1
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
AMONG
KOFAX IMAGE PRODUCTS, INC.
IMAGING COMPONENTS CORPORATION
AND
IMAGING ACQUISITION CORPORATION
DATED AS OF JULY 27, 1999
2
TABLE OF CONTENTS
Page
----
ARTICLE 1
THE OFFER.........................................................................................................2
Section 1.1 The Offer.......................................................................................2
Section 1.2 Company Action..................................................................................4
Section 1.3 Company Board and Committees; Section 14(f) of the Exchange Act.................................5
ARTICLE 2
THE MERGER........................................................................................................6
Section 2.1 Merger..........................................................................................6
Section 2.2 Effective Time..................................................................................6
Section 2.3 Closing of the Merger...........................................................................6
Section 2.4 Effects of the Merger...........................................................................6
Section 2.5 Certificate of Incorporation and Bylaws.........................................................6
Section 2.6 Directors.......................................................................................7
Section 2.7 Officers........................................................................................7
Section 2.8 Conversion of Shares............................................................................7
Section 2.9 Shares of Dissenting Holders....................................................................8
Section 2.10 Exchange of Certificates........................................................................8
Section 2.11 Stock Options; 1997 Stock Plan.................................................................10
Section 2.12 Additional Actions.............................................................................11
Section 2.13 Withholding Taxes..............................................................................11
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................................................11
Section 3.1 Organization and Qualification; Subsidiaries...................................................11
Section 3.2 Capitalization of the Company and its subsidiaries.............................................12
Section 3.3 Authority Relative to this Agreement; Consents and Approvals...................................13
Section 3.4 SEC Reports; Financial Statements..............................................................14
Section 3.5 Information Supplied...........................................................................14
Section 3.6 Consents and Approvals; No Violations..........................................................15
Section 3.7 Material Contracts.............................................................................15
Section 3.8 No Undisclosed Liabilities; Absence of Changes.................................................16
Section 3.9 Litigation.....................................................................................16
Section 3.10 Compliance with Applicable Law.................................................................16
Section 3.11 Employee Plans.................................................................................17
Section 3.12 Environmental Laws and Regulations.............................................................18
Section 3.13 Intellectual Property; Software................................................................20
ii
3
Section 3.14 Certain Business Practices.....................................................................21
Section 3.15 Labor Matters..................................................................................21
Section 3.16 Insurance......................................................................................21
Section 3.17 Tax Matters....................................................................................22
Section 3.18 Brokers........................................................................................23
Section 3.19 Real Estate....................................................................................23
Section 3.20 Opinion of Financial Advisor...................................................................24
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB.........................................................................................24
Section 4.1 Organization...................................................................................24
Section 4.2 Authority Relative to this Agreement...........................................................25
Section 4.3 Information Supplied...........................................................................25
Section 4.4 Consents and Approvals; No Violations..........................................................25
Section 4.5 No Prior Activities............................................................................26
Section 4.6 Brokers........................................................................................26
Section 4.7 Financing......................................................................................26
ARTICLE 5
COVENANTS........................................................................................................27
Section 5.1 Conduct of Business of the Company.............................................................27
Section 5.2 No Solicitation................................................................................28
Section 5.3 Access to Information..........................................................................30
Section 5.4 Shareholders Meeting; Proxy Statement..........................................................30
Section 5.5 Additional Agreements; Reasonable Efforts......................................................30
Section 5.6 Consents.......................................................................................31
Section 5.7 Public Announcements...........................................................................31
Section 5.8 Indemnification; Directors' and Officers' Insurance............................................31
Section 5.9 Notification of Certain Matters................................................................32
Section 5.10 SEC Filings....................................................................................32
Section 5.11 Takeover Statutes..............................................................................32
Section 5.12 Transaction Litigation.........................................................................32
Section 5.13 Delisting......................................................................................33
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER.........................................................................33
Section 6.1 Stockholder Approval...........................................................................33
Section 6.2 No Order.......................................................................................33
Section 6.3 HSR Act........................................................................................33
Section 6.4 Offer..........................................................................................33
iii
4
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER...................................................................................34
Section 7.1 Termination....................................................................................34
Section 7.2 Effect of Termination..........................................................................35
Section 7.3 Fees and Expenses..............................................................................35
Section 7.4 Amendment......................................................................................36
Section 7.5 Extension; Waiver..............................................................................37
ARTICLE 8
MISCELLANEOUS....................................................................................................37
Section 8.1 Nonsurvival of Representations and Warranties..................................................37
Section 8.2 Entire Agreement; Assignment...................................................................37
Section 8.3 Validity.......................................................................................37
Section 8.4 Notices........................................................................................37
Section 8.5 Governing Law..................................................................................38
Section 8.6 Construction; Interpretation...................................................................38
Section 8.7 Parties in Interest............................................................................39
Section 8.8 Severability...................................................................................39
Section 8.9 Specific Performance...........................................................................39
Section 8.10 Counterparts...................................................................................39
Section 8.11 Waiver of Jury Trial...........................................................................39
iv
5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July
27, 1999 is made by and among KOFAX IMAGE PRODUCTS, INC., a Delaware corporation
(the "Company"), IMAGING COMPONENTS CORPORATION, a Delaware corporation
("Parent"), and IMAGING ACQUISITION CORPORATION, a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub").
WHEREAS, the Board of Directors of the Company (the "Company Board"),
the Parent and Merger Sub has, in light of and subject to the terms and
conditions set forth herein, (i) determined that each of the Offer (as defined
in the recitals) and the Merger (as defined in Section 2.1) is fair to, and in
the best interests of, their respective shareholders and (ii) approved and
adopted this Agreement and the transactions contemplated hereby and resolved to
recommend acceptance of the Offer and approval and adoption of this Agreement by
their respective shareholders;
WHEREAS, in furtherance thereof, it is proposed that Parent and Merger
Sub shall commence a tender offer (as it may be amended from time to time as
permitted by this Agreement, the "Offer") to acquire all of the outstanding
shares of common stock of the Company, par value $0.001 per share (the "Common
Stock"), at a price equal to $12.75 per share (such amount, or any greater
amount per share paid pursuant to the Offer, being hereinafter referred to as
the "Per Share Amount"), net to the seller in cash, subject to reduction for any
applicable federal back-up withholding or stock transfer taxes payable by such
seller, in accordance with the terms and subject to the conditions provided
herein; and
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition to Parent's and Merger Sub's willingness to enter into this
Agreement, Merger Sub and certain holders of Shares (as defined in Section
2.8(a)) have entered into Voting Agreements (as amended, restated or modified
from time to time, collectively, the "Voting Agreements") in the form attached
as Exhibit A.
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company, Parent
and Merger Sub hereby agree as follows:
6
ARTICLE 1
THE OFFER
SECTION 1.1 THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 7.1 and none of the events or conditions
set forth in Annex A (the "Offer Conditions", and each an "Offer Condition")
shall have occurred and be existing, as promptly as practicable after, but in no
event later than five (5) Business Days after, the public announcement of the
execution of this Agreement by the parties hereto, Parent shall cause Merger Sub
to, and Merger Sub shall, commence (within the meaning of the Rule 14d-2 under
the Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "Exchange Act")) the Offer for all the
outstanding Shares (as defined in Section 2.8) at the Per Share Amount. The
obligation of Merger Sub to accept for payment, purchase and pay for Shares
tendered pursuant to the Offer shall be subject only to the Offer Conditions and
to the further condition that a number of Shares which, together with Shares
then owned directly or indirectly by Parent and Merger Sub, would, at the
minimum, be more than fifty percent (50%) of the Common Stock then outstanding
on a fully diluted basis (which, for purposes of this Agreement, assumes the
full exercise and/or conversion of all options, warrants or other securities
exchangeable for or convertible into Common Stock) shall have been validly
tendered and not withdrawn prior to the expiration date of the Offer (the
"Minimum Condition"). Parent and Merger Sub expressly reserve the right to
increase the price per Share payable in the Offer or to make any other changes
in the terms and conditions of the Offer; provided, that unless previously
approved by the Company in writing, no change may be made that (i) decreases the
Per Share Amount payable in the Offer, (ii) changes the form of consideration to
be paid in the Offer, (iii) reduces the maximum number of Shares to be purchased
in the Offer, (iv) imposes conditions to the Offer in addition to the Offer
Conditions, (v) amends any other term of the Offer (including the Offer
Conditions) in a manner adverse to the holders of the Common Stock, (vi) extends
the Offer except as provided in Section 1.1(b) (provided that the Offer may not,
without the Company's consent, be extended beyond 60 days after the commencement
of the Offer), or (vii) amends, or waives the satisfaction of, the Minimum
Condition. It is agreed that the Offer Conditions are for the sole benefit of
Parent and Merger Sub and may be asserted by Merger Sub or Parent regardless of
the circumstances giving rise to any such condition (other than any action or
inaction by Merger Sub or Parent which constitutes a breach of this Agreement)
or may be waived by Merger Sub or Parent (other than the Minimum Condition) in
whole or in part at any time and from time to time, in their respective sole
discretion. The failure by Merger Sub or Parent at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time. The Company agrees that no Shares held by the Company or
any of its subsidiaries will be tendered in the Offer. "Business Day" means each
Monday, Tuesday, Wednesday, Thursday, or Friday that banks located in New York,
New York are not required or permitted by law to be closed.
(b) So long as this Agreement has not been terminated in
accordance with the terms hereof, and subject to the terms and conditions
hereof, the Offer shall expire at midnight, Pacific Time, on the date that is
twenty (20) Business Days after the Offer is commenced; provided,
2
7
that (subject to the proviso in clause (vi) of Section 1.1(a)) without the
consent of the Company or the Company Board, Merger Sub may (i) extend the
Offer, if at the scheduled expiration date of the Offer any of the Offer
Conditions shall not have been satisfied or waived, until such time as such
conditions are satisfied or waived, (ii) extend the Offer for any period
required for any rule, regulation, interpretation or position of the Securities
and Exchange Commission ("SEC") or the staff thereof applicable to the Offer,
(iii) extend the Offer for any reason on one or more occasions for an aggregate
period of not more than ten (10) Business Days beyond the latest expiration date
that would otherwise be permitted under clause (i) or (ii) of this sentence if
on such expiration date the Minimum Condition has been satisfied but the number
of Shares validly tendered, together with Shares then owned directly or
indirectly by Merger Sub, constitute at least seventy-five percent (75%) but
less than ninety percent (90%) of all outstanding Shares, or (iv) extend the
Offer for any reason on one or more occasions for an aggregate period of not
more than 10 Business Days beyond the initial expiration date or the latest
expiration date that would otherwise be permitted under clauses (i), (ii) or
(iii) of this sentence. Subject to the terms and conditions of the Offer and
this Agreement, Merger Sub shall and Parent shall cause Merger Sub to, accept
for payment, and pay for, all Shares validly tendered and not withdrawn pursuant
to the Offer that Merger Sub becomes obligated to accept for payment and pay for
pursuant to the Offer as promptly as practicable after the expiration of the
Offer.
(c) On the date of the commencement of the Offer, Parent and
Merger Sub shall file with the SEC a Tender Offer Statement on Schedule 14D-l
with respect to the Offer which will reflect the existence of this Agreement
(together with any supplements or amendments thereto and any other related
documents, including an offer to purchase and a related letter of transmittal
and summary advertisement and, if required, a Rule 13e-3 Transaction Statement
on Schedule 13E-3 (collectively the "Offer Documents") and shall mail the Offer
Documents to the Company's stockholders. The Offer Documents will comply in all
material respects with the provisions of applicable federal securities laws. The
Offer Documents shall not, on the date filed with the SEC and on the date first
published or sent or given to the Company's shareholders, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Parent, Merger Sub and the Company each agrees to correct promptly
any information provided by it for use in the Offer Documents if and to the
extent that it shall have become false or misleading in any material respect,
and each of Parent and Merger Sub further agrees to take all steps necessary to
cause the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given a
reasonable opportunity to review and comment on the Offer Documents and all
amendments and supplements thereto, in each case prior to their filing with the
SEC or dissemination to stockholders of the Company, and the Parent and Merger
Sub shall consider such comments in good faith. Parent and Merger Sub shall
provide the Company and its counsel with any comments Parent, Merger Sub or
their counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments, including a copy of any
such comments that are made in writing.
3
8
(d) The parties understand and agree that the Per Share Amount
has been calculated based upon the accuracy of the representation and warranty
set forth in Section 3.2(a) and that, in the event the number of outstanding
Shares, capital stock or capital stock equivalents of the Company issuable upon
the exercise of, or subject to, options or other agreements exceeds the amounts
specifically set forth in Section 3.2(a) by more than 20,000 Shares (including
without limitation as a result of any stock split, reverse stock split, stock
dividend, including any dividend or distribution of securities convertible into
capital stock or capital stock equivalent of the Company, recapitalization, or
other like change occurring after the date of this Agreement, but excluding any
Shares issued pursuant to the 1997 Stock Plan (as defined in Section 2.11(d)) in
accordance with, and subject to, Section 2.11(d)), the Per Share Amount shall be
appropriately adjusted downward. The provisions of this Section 1.1(d) shall
not, however, affect the representation set forth in Section 3.2(a).
SECTION 1.2 COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer
and represents and warrants that the Company Board, at a meeting duly called and
held, has, subject to the terms and conditions set forth herein, unanimously,
(i) determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to, and in the best interests of,
the shareholders of the Company, (ii) approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, in all
respects and that such approval constitutes approval of the Offer, this
Agreement and the Merger for purposes of Section 251 of the Delaware General
Corporation Law (the "DGCL"), and similar provisions of any other similar state
statutes that might be deemed applicable to the transactions contemplated
hereby, and (iii) resolved to recommend that the shareholders of the Company
accept the Offer, tender their Shares thereunder to Merger Sub and approve and
adopt this Agreement and the Merger. The Company consents to the inclusion of
such recommendation and approval in the Offer Documents; provided, that such
recommendation may be withdrawn, modified or amended in accordance with the
provisions of Section 5.2. The Company further represents and warrants that X.X.
Xxxxxxxxx, Towbin (the "Financial Advisor") has delivered to the Company Board
its written opinion that the cash consideration to be received by the
shareholders of the Company pursuant to the Offer and the Merger is fair to such
shareholders from a financial point of view. The Company has been authorized by
the Financial Advisor to permit, subject to the prior review and consent by the
Financial Advisor (such consent not to be unreasonably withheld), the inclusion
of the fairness opinion (or a reference thereto) in the Schedule 14D-9 (as
defined in Section 1.2(b)) and, if required, the Schedule 13E-3.
(b) Contemporaneously with the commencement of the Offer as
provided in Section 1.1, the Company hereby agrees to file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 pertaining to the Offer
(together with any amendments or supplements thereto, the "Schedule 14D-9")
containing the recommendation described in Section 1.2(a) and to promptly mail
the Schedule 14D-9 to the shareholders of the Company. The Schedule 14D-9 will
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's shareholders,
4
9
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by the Company with
respect to information supplied by Parent or Merger Sub in writing for inclusion
in the Offer Documents or the Schedule 14D-9. The Company, Parent and Merger Sub
each agrees to correct promptly any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect, and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and disseminated to the holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Merger Sub and its counsel shall
be given a reasonable opportunity to review and comment on the Schedule 14D-9
before it is filed with the SEC, and the Company shall consider such comments in
good faith.
(c) In connection with the Offer, the Company will cause its
transfer agent to promptly furnish to Parent and Merger Sub mailing labels,
security position listings and any available listing or computer files
containing the names and addresses of the record holders of Shares as of a
recent date and shall furnish Merger Sub with such additional information and
assistance (including, without limitation, updated lists of shareholders,
mailing labels and lists of securities positions) as Merger Sub or its agents
may reasonably request in communicating the Offer to the record and beneficial
holders of Shares. Subject to the requirements of applicable law, and except for
such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Merger, Parent, Merger Sub and their
affiliates, associates, agents and advisors shall hold in confidence the
information contained in any such labels, listings and files and use such
information only in connection with the Offer and the Merger, and, if this
Agreement shall be terminated, will deliver all copies of such information then
in their possession and control.
SECTION 1.3 COMPANY BOARD AND COMMITTEES; SECTION 14(F) OF THE
EXCHANGE ACT.
(a) Promptly upon the payment by Merger Sub for Shares
pursuant to the Offer and from time to time thereafter, Merger Sub shall be
entitled to designate up to such number of directors, rounded up to the next
whole number, on the Company Board as will give Merger Sub representation on the
Company Board equal to the product of the number of directors on the Board
(giving effect to any increase in the number of directors pursuant to this
Section 1.3) and the percentage that such number of Shares so purchased bears to
the total number of outstanding Shares on a fully diluted basis, and the Company
shall use its reasonable best efforts to, upon request by Merger Sub, promptly,
at the Company's election, either increase the size of the Board or secure the
resignation of such number of directors as is necessary to enable Merger Sub's
designees to be elected to the Company Board and to cause Merger Sub's designees
to be so elected.
(b) The Company's obligation to appoint designees to the
Company Board shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all action
required pursuant to such Section and Rule in order to fulfill its obligations
under this Section 1.3 and shall include in the Schedule 14D-9 such information
with respect to the Company and its officers and directors as is required under
such Section and Rule in
5
10
order to fulfill its obligations under this Section 1.3 (provided that Parent
and Merger Sub shall have provided to the Company on a timely basis all such
information with respect to Merger Sub's designees).
(c) Following the election of Merger Sub's designees pursuant
to this Section and until the Effective Time, any amendment of this Agreement or
the Certificate of Incorporation or Bylaws of the Company, any termination of
this Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of parent of Merger Sub, any
waiver of any of the Company's rights hereunder, or any transaction between
Parent (or any affiliate or associate thereof) and the Company shall require the
concurrence of a majority of the Company's directors (or the concurrence of the
sole remaining director, if there is only one remaining) then in office who are
directors of the Company on the date hereof, or are directors designated by such
persons or person (the "Continuing Directors"). The Continuing Directors shall
have the authority to retain such counsel and other advisors at the expense of
the Company as are reasonably appropriate to assist them in the exercise of
their duties in connection with this Agreement. In addition, the Continuing
Directors shall have the authority to institute any action on behalf of the
Company to enforce performance of this Agreement.
ARTICLE 2
THE MERGER
SECTION 2.1 MERGER. At the Effective Time (as defined below) and upon
the terms and subject to the conditions of this Agreement and in accordance with
the DGCL, Merger Sub shall be merged with and into the Company (the "Merger").
Following the Merger, the Company shall continue as the surviving corporation of
the Merger (the "Surviving Corporation"), and the separate corporate existence
of Merger Sub shall cease.
SECTION 2.2 EFFECTIVE TIME. Subject to the terms and conditions set
forth in this Agreement, on the Closing Date (as defined in Section 2.3) or as
soon thereafter as is practicable, the parties shall cause an agreement or
certificate of merger to be executed and filed with the Secretary of State of
the State of Delaware, in such form as required by, and in accordance with
applicable provisions of, the DGCL (including, if possible, the procedures
permitted by Section 253 thereof), at which time the Merger shall become
effective (the time the Merger becomes effective being referred to herein as the
"Effective Time").
SECTION 2.3 CLOSING OF THE MERGER. The closing of the Merger (the
"Closing") shall take place at a time and on a date to be specified by the
parties, which shall be no later than the second Business Day after satisfaction
(or waiver) of the latest to occur of the conditions precedent set forth in
Article 6 (the "Closing Date"), at the offices of Xxxxxxxx & Xxxxx, 000 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another time, date or place is
agreed to in writing by the parties.
SECTION 2.4 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 259 of the DGCL.
6
11
SECTION 2.5 CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation of the Company in effect at the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until amended in
accordance with applicable law. The Bylaws of Merger Sub in effect at the
Effective Time shall be the Bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 2.6 DIRECTORS. The directors of Merger Sub at the Effective
Time shall be the initial directors of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation until such director's successor is duly elected or
appointed and qualified.
SECTION 2.7 OFFICERS. The officers of the Company at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
SECTION 2.8 CONVERSION OF SHARES.
(a) At the Effective Time, each share of Common Stock issued
and outstanding immediately prior to the Effective Time (individually a "Share"
and, collectively, the "Shares"), other than (i) Shares held by the Company or
any subsidiary of the Company, (ii) Shares held by Parent, Merger Sub, any other
subsidiary of Parent or Merger Sub, if any, (iii) the Shares held by persons and
entities as set forth on Schedule 2.8 hereto (collectively, the "Retained
Shares"), and (iv) Dissenting Shares (as defined in Section 2.9(a)), (the Shares
of subsection (i) through (iv), collectively the "Excluded Shares"), shall, by
virtue of the Merger and without any action on the part of Parent, Merger Sub,
the Company or the holder thereof, be canceled and extinguished and be converted
into and shall become the right to receive a cash payment per Share, without
interest, equal to the Per Share Amount (the "Merger Consideration") in
accordance with the terms hereof. From and after the Effective Time, the holders
of certificates evidencing ownership of Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares
except as otherwise provided for herein or by applicable law.
(b) At the Effective Time, by virtue of the Merger and without
any action on the part of the holder thereof, each issued and outstanding share
of the common stock, par value $0.001 per share, of Merger Sub shall be
converted into one share of common stock, par value $0.001 per share, of the
Surviving Corporation.
(c) At the Effective Time, each Share held by the Company as
treasury stock or held by Parent, Merger Sub or any subsidiary of Parent, Merger
Sub or the Company immediately prior to the Effective Time shall, by virtue of
the Merger and without any action on the part of Parent, Merger Sub, the Company
or the holder thereof, be canceled, retired and cease to exist, and no
consideration shall be delivered with respect thereto.
7
12
(d) Each Retained Share issued and outstanding immediately
prior to the Effective Time shall be exchanged for (as provided in and subject
to the limitations set forth in this Article 2) and become (i) a number of fully
paid and nonassessable shares of Class B Common Stock, par value $0.001 per
share, of the Parent ("Parent Class B Common") equal to (x) 20% of the Per Share
Amount divided by (y) $10.00 and (ii) a number of fully paid and non-assessable
shares of Class A Common Stock par value $0.001 per share, of the Parent
("Parent Class A Common") equal to (x) 80% of the Per Share Amount divided by
(y) $10.00, upon the surrender of the certificate previously representing such
shares of Retained Shares.
SECTION 2.9 SHARES OF DISSENTING HOLDERS.
(a) Notwithstanding anything to the contrary contained in this
Agreement, any holder of Shares with respect to which appraisal rights, if any,
are granted by reason of the Merger under the DGCL and who does not vote in
favor of or consents in writing to the Merger and who otherwise complies with
the provisions of Section 262 of the DGCL ("Dissenting Shares") shall not be
entitled to receive any Merger Consideration pursuant to Section 2.8(a), unless
such holder fails to perfect, effectively withdraws or loses his or her
appraisal right under the provisions of Section 262 of the DGCL. If any such
holder so fails to perfect, effectively withdraws or loses his or her appraisal
rights under the DGCL, each Dissenting Share of such holder shall thereupon be
deemed to have been converted, as of the Effective Time, into the right to
receive the Per Share Amount pursuant to Section 2.8(a).
(b) Any payments relating to Dissenting Shares shall be made
solely by the Surviving Corporation, and no funds or other property have been or
will be provided by Merger Sub, Parent or any of Parent's other direct or
indirect subsidiaries for such payment, nor shall the Company make any payment
with respect to, or settle or offer to settle, any such demands.
(c) The Company shall give Merger Sub prompt notice of any
demands received by the Company for the payment of fair value for shares, and
Merger Sub shall have the right to direct all negotiations and proceedings with
respect to such demands.
SECTION 2.10 EXCHANGE OF CERTIFICATES.
(a) IBJ Whitehall Bank & Trust Company or another bank or
trust company designated by Parent and reasonably acceptable to the Company
shall act as the exchange agent (in such capacity, the "Exchange Agent") for the
benefit of the holders of Shares for the exchange of a certificate or
certificates which immediately prior to the Effective Time represented Shares
(the "Certificates") that were converted into the right to receive the Per Share
Amount pursuant to Section 2.8(a), all in accordance with this Article 2. At the
Effective Time, Parent shall deposit, or shall cause to be deposited, with the
Exchange Agent, and shall otherwise take all action necessary to provide the
Exchange Agent on a timely basis, as and when needed after the Effective Time,
funds necessary to provide for the payment for the benefit of the holders of
Shares, cash in U.S. dollars in an amount equal to the Merger Consideration
multiplied by the aggregate outstanding Shares (other than the Excluded Shares)
to be paid pursuant to Section 2.8(a). The Exchange Agent shall, pursuant
8
13
to irrevocable instructions, deliver the Merger Consideration out of the amount
so deposited by Parent to holders of Shares entitled thereto. The amount
deposited by Parent with the Exchange Agent shall not be used for any other
purpose. Any and all amounts earned on such funds paid over to the Surviving
Corporation.
(b) As soon as reasonably practicable after the Effective
Time, the Exchange Agent shall mail to each holder of record of Certificates
formerly representing Shares converted into the right to receive the Merger
Consideration pursuant to Section 2.8(a): (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Parent and the
Company may reasonably specify); and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for a cash payment of the proper
Merger Consideration pursuant to Section 2.8(a). Upon surrender of a Certificate
for cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by Parent and Merger Sub, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor by check an amount equal to (A) the Per Share Amount,
multiplied by (B) the number of Shares represented by such Certificate, which
such holder has the right to receive pursuant to the provisions of this Article
2, and the Certificate so surrendered shall forthwith be canceled; provided,
that any Certificate (or portion thereof) representing Retained Share shall not
be entitled to such cash amount, but a number of shares of Parent Class A Common
and Parent Class B Common as set forth in Section 2.8(d). No interest shall be
paid or accrued on any Merger Consideration upon the surrender of any
Certificates. In the event of a transfer of ownership of Shares which is not
registered in the transfer records of the Company, payment of the proper Merger
Consideration may be paid to a transferee if the Certificate representing such
Shares is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and by evidence that any applicable stock
transfer or other taxes required as a result of such payment to a person other
than the registered holder of such shares have been paid. Until surrendered and
exchanged as contemplated by this Section 2.10, each Certificate (other than
Certificates representing Excluded Shares) shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender an
amount equal to (A) the Per Share Amount, multiplied by (B) the number of Shares
represented by such Certificate, as contemplated by this Section 2.10.
(c) In the event that any Certificate shall have been lost,
stolen or destroyed, the Exchange Agent shall pay, upon the making of an
affidavit of that fact by the holder thereof in form and substance reasonably
acceptable to Parent, the proper Merger Consideration as may be required
pursuant to Section 2.8; provided, that Parent may, in its discretion, require
the delivery of a suitable bond and/or indemnity.
(d) The Merger Consideration paid upon the surrender of
Certificates in accordance with the terms hereof shall be deemed to have been
paid in full satisfaction of all rights pertaining to Shares formerly
represented thereby. There shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to
9
14
the Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Article 2.
(e) Any portion of the Merger Consideration which remains
undistributed to the shareholders of the Company for six months after the
Effective Time shall be delivered to the Surviving Corporation, upon demand, and
any shareholders of the Company who have not theretofore complied with this
Article 2 shall thereafter look only to the Surviving Corporation for payment of
their claim for any Merger Consideration.
(f) Notwithstanding Section 2.11(e), neither Parent nor the
Company shall be liable to any holder of a Certificate formerly representing
Shares for any Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
SECTION 2.11 STOCK OPTIONS; 1997 STOCK PLAN.
(a) At the Effective Time, each outstanding, vested and
exercisable option to purchase shares of Common Stock (including those options
that will become exercisable upon a change in control of the Company) (a "Stock
Option" or collectively "Stock Options") issued pursuant to the Amended and
Restated Incentive Stock Option, Nonqualified Stock Option and Restricted Stock
Purchase Plan, the 1996 Incentive Stock Option, Nonqualified Stock Option and
Restricted Stock Purchase Plan, and the 1997 Stock Option Plan for Non-Employee
Directors (collectively the "Company Plans") or issued outside any Company Plan
via special grants by the Company's Stock Option Committee to certain employees
shall be converted into and shall become the right to receive a cash payment per
Stock Option, without interest, determined by multiplying (i) the excess, if
any, of the Per Share Amount over the applicable per share exercise price of
such Stock Option by (ii) the number of shares of Common Stock underlying the
Stock Options immediately prior to the Effective Time. At the Effective Time,
all outstanding options to purchase shares of Common Stock (including those
options that are not exercisable at the time of the Merger) shall be canceled
and be of no further force or effect except for the right to receive cash to the
extent provided in this Section 2.11. Prior to the Effective Time, the Company
shall take all actions (including, if appropriate, amending the terms of any
Company Plan) that are necessary to give effect to the transactions contemplated
by this Section 2.11.
(b) Prior to the Effective Time, Parent and the Company shall
establish a procedure to effect the surrender of Stock Options in exchange for
the cash payment to which the holder of a Stock Option shall be entitled under
Section 2.11(a), and, upon surrender of such Stock Option, Parent shall pay to
the holder thereof in cash the amount, if any, to which such holder shall be
entitled thereunder.
(c) The Parent, Merger Sub and the Company hereby acknowledge
and agree that the Surviving Corporation shall not assume or continue any Stock
Options, or substitute any additional options for such Stock Options. On or
before the Effective Time, the Company shall, consistently with the terms of the
Company Plans and other agreements and arrangements
10
15
evidencing Stock Options, or to the extent permissible under applicable law,
accelerate the unvested portion of all outstanding Stock Options, conditioned
upon the consummation of the Merger.
(d) Unless terminated prior to the Effective Time in
accordance with its terms, the Company's 1997 Employee Stock Purchase Plan (the
"1997 Stock Plan") shall be terminated as of the Effective Time. Unless the 1997
Stock Plan is terminated prior to the Effective Time in accordance with its
terms, the Company shall take such actions as are necessary or appropriate to
cause the last day of the then current Offering Period (as such term is used in
the 1997 Stock Plan) to be the last trading day on which the Common Stock of the
Company is traded on the Nasdaq National Market immediately prior to the
Effective Time (the "Final Company Exercise Date"); provided, that such change
shall be conditioned upon the consummation of the Merger. On the Final Company
Exercise Date, and subject to the participants' rights to receive invested cash
as provided in the 1997 Stock Plan, the Company shall apply the funds credited
as of such date under the 1997 Stock Plan within each participant's account to
the purchase of whole shares of Common Stock in accordance with the terms of the
1997 Stock Plan, it being agreed that the number of shares of Common Stock so
purchased shall not exceed the number of shares issuable under the 1997 Stock
Plan, as represented in Section 3.2.
SECTION 2.12 ADDITIONAL ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Merger Sub or the Company or otherwise to carry
out this Agreement, the officers and directors of the Surviving Corporation
shall be authorized to execute and deliver, in the name and on behalf of Merger
Sub or the Company, all such deeds, bills of sale, assignments and assurances
and to take and do, in the name and on behalf of Merger Sub or the Company, all
such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
SECTION 2.13 WITHHOLDING TAXES. Parent and Merger Sub shall be entitled
to deduct and withhold, or cause the Exchange Agent to deduct and withhold, from
the Merger Consideration payable to a holder of Shares or amounts payable to a
holder to the Stock Options pursuant to the Merger any withholding and stock
transfer Taxes and such amounts as are required under the Internal Revenue Code
of 1986, as amended (the "Code"), or any applicable provision of state, local or
foreign Tax law. To the extent that amounts are so withheld by Parent or Merger
Sub, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the Shares or the Stock Options in respect
of which such deduction and withholding was made by Parent or Merger Sub and
Parent shall provide, or cause the Exchange Agent to provide, to the holders of
such Shares written notice of the amounts so deducted or withheld.
11
16
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as
follows:
SECTION 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its businesses as presently
conducted.
(b) Except as set forth on Section 3.1(b) of the disclosure
schedule delivered by the Company to Parent concurrently herewith (the
"Disclosure Schedule") or as disclosed in filings with the SEC made prior to the
date hereof and since, and including, the filing of the Company's most recent
Annual Report on Form 10-K (the "Recent SEC Reports"), the Company has no equity
interests in any corporations, partnerships, limited liability companies, trusts
or similar business entities. The Company has no significant subsidiaries, as
that term is defined in Rule 1-02(w) of Regulation S-X.
(c) The Company is duly qualified or licensed to do business
and in good standing in each jurisdiction in which the property owned, leased or
operated by it, or the nature of the business conducted by it, makes such
qualification or licensing necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing would not have,
individually or in the aggregate, a Company Material Adverse Effect. The term
"Company Material Adverse Effect" means any change, effect, event, occurrence,
condition or development that is or is reasonably likely to be materially
adverse to (i) the assets, liabilities, properties, results of operations, or
conditions (financial or otherwise) of the Company and its subsidiaries, taken
as a whole, or (ii) the ability of the Company to perform its obligations under
this Agreement.
(d) The Company has heretofore delivered to Merger Sub or
Parent accurate and complete copies of the Certificate of Incorporation and
Bylaws, each as amended to date and currently in effect, of the Company and each
of its subsidiaries.
SECTION 3.2 CAPITALIZATION OF THE COMPANY AND ITS SUBSIDIARIES.
(a) The authorized capital stock of the Company consists of
(i) 40,000,000 shares of Common Stock, of which, as of the date hereof,
5,243,956 shares were issued and outstanding (excluding shares held as treasury
shares), and 194,884 shares of Common Stock are held as treasury shares and (ii)
5,000,000 shares of preferred stock, no shares of which are issued or
outstanding. All of the Shares have been validly issued, and are fully paid,
nonassessable and free of preemptive rights. As of the date hereof, (i) 580,555
shares of Common Stock were reserved for issuance and issuable upon, or
otherwise deliverable in connection with, the exercise of outstanding Stock
Options
12
17
and (ii) 34,000 shares of Common Stock are issuable under the 1997 Stock Plan
pursuant to Section 2.11(d). Section 3.2(a) of the Disclosure Schedule sets
forth the outstanding Stock Options. Except as set forth above, there are
outstanding (i) no shares of capital stock or other voting securities of the
Company, (ii) no securities of the Company or its subsidiaries convertible into
or exchangeable for shares of capital stock or voting securities of the Company,
(iii) no options or other rights to acquire from the Company or its
subsidiaries, and no obligations of the Company or its subsidiaries to issue,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company, and (iv) no
equity equivalents, interests in the ownership or earnings of the Company or its
subsidiaries or other similar rights (e.g., phantom stock or stock appreciation
rights). Except for the Voting Agreements and agreements issued under the
Company Plans, there are no stockholder, voting, repurchase or similar
agreements or understandings to which the Company is a party or otherwise bound
relating to the transfer, voting or repurchase of any shares of capital stock of
the Company.
(b) Except as set forth on Schedule 3.2(b) of the Disclosure
Schedule, or as publicly disclosed by the Company, all of the issued and
outstanding shares of capital stock of each subsidiary have been duly and
validly authorized and issued, are fully paid and non-assessable, and are owned
by the Company, directly or indirectly, free and clear of any Lien (as
hereinafter defined) or any other limitation or restriction (including any
restriction on the right to vote or sell the same, except as may be provided as
a matter of law). There are no securities of the Company or its subsidiaries
issued and outstanding that are convertible into or exchangeable for, no options
or other rights to acquire from the Company or its subsidiaries, and no other
contract, understanding, arrangement or obligation (whether or not contingent)
providing for the issuance or sale, directly or indirectly, of any capital stock
or other ownership interests in, or any other securities of, any subsidiary.
There are no outstanding contractual obligations of the Company or its
subsidiaries to repurchase, redeem or otherwise acquire any outstanding shares
of capital stock or other ownership interests in any subsidiary. For purposes of
this Agreement, "Lien" means, with respect to any asset (including, without
limitation, any security) any mortgage, lien, pledge, charge, claim, security
interest or encumbrance of any kind in respect of such asset.
(c) The affirmative vote of the holders of a majority of the
outstanding Shares is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve the Merger.
SECTION 3.3 AUTHORITY RELATIVE TO THIS AGREEMENT; CONSENTS AND
APPROVALS.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Company Board, and no other corporate proceedings on
the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby (other than, with respect to the
Merger, the approval and adoption of this Agreement by the holders of a majority
of the then outstanding Shares). This Agreement has been duly and validly
executed and delivered by the Company and constitutes a valid, legal and binding
13
18
agreement of the Company, enforceable against the Company in accordance with its
terms, except (i) to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors' rights generally and (ii) that the availability of equitable
remedies, including specific performance, is subject to the discretion of the
court before which any proceeding thereof may be brought.
(b) The Company Board has duly and validly approved, and taken
all corporate actions required to be taken by the Company Board for the
consummation of, the transactions, including the Offer and the Merger,
contemplated hereby and resolved to recommend that the shareholders of the
Company approve and adopt this Agreement subject to Section 5.2.
SECTION 3.4 SEC REPORTS; FINANCIAL STATEMENTS.
(a) The Company has filed all required forms, reports and
documents with the SEC since October 10, 1997 (the "SEC Reports"), each of which
has complied in all material respects with all applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the Exchange Act,
each as in effect on the dates such forms, reports and documents were filed. The
Company has delivered to Merger Sub or Parent, in the form filed with the SEC
(including any amendments thereto), (i) its Annual Report on Form 10-K for the
fiscal year ended June 30, 1998, (ii) all definitive proxy statements relating
to the Company's meetings of shareholders (whether annual or special) held since
October 10, 1997, (iii) its Quarterly Reports on Form 10-Q for the quarters
ended September 30, 1998, December 31, 1998 and March 31, 1999, and (iv) all
other reports or registration statements filed by the Company with the SEC since
October 10, 1997. None of such forms, reports, registration statements or
documents, including, without limitation, any financial statements or schedules
included or incorporated by reference therein, contained, when filed, any untrue
statement of a material fact or omitted to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Company and its
subsidiaries included in the Annual Report on Form 10-K referred to in the
second sentence of this Section 3.4(a) and the unaudited consolidated interim
financial statements of the Company and its subsidiaries included in the
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1999 (A)
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, (B) have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods covered thereby, except as may be indicated in the notes thereto and
except, in the case of unaudited statements, as may be permitted under the
Exchange Act, and (C) fairly present the consolidated financial position of the
Company and its subsidiaries as of the dates thereof and their consolidated
results of operations, financial condition, cash flow and changes in financial
position for the periods then ended (subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments).
(b) The Company has heretofore made available to Merger Sub or
Parent a complete and correct copy of any amendments or modifications, which
have not yet been filed with
14
19
the SEC, to agreements, documents or other instruments which previously had been
filed by the Company with the SEC pursuant to the Exchange Act.
SECTION 3.5 INFORMATION SUPPLIED. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in the
Offer Documents, the Proxy Statement or provided by the Company in the Schedule
14D-9 will, at the respective times that the Offer Documents, the Proxy
Statement, and the Schedule 14D-9 or any amendments or supplements thereto are
filed with the SEC and are first published or sent or given to holders of
Shares, 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 3.6 CONSENTS AND APPROVALS; NO VIOLATIONS. Assuming the truth
and accuracy of the representations and warranties of Parent and Merger Sub in
Section 4.4, except for filings, permits, authorizations, consents and approvals
as may be required under, and other applicable requirements of, the Securities
Act, the Exchange Act, state securities or blue sky laws, the Xxxx- Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the filing
and recordation of the Certificate of Merger with the Secretary of State of the
State of Delaware as required by the DGCL, no filing with or notice to, and no
permit, authorization, consent or approval of, or order of, any court or
tribunal or administrative, governmental or regulatory body, agency or authority
(a "Governmental Entity") is necessary for the execution and delivery by the
Company of this Agreement or the consummation by the Company of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not have a Company Material Effect. Neither the execution, delivery
and performance of this Agreement by the Company nor the consummation by the
Company of the transactions contemplated hereby will (a) conflict with or result
in any breach of any provision of the Certificate of Incorporation or Bylaws (or
similar governing documents) of the Company or any of its subsidiaries, (b)
except as set forth on Schedule 3.6 of the Disclosure Schedule, result in a
violation or breach of, or cause acceleration, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under any of the terms,
conditions or provisions of any Material Contracts (as defined in Section
3.7(a)), or (c) violate any order, writ, injunction, decree, law, statute, rule
or regulation of any court, or any Governmental Entity having jurisdiction over
the Company or any of its subsidiaries or any of their respective properties or
assets, except in the case of (b) or (c) for violations, breaches or defaults
which would not have, individually or in the aggregate, a Company Material
Adverse Effect.
SECTION 3.7 MATERIAL CONTRACTS.
(a) Except as set forth in the SEC Reports filed prior to the
date of this Agreement or Section 3.7 of the Disclosure Schedule, neither the
Company nor any of the subsidiaries is a party to or bound by any (i) "material
contract" (as such term is defined in Item 601(b)(10) of Regulations S-K
promulgated by the SEC), (ii) non-competition agreement or any other agreement
or obligation which purports to limit in any material respect the manner in
which, or the localities in which, all
15
20
or any material portion of the business of the Company and the subsidiaries,
taken as a whole, may be conducted, (iii) transaction, agreement, arrangement or
understanding with any affiliate of the Company or such subsidiary that would be
required to be disclosed under Item 404 of Regulation S-K promulgated by the
SEC, (iv) material acquisition, merger, asset purchase or sale agreement, (v)
agreement which provides for, or relates to, the incurrence by the Company or
any subsidiary of indebtedness for borrowed money in excess of $100,000
(including any interest rate or foreign currency swap, cap, collar, hedge or
insurance agreements, or options or forwards on such agreements, or other
similar agreements for the purpose of managing the interest rate or foreign
exchange risk associated with its financing), (vi) agreement with any executive
officer of the Company or any of the subsidiaries the benefits of which are
contingent or vest, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company or any of the subsidiaries of
the nature contemplated by this Agreement, (vii) agreement with respect to any
executive officer of the Company or any of the subsidiaries providing any term
of employment or compensation guarantee, or (viii) contract or other agreement
which would prohibit or materially delay the consummation of the Merger or any
of the transactions contemplated by this Agreement (all contracts of the type
described in clauses (i) through (viii) being referred to herein as "Material
Contracts"). Each Material Contract is valid and binding on the Company (or, to
the extent a subsidiary of the Company is a party, such subsidiary) and is in
full force and effect, and the Company and each subsidiary have performed in all
material respects all material obligations required to be performed by them
under each Material Contract.
(b) Except as set forth on Schedule 3.7 of the Disclosure
Schedule or as disclosed in the Recent SEC Reports, none of the Company or its
subsidiaries is in default, in conflict with or violation (and no event has
occurred which, with notice or the lapse of time or both, would constitute a
default or violation), in any material respect, of any term, condition or
provision of (i) its Certificate of Incorporation or Bylaws (or similar
governing documents), or (ii) any Material Contract, except in the case of (ii)
for violations, breaches or defaults that would not have, individually or in the
aggregate, a Company Material Adverse Effect.
SECTION 3.8 NO UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES.
(a) Except (i) as set forth on Schedule 3.8 of the Disclosure
Schedule or as disclosed in the Recent SEC Reports, or (ii) liabilities incurred
in the ordinary course of business, none of the Company or its subsidiaries has
any material liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, that would be required by GAAP to be reflected on a
consolidated balance sheet of the Company and its subsidiaries (including the
notes thereto).
(b) Except as set forth on Schedules 3.8 and 5.1 of the
Disclosure Schedule or as disclosed in the Recent SEC Reports, since March 31,
1999, the Company and its subsidiaries have conducted their business in the
ordinary course consistent with past practice and there has not been any event,
occurrence or development or state of circumstances or facts as described in
Sections 5.1(a) through 5.1(m).
16
21
SECTION 3.9 LITIGATION. Except as disclosed in the Recent SEC Reports,
there is no suit, litigation, arbitration, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries or any of their respective properties,
assets or business before any Governmental Entity which would have, individually
or in the aggregate, a Company Material Adverse Effect or would prevent or
substantially delay the consummation of the transactions contemplated by this
Agreement. Except as disclosed in the Recent SEC Reports, none of the Company or
its subsidiaries is subject to any outstanding order, writ, injunction or decree
that would have, individually or in the aggregate, a Company Material Adverse
Effect or would prevent or delay the consummation of the transactions
contemplated hereby.
SECTION 3.10 COMPLIANCE WITH APPLICABLE LAW. Except as disclosed in the
Recent SEC Reports, the Company and its subsidiaries hold all permits, licenses,
consents, authorizations, certificates, variances, exemptions, orders and
approvals of and from all, and has made all declarations and filings with,
Governmental Entities necessary for the lawful conduct of their respective
businesses, as presently conducted, and to own, lease, license and use its
respective properties and assets (the "Company Permits"), except for failures to
hold such permits, licenses, variances, exemptions, orders and approvals which
would not have, individually or in the aggregate, a Company Material Adverse
Effect. The Company and its subsidiaries are in compliance with the terms of the
Company Permits, except where the failure so to comply would not have a Company
Material Adverse Effect. Except as disclosed in the Recent SEC Reports, the
activities or businesses of the Company and its subsidiaries are not being
conducted in violation of or in conflict with, in any material respect, any law,
rule, order, judgment, decree, ordinance or regulation of the United States, any
state, county or locality, or of any Governmental Entity of the United States,
except where the violation or conflict would not result in a Company Material
Adverse Effect. Except as disclosed in the Recent SEC Reports, no investigation
or review by any Governmental Entity of the United States, any country, any
state, county or locality or of any foreign jurisdiction with respect to the
Company or its subsidiaries is pending or, to the knowledge of the Company and
any subsidiary, threatened, nor, to the knowledge of the Company and any
subsidiary, has any Governmental Entity of the United States, any country, any
state, county or locality or of any foreign jurisdiction indicated an intention
to conduct the same, other than, in each case, those which could not have a
Company Material Adverse Effect.
SECTION 3.11 EMPLOYEE PLANS. Except as set forth on Schedule 3.11 of
the Disclosure Schedule or as disclosed in the Recent SEC Reports, there are no
employee benefit plans (including without limitation, retirement, savings,
thrift, deferred compensation, severance, stock ownership, stock purchase, stock
option, performance, bonus, incentive, vacation or holiday pay, travel, fringe
benefit, hospitalization or other medical, disability, life or other insurance,
and any other employee benefit policy, trust, understanding or arrangement of
any kind) maintained or contributed to by the Company or its subsidiaries or
with respect to which the Company or its subsidiaries has any actual or
potential liability (the "Employee Plans") except for liability that would not
have, individually or in the aggregate, a Company Material Adverse Effect. The
Employee Plans are in compliance with applicable law, including without
limitation, the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and the Code, except for instances of non-compliance that would not
have,
17
22
individually or in the aggregate, a Company Material Adverse Effect. None of the
Employee Plans are subject to Title IV of ERISA nor provide for medical or life
insurance benefits to retired or former employees of the Company or any
subsidiary (other than as required under Code Section 4980B, or similar state
law). None of the Employee Plans have any material unfunded liabilities. Except
as set forth on Schedule 3.11 of the Disclosure Schedule or as disclosed in the
Recent SEC Reports, none of the Employee Plans obligates the Company to pay any
separation, severance, termination, bonus or similar benefit solely as a result
of any transaction contemplated by this Agreement or solely as a result of a
change in control or ownership of the Company. There are no pending or, to the
knowledge of the Company, threatened actions, suits, investigations or claims
with respect to any Employee Plan, and the Company has no knowledge of any facts
that could result in any actions, suits, investigations or claims that could
reasonably be expected to result in a Company Material Effect.
SECTION 3.12 ENVIRONMENTAL LAWS AND REGULATIONS.
(a) Except as set forth on Schedule 3.12 of the Disclosure
Schedule or as disclosed in the Recent SEC Reports, (i) each of the Company and
its subsidiaries is in compliance with all applicable Environmental Laws (as
defined in Section 3.12(g)), except for non-compliance that would not have a
Company Material Adverse Effect, which compliance includes, but is not limited
to, the possession by the Company and its subsidiaries of all material permits
and other governmental authorizations required under applicable Environmental
Laws, and compliance with the terms and conditions thereof, (ii) since March 31,
1999, none of the Company or its subsidiaries has received written notice of,
or, to the best knowledge of the Company, is the subject of, any material
action, cause of action, claim, investigation, demand or notice by any person or
entity alleging liability under or non-compliance with any Environmental Law (an
"Environmental Claim"), and (iii) to the knowledge of the Company, there are no
circumstances that are reasonably likely to prevent or interfere with such
material compliance, or give rise to material Environmental Claims, in the
future.
(b) Except as disclosed in the Recent SEC Reports, there are
no Environmental Claims which would have a Company Material Adverse Effect that
are pending or, to the knowledge of the Company, threatened against the Company
or its subsidiaries or, to the knowledge of the Company, against any person or
entity whose liability for any Environmental Claim the Company or any of its
subsidiaries has or may have retained or assumed either contractually or by
operation of law.
(c) (i) No site or facility now owned, operated or leased by
the Company or any of its subsidiaries or, to the knowledge of the Company,
previously owned, operated or leased, is listed or, to the knowledge of the
Company proposed for listing on the national priorities List or CERCLIS,
promulgated pursuant to the Comprehensive Environmental Response, Compensation
and liability Act of 1980, as amended ("CERCLA"), and the rules and regulations
thereunder or on any similar state or local list of sites requiring
investigation or remediation.
18
23
(ii) Neither the Company nor any of its subsidiaries
has received any written notice of any actual or alleged violation or
any Environmental law with respect to any of its facilities, except a
violation or violations that, individually, or in the aggregate, could
not reasonably be expected to have a Company Material Adverse Effect.
(iii) The Company and its subsidiaries are not
subject to any material outstanding agreements or orders with any
Governmental or Regulatory Authority or other person respecting (A)
Environmental Laws, (B) Remedial Action or (C) any Release of a
Hazardous Material.
(iv) Neither the Company nor any of its subsidiaries
has received any written notice or request for information pertaining
to a response action (as defined by CERCLA), with respect to any of its
sites or facilities now or previously owned, operated or leased by
them, except for notices or requests that individually or in the
aggregate could not reasonably be expected to have a Company Material
Adverse Effect.
(v) To the knowledge of the Company, no Hazardous
Material is present (except in quantities for retail sale to consumers,
for store maintenance or as otherwise permitted under any Environmental
Law (as defined below)) or has been Released (as defined below) at, on
or about, any of the Company or its subsidiaries' sites or facilities,
now owned, operated or leased by them, except in compliance with
Environmental Law, and except for the presence of Hazardous Material or
such Release(s) which individually or in the aggregate could not
reasonably be expected to have a Company Material Adverse Effect.
(d) No liens have arisen under or pursuant to any
Environmental Law on any site or facility currently owned, operated or leased by
the Company or any of its subsidiaries, other than Liens that individually or in
the aggregate could not reasonably be expected to have a Company Material
Adverse Effect.
(e) There have been no material environmental investigations,
studies, audits, tests, reviews or other analyses conducted by, or which are in
the possession of, the Company or any of its subsidiaries in relation to any
site or facility owned, operated or leased by the Company or any of its
subsidiaries, except for those the reports of which have been made available to
Parent prior to the execution of this Agreement.
(f) No sites or facilities, now or previously owned, operated
or leased by the Company or any of its subsidiaries, have or had at the time of
ownership, operation, or leasing, to the knowledge of the Company, any (i)
underground storage tanks, (ii) friable asbestos, (iii) polychlorinated
byphenyls ("PCBs"), or (iv) chlorofluorocarbons ("CFCs"), except in
circumstances which could not reasonably be expected to have individually or in
the aggregate a Company Material Adverse Effect or adversely affect the ability
of the Company to perform its obligations hereunder or to consummate the Merger.
(g) As used herein:
19
24
(i) "Environmental Law" means any Law or order relating to the
environment or to emissions, discharges or Releases of pollutants, contaminants,
or chemicals, or industrial, toxic or hazardous substances or wastes, into the
environment (including structures, ambient air, soil, surface water, ground
water, wetlands, land or subsurface strata), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
(ii) "Hazardous Material" means (A) any chemicals or other
materials or substances that are defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"pollutants," "contaminants," or words of similar import under any Environmental
Law, including petroleum, friable asbestos, PCBs, and CFCs, and (B) any other
chemical, material or substance, the presence of or exposure to which is
prohibited, limited or regulated by any Governmental or Regulatory Authority
under any Environmental Law.
(iii) "Release" means any actual or threatened (as defined
under CERCLA) release, spill, effluent, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
environment or any structure.
(iv) "Remedial Action" means all actions, including any
capital expenditures, required by a Governmental or Regulatory Authority,
required under any Environmental Law or voluntarily undertaken to (A) clean up,
remediate, remove, treat, or in any other way ameliorate or address any
Hazardous Materials Released into the environment; (B) prevent the Release, or
minimize the further Release of any Hazardous Material so it does not endanger
or threaten to endanger public health or the environment; (C) perform
pre-remedial studies and investigations or post-remedial monitoring and care
relating to a Release; or (D) bring the applicable party into compliance with
any Environmental Law.
SECTION 3.13 INTELLECTUAL PROPERTY; SOFTWARE.
(a) Each of the Company and its subsidiaries owns, or
possesses valid and enforceable third party licenses to use, all existing United
States and foreign patents, trademarks, trade names, service marks, trade dress,
Internet domain names, together with all the goodwill associated therewith,
copyrights, computer software, data, databases and documentation thereof, trade
secrets, know-how and other proprietary information, including any applications
and registrations of any of the foregoing, necessary for the operation of the
business of the Company and its subsidiaries as now conducted (the "Company
Intellectual Property Rights"), except where the failure to own or possess valid
rights to use such Company Intellectual Property Rights would not have a Company
Material Adverse Effect. The patents, registrations and applications for
registration included among the Company Intellectual Property Rights are set
forth on Section 3.13(a) of the Company Disclosure Schedule.
(b) Except as set forth on Schedule 3.13(b) of the Disclosure
Schedule,
20
25
(i) the validity, enforceability and use of the
Company Intellectual Property Rights and the title thereto of the
Company or any subsidiary as the case may be is not being questioned in
any litigation or other proceeding to which the Company or any
subsidiary is a party, nor has any claim of infringement or
misappropriation (including, without limitation, any demand or request
that the Company or any subsidiary license any intellectual property
rights from a third party) been alleged or, to the knowledge of the
Company, threatened against the Company or any subsidiary by any third
party in connection with such third party's intellectual property
rights,
(ii) to the knowledge of the Company and its
subsidiaries, no third party is infringing or misappropriating the
Company Intellectual Property Rights,
(iii) the consummation of the transactions
contemplated hereby will not result in the loss or impairment of any
Company Intellectual Property Rights,
(iv) subject only to customary source code escrow
agreements, the Company and its subsidiaries have ownership and
possession of all source code and use and system documentation for the
material software owned by the Company or any subsidiary, and
(v) all employees and independent contractors who
have participated in the creation or development of any portion of the
Company Intellectual Property Rights have executed an agreement with
the Company and/or a subsidiary assigning all right, title and interest
in such portion of the Company Intellectual Property Rights developed
for the benefit of the Company to the Company or the subsidiary, as the
case may be.
(c) The Company and each of its subsidiaries have conducted an
inventory and assessment of the software, hardware, databases and embedded
control systems (microprocessor controlled, robotic or other device)
(collectively "Systems") used or relied on by the Company and its subsidiaries
in connection with their business or in connection with the use, operation or
enjoyment of, any material tangible or intangible asset or real property of the
Company or its subsidiaries, in order to determine which parts of the Systems
are not Year 2000 Compliant (as defined below) and to estimate the cost of
rendering such Systems Year 2000 Compliant prior to December 31, 1999 or such
earlier date on which the Systems may shut down or may produce incorrect
calculations or otherwise malfunction without becoming totally inoperable. Year
2000 Compliant means that the Systems will operate to accurately process
(including but not limited to calculating, comparing and sequencing) date
information relating to dates before, on, or after January 1, 2000, including
leap- year calculations. To the knowledge of the Company, after due inquiry, and
except as disclosed in the Recent SEC Reports, neither the Company nor any of
its subsidiaries will incur material expenses arising from or relating to the
failure of any of its Systems as a result of the advent of the year 2000, or the
transition from the twentieth century through the year 2000.
SECTION 3.14 CERTAIN BUSINESS PRACTICES. To the knowledge of the
Company, none of the Company, any of its subsidiaries or any directors,
officers, agents or employees of the Company or
21
26
any of its subsidiaries has (i) used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to political activity,
(ii) made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iii)
made any other unlawful payment.
SECTION 3.15 LABOR MATTERS. Neither the Company nor any of its
subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor is the Company or any of its subsidiaries the subject of
any proceeding asserting that the Company or any of its subsidiaries has
committed an unfair labor practice or seeking to compel it to bargain with any
labor union or labor organization, nor is there pending or, to the knowledge of
the Company, threatened any labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving the Company or any of its subsidiaries.
SECTION 3.16 INSURANCE. The Company maintains insurance policies (the
"Insurance Policies") against all risks of a character and in such amounts as
are usually insured against by similarly situated companies in the same or
similar businesses. Each Insurance Policy is in full force and effect and is
valid, outstanding and enforceable, and all premiums due thereon have been paid
in full. None of the Insurance Policies will terminate or lapse (or be affected
in any other materially adverse manner) by reason of the transactions
contemplated by this Agreement. No insurer under any Insurance Policy has
canceled or generally disclaimed liability under any such policy or, to the
Company's knowledge, indicated any intent to do so or not to renew any such
policy.
SECTION 3.17 TAX MATTERS.
(a) The Company and its subsidiaries have accurately prepared
and duly filed with the appropriate domestic federal, state, local and foreign
taxing authorities all tax returns, information returns and reports required to
be filed with respect to the Company and its subsidiaries and have paid in full
or made adequate provision for the payment of (by way of reserves on the balance
sheet or otherwise) all Taxes (as defined below). Neither the Company nor any of
its subsidiaries is delinquent in the payment of any Taxes. As used herein, the
term "Taxes" means all federal, state, local and foreign taxes, including,
without limitation, income, profits, franchise, employment, transfer,
withholding, property, excise, sales and use taxes (including interest and
penalties thereon and additions thereto).
(b) Except as set forth on Section 3.17(b) of the Disclosure
Schedule, no employee responsible for tax matters of the Company or any
subsidiary has knowledge based on personal contact with any agent of any taxing
authority of any claim made by such an authority in a jurisdiction where the
Company or any subsidiary does not file tax returns that the entity so not
filing is or may be subject to taxation by that jurisdiction.
(c) There are no security interests on any of the assets of
the Company or any subsidiary that arose in connection with any failure (or
alleged failure) to pay any Xxx.
00
00
(x) There is no dispute or claim concerning any Tax liability
of the Company or any subsidiary either (i) claimed or raised by any authority
in writing or (ii) as to which any of the employees responsible for Tax matters
of the Company or any subsidiary has knowledge based upon personal contact with
any agent of such authority. Schedule 3.17(d) sets forth those tax returns that
currently are the subject of audit.
(e) None of the Company or any subsidiary has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(f) None of the Company nor any subsidiary has filed a consent
under Code Section 341(f) concerning collapsible corporations. Except as set
forth on Section 3.17(f) of the Disclosure Schedule, none of the Company nor any
subsidiary has made any payments, is obligated to make payments, or is a party
to any agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Section 280G or Code
Section 162(m). None of the Company nor any subsidiary has been a United States
real property holding corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section 897(c)(1)(A)(ii).
(g) None of the Company nor any subsidiary has any liability
for the Taxes of any person other than the Company or any subsidiary (i) under
Treas. Reg. Section 1.1502-6 (or any similar provision of state, local or
foreign law), or (ii) by contract, except pursuant to contracts for the lease,
purchase or sale of goods or services in the ordinary course of business
consistent with commercial practices.
(h) None of the Company nor any subsidiary owns an interest in
an entity either treated as a partnership or whose separate existence is ignored
for federal income tax purposes.
SECTION 3.18 BROKERS. No broker, finder or investment banker (other
than the Financial Advisor pursuant to an arrangement (that may not be amended
or modified without the prior written consent of Parent) that has been disclosed
to Parent and Merger Sub prior to the date hereof) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
the Company or any subsidiary.
SECTION 3.19 REAL ESTATE.
(a) Attached as Schedule 3.19(a) is the address and legal
description of each parcel of real property owned by the Company or any
subsidiary (the "Owned Real Property"). Except as described on such Schedule,
the Company or its applicable subsidiary has good and marketable title in and to
all of the Owned Real Property subject to no Liens or other defects in title,
except for such Liens, if any, as are reflected in the Company's financial
statements included in the Recent SEC Reports or such other Liens as do not
detract in any material respect from the value or marketability of the property
subject thereto and do not materially interfere with the use of such property.
23
28
(b) Attached as Schedule 3.19(b) is a list of all material
leases, subleases and other occupancy agreements, including all amendments,
extensions and other modifications (the "Leases") for real property (the "Leased
Real Property", collectively with the Owned Real Property, the "Real Property")
to which the Company or any subsidiary is a party. The Company or its applicable
subsidiary has a good and valid leasehold interest in and to all of the Leased
Real Property, subject to no Liens except as described in such Schedule, except
for such Liens, if any, as are reflected in the Company's financial statements
included in the Recent SEC Reports or such other Liens as do not detract in any
material respect from the value or marketability of the property subject thereto
and do not materially interfere with the use of such property. Each Lease is in
full force and effect and is enforceable in accordance with its terms in all
material respects. Except as disclosed on Schedule 3.19(b), to the knowledge of
the Company, there exists no default or condition which, with the giving of
notice, the passage of time or both, could become a material default under any
Lease. The Company has previously delivered to Parent true, complete, and
correct copies of all the Leases.
(c) The Real Property constitutes all of the material real
property owned, leased, occupied or otherwise used in connection with the
business of the Company and its subsidiaries. The Real Property and all plants,
buildings and improvements located thereon conform to all applicable building,
zoning and other laws, ordinances, rules and regulations except for violations
which would not have a Company Material Adverse Effect. All permits, licenses
and other approvals necessary to the current occupancy and use of the Real
Property have been obtained, are in full force and effect and have not been
violated, except for violations that, individually or in the aggregate, would
not have a Company Material Adverse Effect. There exists no violation by the
Company or any subsidiary of any covenant, condition, restriction, easement,
agreement or order affecting any portion of the Real Property (except for
violations that, individually or in the aggregate, would not have a Company
Material Adverse Effect). There is no pending or, to the knowledge of the
Company and its subsidiaries, any threatened condemnations proceeding affecting
any portion of the Real Property. Except as disclosed on Schedule 3.19(c), there
are no outstanding options or rights of first refusal with respect to the
purchase or use of any or the Owned Property, any portion thereof or interest
therein. Except as disclosed on Schedule 3.19(c), neither the Company nor any
subsidiary is obligated to purchase any real property.
SECTION 3.20 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of the Financial Advisor to the effect that, as of the date of this
Agreement, the consideration to be received in the Offer and the Merger by the
Company's stockholder is fair to the Company's stockholders from a financial
point of view, and a complete and correct signed copy of such opinion has been,
or promptly upon receipt thereof will be, delivered to Parent. The Company has
been authorized by the Financial Advisor to permit the inclusion of such opinion
in its entirety in the Offer Documents, the Schedule 14D-9, and the Proxy
Statement, so long as such inclusion is in form and substance reasonably
satisfactory to the Financial Advisor and its counsel.
24
29
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant, on a joint and
several basis, to the Company as follows:
SECTION 4.1 ORGANIZATION.
(a) Each of Parent and Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its businesses as now being conducted. Except as set forth
in the Commitment Letters (as defined in Section 4.7), Parent and Merger Sub
have no obligations or liabilities, and none of such parties are parties to any
litigation, which in either case if paid or determined adversely, or with
respect to which an event of default occurs, would have a material effect on
their ability to consummate the transactions contemplated hereby.
(b) Parent has heretofore delivered to the Company accurate
and complete copies of the Certificate of Incorporation and Bylaws, as currently
in effect, of Parent and Merger Sub. Each of Parent and its subsidiaries is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
in such jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not have a Parent Material Adverse Effect. The term
"Parent Material Adverse Effect" means (i) a material adverse effect on the
financial condition, properties, business or results of operations of the Parent
and Merger Sub, individually or in the aggregate or (ii) the ability of the
Parent or Merger Sub to perform its obligations under this Agreement.
SECTION 4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
boards of directors of Parent and Merger Sub and by their respective
shareholders as required by applicable law or their respective charter
documents, and no other corporate proceedings on the part of Parent or Merger
Sub are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each of Parent and Merger Sub and constitutes a valid, legal and
binding agreement of each of Parent and Merger Sub, enforceable against each of
Parent and Merger Sub in accordance with its terms, except (i) to the extent
that enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally and (ii) that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding thereof may be brought.
25
30
SECTION 4.3 INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Parent or Merger Sub for inclusion or incorporation by
reference in the Offer Documents, the Schedule 14D-9, or the Proxy Statement (as
defined in Section 5.4(a)) will, at the respective times that the Offer
Documents, the Schedule 14D-9, the Proxy Statement or any amendments or
supplements thereto are filed with the SEC and are first published or sent or
given to holders of Shares, 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 4.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Assuming the truth
and accuracy of the Company's representations and warranties contained in
Section 3.6, except for filings, permits, authorizations, consents and approvals
as may be required under, and other applicable requirements of, the Securities
Act, the Exchange Act, state securities or blue sky laws, the HSR Act and the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware as required by the DGCL, no filing with or notice to, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary for
the execution and delivery by Parent or Merger Sub of this Agreement or the
consummation by Parent or Merger Sub of the transactions contemplated hereby,
except where the failure to obtain such permits, authorizations, consents or
approvals or to make such filings or give such notice would not have a Parent
Material Adverse Effect or have a material adverse affect on the ability of
Parent or Merger Sub to consummate the Offer or the Merger. Neither the
execution, delivery and performance of this Agreement by Parent or Merger Sub
nor the consummation by Parent or Merger Sub of the transactions contemplated
hereby will (a) conflict with or result in any breach of any provision of the
respective certificate or articles of incorporation or Bylaws (or similar
governing documents) of Parent or Merger Sub, (b) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent or Merger Sub is a party or by which
any of them or any of their respective properties or assets may be bound or (c)
violate any order, writ, injunction, decree, law, statute, rule or regulation
applicable to Parent or Merger Sub or any of Parent's subsidiaries or any of
their respective properties or assets, except in the case of (b) or (c) for
violations, breaches or defaults which would not have a Parent Material Adverse
Effect or have a material adverse effect on the ability of Parent or Merger Sub
to consummate the Offer or the Merger.
SECTION 4.5 NO PRIOR ACTIVITIES. Except for obligations incurred in
connection with its incorporation or organization, the making of the Offer or
the negotiation and consummation of this Agreement and the transactions
contemplated hereby, Merger Sub has neither incurred any obligation or liability
or engaged in any business or activity of any type or kind whatsoever or entered
into any agreement or arrangement with any person or entity.
SECTION 4.6 BROKERS. Except for Dresdner Kleinwort Xxxxxx North America
LLC, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission
26
31
in connection with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of Parent or Merger Sub.
SECTION 4.7 FINANCING. Attached hereto as Exhibit 4.7 are (i) a Senior
Facilities Commitment Letter from Dresdner Kleinwort Xxxxxx North America LLC
("DKBNA") and Dresdner Bank AG, New York and Grand Caymans Branch ("Dresdner"),
dated as of the date hereof, which provides for a commitment for senior debt
financing in an aggregate principal amount of up to $50,000,000, (ii) a Senior
Subordinated Notes Commitment Letter from DKBNA, Dresdner and Dresdner AG,
Hamburg Branch, dated as of the date hereof, which provides for a commitment for
subordinated debt financing in an aggregate principal amount of $10,000,000,
(iii) a letter from Dicom Group plc, dated as of the date hereof, which provides
for a commitment of equity financing of $4,000,000, (iv) a letter from Dresdner
Kleinwort Xxxxxx Private Equity Partners LP, dated as of the date hereof, which
provides for a commitment of equity financing of $16,000,000 (collectively, the
"Commitment Letters"). Assuming the financings contemplated by the Commitment
Letters are consummated in accordance with the terms thereof, the amounts
received thereunder by Parent and Merger Sub will provide Parent and Merger Sub
with sufficient funds to pay the aggregate amount payable in respect of the
Shares and the Stock Options upon the consummation of the Offer and the Merger
in accordance with the terms hereof. Neither Parent nor Merger Sub is presently
aware of any facts or circumstances which create a reasonable basis for Parent
or Merger Sub to believe that the conditions precedent set forth in the
Commitment Letters will not be satisfied.
ARTICLE 5
COVENANTS
SECTION 5.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated
by this Agreement, during the period from the date hereof to the Effective Time,
the Company will conduct its operations in the ordinary course of business
consistent with past practice, and the Company shall, and shall cause its
subsidiaries to, use its or their reasonable efforts to preserve substantially
intact its business organization, to keep available the services of its present
officers and employees and to preserve the present commercial relationships of
the Company and its subsidiaries with persons with whom the Company or its
subsidiaries do business. Without limiting the generality of the foregoing, and
except as otherwise expressly provided in this Agreement, prior to the Effective
Time, the Company will not and will not permit any of its subsidiaries, without
the prior written consent of Parent or Merger Sub, or as set forth in Section
5.1 of the Disclosure Schedule, to:
(a) amend its Certificate of Incorporation or Bylaws (or other
similar governing instrument);
(b) amend or modify (except as required hereby) the terms of
the Company Plans or authorize for issuance, issue, sell, deliver or agree or
commit to issue (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of any
class or any other securities or equity equivalents (including, without
27
32
limitation, any phantom stock or stock appreciation rights), except for the
issuance or sale of shares of common stock pursuant to the exercise of Stock
Options or under its 1997 Stock Plan;
(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, or redeem or otherwise acquire any capital stock of its subsidiaries;
(d) (i) incur or assume any indebtedness for borrowed money
except for indebtedness not exceeding $100,000 in the aggregate, (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, except for
obligations not exceeding $100,000 in the aggregate, (iii) except for
investments not exceeding $100,000 in the aggregate, make any loans, advances or
capital contributions to, or investments in, any other person (other than to
subsidiaries of the Company or customary loans or advances to employees in the
ordinary course of business consistent with past practice), (iv) pledge or
otherwise encumber shares of capital stock of the Company's subsidiaries, or (v)
mortgage or pledge any of its material assets, tangible or intangible, or create
or suffer to exist any material Lien thereupon except for Liens securing
indebtedness for borrowed money not exceeding $100,000 in the aggregate;
(e) except as may be required by law or as contemplated by
this Agreement, (i) enter into, adopt or amend or terminate any bonus, profit
sharing, compensation, severance, termination, stock option, stock appreciation
right, restricted stock, performance unit, stock equivalent, stock purchase
agreement, pension, retirement, deferred compensation, employment, severance or
other employee benefit agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any director, officer or employee in any material manner,
or (ii) except for normal salary increases and bonus payments in the ordinary
course of business consistent with past practice, increase in any material
manner the compensation of any director, officer or employee or agent, or (iii)
pay any material benefit not required by any plan and arrangement as in effect
as of the date hereof (including, without limitation, the granting of stock
appreciation rights or performance units), or (iv) create, issue or increase any
severance agreement or stay bonus with any officer, director or employee;
(f) acquire, sell, lease or dispose of any assets outside the
ordinary course of business which have a value in the aggregate in excess of
$100,000;
(g) except as may be required as a result of a change in law
or in GAAP, change any of the accounting principles or cash management practices
used by it;
(h) authorize or make any new capital expenditure or
expenditures which, individually, is in excess of $100,000 or, in the aggregate,
are in excess of $500,000;
(i) make any tax election or settle or compromise any income
tax liability material to the Company and its subsidiaries taken as a whole;
28
33
(j) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the notes
thereto) of the Company and its subsidiaries in the Recent SEC Reports or
incurred in the ordinary course of business consistent with past practice;
(k) alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership of
any subsidiary or the Company; or
(l) take, or agree in writing or otherwise to take, any of the
actions described in Sections 5.1(a) through 5.1(k) or any action which would
cause or constitute a breach of any of the representations or warranties of the
Company contained in this Agreement.
SECTION 5.2 NO SOLICITATION.
(a) The Company shall not, nor shall it permit any of the
subsidiaries to, nor shall it authorize or permit any officer, director or
employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of the subsidiaries to (i) solicit or
initiate, encourage, or facilitate, directly or indirectly, any inquiries
relating to, or the submission of, any proposal or offer, whether in writing or
otherwise, from any person other than Parent, Merger Sub or any affiliates
thereof (a "Third Party") to acquire beneficial ownership (as defined under Rule
13(d) of the Exchange Act) of all or a material portion of the assets of the
Company or any of its subsidiaries or 20% or more of any class of equity
securities of the Company or any of its subsidiaries pursuant to a merger,
consolidation or other business combination, sale of shares of capital stock,
sale of assets, tender offer, exchange offer or similar transaction with respect
to either the Company or any of its subsidiaries, including any single
transaction or series of related transactions, which is structured to permit
such third Party to acquire beneficial ownership of any material portion of the
assets of or 20% or more of the equity interest in either the Company or any of
its subsidiaries (a "Takeover Proposal"), (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information or data with
respect to or access to the properties of, or take any other action to knowingly
facilitate the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Takeover Proposal or (iii) enter into any agreement
with respect to any Takeover Proposal, approve or recommend or resolve to
approve or recommend any Takeover Proposal or enter into any agreement or
understanding requiring it to abandon, terminate or fail to consummate the
Offer, the Merger and the other transactions contemplated by this Agreement.
Notwithstanding the foregoing sentence, prior to the expiration of the Offer, if
the Company Board receives a bona fide Takeover Proposal by a Third Party that
was not solicited or initiated, or encouraged or facilitated, directly or
indirectly, by the Company, any of the subsidiaries or any officer, director or
employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of the subsidiaries, the terms of which
the Company Board determines in good faith (after consulting and receiving
advice from the Company's independent financial advisor and independent legal
counsel) are more favorable from a financial point of view to the holders of
Shares than the Offer, the Merger and other transactions contemplated by this
29
34
Agreement (taking into account any adjustments to the terms and conditions
proposed in writing by Merger Sub within three (3) Business Days after Parent
and Merger Sub receive notice of such Takeover Proposal) and taking into account
any differences in the conditions set forth in the Superior Proposal, in the
aggregate, from the conditions set forth herein (a "Superior Proposal"), then
the Company may, in response to an unsolicited request therefor and subject to
compliance with Section 5.2(b) furnish information with respect to the Company
and the subsidiaries to, and participate in discussions and negotiations
directly or through its representatives with, such Third Party, subject to a
confidentiality agreement; provided, that the Company Board first determines in
good faith, after receiving the advice of independent legal counsel, that such
action is required in order for the Company Board to comply with its fiduciary
duties to the Company's stockholder under applicable law, and the Company shall
not have violated any of the restrictions set forth in this Section 5.2;
provided, however, that any such Takeover Proposal shall not be deemed to be a
Superior Proposal if any financing required to consummate the transaction
contemplated thereby is not committed on terms substantially similar to those
obtained by or for the benefit of Parent and Merger Sub in connection with the
Offer and the Merger and such commitment is not likely, in the reasonable
judgment of the Company's Board (after consultation with its independent
financial advisor), to be obtained by such third party within a reasonable
period of time.
(b) The Company shall advise Parent orally and in writing of
(i) any Takeover Proposal or any inquiry with respect to or which could
reasonably be expected to lead to any Takeover Proposal received by any officer
or director of the Company or, to the knowledge of the Company, any financial
advisor, attorney or other advisor or representative of the Company, (ii) the
material terms of such Takeover Proposal (including a copy of any written
proposal), and (iii) the identity of the person making any such Takeover
Proposal or inquiry promptly following receipt of such Takeover Proposal or
inquiry. The Company will keep Parent duly informed of the status and details of
any such Takeover Proposal or inquiry in a timely manner.
SECTION 5.3 ACCESS TO INFORMATION. Between the date hereof and the
Effective Time, the Company will provide to Parent and Merger Sub and their
authorized representatives reasonable access to all employees, plants, offices,
warehouses and other facilities and to all books and records of the Company and
its subsidiaries, will permit Parent and Merger Sub to make such inspections as
Parent and Merger Sub may reasonably require and will cause the officers of the
Company and its subsidiaries to furnish Parent and Merger Sub with such
financial and operating data and other information with respect to the business
and properties of the Company and its subsidiaries as Parent or Merger Sub may
from time to time reasonably request. All of such information shall be treated
as Confidential Information pursuant to the terms of the Confidentiality
Agreement, dated June 29, 1999, between the Company and Dicom Group plc, the
provisions of which are by this reference incorporated herein.
SECTION 5.4 SHAREHOLDERS MEETING; PROXY STATEMENT.
(a) The Company will, as promptly as practicable following the
acceptance for payment of Shares by Merger Sub pursuant to the Offer, take, in
accordance with applicable law and its Certificate of Incorporation and By-laws,
all action necessary to convene a special meeting of
30
35
holders of Shares (the "Shareholders Meeting") to consider and vote upon the
approval of the Merger, if such approval is required. The Company shall, as
promptly as practicable, prepare and file with the SEC a preliminary proxy
statement for the solicitation of a vote of holders of Shares approving the
Merger (the "Proxy Statement"), which shall (subject to Section 5.4(c)) include
the unanimous recommendation of the Company Board that shareholders of the
Company vote in favor of the approval and adoption of this Agreement and the
written opinion of the Financial Advisor that the cash consideration to be
received by the shareholders of the Company pursuant to the Merger is fair to
such shareholders from a financial point of view. The Company shall use all
reasonable efforts to respond to any comments of the SEC and its staff and as
promptly as practicable after responding to such comments to the satisfaction of
the staff cause the Proxy Statement to be mailed to the shareholders of the
Company. Notwithstanding the foregoing, if Parent, Merger Sub and/or any other
subsidiary of Parent shall acquire at least ninety percent (90%) of the
outstanding Shares, the parties shall take all necessary and appropriate action
to cause the Merger to become effective as soon as practicable after the
expiration of the Offer without a Shareholders Meeting in accordance with
Section 253 of the DGCL.
(b) Parent and Merger Sub agree to cause all Shares purchased
pursuant to the Offer and all other Shares owned by Parent, Merger Sub or any
subsidiary of Parent to be voted in favor of the Merger.
SECTION 5.5 ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. Subject to the
terms and conditions herein provided, each party agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable laws
and regulations to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, including, without limitation, (a)
cooperation in the preparation and filing of the Offer Documents, the Schedule
14D-9, the Proxy Statement, any filings that may be required under the HSR Act
and any amendments thereto, (b) the taking of all action reasonably necessary,
proper or advisable to secure any necessary consents under Material Contracts,
(c) contesting any legal proceeding relating to the Offer or the Merger and (d)
the execution of any additional instruments necessary to consummate the
transactions contemplated hereby. Subject to the terms and conditions of this
Agreement, Parent and Merger Sub agree to use (i) all reasonable efforts to
cause the Effective Time to occur as soon as practicable after the shareholder
vote with respect to the Merger and (ii) their respective best efforts to
satisfy the conditions precedent set forth in the Commitment Letters (provided
that nothing herein shall be deemed to be an obligation of Parent or Merger Sub
to increase the Per Share Amount). In addition, Parent and Merger Sub will not
consent or agree to any amendment, waiver, modification or early termination of
the Commitment Letter in any manner adverse to Parent or Merger Sub without the
Company's prior written consent, which shall not be unreasonably withheld.
SECTION 5.6 CONSENTS. Parent, Merger Sub and the Company each will use
all commercially reasonable efforts to obtain consents of all third parties to
Material Contracts and Governmental Entities necessary, proper or advisable for
the consummation of the transactions contemplated by this Agreement.
31
36
SECTION 5.7 PUBLIC ANNOUNCEMENTS. Parent, Merger Sub and the Company,
as the case may be, will consult with one another and seek one another's
approval before issuing any press release, or otherwise making any public
statements, with respect to the transactions contemplated by this Agreement,
including, without limitation, the Offer or the Merger and shall not issue any
such press release or make any such public statement prior to such consultation
and approval, except as may be required by applicable law or by obligations
pursuant to any listing agreement with the Nasdaq Stock Market, as determined by
Parent, Merger Sub or the Company, as the case may be.
SECTION 5.8 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) Parent and Merger Sub agree that all rights to
indemnification or exculpation now existing in favor of the directors, officers,
employees and agents of the Company and its subsidiaries, as provided in
indemnification agreements or their respective charters or bylaws (or other
similar governing instruments) or otherwise in effect as of the date hereof with
respect to matters occurring prior to the Effective Time, shall survive the
Merger and shall continue in full force and effect. To the maximum extent
permitted by the DGCL, such indemnification shall be mandatory rather than
permissive, and the Surviving Corporation shall advance expenses in connection
with such indemnification as provided in such indemnification agreements. From
and after the Effective Time, Parent will fulfill and honor, and will cause the
Surviving Corporation to fulfill and honor, in all respects the indemnification
obligations described above, which shall be joint and several obligations of
Parent and the Surviving Corporation. The indemnification and liability
limitation or exculpation provisions of the Company's Certificate of
Incorporation and bylaws shall not be amended, repealed or otherwise modified
after the Effective Time in any manner that would materially adversely affect
the rights thereunder of individuals who, as of the date hereof and prior to the
Effective Time, were directors, officers, employees or agents of the Company or
its subsidiaries, unless such modification is required by applicable law.
(b) Parent shall cause the Surviving Corporation to maintain
in effect for not less than six (6) years from the Effective Time, if available,
the coverage provided by the policies of the directors' and officers' liability
and fiduciary insurance most recently maintained by the Company; provided, that
the Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less advantageous to the
beneficiaries thereof so long as such substitution does not result in gaps or
lapses in coverage with respect to matters occurring prior to the Effective Time
and provided further that the Surviving Corporation shall not be obligated to
pay annual premiums in excess of 150% of the annual aggregate premium for
existing insurance with respect to such insurance for the next renewal of such
insurance (the "Current Premium"). If such annual premium for such insurance
would at any time exceed 150% of the Current Premium, then the Parent and the
Surviving Corporation shall cause to be maintained policies of insurance which,
in the Surviving Corporation's good faith determination, provide the maximum
coverage reasonably available at an annual premium equal to 150% of the Current
Premium.
32
37
(c) The directors, officers, employees and agents of the
Company and its subsidiaries entitled to the indemnification, liability
limitation, exculpation and insurance set forth in this Section 5.8. are
intended to be third party beneficiaries of this Section 5.8.
SECTION 5.9 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent and Merger Sub, and Parent and Merger Sub shall give
prompt notice to the Company, of (a) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty of the notifying party contained in this Agreement to
be untrue or inaccurate in any material respect as if made at the Effective Time
and (b) any material failure of the notifying party to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, that the delivery of any notice pursuant to this Section
5.9 shall not cure such breach or non-compliance or limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
SECTION 5.10 SEC FILINGS. Each of Parent and the Company shall promptly
provide the other party (or its counsel) with copies of all filings made by the
other party or any of its subsidiaries with the SEC or any other state or
federal Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
SECTION 5.11 TAKEOVER STATUTES. If any "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
enacted under state or federal laws in the United States (each a "Takeover
Statute") is or may become applicable to the Offer or the Merger, the Company
will use reasonable best efforts to grant such approvals and take such actions
as are necessary so that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act so as to eliminate or minimize the effects of any Takeover Statute
on any of the transactions contemplated hereby.
SECTION 5.12 TRANSACTION LITIGATION. The Company shall give Parent and
Merger Sub the opportunity to participate in the defense or settlement of any
litigation against the Company and its directors directly relating to any of the
transactions contemplated by this Agreement; provided, that no such settlement
shall be agreed to without Parent's consent, which consent shall not be
unreasonably withheld.
SECTION 5.13 DELISTING. Each of the parties hereto shall cooperate with
each other in taking or causing to be taken, all actions necessary to delist all
of the Company's securities from the Nasdaq National Market System and to
terminate registration under the Exchange Act; provided, that such delisting and
termination shall not be effective until after the Effective Date.
33
38
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver at or prior to the Effective Time of the
following conditions:
SECTION 6.1 STOCKHOLDER APPROVAL. This Agreement, including the Merger,
shall have been approved and adopted by the affirmative vote of the shareholders
of the Company (unless the vote of the shareholders is not required by the DGCL)
as required under the Company's Certificate of incorporation or Bylaws or the
DGCL.
SECTION 6.2 NO ORDER. No federal, state or foreign Governmental Entity
or federal, state or foreign court of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any law, rule, regulation, executive
order, decree, injunction or other order (whether temporary, preliminary or
permanent) which is then in effect (which order or other action the parties
hereto shall use their reasonable efforts to vacate or lift) and has the effect
of making the consummation of the Merger illegal under applicable law.
SECTION 6.3 HSR ACT. Any waiting period (and any extension thereof)
applicable to the Merger and the other transactions described in the recitals to
this Agreement under the HSR Act shall have terminated or expired, and any other
governmental or regulatory notices or approvals required with respect to the
transactions contemplated hereby (the absence of which would reasonably be
expected to have a Company Material Adverse Effect) shall have been either filed
or received.
SECTION 6.4 OFFER. Merger Sub shall have accepted for payment and
purchased all Shares validly tendered and not withdrawn pursuant to the Offer.
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1 TERMINATION. This Agreement may be terminated and the Offer
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval of this Agreement by the shareholders of the Company:
(a) by mutual written consent of Parent, Merger Sub and the
Company;
(b) by Parent and Merger Sub or by the Company
(i) if (x), the Offer shall have terminated or
expired in accordance with its terms without Merger Sub's having
accepted for payment any Shares pursuant to the Offer or (y) the Offer
shall not have been consummated prior to October 15, 1999; provided,
that the right to terminate this Agreement pursuant to this Section
7.1(b)(i) shall not be available
34
39
to any party if it is in material breach of its obligation hereunder
and such breach is the principal cause of, or resulted in, the failure
of the Offer to have been consummated on or before such date; or
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the acceptance for
payment of, or payment for, Shares pursuant to the Offer and such
order, decree or ruling or other action shall have become final and
nonappealable; provided, that the party seeking to terminate this
Agreement pursuant to this clause (ii) shall have used all commercially
reasonable efforts to remove such order, decree, ruling, judgment or
injunction.
(c) by Parent or Merger Sub prior to the purchase of Shares
pursuant to the Offer in the event of a breach by the Company of any
representation, warranty, covenant or other agreement contained in this
Agreement which (i) would give rise to the failure of the Offer Condition set
forth in paragraph (b) of Annex A to this Agreement and (ii) cannot be or has
not been cured within 10 Business Days after the giving of written notice
thereof to the Company by Parent or Merger Sub;
(d) by Parent or Merger Sub prior to the purchase of Shares
pursuant to the Offer if either Parent or Merger Sub is entitled to terminate
the Offer as a result of the occurrence of any event set forth in paragraphs (e)
or (j) of Annex A to this Agreement.
(e) by the Company if the Company Board has received a
Superior Proposal and the Company furnishes information with respect to the
Company and the subsidiaries to, and participates in discussions and
negotiations directly or through its representatives with a Third Party, subject
to a confidentiality agreement, after the Company Board determined in good
faith, after receiving the advice of independent legal counsel, that such action
is required in order for the Company Board to comply with its fiduciary duties
to the Company's stockholder under applicable law; provided, that (i) the
Company has complied with all provisions of Section 5.2, (ii) the Company may
not terminate this Agreement pursuant to this Section 7.1(e) unless and until
three (3) Business Days have elapsed following delivery to Parent of a written
notice of such determination by the Company Board (which notice shall include
the identity of the Third Party making such Superior Proposal and a copy of all
documentation relating to such Superior Proposal), and (iii) the Company
delivers payment to the Parent of the Termination Fee and the Expenses (each as
defined in Section 7.3(b)) contemporaneously with such termination.
(f) by the Company prior to the purchase of Shares pursuant to
the Offer if (i) any of the representations or warranties of Parent or Merger
Sub set forth in this Agreement that are qualified as to materiality shall not
be true and correct in any respect or any such representations or warranties
that are not so qualified shall not be true and correct in any material respect,
or (ii) Parent or Merger Sub shall have failed to perform in any material
respect any material obligation or to comply in any material respect with any
material agreement or covenant of Parent or Merger Sub to be performed or
complied with by it under this Agreement and such untruth, incorrectness or
35
40
failure cannot be or has not been cured within 10 Business Days after the
Company's giving of written notice to Parent or Merger Sub, as applicable.
SECTION 7.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
void (except for the provisions of this Section 7.2, the last sentence of
Section 5.3, Sections 5.7, 7.3 and Article 8), and there shall be no liability
or obligation on the part of any party or its affiliates, directors, officers or
shareholders, other than (a) the provisions of this Section 7.2 , the last
sentence of Section 5.3, Sections 5.7, 7.3 and Article 8, and (b) any liability
of any party for any breach of this Agreement prior to such termination.
SECTION 7.3 FEES AND EXPENSES.
(a) Except as provided in this Section 7.3, whether or not the
Merger is consummated, all costs and expense incurred in connection with this
Agreement and the transactions contemplated by this Agreement, including the
fees and disbursements of counsel, financial advisors and accountants, shall be
paid by the party incurring such costs and expenses.
(b) The Company shall pay, or cause to be paid, by wire
transfer of immediately available funds to Parent (i) the documented reasonable
out-of-pocket fees and expenses incurred by or paid by or on behalf of Parent
and its affiliates (including, but not limited to, Dicom Group plc and Dresdner
Kleinwort Xxxxxx Private Equity Partners L.P.) in connection with the Offer, the
Merger or the consummation of any of the transactions contemplated by this
Agreement, including all reasonable fees and expenses of law firms, commercial
banks, investment banking firms, accountants, experts and consultants to Parent
and its affiliates ("Purchaser Expenses") not to exceed $1,750,000 and, if
applicable, (ii) $1,500,000 (the "Termination Fee") under the circumstances and
at the times set forth as follows:
(i) if the Company terminates this Agreement under
Section 7.1(e), the Company shall pay the Purchaser Expenses and the
Termination Fee concurrently with such termination in accordance with
Section 7.1(e);
(ii) if Parent or Merger Sub terminates this
Agreement under Sections 7.1(c) or 7.1 (d), (x) the Company shall pay
the Purchaser Expenses upon demand, and (y) if concurrently with such
termination or within 270 days thereafter (A) the Company enters into a
merger agreement, acquisition agreement or similar agreement with
respect to a Takeover Proposal, or a Takeover Proposal is consummated,
involving any party other than Parent or any of its affiliates (1) with
whom the Company had any discussions with respect to a Takeover
Proposal, (2) to whom the Company furnished information with respect to
or with a view to a Takeover Proposal or (3) who had submitted a
proposal or expressed any interest publicly in a Takeover Proposal, in
the case of each of clauses (1), (2) and (3), after the date hereof and
prior to such termination, or (B) the Company enters into a merger
agreement, acquisition agreement or similar agreement with respect to a
Superior Proposal, or a Superior Proposal is consummated, then, in the
case of either (A) or (B) above, the
36
41
Company shall pay the Termination Fee upon consummation of such
Takeover Proposal or Superior Proposal; and
(iii) notwithstanding clause (ii) above, if the
Parent or Merger Sub terminates this Agreement under Section 7.1(c) as
a result of the Company's material breach of Section 5.2, the Company
shall pay the Purchaser Expenses and the Termination Fee upon demand.
In no event shall the Purchaser Expenses and the Termination Fee be payable by
the Company more than once. Any such payments shall be made to the Parent by
wire transfer of immediately available funds.
(c) In the event that the Company terminates this Agreement
under Section 7.1(f) or the Parent or Merger Sub terminates this Agreement
solely as a result of the failure of the condition set forth in paragraph (k) of
Annex A, Parent shall pay, or shall cause to be paid by wire transfer of
immediately available funds to the Company the documented reasonable
out-of-pocket fees and expenses incurred by or paid on behalf of the Company in
connection with the offer, the Merger or the consummation of any of the
transactions contemplated by this Agreement, including all reasonable fees and
expenses of law firms, investment banking firms, accountants, experts and
consultants to the Company (the "Company Expenses") not to exceed $400,000.
(d) Each of the parties hereto acknowledge that all amounts
payable under this Section 7.3 shall constitute liquidated damages in lieu of
any actual damages for termination of this Agreement.
SECTION 7.4 AMENDMENT. Subject to applicable law, this Agreement may be
amended by the parties hereto, by action taken by or on behalf of the respective
board of directors of the Company, Parent and Merger Sub at any time prior to
the Effective Time; provided, that after the approval and adoption of this
Agreement and the transactions contemplated thereby by the shareholders of the
Company (if required by applicable law) no amendment shall be made which would
reduce the amount or change the type of consideration into which each Share
shall be converted upon the consummation of the Merger. This Agreement may not
be amended except by an instrument in writing signed on behalf of the parties.
SECTION 7.5 EXTENSION; WAIVER. At any time prior to the Effective Time
subject to Section 1.1(a) and Section 1.3(c), each party may (a) extend the time
for the performance of any of the obligations or other acts of the other party
or parties, (b) waive any inaccuracies in the representations and warranties of
the other parties contained herein or in any document, certificate or writing
delivered pursuant hereto or (c) waive compliance by the other parties with any
of the agreements or conditions contained herein, which may be legally waived.
Any agreement on the part of any 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 assert any of its rights hereunder shall not
constitute a waiver of such rights.
37
42
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement pursuant to Section 7.1, as
the case may be, except for representations and warranties set forth in Sections
3.19 and 4.6.
SECTION 8.2 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (a)
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (b) shall not be assigned by operation of law or otherwise; provided, that
Merger Sub may assign any or all of its rights and obligations under this
Agreement to Parent or any wholly owned subsidiary of Parent.
SECTION 8.3 VALIDITY. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
SECTION 8.4 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram, facsimile or telex, or by registered or certified mail (postage
prepaid, return receipt requested) to the other party as follows:
To Parent or Merger Sub:
c/o DICOM Group plc
Business Building Forren West
Xxxxxxxxxxxx 00
0000 Xxxxxxxx
XX Xxxxxxxxxxx
Attention: Xxxx Xxxxxx
Facsimile: 011 41 41 798 3088
38
43
and
c/o Dresdner Kleinwort Xxxxxx Private Equity LLC
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice to
Parent or Merger Sub) to:
Xxxxxxxx & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq.
Xxxx Xxxx, Esq.
Facsimile: (000) 000-0000
To the Company:
Kofax Image Products, Inc.
00000 Xxxxxx Xxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice to the
Company) to:
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Attention: X.X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 8.5 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 CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
SECTION 8.6 CONSTRUCTION; INTERPRETATION. The headings contained in
this Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this
39
44
Agreement. Article, section, exhibit, schedule, annex, party, preamble and
recital references are to this Agreement unless otherwise stated. No party, nor
its respective counsel, shall be deemed the drafter of this Agreement for
purposes of construing the provisions hereof, and all provisions of this
Agreement shall be construed according to their fair meaning and not strictly
for or against any party.
SECTION 8.7 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party and its successors and permitted
assigns and, except as provided in Section 5.8 and Section 8.2, nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 8.8 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or unenforceable, all other provisions of this
Agreement shall remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
SECTION 8.9 SPECIFIC PERFORMANCE. The parties acknowledge that
irreparable damage would result if this Agreement were not specifically
enforced, and they therefore consent that the rights and obligations of the
parties under this Agreement may be enforced by a decree of specific performance
issued by a court of competent jurisdiction. Such remedy shall, however, not be
exclusive and shall be in addition to any other remedies, including arbitration,
which any party may have under this Agreement or otherwise.
SECTION 8.10 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 8.11 WAIVER OF JURY TRIAL. The parties to this Agreement each
hereby waives, to the fullest extent permitted by law, any right to trial by
jury of any claim, demand, action, or cause of action (i) arising under this
Agreement or (ii) in any way connected with or related or incidental to the
dealings of the parties hereto in respect of this Agreement or any of the
transactions related hereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity, or otherwise. The parties to
this Agreement each hereby agrees and consents that any such claim, demand,
action, or cause of action shall be decided by court trial without a jury and
that the parties to this Agreement may file an original counterpart of a copy of
this Agreement with any court as written evidence of the consent of the parties
hereto to the waiver of their right to trial by jury.
* * * * *
40
45
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
KOFAX IMAGE PRODUCTS, INC.
By: ____________________________________
Name:
Title:
IMAGING COMPONENTS CORPORATION
By: ____________________________________
Name: Xxxxxxxxx X. Xxxxxxx
Title: Vice President
IMAGING ACQUISITION CORPORATION
By: ____________________________________
Name: Xxxxxxxxx X. Xxxxxxx
Title: Vice President
40
46
ANNEX A
The capitalized terms used herein have the meanings set forth in the
Agreement and Plan of Merger to which this Annex A is attached.
Notwithstanding any other provisions of the Offer, Merger Sub shall not
be required to accept for payment purchase or pay for any validly tendered
Shares (subject to any applicable rules and regulations of the SEC, including
Rule 14e-1(c) under the Exchange Act), and may delay in accordance with Section
1.1(b) the acceptance for payment of, or the payment for, any validly tendered
Shares (subject to the restrictions referred to above), may amend the Offer
consistent with the terms of the Agreement, or may terminate the Offer if (i)
immediately prior to the expiration of the Offer (as extended in accordance with
the Offer), the Minimum Condition shall not have been satisfied, (ii) any
applicable waiting period under the HSR Act shall not have expired or been
terminated (the "HSR Condition") or (iii) prior to the acceptance for payment of
Shares, any of the following conditions exist:
(a) There shall be threatened in writing or pending any suit, action or
proceeding by a federal, state or foreign Governmental Entity (but only if such
suit, action or proceeding is deemed by Parent to have a reasonable likelihood
of success) (i) seeking to prohibit or impose any material limitations on the
ownership or operation by the Company, Merger Sub, Parent or any of their
respective subsidiaries of a material portion of the businesses or assets of the
Company, Merger Sub, Parent or any of their respective subsidiaries which could
reasonably be expected to have a Company Material Adverse Effect as a result of
the Offer or any other transactions contemplated by this Agreement, (ii) seeking
to compel the Company, Merger Sub, or Parent to dispose of or hold separate any
material portion of their respective business or assets as a result of the Offer
or any other transactions contemplated by this Agreement, (iii) seeking to
restrain or prohibit the making or consummation of the Offer or the Merger or
the consummation of any of the other transactions contemplated by the Agreement
or the Voting Agreements, (iv) seeking to impose material limitations on the
ability of Merger Sub or Parent, or rendering Merger Sub unable, to accept for
payment, pay for or purchase some or all of the Shares pursuant to the Offer or
the Merger, or (v) seeking to impose material limitations on the ability of
Merger Sub effectively to exercise full rights of ownership of the Shares
accepted for payment pursuant to the Offer, including the right to vote such
Shares on all matters properly presented to the Company's shareholders. There
shall be any statute, rule regulation, judgment, order or injunction enacted,
entered, enforced, promulgated or applicable to the Offer or the Merger, or any
other action shall be taken by any Governmental Entity, other than the
application to the Offer or the Merger of applicable waiting periods under the
HSR Act, that is reasonably likely to result, directly or indirectly, in any of
the consequences referred to in clauses (i) through (v) above.
(b) Any of the representations and warranties of the Company set forth
in the Agreement, without, for purposes of this paragraph (b) only, giving
effect to any qualifications as to materiality, shall not be true and correct in
any material respect as of the date of the Agreement and as of consummation of
the Offer as though made on or as of such date (except for those representations
and warranties that address matters only as of a particular date, which need to
be true and correct as
Annex A - 1
47
of such particular date), or the Company shall have breached or failed to comply
with, in any material respect, any obligation, agreement or covenant required by
the Agreement to be performed or complied with by it, which in either case could
reasonably be expected to have a Company Material Adverse Effect.
(c) It shall have been publicly disclosed that any person (which
includes a "person" as such term is defined in Section 13(d)(3) of the Exchange
Act) other than Parent, Merger Sub or any of their affiliates and stockholders
of the Company listed on Schedule 2.8, and (i) shall have acquired or announced
its intention to acquire beneficial ownership of more than 20% of the
outstanding Shares or (ii) shall have entered into a definitive agreement or an
agreement in principle with the Company with respect to a tender offer or
exchange offer for any Shares or a merger, consolidation or other business
combination with or involving the Company, any of its subsidiaries or any of
their material assets; provided, that clause (i) hereof shall not continue after
the date on which the Minimum Condition is satisfied.
(d) The Agreement shall have been terminated in accordance with its
terms.
(e) Prior to the purchase of Shares pursuant to the Offer, the Company
Board (i) shall have withdrawn or modified (including by amendment of the
Schedule 14D-9) in a manner adverse to Parent or Merger Sub its approval or
recommendation of the Offer, this Agreement or the Merger (ii) shall have
recommended a Takeover Proposal, or (iii) shall have adopted any resolution to
effect any of the foregoing.
(f) There shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange, the
American Stock Exchange, or in Nasdaq National Market System, (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory), or (iii) any limitation by any United
States Governmental Entity that has a material adverse effect generally on the
extension of credit by banks or other financial institutions, in the case of any
of the situations in clauses (i) through (iii) inclusive, existing on the date
hereof, a material acceleration or worsening thereof.
(g) The Company shall commence a case under any chapter of Title XI of
the United States Code or any similar law or regulation; or a petition under any
chapter of Title XI of the United States Code or any similar law or regulation
is filed against the Company which is not dismissed within 30 Business Days.
(h) Any party identified with an asterisk on Exhibit A to any of the
Voting Agreements other than Parent or Merger Sub shall have breached or failed
to perform any of its agreements under such agreements or breach any of its
representations and warranties in such agreements or any such agreements shall
not be valid, binding and enforceable; provided, that this clause (h) shall be
deemed satisfied upon the satisfaction of the Minimum Condition.
Annex A - 2
48
(i) There shall have occurred any events or changes which have had, or
could reasonably be expected to have or constitute, individually or in the
aggregate, a Company Material Adverse Effect.
(j) The Company shall have less than $22,991,000 of freely available
cash or cash equivalents ("Minimum Cash"); provided, that the following
adjustments may be made, without duplication, to Minimum Cash: (i) in the event
the Offer is not consummated before August 15, 1999, Minimum Cash shall be
reduced by $750,000 (representing employee bonuses), (ii) in the event the Offer
is not consummated before September 15, 1999, Minimum Cash shall be reduced by
$1,000,000 (representing payment of the Company's Federal income taxes), (iii)
in the event the Offer is not consummated before October 15, 1999, Minimum Cash
shall be reduced by $800,000 (representing payment of the Company's Federal
income taxes), (iv) Minimum Cash shall be determined without giving effect to
Company Expenses, and (v) Minimum Cash may be reduced by an amount not to exceed
$1,350,000 in the aggregate (such aggregate amount, the "Operating Cash
Shortfall") so long as the Company's consolidated non-cash, net working capital
(i.e., current assets (excluding cash and cash equivalents) less current
liabilities as determined in accordance with GAAP, applied on a basis consistent
with the preparation of the financial statements described in Section 3.4)
("Working Capital") exceeds $2,098,000 (the Company's Working Capital as of June
30, 1999) (less up to $500,000 for capital expenditures made by the Company in
accordance with Section 5.1(h)) by an amount equal to or greater than such
Operating Cash Shortfall. The condition set forth in this clause (j) shall be
satisfied upon the presentation of evidence, documentation and information by
the Company to the Parent that the Minimum Cash, and all adjustments thereto
(including with respect to the Operating Cash Shortfall and working capital) as
of the consummation of the Offer.
(k) Parent or Merger Sub shall have not received the cash proceeds of
equity and debt financing in an amount necessary to consummate the Offer, the
Merger and the other transactions contemplated by the Agreement and to pay all
fees and expenses in connection therewith and to provide adequate working
capital for the Surviving Corporation, all on terms and conditions satisfactory
to the Parent and Merger Sub.
Annex A - 3
49
VOTING AGREEMENT
VOTING AGREEMENT (this "Agreement"), dated as of July 27, 1999 is
made by and among Imaging Components Corporation, a Delaware corporation (the
"Parent"), Imaging Acquisition Corporation, a Delaware corporation ("Merger
Sub"), and each of the persons named on Exhibit A hereto (each, a "Stockholder",
and collectively, the "Stockholders").
WHEREAS, Parent, Merger Sub and Kofax Image Products, Inc., a
Delaware corporation (the "Company") are concurrently herewith entering into an
Agreement and Plan of Merger dated as of the date hereof (as may be amended,
restated or modified from time to time, the "Merger Agreement") which provides
for, among other things, the merger of Merger Sub with and into the Company,
upon the terms and subject to the conditions set forth in the Merger Agreement.
Capitalized terms used but not otherwise defined herein shall have the meanings
set forth in the Merger Agreement.
WHEREAS, as of the date hereof, each Stockholder is the record and
beneficial owner of the number of Shares set forth opposite such Stockholder's
name on Exhibit A (the "Existing Shares" and, together with any shares of Common
Stock acquired by or issued to such Stockholder after the date hereof, the
"Subject Shares").
WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, Parent and Merger Sub have required that the Stockholders
agree, and the Stockholders have agreed, to enter into this Agreement.
WHEREAS, the Stockholders and Merger Sub desire to set forth their
agreement with respect to the voting of the Subject Shares in connection with
the Merger Agreement and the transactions contemplated thereby (the
"Transactions") upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. COVENANTS OF THE STOCKHOLDERS. Until the termination of this
Agreement in accordance with Section 5, the Stockholders agree as follows:
(a) Agreement to Vote in Favor. At any meeting of shareholders of
the Company called for purposes that include approval of the Merger Agreement
and the Transactions, or in connection with any written consent of the holders
of Shares or in any other circumstances in which the Stockholders are entitled
to vote, consent or give any other approval with respect to the Merger Agreement
and the Transactions, the Stockholders shall vote (or cause to be voted) the
Subject
50
Shares in favor of adoption and approval of the Merger Agreement and the
Transactions and the approval of the terms thereof and each of the other actions
contemplated by this Agreement and the Merger Agreement and any amendments.
(b) Agreement to Tender. Within the first ten (10) Business Days
after the commencement of the Offer to tender all of their respective Subject
Shares, except, if applicable, their respective Retained Shares, into the Offer,
and not to withdraw any of their respective Shares so tendered from the Offer.
(c) Agreement to Vote Against. At any meeting of shareholders of the
Company, or in connection with any written consent of the holders of Shares or
in any other circumstances in which the Stockholders are entitled to vote,
consent or give any other approval, except as otherwise agreed to in writing in
advance by Merger Sub, the Stockholders shall vote (or cause to be voted) the
Subject Shares against the following actions:
(i) any action or agreement that would result in a breach in
any material respect of any covenant, representation or warranty or
any other obligation or agreement of the Company under the Merger
Agreement or of the Stockholders hereunder; or
(ii) any action or agreement that could reasonably be expected
to impede, interfere with, delay, postpone or attempt to discourage
the Merger and/or the Transactions, including, without limitation,
(x) the adoption by the Company of a proposal supporting a Takeover
Proposal or the repurchase by the Company or any of its Subsidiaries
of outstanding Shares for consideration in excess of the Per Share
Amount or (y) any amendment of the Company's Articles of
Incorporation or By-laws (including any amendment affecting the
voting rights of the Company's Capital Stock) or other proposal or
transaction involving the Company or any of its Subsidiaries
(including any changes in management or the directors of the
Company), which amendment or other proposal or transaction could in
any manner reasonably be expected to impede, in any material
respect, or prevent the Merger, the Merger Agreement or the
Transactions.
(d) Proxies. As security for the agreements of the Stockholders
provided for herein, the Stockholders hereby grant to Merger Sub a proxy to vote
the Subject Shares as indicated in Sections 1(a) and 1(b) above. The
Stockholders agree that this proxy shall be irrevocable during the term of this
Agreement and coupled with an interest and each of the Stockholders and Merger
Sub will take such further action or execute such other instruments as may be
necessary to effectuate the intent of this proxy and hereby revokes any proxy
previously granted by the Stockholders with respect to the Subject Shares.
(e) Transfer Restrictions. The Stockholders agree not to (i) sell,
transfer, pledge, encumber, assign or otherwise dispose of or hypothecate
(including by gift or by contribution or distribution to any trust or similar
instrument or to any beneficiaries of the Stockholders) (collectively,
"Transfer"), or enter into any contract, option or other arrangement or
understanding
2
51
(including any profit sharing arrangement) with respect to the Transfer of, any
of the Subject Shares other than pursuant to the terms hereof and the Merger
Agreement, or (ii) enter into any voting arrangement or understanding with
respect to the Subject Shares, whether by proxy, voting agreement or otherwise
other than this Agreement.
(f) Appraisal Rights. The Stockholders hereby irrevocably waive any
and all rights which it may have as to appraisal, dissent or any similar or
related matter with respect to the Merger including any such rights set forth in
the DGCL.
2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each
Stockholder hereby severally but not jointly represents and warrants to Merger
Sub as of the date hereof as follows:
(a) Authority; No Conflict. Such Stockholder has the requisite power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by such Stockholder, and this Agreement constitutes a
valid and binding agreement of such Stockholder, enforceable against such
Stockholder in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law), an implied
covenant of good faith and fair dealing and considerations of public policy. The
execution and delivery of this Agreement by such Stockholder does not, and the
consummation by such Stockholder of the transactions contemplated hereby will
not violate any law applicable to such Stockholder or result in a violation or
any breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under any contract or agreement to which
such Stockholder is a party.
(b) Shares. The Existing Shares are owned beneficially and of record
by the Stockholders. The Existing Shares constitute all of the shares of Common
Stock owned of record or beneficially by the Stockholders as at the date hereof.
All of the Existing Shares are issued and outstanding and except as set forth on
Schedule A attached hereto, the Stockholders do not own, of record or
beneficially, any warrants, options or other rights to acquire any shares of
Common Stock. Each Stockholder has sole voting power, sole power of disposition,
sole power to issue instructions with respect to the matters set forth in
Section 1 hereof, sole power to demand appraisal rights (to the extent such
rights are available) and sole power to agree to all of the matters set forth in
this Agreement, in each case with respect to all of the Existing Shares, and
will have sole voting power, sole power of disposition, sole power to issue
instructions with respect to the matters set forth in Section 1 hereof, sole
power to demand appraisal rights (to the extent such rights are available) and
sole power to agree to all of the matters set forth in this Agreement, in each
case with respect to all of the Subject Shares held of record. Each Stockholder
has good and valid title to the Existing Shares and at all times during the term
hereof and on the Effective Time will have good and valid title to the Subject
Shares, free and clear of all Liens and free of any other limitation or
restriction other than restrictions under applicable securities laws.
3
52
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Each of
Parent and Merger Sub hereby represents and warrants to the Stockholders as of
the date hereof as follows:
(a) Authority. Each of Parent and Merger Sub has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Parent and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by its respective board of directors and no other corporate action or
proceedings on the part of Parent or Merger Sub is necessary to authorize the
execution and delivery by Parent and Merger Sub of this Agreement and the
consummation by Parent and Merger Sub of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Parent and Merger Sub,
and, assuming this Agreement constitutes a valid and binding obligation of the
Stockholders, constitutes valid and binding obligations of Parent and Merger
Sub, enforceable against them in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law), an implied covenant of good faith and fair dealing and
considerations of public policy.
(b) No Conflict. The execution and delivery of this Agreement by
Merger Sub does not, and the consummation by Merger Sub of the transactions
contemplated hereby will not (i) conflict with or violate the Articles of
Incorporation, By-laws or other organizational documents of Merger Sub, (ii)
conflict with or violate any law applicable to Merger Sub or by which any
property or asset of Merger Sub is bound or affected, except for such conflicts
or violations which would not, individually or in the aggregate, have a Parent
Material Adverse Effect, or (iii) result in a violation or any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Merger Sub is a party or by which Merger Sub or any property or asset
of Merger Sub is bound or affected, except for any such breaches or defaults
which would not materially impair the ability of Merger Sub to consummate the
transactions contemplated hereby.
4. FURTHER ASSURANCES. From time to time prior to the Effective
Time, at any other party's request and without further consideration, each party
hereto shall execute and deliver such additional documents and take all such
further lawful action as may be reasonably necessary or desirable to consummate
and make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement.
5. TERMINATION. This Agreement shall terminate, and no party shall
have any rights or obligations hereunder and this Agreement shall become null
and void and have no further effect upon the earliest to occur of (x) the
Effective Time or (y) termination of the Merger Agreement pursuant to Section
7.1 thereof. Nothing in this Section 5 shall relieve any party of liability for
breach of this Agreement; provided, that Merger Sub's sole remedy in the event
of a breach of this Agreement shall be as specified in Section 6(i) (provided
that injunctive relief shall
4
53
also be available for any breach of Section 1(e)) and in no event shall Merger
Sub be entitled to any form of monetary damages.
6. GENERAL PROVISIONS.
(a) Costs and Expenses. All costs and expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such expenses;
provided, that Merger Sub shall pay the documented reasonable out-of-pocket fees
and expenses of the Shareholders, including the fees and disbursements of one
counsel for all Shareholders.
(b) Amendment. This Agreement may not be amended except by an
instrument in writing signed by the party to be charged therewith.
(c) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed by customary receipt of transmission) or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses (or at
such other addresses for a party as shall be specified by like notice):
To Parent or Merger Sub:
c/o Dicom Group plc
Business Building Forren West
Xxxxxxxxxxxx 00
0000 Xxxxxxxx
XX Xxxxxxxxxxx
Attention: Xxxx Xxxxxx
Facsimile: 011 41 41 798 3088
and
c/o Dresdner Kleinwort Xxxxxx Private Equity LLC
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice to Parent
or Merger Sub) to:
Xxxxxxxx & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq.
Xxxx Xxxx, Esq.
Facsimile: (000) 000-0000
5
54
To the Stockholders:
Addresses on Exhibit A
with a copy (which shall not constitute notice to the
Stockholders) to:
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: X.X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
(d) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
(e) Entire Agreement; No Third Party Beneficiaries. This Agreement
and the Merger Agreement constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, and is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.
(f) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF
DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAW
OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Merger Sub may assign, in Merger Sub's
sole discretion, any or all of their respective rights, interests and
obligations hereunder to any affiliate of Merger Sub. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors, heirs, agents,
representatives, trust beneficiaries, attorneys, affiliates and associates and
6
55
all of their respective predecessors, successors, permitted assigns, heirs,
executors and administrators.
(i) Specific Performance. The parties acknowledge that irreparable
damage would result if this Agreement were not specifically enforced, and they
therefore consent that the rights and obligations of the parties under this
Agreement may be enforced by a decree of specific performance issued by a court
of competent jurisdiction. Such remedy shall be exclusive and in lieu of any
other remedies, including arbitration, which any party may have under this
Agreement or otherwise.
(j) Waiver of Jury Trial. The parties to this Agreement each hereby
waives, to the fullest extent permitted by law, any right to trial by jury of
any claim, demand, action, or cause of action (i) arising under this Agreement
or (ii) in any way connected with or related or incidental to the dealings of
the parties hereto in respect of this Agreement or any of the transactions
related hereto, in each case whether now existing or hereafter arising, and
whether in contract, tort, equity, or otherwise. The parties to this Agreement
each hereby agrees and consents that any such claim, demand, action, or cause of
action shall be decided by court trial without a jury and that the parties to
this Agreement may file an original counterpart of a copy of this Agreement with
any court as written evidence of the consent of the parties hereto to the waiver
of their right to trial by jury.
* * * * *
7
56
IN WITNESS WHEREOF, Parent, Merger Sub and the Stockholders have
caused this Agreement to be signed by their respective officers or other
authorized person thereunto duly authorized as of the date first written above.
IMAGING COMPONENTS CORPORATION
By: _____________________________
Name: Xxxxxxxxx X. Xxxxxxx
Title: Vice President
IMAGING ACQUISITION CORPORATION
By: _____________________________
Name: Xxxxxxxxx X. Xxxxxxx
Title: Vice President
____________________________________
XXXXX X. SILVER
____________________________________
XXXX X. XXXXX
____________________________________
XXXXXX X. XXXXXX
____________________________________
XXXXXXX X. XXXXXX
____________________________________
XXXXX XXXX
57
____________________________________
XXXXXXXXX X. XXXXXXX
____________________________________
XXXXXXX X. XXXXXXX
____________________________________
X. XXXXX LAY
SOUTHERN CALIFORNIA VENTURES
By: _____________________________
Name:
Title:
58
EXHIBIT A
NUMBER OF
EXISTING
STOCKHOLDERS' NAME AND ADDRESS SHARES
------------------------------ ------
Xxxxx X. Silver 342,500
00000 Xxxxxx Xxxxxx Xxxx
Xxxxx, XX 00000
Xxxx X. Xxxxx 345,000
00000 Xxxxxx Xxxxxx Xxxx
Xxxxx, XX 00000
Xxxxxx X. Xxxxxx 37,500
00000 Xxxxxx Xxxxxx Xxxx
Xxxxx, XX 00000
Xxxxxxx X. Xxxxxx 54,444
00000 Xxxxxx Xxxxxx Xxxx
Xxxxx, XX 00000
Xxxxx Xxxx 32,500
00000 Xxxxxx Xxxxxx Xxxx
Xxxxx, XX 00000
Xxxxxxxxx X. Xxxxxxx 2,615
[STREET]
[CITY]
Xxxxxxx X. Xxxxxxx 120,000
[STREET]
[CITY]
X. Xxxxx Lay 45,101
[STREET]
[CITY]
Southern California Ventures 42,806
[STREET]
[CITY]
Exhibit A -- Page 1
