section 5.3, including the notice provisions therein, and with applicable
requirements of Section 5.9, including the payment of the Termination Fee.
SECTION 7.2 EFFECT OF TERMINATION. If this Agreement is terminated by
either the Company or the Parent as provided in Section 7.1, this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of the Parent or the Company, except to the extent that
such termination results from the material breach by a party of any of its
representations, warranties, covenants or agreements in this Agreement and
provided that the Confidentiality Agreement, Section 3.16, Section 5.5, Section
5.9, this Section 7.2 and Article 8 shall survive any termination of this
Agreement.
SECTION 7.3 PROCEDURE FOR TERMINATION. If a party has a right to terminate
this Agreement under Section 7.1, it may only exercise that right by delivering
notice to the other parties of such termination, stating the subsection of
Section 7.1 providing the basis for such termination and paying any required
fees.
ARTICLE 8: GENERAL PROVISIONS
SECTION 8.1 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 8.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 8.2 AMENDMENT. The parties may amend this Agreement at any time
prior to the Effective Time; provided that after receipt of the Company
Stockholder Approval, there shall not be made any amendment that by law requires
further approval by the stockholders of the Company 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.
SECTION 8.3 EXTENSION; WAIVER. At any time prior to the Effective Time, a
party 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 of the other parties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) waive compliance
by the other party 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 8.4 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered
36
personally, telecopied (which is confirmed) or sent by internationally
recognized overnight courier (providing proof of delivery) 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 the Parent or Merger Sub, to:
Xxxx Foods Company
0000 XxXxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: 214.303.3853
Attention: Xxxxxx X. Xxxxx
With a copy (which shall not constitute notice) to:
Xxxxxx & Xxxx, LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No. 214.939.5849
Attention: Xxxxxxx X. XxXxxxxxx, Esq.
(b) If to the Company, to:
Horizon Organic Holding Corporation
6311 Horizon, Xxxxxxxx, XX 00000
Telecopy No.: 303.516.4501
Attention: Xxxxxxx X. Xxxxx, President and CEO
With copies (which shall not constitute notice) to:
Xxxxxxxx Thomson & Xxxxxx, P.C.
0000 00xx Xx. #0000, Xxxxxx XX 00000
Telecopy No.: 303.572.7883
Attention: Xxxxxxx X. Sabian, Esq.
SECTION 8.5 DEFINITIONS. For purposes of this Agreement:
(a) 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, where "Control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a Person, whether through the ownership
of voting securities, by contract, as trustee or executor, or otherwise.
(b) "Business Day" means any day other than Saturday, Sunday or any
other day on which banks are legally permitted to be closed in Denver, Colorado.
37
(c) "Cash Consideration" shall have the meaning set forth in Section
2.2 hereof.
(d) "Certificates" shall have the meaning set forth in Section
2.3(a).
(e) "Closing" or " the Closing" shall have the meaning set forth at
Section 1.2 and, in addition, shall mean the completion and/or consummation of
all performances and transactions required hereunder.
(f) "Company Common Stock" shall have the meaning set forth in the
Recitals.
(g) "Company Stock Plans" shall have the meaning set forth in
Section 2.5(c).
(h) "Company Stockholder Approval" shall have the meaning set forth
in Section 3.14.
(i) "Company Stock Options" shall have the meaning set forth in
Section 3.3(b).
(j) "Contract" means any written, oral, electronic or other
contract, lease, license, arrangement, commitment, undertaking or understanding
(whether or not defenses exist to enforceability).
(k) "Effective Time" shall have the meaning set forth in Section 1.3
hereof
(l) "Knowledge" of any Person that is not an individual means the
knowledge of any of such Person's executive officers after reasonable inquiry.
(m) "Material Adverse Change" or "Material Adverse Effect" means,
when used in connection with the Company or the Parent, any change, effect,
event, occurrence, condition or development or state of facts that (i) is or
would reasonably be expected to be materially adverse to the business, assets or
results of operations or condition (financial or other) of such party and its
Subsidiaries, taken as a whole, or (ii) prevents or delays the consummation of
the Merger, the Closing or the performance of any duties or transactions
required hereunder, in each case, other than any change, effect, event,
occurrence, condition or development or state of facts (A) relating to the U.S.
economy in general, (B) relating to the industry in which such party operates in
general (and not having a materially disproportionate effect on such party
relative to most other industry participants) or (C) in respect of decreases in
such party's stock price (provided that any effect described in clauses (A),(B)
or (C) is direct and that the party claiming such effect shall have the burden
of proving such direct effect).
(n) "Parent Common Stock" shall have the meaning set forth in
Section 2.5(a).
38
(o) "Parent Stock Options" shall have the meaning set forth in
Section 2.5(a).
(p) "Parent ESPP" shall have the meaning set forth in Section
5.7(d).
(q) "Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
(r) 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.
(s) "Tax" or "Taxes" means any and all taxes, charges, fees, levies,
assessments, duties or other amounts payable to any federal, state, local or
foreign taxing authority or agency, including, without limitation, (i) income,
franchise, profits, gross receipts, minimum, alternative minimum, estimated, ad
valorem, value added, sales, use, service, real or personal property, capital
stock, license, payroll, withholding, disability, employment, social security,
workers compensation, unemployment compensation, utility, severance, excise,
stamp, windfall profits, transfer and gains taxes, (ii) customs, duties,
imposts, charges, levies or other similar assessments of any kind, and (iii)
interest, penalties and additions to tax imposed with respect thereto.
SECTION 8.6 CONSTRUCTION AND INTERPRETATION. When a reference is made in
this Agreement to a section or article, such reference shall be to a section or
article of this Agreement unless otherwise clearly indicated to the contrary.
Whenever the word "include," "includes" or "including" is used in this Agreement
they shall be deemed to be followed by the words "without limitation." The words
"hereof," "herein" and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to
any particular provision of this Agreement, and article, section, paragraph,
exhibit and schedule references are to the articles, sections, paragraphs,
exhibits and schedules of this Agreement unless otherwise specified. The
singular or plural of any defined term shall have a meaning correlative to such
defined term, and words denoting any gender shall include all genders and the
neuter. Where a word or phrase is defined herein, each of its other grammatical
forms shall have a corresponding meaning. A reference to any party to this
Agreement or any other agreement or document shall include such party's
successors and permitted assigns. A reference to any legislation or to any
provision of any legislation shall include any modification, amendment or
re-enactment thereof, any legislative provision substituted therefor and all
rules, regulations and statutory instruments issued thereunder or pursuant
thereto. If there is an ambiguity or a question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties,
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement. Each
provision of this Agreement shall be given full separate and independent effect.
Although the same or similar subject matters may be addressed in different
provisions of this Agreement, the parties intend that, except as expressly
provided in this Agreement, each such provision be read separately, be given
independent significance and not be construed as limiting any other provision in
this Agreement (whether or not more general or more specific in scope, substance
or context). No prior draft of
39
this Agreement or any course of performance or course of dealing shall be used
in the interpretation or construction this Agreement.
SECTION 8.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered (whether delivered by telecopy or
otherwise) 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 8.8 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
(including the documents and instruments referred to herein) (a) constitutes the
entire agreement, and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Agreement and (b) except for the provisions of Section 5.8, are not intended to
confer upon any Person, other than the parties, any rights or remedies.
SECTION 8.9 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without giving
effect to any other choice of law or conflict of law provision or rule (whether
of the State of Delaware or otherwise) that would cause the application of the
laws of any jurisdiction, other than the State of Delaware.
SECTION 8.10 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 hereto without the
prior written consent of the other parties. Any assignment in violation of the
preceding sentence shall be void. Subject to the preceding two 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 8.11 ENFORCEMENT. The parties hereby acknowledge and agree that
the failure of any party to perform its agreements and covenants hereunder in
accordance with their specific terms, including its failure to take all actions
as are necessary on its part to the consummation of the Merger, will cause
irreparable injury to the other parties for which damages, even if available,
will not be an adequate remedy. Accordingly, each party hereby consents (i) to
the issuance of injunctive relief by any court of competent jurisdiction to
compel performance of such party's obligations and to prevent breaches of this
Agreement and (i) to the granting by any court the remedy of specific
performance of its obligations hereunder, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties (a) consents to submit itself to the personal jurisdiction of the Court
of Chancery of the State of Delaware of and for the County of New Castle if any
dispute arises out of this Agreement, the Merger, the Closing, or the
performance of any duties or transactions required hereunder; provided that if
there is no equitable subject matter jurisdiction in the Court of Chancery, each
party consents to submit itself to the personal jurisdiction of such other
federal or state court within the State of Delaware having subject matter
jurisdiction over such dispute, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from the
Court of Chancery (or such other court) and (c) agrees that it will not bring
any action relating to this Agreement, the Merger, the Closing or the
performance of any duties or transactions required hereunder in any court other
than the Court of Chancery of the State of Delaware of and for the County of New
Castle; provided, that if the Court of Chancery declines to exercise equitable
jurisdiction over any such action (or any part thereof), then each party agrees
that it will transfer any such action (or part thereof) only to, or recommence
any such action (or part thereof), only in such other federal or state court
within the State of
40
Delaware having subject matter jurisdiction over such dispute. EACH OF THE
PARENT, MERGER SUB, AND THE COMPANY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE NEGOTIATION OR ENFORCEMENT HEREOF OR THE MERGER, THE CLOSING
OR THE PERFORMANCE OF ANY DUTIES OR TRANSACTIONS REQUIRED HEREUNDER.
SECTION 8.12 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. If the final judgment of a court
of competent jurisdiction or other authority declares that any term or provision
hereof is invalid, void or unenforceable, the parties agree that the court
making such determination shall have the power to and shall, subject to the
discretion of such court, reduce the scope, duration, area or applicability of
the term or provision, to delete specific words or phrases, or to replace any
invalid, void or unenforceable term or provision with a term or provision that
is valid and enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision. Each of the Parent, Merger Sub
and the Company has caused this Agreement to be duly executed and delivered as
of the date first written above.
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XXXX FOODS COMPANY
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President - Corporate
Development
CAPRICORN ACQUISITION SUB, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Authorized Signatory
HORIZON ORGANIC HOLDING CORPORATION
By: /s/ Xxxxxx X. XxXxxxxxx, Xx.
-------------------------------------
Name: Xxxxxx X. XxXxxxxxx, Xx.
Title: Chairman of the Board
42