EXHIBIT 7(A)
EXECUTION COPY
--------------
ACQUISITION AGREEMENT
AND
AGREEMENT AND PLAN OF MERGER
DATED AS OF
JULY 18, 2002
BY AND AMONG
LANTE CORPORATION,
SBI AND COMPANY
AND
SBI ACQUISITION CORP.
TABLE OF CONTENTS
ARTICLE I THE OFFER ..........................................................1
Section 1.1 The Offer 1
Section 1.2 Company Action ..........................................4
Section 1.3 Directors 5
ARTICLE II THE MERGER ........................................................6
Section 2.1 The Merger ..............................................6
Section 2.2 The Closing .............................................6
Section 2.3 Effective Time ..........................................7
Section 2.4 Effects of the Merger ...................................7
Section 2.5 Organizational Documents ................................7
Section 2.6 Directors and Officers ..................................7
Section 2.7 Merger Without Meeting of Stockholders ..................7
Section 2.8 Conversion of Shares ....................................7
Section 2.9 Company Options .........................................8
ARTICLE III PAYMENT ..........................................................9
Section 3.1 Surrender of Certificates ...............................9
Section 3.2 Paying Agent; Certificate Surrender Procedures .........10
Section 3.3 Transfer Books .........................................10
Section 3.4 Termination of Payment Fund ............................11
Section 3.5 Appraisal Rights .......................................11
Section 3.6 Lost Certificates ......................................11
Section 3.7 No Rights as Stockholder ...............................11
Section 3.8 Withholding ............................................11
Section 3.9 Escheat 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY ....................12
Section 4.1 Corporate Existence and Power ..........................12
Section 4.2 Corporate Authorization; Approvals .....................13
Section 4.3 Governmental Authorization .............................13
Section 4.4 Non-Contravention; Real Property .......................13
Section 4.5 Capitalization .........................................14
Section 4.6 Subsidiaries ...........................................14
Section 4.7 Company SEC Documents ..................................15
Section 4.8 Financial Statements; Liabilities ......................15
Section 4.9 Information to be Supplied .............................16
Section 4.10 Absence of Certain Changes .............................16
Section 4.11 Litigation and Legal Compliance ........................16
Section 4.12 Taxes ..................................................17
Section 4.13 Contracts ..............................................19
Section 4.14 Employee Benefit Plans .................................20
Section 4.15 Intellectual Property ..................................21
Section 4.16 Customers ..............................................22
i
Section 4.17 Brokers' Fees; Opinion of Financial Advisor ............22
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PARENT AND PURCHASER ........22
Section 5.1 Corporate Existence and Power ..........................22
Section 5.2 Corporate Authorization; Approvals .....................22
Section 5.3 Governmental Authorization .............................23
Section 5.4 Non-Contravention ......................................23
Section 5.5 Adequate Cash Resources ................................23
Section 5.6 No Capital Ownership in the Company ....................23
Section 5.7 Information to be Supplied .............................23
ARTICLE VI COVENANTS ........................................................23
Section 6.1 Commercially Reasonable Efforts ........................23
Section 6.2 Interim Operations .....................................24
Section 6.3 Company Stockholder Meeting; Certain Filings ...........26
Section 6.4 Acquisition Proposals ..................................27
Section 6.5 Director and Officer Liability .........................29
Section 6.6 Employee Benefits ......................................30
Section 6.7 Public Announcements ...................................31
Section 6.8 Access to Information ..................................31
Section 6.9 Notice of Developments .................................32
Section 6.10 Parent's Board of Directors ............................32
Section 6.11 Further Assurances .....................................32
ARTICLE VII CONDITIONS TO THE CONSUMMATION OF THE MERGER ....................32
Section 7.1 Conditions to the Obligations of Each Party ............32
Section 7.2 Frustration of Closing Conditions ......................33
ARTICLE VIII TERMINATION ....................................................33
Section 8.1 Termination ............................................33
Section 8.2 Effect of Termination ..................................34
Section 8.3 Fees and Expenses ......................................34
Section 8.4 Termination Fee and Expense Reimbursement ..............35
Section 8.5 Other Termination and Expense Reimbursement Matters ....35
ARTICLE IX MISCELLANEOUS ....................................................35
Section 9.1 Nonsurvival of Representations .........................35
Section 9.2 Specific Performance ...................................35
Section 9.3 Successors and Assigns .................................36
Section 9.4 Amendment ..............................................36
Section 9.5 Severability ...........................................36
Section 9.6 Extension of Time; Waiver ..............................36
Section 9.7 Counterparts ...........................................36
Section 9.8 Descriptive Headings ...................................36
Section 9.9 Notices ................................................36
Section 9.10 No Third-Party Beneficiaries ...........................37
Section 9.11 Entire Agreement .......................................37
ii
Section 9.12 Construction ...........................................38
Section 9.13 Consent to Jurisdiction ................................38
Section 9.14 Governing Law ..........................................38
Section 9.15 Company Disclosure Letter ..............................38
iii
TABLE OF DEFINED TERMS
Acquisition Proposal Section 6.4(a)
Affiliates Section 4.9
Agreement Preamble
Antitrust Laws Section 4.3
Certificate Section 3.1
Certificate of Merger Section 2.3
Closing Section 2.2
Closing Date Section 2.2
COBRA Section 4.14(g)
Code Section 2.9(c)
Company Preamble
Company Contracts Section 4.13(a)
Company Employee Plan Section 4.14(a)
Company Employees Section 6.6(a)
Company Financial Statements Section 4.8(a)
Company Intellectual Property Section 4.15
Company Material Adverse Effect Section 4.1
Company Options Section 2.9(b)
Company Option Plans Section 2.9(a)
Company Preferred Shares Section 4.5(a)
Company Recommendation Section 6.3(a)
Company Representatives Section 6.4(a)
Company SEC Documents Section 4.7
Company Shares Background
Company Stockholder Approval Section 4.2(c)
Company Stockholder Meeting Section 6.3(a)
Confidentiality Agreement Section 1.2(a)
Constituent Corporations Section 2.1
Consummation of the Offer Section 1.1(a)
Delaware Act Section 2.1
Dissenting Shares Section 3.5
Effective Time Section 2.3
Employee Plan Section 4.14(a)
ERISA Section 4.14(a)
Exchange Act Section 1.1(a)
Expense Reimbursement Section 8.4(a)
Financial Advisor Section 4.17(a)
Fully Diluted Basis Section 1.1(a)
GAAP Section 4.8(a)
Governmental Entity Section 4.3
HSR Act Section 4.3
IRS Section 4.14(c)
Independent Directors Section 1.3(a)
iv
Indemnified Parties Section 6.5(a)
Initial Expiration Date Section 1.1(b)
Joint Press Release Section 1.1(d)
Knowledge of the Company Section 4.11(a)
Laws Section 4.11(b)
Lien Section 4.6(a)
Material Adverse Effect Section 4.1
Merger Section 2.1
Merger Consideration Section 2.8(a)
Minimum Condition Section 1.1(a)
Multiemployer Plan Section 4.14(h)
Offer Section 1.1(a)
Offer Documents Section 1.1(e)
Offer Price Section 1.1(a)
Offer to Purchase Section 1.1(a)
Option Spread Payment Section 2.9(c)
Outside Date Section 1.1(b)
Parent Preamble
Parent Material Adverse Effect Section 5.1
Paying Agent Section 3.2(a)
Payment Fund Section 3.2(b)
Person Section 4.1
Proxy Statement Section 6.3(a)
Purchaser Preamble
Qualified Person Section 1.3(a)
Schedule 14D-9 Section 1.2(c)
Schedule TO Section 1.1(e)
SEC Section 1.1(b)
Securities Act Section 4.3
Subsidiary Section 2.8(b)
Superior Proposal Section 6.4(a)
Surviving Corporation Section 2.1
Tax Section 4.12(a)
Tax Returns Section 4.12(a)
Termination Fee Section 8.4(a)
v
ACQUISITION AGREEMENT AND
AGREEMENT AND PLAN OF MERGER
ACQUISITION AGREEMENT AND AGREEMENT AND PLAN OF MERGER dated as of July
18, 2002 (this "AGREEMENT") by and among Lante Corporation, a Delaware
corporation (the "COMPANY"), SBI And Company, a Utah corporation (the "PARENT"),
and SBI Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of Parent (the "PURCHASER").
BACKGROUND
This Agreement provides for the Parent to acquire the Company by (i)
causing the Purchaser to make a tender offer for all shares of common stock, par
value $0.01 per share, of the Company (the "COMPANY Shares") for $1.10 per
share, net to the seller in cash, and (ii) as promptly as practicable after the
closing of such tender offer, causing the Purchaser to merge with and into the
Company, with each then issued and outstanding Company Share being converted
into the same amount of cash per share as paid in the tender offer, upon the
terms and conditions set forth herein.
The Boards of Directors of each of the Company, the Parent and the
Purchaser accordingly have duly adopted resolutions approving this Agreement and
the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the mutual agreements contained in
this Agreement, and for other good and valuable consideration, the value,
receipt and sufficiency of which are acknowledged, the parties agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 THE OFFER.
(a) Provided that this Agreement has not been terminated pursuant to
SECTION 8.1 hereof, as promptly as reasonably practicable, but in any event
within ten (10) "business days" (as defined in Rule 14d-1(g) under the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "EXCHANGE ACT")) following the date
hereof, the Purchaser will, and the Parent will cause the Purchaser to, commence
(within the meaning of Rule 14d-2 under the Exchange Act) a tender offer (as it
may be amended from time to time as permitted by this Agreement, the "OFFER") to
purchase all of the Company Shares at a price of U.S. $1.10 per Company Share,
net to the seller in cash (such price, or the highest price per Company Share as
may be paid in the Offer, being referred to herein as the "OFFER PRICE"). The
obligation of the Purchaser to accept for payment and pay for the Company Shares
tendered pursuant to the Offer will be subject only to the following conditions:
(i) that there will be validly tendered and not withdrawn prior to the final
expiration of the Offer that number of Company Shares, together with the Company
Shares then owned by the Parent, the Purchaser and their respective Subsidiaries
(as defined in SECTION 2.8(B)) that represents at least a majority of the
Company Shares outstanding on a Fully Diluted Basis (as
defined below) (the "MINIMUM CONDITION") and (ii) the satisfaction or waiver by
the Purchaser as permitted hereunder of the other conditions set forth in ANNEX
I hereto. For purposes of this Agreement, "FULLY DILUTED BASIS" means the number
of Company Shares issued and outstanding at the time of determination, after
taking into account all Company Shares issuable upon conversion or exercise of
all outstanding options, warrants or rights to purchase Company Shares. The
Offer will be made by means of an offer to purchase (the "OFFER TO PURCHASE")
and a related letter of transmittal, each in form reasonably satisfactory to the
Company, containing the terms set forth in this Agreement and the conditions set
forth in ANNEX I. Without limiting the foregoing, effective upon the first
acceptance for payment of Company Shares by the Purchaser pursuant to the Offer,
the holder of such Company Shares will sell and assign to the Purchaser all
right, title and interest in and to all of the Company Shares tendered
(including, but not limited to, such holder's right to any and all dividends and
distributions with a record date before, and a payment date after, the scheduled
or extended expiration date) (such time being referred to as the "CONSUMMATION
OF THE Offer").
(b) The Purchaser expressly reserves the right, subject to compliance with
the Exchange Act, to waive any of the conditions to the Offer and to make any
change in the terms of or conditions to the Offer, provided that (i) the Minimum
Condition may not be waived or changed without the prior written consent of the
Company and (ii) no change may be made that changes the form of consideration to
be paid, decreases the Offer Price, decreases the number of Company Shares
sought in the Offer, adds additional conditions to the Offer, modifies any of
the conditions to the Offer in a manner adverse to holders of Company Shares,
makes any other change in the terms of the Offer that is in any manner adverse
to the holders of the Company Shares or (except as provided in the next sentence
and in subsection (c)) extends the Offer beyond the date that is twenty (20)
business days after commencement of the Offer (the "INITIAL EXPIRATION DATE"),
without the prior written consent of the Company. Notwithstanding the foregoing,
the Purchaser may, without the consent of the Company, and will, at the request
of the Company, (x) from time to time, extend the Offer beyond the then current
expiration date if at such date, or if applicable any extension thereof, any of
the conditions to the Offer set forth in clauses (i), (ii), (iii) and (iv) of
ANNEX I will not be satisfied or waived, until such time as such conditions are
satisfied or waived; provided that if any of the conditions to the Offer set
forth in clause (ii) of ANNEX I will not be satisfied or waived, the Purchaser
may, but will not be required to, extend the expiration date of the Offer beyond
the then current expiration date; provided further, that if all conditions other
than the Minimum Condition are satisfied or waived, the Purchaser may on one
occasion for a period not to exceed twenty (20) business days, extend the Offer
beyond the then current expiration date, and (y) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission or the staff thereof (the "SEC") applicable to the
Offer; provided, however, that the Initial Expiration Date, as it may be
extended from time to time, may not be so extended beyond October 1, 2002 (the
"OUTSIDE DATE").
(c) As soon as practicable after the expiration date of the Offer,
assuming the prior satisfaction or waiver of the Minimum Condition and the other
conditions of the Offer set forth in ANNEX I as contemplated hereby, the
Purchaser will accept for payment and pay for all Company Shares that have been
validly tendered and not withdrawn pursuant to the Offer. The Parent will
provide or cause to be provided to the Purchaser on a timely basis the funds
necessary to purchase all Company Shares that the Purchaser becomes obligated to
purchase
2
pursuant to the Offer, and will be liable on a direct and primary basis for the
performance by the Purchaser of its obligations under this Agreement. If, on the
expiration date of the Offer, the Minimum Condition has been satisfied or, with
the consent of the Company, waived, and all other conditions to the Offer have
been satisfied or waived, but less than 90 percent (90%) of the Company Shares
then issued and outstanding, together with the Company Shares beneficially owned
by the Parent, the Purchaser and their Subsidiaries, have been validly tendered
and not withdrawn, the Purchaser may extend the Offer for a further period of
time, after it has accepted and paid for (in accordance with the first sentence
of this section) all of the Company Shares tendered in the Offer, by means of a
"subsequent offering period" of at least three (3) but no more than twenty (20)
business days in accordance with Rule 14d-11 under the Exchange Act to meet the
objective (which is not a condition to the Offer) that there be tendered prior
to the expiration date of the Offer (as so extended) and not withdrawn a number
of Company Shares that, together with the Company Shares beneficially owned by
the Parent, the Purchaser and their Subsidiaries, represents at least 90 percent
(90%) of the then issued and outstanding Company Shares. During the subsequent
offering period, the Purchaser will immediately accept for payment and promptly
pay for all Company Shares as they are tendered pursuant to the Offer in
accordance with Rule 14d-11 under the Exchange Act.
(d) No later than the first business day following execution of this
Agreement and subject to the conditions of this Agreement, the Parent will issue
a joint press release with the Company (the "JOINT PRESS RELEASE") regarding
this Agreement and its intent to make the Offer, and will file with the SEC the
Joint Press Release, under cover of Schedule TO, indicating on the front of such
Schedule TO that such filing contains pre-commencement communications.
(e) On the date of commencement of the Offer, the Parent and the Purchaser
will file with the SEC a Tender Offer Statement on Schedule TO (together with
all amendments, supplements, and exhibits thereto, the "SCHEDULE TO") with
respect to the Offer. The Schedule TO will include the summary term sheet
required thereby, and as exhibits thereto, the Offer to Purchase and forms of
the letter of transmittal, summary advertisement and all other ancillary offer
documents (the Schedule TO and the other documents pursuant to which the Offer
is made, together with any supplements, amendments or exhibits thereto, are
referred to as the "OFFER DOCUMENTS"). The Parent and the Purchaser will take
all steps necessary to cause the Offer Documents to be disseminated to holders
of Company Shares to the extent required by applicable federal securities Law
(as defined in SECTION 4.11(B)). The Company, the Parent and the Purchaser each
agree promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information becomes false or misleading
in any material respect. The Parent and the Purchaser agree 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 Company Shares, in each case as and to the
extent required by applicable federal securities Law. The Company and its
counsel will be given a reasonable opportunity to review and comment on the
Offer Documents prior to their being filed with the SEC or disseminated to the
holders of Company Shares. The Parent and the Purchaser also agree to provide
the Company and its counsel in writing with any comments the Parent, the
Purchaser or their counsel may receive from the SEC or its staff with respect to
the Offer Documents promptly after the receipt of such comments, and will
consult with and provide the Company and its counsel a reasonable opportunity to
review and comment on the response of the Parent and the Purchaser to such
comments prior to responding.
3
(f) If this Agreement has been terminated pursuant to SECTION 8.1 hereof,
the Purchaser will, and the Parent will cause the Purchaser to, promptly
terminate the Offer without accepting any Company Shares for payment.
SECTION 1.2 COMPANY ACTION.
(a) The Company has approved of and consented to the Offer. The Company
has been advised that all of its directors and executive officers who own
Company Shares intend to tender their Company Shares pursuant to the Offer so
long as such action would not result in liability under Section 16(b) of the
Exchange Act. In connection with the Offer, the Company will, or will cause its
transfer agent to, promptly furnish the Parent with a list of its stockholders,
mailing labels and any available listing or computer file containing the names
and addresses of all record holders of Company Shares and lists in the Company's
possession or control of securities positions of Company Shares held in stock
depositories, in each case as of a recent date, and will provide to the Parent
such additional information (including updated lists of stockholders, mailing
labels and lists of securities positions) and such other assistance as the
Parent may reasonably request in connection with the Offer. The information
provided pursuant to the preceding sentence will be used only by the Parent and
the Purchaser solely in connection with the Offer and the Merger (as defined in
SECTION 2.1) and will be subject to the provisions of the confidentiality
agreement between the Company and the Parent dated as of May 31, 2002 and
executed by the Parent on June 3, 2002 (the "CONFIDENTIALITY AGREEMENT"),
provided, that the Parent and the Purchaser may take such actions as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer and the transactions contemplated by this Agreement.
(b) No later than the first business day following execution of this
Agreement, and subject to the conditions of this Agreement, the Company will
issue the Joint Press Release with the Parent and file with the SEC the Joint
Press Release, under cover of Schedule 14D-9, indicating on the front of such
Schedule 14D-9 that such filing contains pre-commencement communications.
(c) On the day that the Offer is commenced, the Company will file with the
SEC and disseminate to holders of Company Shares, in each case as and to the
extent required by applicable federal securities Law, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "SCHEDULE 14D-9") that will reflect the
recommendations of the Company's Board of Directors with respect to the Offer
and the Merger; provided that such recommendation need not be made or, if
previously made, may be withdrawn, modified or amended to the extent the
Company's Board of Directors has determined that the failure to take such action
would be inconsistent with their fiduciary duties under applicable Laws in
accordance with SECTION 6.4. The Company, the Parent and the Purchaser each
agree promptly to correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it will have become false or misleading in any
material respect. The Company agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of Company Shares, in each case as and to the extent required by
applicable federal securities Law. The Parent and its counsel will be given a
reasonable opportunity to review and comment on the Schedule 14D-9 prior to its
being filed with the SEC or disseminated to holders of Company Shares. The
Company also agrees to
4
provide the Parent and its counsel in writing with any comments the Company or
its counsel may receive from the SEC with respect to the Schedule 14D-9 promptly
after the receipt of such comments, and will consult with and provide the Parent
and its counsel a reasonable opportunity to review and comment on the response
of the Company to such comments prior to responding.
SECTION 1.3 DIRECTORS.
(a) Promptly upon the purchase of and payment for Company Shares by the
Parent or the Purchaser representing at least a majority of the Company Shares
on a Fully Diluted Basis, the Parent will be entitled to designate for
appointment or election to the Company's then existing Board of Directors, upon
written notice to the Company, such number of directors, rounded up to the next
whole number, on the Board of Directors such that the percentage of its
designees on the Board will equal the percentage of the outstanding Company
Shares on a Fully Diluted Basis owned of record by the Parent and its direct or
indirect Subsidiaries. In furtherance thereof, the Company will, upon request of
the Purchaser, use commercially reasonable efforts promptly to cause the
Parent's designees (and any replacement designees in the event that any designee
will no longer be on the Board of Directors) to be so elected to the Company's
Board of Directors, and, to the extent necessary, use commercially reasonable
efforts to obtain the resignation of such number of its current directors as is
necessary to give effect to the foregoing provision. At such time, the Company
will also, upon the request of the Purchaser, use commercially reasonable
efforts to cause the Persons (as defined in SECTION 4.1) designated by the
Parent to constitute at least the same percentage (rounded up to the next whole
number) as is on the Company's Board of Directors of (i) each committee of the
Company's Board of Directors, (ii) each board of directors (or similar body) of
each Subsidiary of the Company and (iii) each committee (or similar body) of
each such board. Notwithstanding the foregoing, until the Effective Time (as
defined in SECTION 2.3), the Board of Directors of the Company will have at
least three (3) directors who are directors of the Company on the date of this
Agreement and who are not officers of the Company or any of its Subsidiaries
(the "INDEPENDENT DIRECTORS"); provided, however, that (x) notwithstanding the
foregoing, in no event will the requirement to have at least three Independent
Directors result in the Parent's designees constituting less than a majority of
the Company's Board of Directors unless the Parent will have failed to designate
a sufficient number of Persons to constitute at least a majority and (y) if the
number of Independent Directors is reduced below three (3) for any reason
whatsoever (or if immediately following Consummation of the Offer there are not
at least three then-existing directors of the Company who (1) are Qualified
Persons (as defined below) and (2) are willing to serve as Independent
Directors), then the number of Independent Directors required hereunder will be
one, unless the remaining Independent Director is able to identify a person, who
is not an officer or Affiliate (as defined in SECTION 4.9) of the Company, the
Parent or any of their respective Subsidiaries and who is reasonably acceptable
to the Parent (any such person being referred to herein as a "QUALIFIED
PERSON"), willing to serve as an Independent Director, in which case such
remaining Independent Director will be entitled to designate any such Qualified
Person or Persons to fill such vacancies, and such designated Qualified Person
will be deemed to be an Independent Director for purposes of this Agreement, or
if no Independent Directors then remain, the other Directors will be required to
designate three (3) Qualified Persons to fill such vacancies, and such persons
will be deemed to be Independent Directors for purposes of this Agreement.
5
(b) The Company's obligations to appoint the Parent's designees to the
Company's Board of Directors will be subject to compliance with Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder. The Company will
promptly take all actions required pursuant to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder in order to fulfill its obligations
pursuant to (a) above, including mailing to stockholders the information
required by such Section 14(f) and Rule 14f-1 (which the Company will mail
together with the Schedule 14D-9 if it receives from the Parent and the
Purchaser the information below on a timely basis to permit such mailing) as is
necessary to fulfill the Company's obligations pursuant to (a) above. The Parent
or the Purchaser will supply the Company in writing any information with respect
to either of them and their nominees, officers, directors and Affiliates
required by such Section 14(f) and Rule 14f-1 as is necessary in connection with
the appointment of any of the Parent's designees pursuant to (a) above. The
provisions of (a) above are in addition to and will not limit any rights that
the Purchaser, the Parent or any of their Affiliates may have as a holder or
beneficial owner of Company Shares as a matter of Law with respect to the
election of directors or otherwise.
(c) Following the election or appointment of the Parent's designees as set
forth above, the approval by affirmative vote or written consent of all of the
Independent Directors then in office (or, if there is only one Independent
Director then in office, the Independent Director) will be required to authorize
(and such authorization will constitute the authorization of the Company's Board
of Directors and no other action on the part of the Company, including any
action by any committee thereof or any other director of the Company, will,
unless otherwise required by Law, be required or permitted to authorize) (i) any
amendment or termination of this Agreement by the Company, (ii) any other action
of the Company's Board of Directors under or in connection with this Agreement
that in any manner adversely affects the holders of Company Shares, as
determined by any of the Independent Directors, or (iii) any waiver or exercise
of any of the Company's rights under this Agreement. The Independent Directors
will have the authority to retain such counsel and other advisors at the expense
of the Company as determined appropriate by any of the Independent Directors. In
addition, the Independent Directors will have the authority to institute any
action, on behalf of the Company, to enforce performance of this Agreement.
ARTICLE II
THE MERGER
SECTION 2.1 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time the Purchaser will be merged with and into the
Company (the "MERGER") in accordance with the provisions of the General
Corporation Law of the State of Delaware (the "DELAWARE ACT"). Following the
Merger, the Company will continue as the surviving corporation (the "SURVIVING
CORPORATION") and the separate corporate existence of the Purchaser will cease.
The Company and the Purchaser are sometimes referred to collectively as the
"CONSTITUENT CORPORATIONS."
SECTION 2.2 THE CLOSING. Unless this Agreement has been terminated
pursuant to SECTION 8.1, the closing of the transactions contemplated by this
Agreement (the "CLOSING") will take place at 10:00 a.m., local time, on a date
to be specified by the parties that is no later than the third business day
following satisfaction or waiver of the conditions set forth in
6
SECTION 7.1 (the "CLOSING DATE"), at the offices of Jenner & Block, LLC, Xxx XXX
Xxxxx, Xxxxxxx, Xxxxxxxx, unless another date, time or place is agreed to in
writing by the parties.
SECTION 2.3 EFFECTIVE TIME. Upon the terms and subject to the conditions
of this Agreement, on the Closing Date (or on such other date as the parties may
agree) the Company will file with the Delaware Secretary of State an appropriate
certificate of merger (or certificate of ownership and merger, as the case may
be) (the "CERTIFICATE OF MERGER") and make all other filings or recordings
required by the Delaware Act in connection with the Merger. The Merger will be
consummated on the later of the date on which the Certificate of Merger has been
filed with the Delaware Secretary of State or such time as is agreed upon by the
parties and specified in such Certificate of Merger. The time the Merger becomes
effective in accordance with the Delaware Act is referred to in this Agreement
as the "EFFECTIVE TIME."
SECTION 2.4 EFFECTS OF THE MERGER. The Merger will have the effects set
forth in this Agreement and Section 259 of the Delaware Act. Without limiting
the generality of the foregoing, as of the Effective Time, the Surviving
Corporation will succeed to all the properties, rights, privileges, powers,
franchises and assets of the Constituent Corporations, and all debts,
liabilities and duties of the Constituent Corporations will become debts,
liabilities and duties of the Surviving Corporation.
SECTION 2.5 ORGANIZATIONAL DOCUMENTS. At the Effective Time, the
certificate of incorporation and bylaws of the Purchaser (as in effect
immediately prior to the Effective Time), will become the certificate of
incorporation and bylaws of the Surviving Corporation until thereafter amended
in accordance with their respective terms and the Delaware Act.
SECTION 2.6 DIRECTORS AND OFFICERS. The directors and the officers of the
Purchaser at the Effective Time will be the initial directors and officers of
the Surviving Corporation and will hold office from the Effective Time in
accordance with the certificate of incorporation and bylaws of the Surviving
Corporation until their respective successors are duly elected or appointed and
qualified.
SECTION 2.7 MERGER WITHOUT MEETING OF STOCKHOLDERS. If following the
Consummation of the Offer or any subsequent offering period, the Purchaser owns
at least 90 percent (90%) of the outstanding Company Shares, each of the parties
hereto will take all necessary and appropriate action to cause the Merger to
become effective as soon as reasonably practicable after such acquisition,
without the Company Stockholder Meeting (as defined in SECTION 6.3(A)), in
accordance with Section 253 of the Delaware Act.
SECTION 2.8 CONVERSION OF SHARES. As of the Effective Time, by virtue of
the Merger and without any action on the part of the Company, the Parent or the
Purchaser or their respective stockholders:
(a) each Company Share (other than shares to be canceled in accordance
with subsection (b) below and any Dissenting Shares (as defined in SECTION 3.5))
issued and outstanding immediately prior to the Effective Time will be converted
into the right to receive the Offer Price in cash, payable to the holder
thereof, without interest (the "MERGER CONSIDERATION"), upon surrender of the
Certificate (as defined in SECTION 3.1) formerly
7
representing such Company Share in the manner provided in SECTION 3.2. All such
Company Shares, when so converted, will no longer be outstanding and will
automatically be canceled and will cease to exist, and each holder of a
Certificate will cease to have any rights with respect to such Company Shares,
except the right to receive the Merger Consideration, without interest, upon the
surrender of such Certificate in accordance with SECTION 3.2;
(b) each Company Share owned immediately prior to the Effective Time by
the Company, the Parent, the Purchaser or any of their respective Subsidiaries,
including without limitation, any such shares held as treasury stock of the
Company, will be canceled and extinguished and no consideration will be
delivered in exchange therefor. For purposes of this section, Company Shares
owned beneficially or held of record by any plan, program or arrangement
sponsored or maintained for the benefit of any current or former employee of the
Company, the Parent, the Purchaser or any of their respective Subsidiaries, will
not be deemed to be held by the Company, the Parent, the Purchaser or any such
Subsidiary, regardless of whether the Company, the Parent, the Purchaser or any
such Subsidiary has the power, directly or indirectly, to vote or control the
disposition of such shares. For purposes of this Agreement, the term
"SUBSIDIARY" as used in this Agreement means any corporation, partnership,
limited liability company or other business entity 50 percent or more of the
outstanding voting equity securities of which are owned, directly or indirectly,
by the Company, the Parent, or the Purchaser as applicable; and
(c) each share of common stock, par value $1.00 per share, of the
Purchaser issued and outstanding immediately prior to the Effective Time will,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into one share of common stock, par value $1.00 per share,
of the Surviving Corporation.
SECTION 2.9 COMPANY OPTIONS.
(a) As soon as practicable following the date of this Agreement, the
Company's Board of Directors or any committee administering the Company's
Amended and Restated 1998 Stock Option Plan, 2000 Employee Stock Purchase Plan
and 2001 Stock Incentive Plan (collectively, the "COMPANY OPTION PLANS") will
adopt such resolutions or take such other actions as may be required or
appropriate in the sole discretion of the Company to effect the provisions of
this section and to cause the transactions contemplated by this section to be
exempt from the provisions of Section 16(b) of the Exchange Act.
(b) The Parent hereby agrees that the transactions contemplated by this
Agreement will be deemed to constitute a "Change in Control" as defined in and
pursuant to the Company Option Plans, and, under the terms of such Company
Option Plans, and the authority granted thereunder, upon the Consummation of the
Offer, each option to purchase Company Shares under any Company Option Plan
unexercised and outstanding immediately prior to the Consummation of the Offer
(the "COMPANY OPTIONS") will fully vest and become exercisable to the extent not
prohibited by Section 10(a)(i)(A) of the Company's Amended and Restated 1998
Stock Option Plan, Section 7.2 of the Company's 2000 Employee Stock Purchase
Plan and Section 12(a)(i)(A) of the Company's 2001 Stock Incentive Plan. Upon
the Consummation of the Offer, all conditions and restrictions with respect to
the Company Options then outstanding, including limitations on exercisability
and vesting, risks of forfeiture and conditions and
8
restrictions requiring continued performance of services or the meeting of any
targets or milestones with respect to the exercisability or vesting of any such
the Company Options, will immediately lapse.
(c) Each Company Option unexercised and outstanding immediately prior to
the Effective Time will at the Effective Time be deemed to constitute an option
to acquire, on the same terms and conditions as were applicable under such
Company Option immediately prior to the Effective Time, the Merger
Consideration. In accordance with the foregoing, as contemplated by each of the
Company Option Plans, the committee that administers the Company Option Plans
will make the provision for a cash payment to each holder of a Company Option
unexercised and outstanding at the Effective Time in accordance with this
subsection (c). Each Company Option unexercised and outstanding at the Effective
Time will be canceled as of the Effective Time in exchange for a cash payment to
the holder of the Company Option in an amount equal to the excess, if any, of
the Merger Consideration less the exercise price for each Company Share
purchasable pursuant to such Company Option immediately prior to the Effective
Time (in each case assuming such Company Option had been fully vested and fully
exercisable as of the Effective Time as contemplated by the immediately
preceding subsection), less any amounts as are required to be deducted and
withheld under the United States Internal Revenue Code of 1986, as amended (the
"CODE") or any provision of state or local tax law in connection with such
payment (the "OPTION SPREAD PAYMENT"). The Company will make the Option Spread
Payment at or promptly following the Closing by check or wire transfer of
immediately available funds as directed by the holder of the Company Option.
(d) As of the Effective Time, the Company Option Plans will terminate and
all rights under any provision of any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company will be canceled. At and after the Effective Time,
no person will have any right under the Company Options, the Company Option
Plans or any other plan, program or arrangement with respect to equity
securities of the Surviving Corporation or any Subsidiary thereof, except the
right to receive the amount payable under subsection (c) above.
(e) Each Company Share granted to any employee or director of the Company
as compensation for services that is subject to restrictions on ownership or
transferability will vest in full and become fully transferable and free of
restrictions immediately prior to the Effective Time.
ARTICLE III
PAYMENT
SECTION 3.1 SURRENDER OF CERTIFICATES. From and after the Effective Time,
each holder of a certificate that immediately prior to the Effective Time
represented an outstanding Company Share (a "CERTIFICATE") will be entitled to
receive in exchange therefor, upon surrender thereof to the Paying Agent (as
defined in SECTION 3.2(A)), the Merger Consideration into which the Company
Shares evidenced by such Certificate were converted pursuant to the Merger. No
interest will be payable on the Merger Consideration to be paid to any holder of
a Certificate irrespective of the time at which such Certificate is surrendered
for exchange.
9
SECTION 3.2 PAYING AGENT; CERTIFICATE SURRENDER PROCEDURES.
(a) On or prior to the Effective Time, the Parent will designate (with the
approval of the Company, not to be unreasonably withheld) and enter into an
agreement with an institution or trust company to act as paying agent for the
Merger Consideration (the "PAYING AGENT").
(b) As soon as reasonably practicable after the Effective Time, the Parent
will deposit, or cause to be deposited, with the Paying Agent, an amount in cash
sufficient to provide all funds necessary for the Paying Agent to make payment
of the Merger Consideration (the "PAYMENT FUND"). Pending payment of such funds
to the holders of Certificates, the Payment Fund will be held and may be
invested by the Paying Agent as the Parent directs (so long as such directions
do not impair the rights of holders of Company Shares) in: (i) the direct
obligations of the United States for which the full faith and credit of the
United States is pledged to provide for the payment of principal and interest;
(ii) commercial paper maturing not more than 270 days after the date of issue
and rated P-1 by Moody's Investors Services, Inc. or A-1 by Standard & Poor's
Corporation, (iii) certificates of deposit maturing not more than 270 days after
the date of issue issued by, or in money market or demand deposit accounts
maintained at, a commercial banking institution, which is a member of the
Federal Reserve System and has a combined capital and surplus and undivided
profits of not less than $500,000,000; (iv) money market accounts maintained
with mutual funds having assets in excess of $2,500,000,000; and (v) tax exempt
securities rated A or better by Moody's or A+ or better by Standard & Poor's.
Any net profit resulting from, or interest or income produced by, such
investments will be payable to the Parent or its designee, in the Parent's sole
discretion. The Parent will promptly replace any monies lost through any
investment made pursuant to this subsection (b).
(c) As soon as reasonably practicable after the Effective Time, the Parent
will instruct the Paying Agent to mail to each record holder of a Certificate
(i) a letter of transmittal (which will specify that delivery will be effected,
and risk of loss and title to such Certificates will pass, only upon delivery of
the Certificate to the Paying Agent and will be in such form and have such other
provisions as the Parent will reasonably specify) and (ii) instructions for use
in effecting the surrender of Certificates for the Merger Consideration. Upon
the surrender to the Paying Agent of such Certificates together with a duly
executed and completed letter of transmittal and all other documents and other
materials required by the Paying Agent to be delivered in connection therewith,
the holder will be entitled to receive the Merger Consideration into which the
Certificates so surrendered have been converted in accordance with the
provisions of this Agreement. Until so surrendered, each outstanding Certificate
will be deemed from and after the Effective Time, for all corporate purposes, to
evidence the right to receive the Merger Consideration into which the Company
Shares represented by such Certificate have been converted in accordance with
the provisions of this Agreement.
SECTION 3.3 TRANSFER BOOKS. The stock transfer books of the Company will
be closed at the Effective Time, and no transfer of any Company Shares will
thereafter be recorded on any of the stock transfer books. In the event of a
transfer of ownership of any Company Shares prior to the Effective Time that is
not registered in the stock transfer records of the Company at the Effective
Time, the Merger Consideration into which such Company Shares has been converted
in the Merger will be paid to the transferee in accordance with the provisions
of
10
SECTION 3.2 only if the Certificate is surrendered as provided in SECTION 3.2
and accompanied by all documents required to evidence and effect such transfer
(including evidence of payment of any applicable stock transfer taxes).
SECTION 3.4 TERMINATION OF PAYMENT FUND. Any portion of the Payment Fund
that remains undistributed one hundred eighty (180) days after the Effective
Time will be delivered to the Parent upon demand, and each holder of Company
Shares who has not previously surrendered Certificates in accordance with the
provisions of this article will thereafter look only to the Parent for
satisfaction of such holder's claims for the Merger Consideration.
SECTION 3.5 APPRAISAL RIGHTS. Notwithstanding anything in this Agreement
to the contrary, Company Shares outstanding immediately prior to the Effective
Time and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who has complied with all of the relevant provisions of
Section 262 of the Delaware Act regarding appraisal for such shares ("DISSENTING
SHARES"), will not be converted into a right to receive the Merger
Consideration, unless such holder fails to perfect or withdraws or otherwise
loses its right to appraisal. The Company will give the Parent prompt written
notice of any and all demands for appraisal rights, withdrawal of such demands
and any other communications delivered to the Company pursuant to Section 262 of
the Delaware Act, and the Company will give the Parent the opportunity, to the
extent permitted by applicable Law, to participate in all negotiations and
proceedings with respect to such demands. Except with the prior written consent
of the Parent, the Company will not voluntarily make any payment with respect to
any demand for appraisal rights and will not settle or offer to settle any such
demand. Each holder of Dissenting Shares who becomes entitled to payment for
such Dissenting Shares under the provisions of Section 262 of the Delaware Act,
will receive payment thereof from the Surviving Corporation and such Dissenting
Shares will no longer be outstanding and will automatically be canceled and
retired and will cease to exist.
SECTION 3.6 LOST CERTIFICATES. If any Certificate has been lost, stolen or
destroyed, upon the making of an affidavit (in form and substance reasonably
acceptable to the Parent) of that fact by the person making such a claim, and,
if required by the Parent, the posting by such person of a bond in such
reasonable amount as the Parent may direct as indemnity against any claim that
may be made against or with respect to such Certificate, the Paying Agent will
deliver in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration pursuant to SECTION 3.2.
SECTION 3.7 NO RIGHTS AS STOCKHOLDER. From and after the Effective Time,
the holders of Certificates will cease to have any rights as a stockholder of
the Surviving Corporation except as otherwise expressly provided in this
Agreement or by applicable Laws, and the Parent will be entitled to treat each
Certificate that has not yet been surrendered for exchange solely as evidence of
the right to receive the Merger Consideration into which the Company Shares
evidenced by such Certificate have been converted pursuant to the Merger.
SECTION 3.8 WITHHOLDING. The Parent will be entitled to deduct and
withhold from the Merger Consideration otherwise payable to any former holder of
Company Shares all amounts required by Law to be deducted or withheld therefrom.
To the extent that amounts are
11
so deducted and withheld and paid to the appropriate Governmental Entity, such
amounts will be treated for all purposes of this Agreement as having been paid
to the holder of the Company Shares in respect of which such deduction and
withholding was made by the Parent or the Purchaser.
SECTION 3.9 ESCHEAT. Neither the Parent, the Purchaser nor the Company
will be liable to any former holder of Company Shares for any portion of the
Merger Consideration delivered to any public official pursuant to any applicable
abandoned property, escheat or similar law. In the event any Certificate has not
been surrendered for the Merger Consideration prior to the sixth anniversary of
the Closing Date, or prior to such earlier date as of which such Certificate or
the Merger Consideration payable upon the surrender thereof would otherwise
escheat to or become the property of any governmental entity, then the Merger
Consideration otherwise payable upon the surrender of such Certificate will, to
the extent permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of all rights, interests and adverse claims of any
person.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the Company Disclosure Letter or the Company SEC
Documents (as defined in SECTION 4.7 below), the Company represents and warrants
to the Parent and the Purchaser that:
SECTION 4.1 CORPORATE EXISTENCE AND POWER. The Company and each of its
Subsidiaries 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 assets and to carry on its business as presently being conducted. The
Company and each of its Subsidiaries is duly qualified or licensed to conduct
business as a foreign corporation in each jurisdiction where such qualification
or licensing is necessary, except where the failure to be so qualified would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect (as defined below). For purposes of this Agreement,
"COMPANY MATERIAL ADVERSE EFFECT" means a Material Adverse Effect with respect
to the Company and "MATERIAL ADVERSE EFFECT" means any change, effect,
occurrence or state of facts that is materially adverse to the business,
financial condition, operations or results of operations of a Person and its
Subsidiaries, taken as a whole; provided, however, that the following are
excluded from the definition of "Material Adverse Effect" and from the
determination of whether such a Material Adverse Effect has occurred: (i)
changes in Laws (including without limitation, common law, rules and regulations
or the interpretation thereof) or applicable accounting regulations and
principles; (ii) any change in the relationship of a Person and its Subsidiaries
with their respective employees, customers and suppliers, which change results
from the announcement, pendency, or consummation of the transactions and actions
contemplated in this Agreement; or (iii) receipt by the Person of any notice
regarding the de-listing, or the actual de-listing, of the Person's shares from
the Nasdaq National Market. For purposes of this Agreement, "PERSON" means an
individual, a corporation, a limited liability company, a partnership, an
association, a trust or any other entity or organization, including any
Governmental Entity (as defined in SECTION 4.3).
12
SECTION 4.2 CORPORATE AUTHORIZATION; APPROVALS.
(a) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby are within the Company's corporate powers and, except for the Company
Stockholder Approval (as defined in (c) below), have been duly authorized by all
necessary corporate action. Assuming that this Agreement constitutes the valid
and binding obligation of the Parent and Purchaser, this Agreement constitutes a
valid and binding agreement of the Company, enforceable in accordance with its
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar Laws of
general applicability relating to or affecting creditors' rights, or by general
equity principles, including principles of commercial reasonableness, good faith
and fair dealing).
(b) The Board of Directors of the Company has taken all action necessary
so that the provisions of Section 203 of the Delaware Act applicable to a
"business combination" (as defined in Section 203 of the Delaware Act) will not
apply to the acquisition by the Parent and the Purchaser of beneficial ownership
of Company Shares pursuant to the Offer and the Merger, or to the execution,
delivery or performance of this Agreement.
(c) The affirmative vote of the holders of a majority of the outstanding
Company Shares on the applicable record date (the "COMPANY STOCKHOLDER
APPROVAL"), if required by applicable Law, is the only vote of the holders of
any class or series of the Company's capital stock necessary to approve the
Merger and the consummation of the transactions contemplated hereby.
SECTION 4.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby do not require any filing or
registration with, notification to, or authorization, consent or approval of,
any federal, state or local governmental authority, court, administrative or
regulatory agency or commission (each a "GOVERNMENTAL ENTITY"), other than: (a)
the filing of (i) the Certificate of Merger in accordance with the Delaware Act
and (ii) appropriate documents with the relevant authorities of other states or
jurisdictions in which the Company or any of its Subsidiaries is qualified to do
business; (b) compliance with any applicable requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), and any other applicable competition, merger control, antitrust or
similar laws or regulations (collectively with the HSR Act, the "ANTITRUST
LAWS"); (c) compliance with any applicable requirements of the Securities Act of
1933, as amended (together with the rules and regulations promulgated
thereunder, the "SECURITIES ACT"), and the Exchange Act; (d) such actions as may
be required under any applicable state securities or blue sky laws; and (e) such
other actions or filings that, if not obtained or made, would not, individually
or in the aggregate, reasonably be expected to have either a Company Material
Adverse Effect, or to prevent or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement.
SECTION 4.4 NON-CONTRAVENTION; REAL PROPERTY. The execution, delivery
and performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby (a) do not contravene or
conflict with the Company's
13
certificate of incorporation or bylaws, (b) violate, conflict with or result in
a breach of any Law applicable to the Company or any of the properties or assets
of the Company, or (c) violate, result in a breach of, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by, result in the creation or imposition of any Lien (as defined in
SECTION 4.6(A)) upon any of the properties or assets of the Company under, or
require any consent, approval, notice or filing under, any of the Company
Contracts (as defined in SECTION 4.13(A)), other than any of the foregoing that
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries
owns any real property.
SECTION 4.5 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 150,000,000
Company Shares and 10,000,000 shares of the Company's preferred stock, par value
$0.01 per share (the "COMPANY PREFERRED SHARES"), of which 4,243,000 are
designated as Series A convertible preferred stock. As of the close of business
on July 16, 2002, (i) 37,379,367 Company Shares were issued and outstanding and
no Company Shares were held in treasury and (ii) no Company Preferred Shares
were issued and outstanding or held in treasury. As of the close of business on
July 16, 2002, Company Options to acquire an aggregate of 8,783,658 Company
Shares, a list of which Company Options (including optionholder name and
exercise price) is set forth as SECTION 4.5 of the Company Disclosure Letter,
were outstanding under the Company Option Plans. All outstanding shares of the
capital stock of the Company have been duly authorized and validly issued, and
are fully paid, non-assessable and free of preemptive rights.
(b) Except as described in subsection (a) above, as of the date hereof
there are no outstanding (i) shares of capital stock or other voting securities
of the Company or its Subsidiaries; (ii) securities of the Company or its
Subsidiaries convertible into or exchangeable for shares of capital stock or
voting securities of the Company or its Subsidiaries; or (iii) options, warrants
or other rights to acquire from the Company or its Subsidiaries, any capital
stock, voting securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company or its Subsidiaries. There are
no outstanding obligations of the Company or its Subsidiaries to repurchase,
redeem or otherwise acquire any Company Shares.
(c) The number of Company Shares outstanding on a Fully Diluted Basis
required to be validly tendered to satisfy the Minimum Condition, calculated as
of July 16, 2002, is 23,081,513.
SECTION 4.6 SUBSIDIARIES.
(a) SECTION 4.6 of the Company Disclosure Letter sets forth a list of all
Subsidiaries of the Company and their respective jurisdictions of incorporation
or organization. All of the outstanding shares of capital stock of each
Subsidiary of the Company are owned by the Company, directly or indirectly, free
and clear of any Liens and free of any other limitation or restriction,
including any limitation or restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interest (other than any of the
foregoing that may exist
14
under the Securities Act or any state securities Laws). For purposes of this
Agreement, "LIEN" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of an asset, provided, however, that the term
"Lien" will not include (i) liens for water and sewer charges and current Taxes
(as defined in SECTION 4.12(A)) not yet due and payable or being contested in
good faith, (ii) mechanics', carriers', workers', repairers', materialmen's,
warehousemen's and similar liens, (iii) purchase money liens and liens securing
rental payments under capital lease arrangements and (iv) other liens arising in
the ordinary course of business and not incurred in connection with the
borrowing of money.
(b) All outstanding shares of the capital stock of each Subsidiary of the
Company have been duly authorized and validly issued, and are fully paid,
non-assessable and free of preemptive rights.
(c) None of the Subsidiaries of the Company own or control directly or
indirectly, or have any direct or indirect equity participation in, any
corporation, partnership, limited liability company, joint venture or other
entity.
SECTION 4.7 COMPANY SEC DOCUMENTS. The Company has filed all material
forms, reports and documents with the SEC required to be filed by it after
January 1, 2000 and prior to the date of this Agreement (together with the
amendments and supplements to such filings filed prior to the date of this
Agreement, the "COMPANY SEC DOCUMENTS"). Each Company SEC Document, as of its
filing date (or if amended, as of the date of its last amendment) complied as to
form in all material respects with the applicable requirements of the Securities
Act and the Exchange Act, as the case may be. No Company SEC Document filed
pursuant to the Exchange Act, as of its filing date (or if amended, as of the
date of its last amendment), contained any untrue statement of a material fact
or omitted to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. No Company SEC Document filed pursuant to the Securities Act, as of
the date such document or amendment became effective (or if amended or
supplemented, as of the date of its last amendment or supplement), contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading. No Subsidiary of the Company is required to file any forms, reports,
or other documents pursuant to the Securities Act or the Exchange Act.
SECTION 4.8 FINANCIAL STATEMENTS; LIABILITIES.
(a) Each of the consolidated balance sheets included in the Company SEC
Documents fairly presents in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates thereof,
and the other related consolidated financial statements (including the notes
thereto) included therein fairly present in all material respects the results of
operations and cash flows of the Company and its Subsidiaries for the respective
periods or as of the respective dates set forth therein (collectively, the
"COMPANY FINANCIAL STATEMENTS"). As of the respective filing date for the
applicable Company SEC Document in which it was included, each of the Company
Financial Statements (including the notes thereto) complied in all material
respects with the then applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, and was
15
prepared in accordance with accounting principles generally accepted in the
United States ("GAAP") applied on a consistent basis during the periods or as of
the respective dates involved, except as otherwise noted therein and subject, in
the case of unaudited interim financial statements, to normal year-end
adjustments.
(b) There are no material liabilities or obligations of the Company or any
of its Subsidiaries of any kind whatsoever, whether accrued or unaccrued,
absolute or contingent, liquidated or unliquidated, or due or to become due, in
each case, other than liabilities or obligations (i) referenced (whether by
value or otherwise) or reflected in the Company SEC Documents, the Company
Financial Statements or disclosed in the notes thereto, (ii) incurred since
December 31, 2001 in the ordinary course of business, (iii) incurred in
connection with the transactions contemplated hereby or (iv) that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
SECTION 4.9 INFORMATION TO BE SUPPLIED. The information to be supplied by
the Company expressly for inclusion or incorporation by reference in the Offer
Documents will comply with the applicable provisions of SECTION 6.3(C). The
Schedule 14D-9 and the Proxy Statement (as defined in SECTION 6.3(A)) will
comply as to form in all material respects with the applicable requirements of
the Securities Act and the Exchange Act. Notwithstanding the foregoing, the
Company makes no representations or warranties with respect to any information
supplied by, or related to, the Parent, the Purchaser or any of their Affiliates
(as such term is defined in Rule 12b-2 of the regulations promulgated under the
Exchange Act, "AFFILIATES") or advisors that is contained in, or incorporated by
reference into, any of the foregoing documents.
SECTION 4.10 ABSENCE OF CERTAIN CHANGES. Except as otherwise contemplated
by this Agreement, since December 31, 2001 the Company and each of its
Subsidiaries have conducted their businesses in the ordinary course consistent
with past practice, and there has not been (a) any damage, destruction or other
casualty loss (whether or not covered by insurance) affecting the business or
assets of the Company or any of its Subsidiaries that would, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect
or (b) any action, event, occurrence, development or state of circumstances or
facts that would, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect.
SECTION 4.11 LITIGATION AND LEGAL COMPLIANCE.
(a) As of the date hereof, there are no claims, actions, suits,
proceedings or investigations pending or to the actual knowledge, without
special investigation, of the executive officers of the Company ("KNOWLEDGE OF
THE COMPANY"), threatened by or against the Company or any of its Subsidiaries
that would, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries
is subject to any outstanding judgment, injunction, order or decree of any
Governmental Entity that would, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. There are no judicial or
administrative actions, proceedings or investigations pending, or to the
Knowledge of the Company, threatened, which question the validity of this
Agreement or any action taken or to be taken by the Company in connection with
this Agreement. SECTION 4.11 of the Company Disclosure Letter lists, as of the
date of this
16
Agreement, all pending and, to the Knowledge of the Company, threatened
litigation against the Company.
(b) Except for instances of noncompliance that would not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect, the Company and its Subsidiaries are in compliance with, to the extent
applicable to the Company, any of its Subsidiaries, or any of their respective
assets or properties, all federal, state and local laws, statutes, rules,
regulations, ordinances, permits, orders or writs (collectively "LAWS").
(c) Each of the Company and its Subsidiaries has all permits, licenses,
approvals, authorizations of, and registrations with and under all Laws, and
from all Governmental Entities required for the Company and its Subsidiaries to
carry on their respective businesses as currently conducted, except where the
failure to have any of the foregoing would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
SECTION 4.12 TAXES.
(a) The Company and each of its Subsidiaries has filed (after taking into
account any extensions) all material reports, returns, declarations or other
filings required by any taxing authority (collectively, the "TAX RETURNS")
relating to any federal, local and state income, sales, use, transfer, real
property, personal property, social security, unemployment, disability, payroll,
employee or other withholding or other tax ("TAX") required by any applicable
Laws relating to Taxes. All such Tax Returns were correct and complete in all
material respects when filed, and all Taxes shown to be owed by the Company or
any of its Subsidiaries on such Tax Returns have been paid. Other than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax treatment, the Company has made accruals for Taxes on the Company
Financial Statements that are adequate to cover, in all material respects, any
Tax liability of the Company and each of its Subsidiaries determined in
accordance with GAAP through the date of the Company Financial Statements.
(b) The Company and each of its Subsidiaries has withheld with respect to
its employees, creditors, independent contractors, stockholders or other
parties, all material federal and state income taxes, FICA, FUTA and other Taxes
required to be withheld.
(c) There is no Tax deficiency outstanding, assessed, or to the Knowledge
of the Company, proposed against the Company or any of its Subsidiaries, except
as would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries
have executed or requested any waiver of any statute of limitations on or
extending the period for the assessment or collection of any material federal or
material state Tax that is still in effect. There are no liens for Taxes on the
assets of the Company or of any of its Subsidiaries other than with respect to
Taxes not yet due and payable.
(d) To the Knowledge of the Company, no claim has ever been made by a
Governmental Entity in a jurisdiction where any of the Company and its
Subsidiaries do not file Tax Returns that it is or may be subject to Taxes in
that jurisdiction.
17
(e) No federal or state Tax audit or other examination of the Company or
any of its Subsidiaries is presently in progress, nor has the Company or any of
its Subsidiaries been notified either in writing or, to the Knowledge of the
Company, orally of any request for any such federal or state Tax audit or other
examination.
(f) Neither the Company nor any of its Subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by the Company.
(g) Neither the Company nor any of its Subsidiaries is a party to any
agreement with a party other than the Company or any of its Subsidiaries
providing for the allocation or payment of Tax liabilities, or payment for Tax
benefits with respect to a consolidated, combined or unitary Tax Return, which
Tax Return includes or included the Company or any of its Subsidiaries.
(h) Except for the group of which the Company and its Subsidiaries are now
presently members, neither the Company nor any of its Subsidiaries has ever been
a member of an affiliated group of corporations within the meaning of Section
1504 of the Code. None of the Company and its Subsidiaries has any liability for
the Taxes of any person (other than any of the Company and its Subsidiaries)
under Treas. Reg. 1.1502-6 (or any similar provision of state or local Law
relating to Taxes), as a transferee or successor, by contract, or otherwise.
There is no excess loss account, deferred intercompany gain or loss, or
intercompany items as such terms are defined in the regulations promulgated
under the Code, that exist with respect to the Company or any of its
Subsidiaries.
(i) Neither the Company nor any of its Subsidiaries is a party to any
joint venture, partnership or other arrangement or contract that could be
treated as a partnership for federal income tax purposes.
(j) Except as would not, either individually or in the aggregate, result
in a material liability of or to the Company, none of the Company and its
Subsidiaries will be required to include any item of income in, or exclude any
item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any: (i) change in method
of accounting for a taxable period ending on or prior to the Closing Date under
Section 481 of the Code (or any corresponding or similar provision of state or
local Law relating to Taxes); (ii) "closing agreement" as described in Section
7121 of the Code (or any corresponding or similar provision of state or local
Law relating to Taxes) executed on or prior to the Closing Date; (iii)
installment sale or open transaction disposition made on or prior to the Closing
Date; or (iv) prepaid amounts received on or prior to the Closing Date.
(k) There is no contract, agreement, plan or arrangement covering any
individual or entity treated as an individual included in the business or assets
of the Company or its Subsidiaries that, individually or collectively, would
give rise to the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code by the Company, any of its Subsidiaries, the
Purchaser or the Parent, or any payment that would not be deductible by reason
of Section 162(m) of the Code or similar provisions of Laws relating to Taxes.
18
(l) There are no outstanding rulings of, or requests for rulings with any
Tax authority expressly addressed to the Company or its Subsidiaries that are,
or if issued, would be binding on the Company or any of its Subsidiaries.
(m) The only representations and warranties given in respect of Taxes and
matters and agreements relating thereto are those contained in this section and
none of the other representations and warranties will be deemed to constitute,
directly or indirectly a representation and warranty in respect of Taxes and
matters or agreements relating thereto.
SECTION 4.13 CONTRACTS.
(a) SECTION 4.13(A) of the Company Disclosure Letter lists or describes
all of the following to which the Company or any of its Subsidiaries is a party
as of the date of this Agreement (collectively, the "COMPANY CONTRACTS"): (i)
all agreements, contracts, leases or binding commitments, the performance of
which may involve payment or receipt by the Company or any of its Subsidiaries
of consideration in excess of $200,000 in any twelve (12) month period; (ii) any
indenture, mortgage, promissory note, loan agreement or other agreement or
commitment for the borrowing of money by the Company or any of its Subsidiaries;
(iii) any lease, sublease or other agreement pursuant to which it is a lessee of
or holds or operates any real or personal property owned by any third party
requiring payments in excess of $200,000 over the remaining term of the
contract; (iv) any option or other executory agreement or other agreement with
remaining obligations thereunder to purchase or acquire any interest in assets
or property for more than $200,000 other than in the ordinary course of
business; (v) any option or other executory agreement or other agreement with
remaining obligations thereunder to sell or dispose of any interest in assets or
property for more than $200,000 other than in the ordinary course of business;
(vi) any contract or agreement creating a joint venture or similar arrangement
by which the assets, properties, rights, or business is materially affected;
(vii) any guaranty, keepwell, makewhole or similar agreement of or with respect
to the obligations of third parties involving in excess of $200,000; (viii) any
agreement which restricts the Company from doing business anywhere in the world
or limits the business in which it may engage; (ix) any agreement or arrangement
under which the Company agrees to indemnify any person or to share Tax liability
of any person; (x) any license of material Company Intellectual Property (as
defined in SECTION 4.15) (including use of the name of the Company or any
similar name) of or by the Company other than in the ordinary course of
business; and (xi) any contract or agreement under which the Company has the
obligation to issue or sell any security.
(b) Each Company Contract is a valid, binding and enforceable obligation
of the Company, and, to the Knowledge of the Company, of the other party or
parties thereto (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar Laws of general applicability relating to or affecting creditors'
rights, or by general equity principles, including principles of commercial
reasonableness, good faith and fair dealing), and to the Knowledge of the
Company, each Company Contract is in full force and effect.
(c) Neither the Company nor, to the Knowledge of the Company any other
party thereto, is in breach of or default under any term of any Company Contract
or has repudiated any term of any Company Contract, except for such breaches,
defaults or repudiations
19
that would not, individually or in the aggregate, reasonably be expected to have
a Company Material Adverse Effect.
(d) The Company has not received any written notice of termination or
cancellation with respect to any Company Contract, and to the Knowledge of the
Company, no other party to a Company Contract plans to terminate or cancel any
such agreement, except for such terminations and cancellations that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
SECTION 4.14 EMPLOYEE BENEFIT PLANS.
(a) SECTION 4.14(A) of the Company Disclosure Letter contains an accurate
and complete list of each material "employee benefit plan," as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), each employment, severance or similar contract, plan, arrangement or
policy and each other plan or arrangement providing for compensation, bonuses,
profit-sharing, stock option or other stock related rights or other forms of
incentive or deferred compensation, health or medical benefits, disability
benefits, workers' compensation, supplemental unemployment benefits and
post-employment or retirement benefits (each, an "EMPLOYEE PLAN") which is
maintained or contributed to by the Company or any of its Subsidiaries and
covers any employee or former employee of the Company or any Company Subsidiary
(a "COMPANY EMPLOYEE PLAN").
(b) Neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement or other labor union agreement and, with respect
to the Company and its Subsidiaries, (i) to the Knowledge of the Company, there
is no union organizing activity currently underway; (ii) as of the date hereof,
no complaints of discrimination (including charges relating to sex, age, race,
national origin, handicap or veteran status) are pending before any Governmental
Entity; and (iii) no organized work stoppage or material labor dispute is
pending.
(c) Each Company Employee Plan that is intended to be qualified within the
meaning of Section 401(a) of the Code and each trust which forms a part of any
such Company Employee Plan has received (or is not required to receive) a
determination from the United States Internal Revenue Service (the "IRS") that
such Company Employee Plan is qualified under Section 401(a) of the Code and
that such related trust is exempt from taxation under Section 501(a) of the
Code, and nothing has occurred since the date of any such determination that
could reasonably adversely affect the qualification of such Company Employee
Plan or the exemption from taxation of such related trust.
(d) No Company Employee Plan is a "defined benefit plan" (as such term is
defined in Section 3(35) of ERISA).
(e) Except as disclosed in SECTION 4.14(E) of the Company Disclosure
Letter, no Company Employee Plan will obligate the Company or any of its
Subsidiaries to pay any separation, severance, termination or similar benefit as
a result of any transaction contemplated by this Agreement or as a result of a
change in control or ownership within the meaning of Section 280G of the Code.
20
(f) (i) Each Company Employee Plan and any related trust, insurance
contract or fund has been maintained, funded and administered in compliance in
all material respects with its respective terms and applicable Law; (ii) neither
the Company nor any of its Subsidiaries has incurred any liability under Title
IV of ERISA (other than for contributions not yet due) or to the Pension Benefit
Guaranty Corporation (other than for payment of premiums not yet due); and (iii)
there are no pending or, to the Knowledge of the Company, threatened actions,
suits, investigations or claims with respect to any Company Employee Plan (other
than routine claims for benefits) which could result in any material liability
to the Company or any of its Subsidiaries (whether direct or indirect), and to
the Knowledge of the Company, there are no facts which could reasonably give
rise to (or be expected to give rise to) any such actions, suits, investigations
or claims.
(g) The Company and each of its Subsidiaries has complied in all material
respects with the health care continuation requirements of Part 6 of Title I of
ERISA ("COBRA"), and the Company and its Subsidiaries have no obligation under
any Company Employee Plan or otherwise to provide health benefits to former
employees of the Company or any of its Subsidiaries or any other person, except
as specifically required by COBRA.
(h) Neither the Company nor any of its Subsidiaries has incurred any
liability on account of a "partial withdrawal" or a "complete withdrawal"
(within the meaning of Sections 4205 and 4203, respectively, of ERISA) from any
Company Employee Plan subject to Title IV of ERISA which is a "multiemployer
plan" (as such term is defined in Section 3(37) of ERISA) (a "MULTIEMPLOYER
PLAN"), no such liability has been asserted, and there are no events or
circumstances which would reasonably be expected to result in any such partial
or complete withdrawal, and neither the Company nor any of its Subsidiaries is
bound by any contract or agreement or has any obligation or liability described
in Section 4204 of ERISA.
(i) With respect to each Company Employee Plan, the Company or the
appropriate Company Subsidiary has made available to the Parent true, complete
and correct copies of (to the extent applicable) (i) all documents pursuant to
which such Company Employee Plans are maintained, funded and administered; (ii)
the most recent annual report (Form 5500 series) filed with the IRS (with
applicable attachments); (iii) the most recent financial statements; (iv) the
most recent actuarial valuation of benefit obligations; and (v) the most recent
determination letter received from the IRS and the most recent application to
the IRS for such determination letter.
SECTION 4.15 INTELLECTUAL PROPERTY. SECTION 4.15 of the Company Disclosure
Letter lists all trademarks, service marks and trade names of the Company and
its Subsidiaries. The Company and its Subsidiaries (a) own all right, title and
interest in and to all such trademarks, service marks and trade names, including
any registrations therefore and the goodwill associated therewith, which
trademarks, service marks and trade names are all of the trademarks, service
marks and trade names necessary for the Company and its Subsidiaries to carry on
their respective businesses as currently conducted, and (b) have adequate rights
to use all patents, copyrights, trade secrets and other intellectual property
rights (the items listed in (a) and (b) being collectively referred to herein
as, the "COMPANY INTELLECTUAL PROPERTY") necessary to carry on their respective
businesses as currently conducted, except where the failure to own or have
adequate rights would not, individually or in the aggregate, reasonably be
expected to have
21
a Company Material Adverse Effect. To the Knowledge of the Company, the use by
the Company of the Company Intellectual Property does not conflict with the
rights of others, other than such as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
SECTION 4.16 CUSTOMERS. SECTION 4.16 of the Company Disclosure Letter sets
forth (a) a list of the twenty (20) largest customers of the Company for the
year ended December 31, 2001 and the amount of business transacted with such
customers during such year, and (b) a list of the twenty (20) largest customers
of the Company for the six-month period ended June 30, 2002 and the amount of
business transacted with such customers during such six-month period.
SECTION 4.17 BROKERS' FEES; OPINION OF FINANCIAL ADVISOR.
(a) Except for Xxxxxxx Xxxxx & Co. L.L.C. (the "FINANCIAL ADVISOR"),
there is no investment banker, broker or finder that has been retained by, or is
authorized to act on behalf of, the Company or any of its Subsidiaries who might
be entitled to any fee or commission from the Parent or any of its Subsidiaries
upon consummation of the transactions contemplated by this Agreement.
(b) The Company has received the opinion of the Financial Advisor, to the
effect that, as of the date hereof and based on and subject to the assumption,
qualifications and limitations of such opinion, the Merger Consideration to be
received by holders of Company Shares is fair to such holders from a financial
point of view.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE PARENT AND PURCHASER
The Parent and the Purchaser represent and warrant to the Company that:
SECTION 5.1 CORPORATE EXISTENCE AND POWER. Each of the Parent and the
Purchaser 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
assets and to carry on its business as presently being conducted. Each of the
Parent and the Purchaser is duly qualified or licensed to conduct business as a
foreign corporation in each jurisdiction where such qualification or licensing
is necessary, except where the failure to be so qualified would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect with respect to the Parent (a "PARENT MATERIAL ADVERSE EFFECT").
Since the date of its incorporation, the Purchaser has not engaged in any
activities other than in connection with or as contemplated by this Agreement.
SECTION 5.2 CORPORATE AUTHORIZATION; APPROVALS. The execution, delivery
and performance by the Parent and the Purchaser of this Agreement and the
consummation by the Parent and the Purchaser of the transactions contemplated
hereby are within the Parent's and the Purchaser's corporate powers and have
been duly authorized by all necessary corporate action. Assuming that this
Agreement constitutes the valid and binding obligation of the Company, this
Agreement constitutes a valid and binding agreement of the Parent and the
Purchaser, enforceable in accordance with its terms (except as enforceability
may be limited by applicable
22
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar Laws of general applicability relating to or affecting creditors'
rights, or by general equity principles, including principles of commercial
reasonableness, good faith and fair dealing).
SECTION 5.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by the Parent and the Purchaser of this Agreement and the
consummation by the Parent and the Purchaser of the transactions contemplated
hereby do not require any filing or registration with, notification to, or
authorization, consent or approval of any Governmental Entity, other than (a)
the filing of (i) the Certificate of Merger in accordance with the Delaware Act
and (ii) appropriate documents with the relevant authorities of other states or
jurisdictions in which the Parent or the Purchaser is qualified to do business;
(b) compliance with any applicable requirements of the Antitrust Laws; (c)
compliance with any applicable requirements of the Securities Act and the
Exchange Act; (d) such actions as may be required under any applicable state
securities or blue sky laws; and (e) such other actions or filings that, if not
obtained or made, would not, individually or in the aggregate, reasonably be
expected to have either a Parent Material Adverse Effect, or to prevent or
materially impair the ability of the Parent and the Purchaser to consummate the
transactions contemplated by this Agreement.
SECTION 5.4 NON-CONTRAVENTION. The execution, delivery and performance by
the Parent and Purchaser of this Agreement and the consummation by the Parent
and the Purchaser of the transactions contemplated hereby do not contravene or
conflict with the Parent's and the Purchaser's certificate of incorporation or
bylaws.
SECTION 5.5 ADEQUATE CASH RESOURCES. The Parent has adequate resources for
obtaining and providing the aggregate Merger Consideration in cash in the amount
and at the time required under this Agreement.
SECTION 5.6 NO CAPITAL OWNERSHIP IN THE COMPANY. Neither the Parent nor
any of its Subsidiaries owns any Company Shares.
SECTION 5.7 INFORMATION TO BE SUPPLIED. The information to be supplied by
the Parent and the Purchaser expressly for inclusion or incorporation by
reference in the Schedule 14D-9 and the Proxy Statement will comply with the
applicable provisions of SECTION 6.3(D). The Offer Documents will comply as to
form in all material respects with the applicable requirements of the Securities
Act and the Exchange Act. Notwithstanding the foregoing, the Parent and the
Purchaser make no representations or warranties with respect to any information
supplied by, or related to, the Company or any of its advisors that is contained
in, or incorporated by reference into, any of the foregoing documents.
ARTICLE VI
COVENANTS
SECTION 6.1 COMMERCIALLY REASONABLE EFFORTS.
(a) Subject to the terms and conditions hereof, each party will use their
respective commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws to consummate the transactions contemplated by
this Agreement as promptly as reasonably practicable, provided
23
that nothing in this section will require the Company to take any action which
would be inconsistent with the fiduciary duties of its Board of Directors as
such duties would exist under applicable Law in the absence of this section.
(b) In connection with and without limiting the foregoing, the Company,
the Parent and the Purchaser will (i) take all action reasonably necessary to
ensure that no state takeover statute or similar statute or regulation is or
becomes applicable to the Merger, the Offer, this Agreement or any of the other
transactions contemplated hereby and (ii) if any such statute or regulation
becomes applicable hereto, take all action reasonably necessary to ensure that
the Merger, the Offer and the other transactions contemplated hereby may be
consummated as promptly as reasonably practicable on the terms contemplated by
this Agreement and otherwise to minimize or eliminate the effect of such statute
or regulation on the Merger, the Offer and the other transactions contemplated
by this Agreement. The Company, the Parent and the Purchaser will each furnish
to one another and to their respective counsel all such information as may be
required in order to accomplish the foregoing actions.
SECTION 6.2 INTERIM OPERATIONS. Except as set forth in SECTION 6.2 of the
Company Disclosure Letter or as otherwise expressly contemplated or permitted
hereby, without the prior written consent of the Parent, from the date hereof
until the Effective Time, the Company will, and will cause each of its
Subsidiaries to, conduct its business in all material respects in the ordinary
course consistent with past practice and will use commercially reasonable
efforts to preserve intact its present business organization; provided, however,
that neither the Company nor any of its Subsidiaries will be required to take,
or omit to take, any action that would reasonably be expected to result in a
violation of Law, or cause a termination of or material breach of or default
under any material Company Contract. Without limiting the generality of the
foregoing, except as set forth in SECTION 6.2 of the Company Disclosure Letter
or as otherwise expressly contemplated or permitted by this Agreement, from the
date hereof until the Effective Time, without the prior written consent of
Parent, the Company will not, nor will it permit any of its Subsidiaries to:
(a) amend its certificate of incorporation or bylaws;
(b) split, combine or reclassify any shares of capital stock of the
Company or any less-than-wholly-owned Subsidiary or declare or pay any dividend
or other distribution (whether in cash, stock or property or any combination
thereof) in respect of any Company Shares or any other Company capital stock, or
redeem, repurchase or otherwise acquire any equity or equity related securities
of the Company or any of its Subsidiaries;
(c) issue, deliver or sell any shares of Company capital stock of any
class or series or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such capital stock or any such
convertible or exchangeable securities, other than in connection with the
issuance of Company Shares upon the exercise of Company Options in accordance
with their current terms or as contemplated by this Agreement;
(d) amend any material term of any outstanding security of the Company
or any Subsidiary;
24
(e) other than in connection with transactions permitted by (f) below,
incur any capital expenditures or any obligations or liabilities in respect
thereof, except for those incurred in the ordinary course of business of the
Company and its Subsidiaries consistent with past practices, and which do not
exceed $100,000 in the aggregate;
(f) acquire (whether pursuant to merger, stock or asset purchase or
otherwise) any assets (including any equity interests) having a fair market
value in excess of $100,000;
(g) sell, lease, encumber or otherwise dispose of any material assets,
other than sales in the ordinary course of business consistent with past
practice or dispositions of equipment and property no longer necessary for the
operation of the business of the Company and its Subsidiaries;
(h) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or any of its Subsidiaries or
guarantee any debt securities of others;
(i) (i) except as required by Law or an agreement or policy existing on
the date hereof that is specifically listed or described in SECTION 6.2 of the
Company Disclosure Letter, increase the amount of compensation of any employee,
director or executive officer or make any increase in or commitment to increase
any employee health, welfare or retirement benefits, (ii) except as required by
applicable Law or an agreement or policy existing on the date hereof that is
specifically listed or described in SECTION 6.2 of the Company Disclosure
Letter, grant any severance or termination pay or rights to any director,
officer or employee of the Company or any Subsidiary, or (iii) adopt any
additional Company Employee Plan or, except in the ordinary course of business
consistent with past practice or as required by Law, make any contribution to
any existing such plan;
(j) change the Company's methods of accounting in effect at December 31,
2001, except as required by concurrent changes in GAAP or Regulation S-X of the
Exchange Act;
(k) enter any new line of business;
(l) make expenditures or incur obligations with respect to the matters
referenced in this subsection (l) prior to the Consummation of the Offer (i) in
excess of the aggregate amounts set forth in SECTION 6.2(L)(I) of the Company
Disclosure Letter for (A) the fees of the Financial Advisor referenced in
SECTION 4.17, (B) the legal, accounting and similar fees and expenses in
connection with the Consummation of the Offer, and (C) for the insurance
referred to in SECTION 6.5(C); and (ii) in excess of the aggregate amounts set
forth in SECTION 6.2(L)(II) of the Company Disclosure Letter for employee,
officer and director severance or termination payments with respect to the
employee categories identified in, and as specifically provided in SECTION 6.2
of the Company Disclosure Letter;
(m) enter into any material real property or equipment lease or similar
transaction pursuant to which the Company would make or incur a material
expense; or
(n) agree, resolve or commit to do any of the foregoing;
25
provided that the foregoing limitations in clauses (d), (f), (g) and (h) will
not apply to any action, transaction or event occurring exclusively between the
Company and any of its wholly-owned Subsidiaries or between any of its
wholly-owned Subsidiaries. If the Company (y) makes expenditures or incurs
obligations prior to the Consummation of the Offer aggregating $100,000 or more
in excess of the amounts provided for in SECTIONS 6.2(E), (F) and (L)(I), or (z)
makes expenditures or incurs obligations prior to the Consummation of the Offer
aggregating $100,000 or more in excess of the amount provided for in SECTION
6.2(L)(II), the Parent may deem each such breach, failure, expenditure or
incurrence to be a Company Material Adverse Effect.
SECTION 6.3 COMPANY STOCKHOLDER MEETING; CERTAIN FILINGS.
(a) If, after the Consummation of the Offer the Merger cannot be
consummated under Section 253 of the Delaware Act in accordance with SECTION
2.7, the Company will:
(i) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "COMPANY STOCKHOLDER MEETING") for the purpose of
obtaining the Company Stockholder Approval;
(ii) prepare and file with the SEC a preliminary proxy or
information statement in accordance with the Exchange Act relating to the Merger
and this Agreement, and use commercially reasonable efforts to obtain and
furnish the information required to be included therein by the Exchange Act and
the SEC and, after consultation with the Parent, respond promptly to any
comments made by the SEC with respect thereto, and to cause a definitive proxy
or information statement (including any amendment or supplement thereto, the
"PROXY STATEMENT"), to be mailed to its stockholders, provided that no amendment
or supplement to the Proxy Statement will be made by the Company without
consultation with the Parent and its counsel. The Proxy Statement will include
the recommendation of the Company's Board of Directors that the stockholders of
the Company approve and adopt this Agreement and the Merger (the "COMPANY
RECOMMENDATION"); and
(iii) take all action necessary and advisable to secure the Company
Stockholder Approval, including, if necessary, using commercially reasonable
efforts to solicit proxies from its stockholders.
(b) In the event a Company Stockholder Meeting is required under
applicable Law in order to consummate the Merger, the Parent will provide the
Company with the information concerning the Parent and the Purchaser required to
be included in the Proxy Statement, and will vote or cause to be voted all
Company Shares held by the Parent or its Subsidiaries in favor of the adoption
and approval of this Agreement and the transactions contemplated hereby. In
addition, each of the Parent and the Purchaser agrees that from (and including)
the Consummation of the Offer through the Effective Time, it will not sell,
transfer, pledge, assign, exchange or otherwise dispose of any Company Shares,
including those purchased in the Offer.
(c) The information that is supplied by the Company expressly for
inclusion or incorporation by reference in the Offer Documents, the Schedule
14D-9 or the Proxy
26
Statement will 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, at, (i) with respect to the Offer Documents, the time the
Offer Documents are filed with the SEC, (ii) with respect to the Schedule 14D-9,
the time the Schedule 14D-9 is filed with the SEC, and (iii) with respect to the
Proxy Statement, the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of the Company, the time
of the Company Stockholder Meeting or the Effective Time.
(d) The information that is supplied by the Parent expressly for inclusion
or incorporation by reference in the Offer Documents, the Schedule 14D-9 or the
Proxy Statement will 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, at, (i) with respect to the Offer Documents, the time
the Offer Documents are filed with the SEC, (ii) with respect to the Schedule
14D-9, the time the Schedule 14D-9 is filed with the SEC, and (iii) with respect
to the Proxy Statement, the time the Proxy Statement (or any amendment thereof
or supplement thereto) is first mailed to the stockholders of the Company, the
time of the Company Stockholder Meeting or the Effective Time.
(e) If at any time prior to the Effective Time, the Company or the Parent
discovers any information relating to either party or any of their respective
officers or directors that should be set forth in an amendment or supplement to
the Offer Documents, the Schedule 14D-9 or the Proxy Statement, so that such
document would not include any misstatement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party that
discovers such information will promptly provide written notice to the other
parties hereto and the parties will jointly prepare an appropriate amendment or
supplement describing such information that will be promptly filed with the SEC
and, to the extent required by Law, disseminated to the stockholders of the
Company.
SECTION 6.4 ACQUISITION PROPOSALS.
(a) Each of the Company and its Subsidiaries shall, and shall use
commercially reasonable efforts to cause its Affiliates and each of their
respective directors, officers, employees, agents and representatives
(collectively, the "COMPANY REPRESENTATIVES"), to immediately cease all existing
discussions or negotiations with any other Person conducted heretofore with
respect to any offer or proposal for, or indication of interest in, a merger,
consolidation, stock exchange, tender offer, exchange offer, business
combination, reorganization, recapitalization, liquidation, dissolution or other
similar transaction involving the Company or any of its Subsidiaries, any
purchase of 20% or more of the assets of the Company and its Subsidiaries taken
as a whole, or 20% or more of the Company Shares or capital stock of any of the
Company's Subsidiaries, other than the transactions contemplated by this
Agreement (each, an "ACQUISITION PROPOSAL"). Each of the Company and its
Subsidiaries shall not take, and shall cause each of the Company Representatives
not to take, any action (i) to solicit, initiate or knowingly facilitate or
encourage, directly or indirectly, the making or submission of any Acquisition
Proposal, (ii) to enter into any agreement, arrangement or understanding with
respect
27
to any Acquisition Proposal, other than a confidentiality agreement, or to agree
to approve or endorse any Acquisition Proposal or enter into any agreement,
arrangement or understanding that would require the Company to abandon,
terminate or fail to consummate the Merger or any other transaction contemplated
by this Agreement, (iii) to initiate or participate in any way in any
discussions or negotiations with, or furnish or disclose any information to, any
Person (other than the Parent or the Purchaser) in furtherance of any proposal
that constitutes, or could reasonably be expected to lead to, any Acquisition
Proposal, (iv) to knowingly facilitate or further in any other manner any
inquiries or the making or submission of any proposal that constitutes, or could
reasonably be expected to lead to, any Acquisition Proposal, or (v) to grant any
waiver or release under any standstill, confidentiality or similar agreement
entered into by the Company or any of its affiliates or representatives;
provided, however, that prior to the purchase by the Parent or the Purchaser of
the Company Shares pursuant to the Offer, the Company's Board of Directors may,
in response to a bona fide, unsolicited Acquisition Proposal that it determines
in good faith (after consulting with its financial advisor) is reasonably likely
to result in or lead to a bona fide, written Acquisition Proposal that is on
terms that the Company's Board of Directors determines in good faith would, or
is reasonably likely to, result in a transaction that is more favorable to its
stockholders (taking into account, among other things, all legal, financial,
regulatory and other aspects of the proposal and the identity of the offeror)
than the transactions contemplated hereby (a "SUPERIOR PROPOSAL"), (A) furnish
information with respect to the Company and its Subsidiaries to the Person
making such Superior Proposal pursuant to a confidentiality agreement, and (B)
participate in discussions or negotiations with the Person making such Superior
Proposal. Nothing herein will prohibit the Company from requesting clarification
from any third party that makes a bona fide unsolicited Acquisition Proposal if
such action is taken solely for the purpose of obtaining information reasonably
necessary for the Company to determine whether such Acquisition Proposal is, or
is reasonably likely to result in or lead to, a Superior Proposal. The Parent
acknowledges that prior to the date of this Agreement, the Company has solicited
or caused to be solicited by the Financial Advisor indications of interest and
proposals for an Acquisition Proposal.
(b) The Company's Board of Directors will not withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to the Parent, the
Company Recommendation, unless the Company's Board of Directors determines in
good faith (after consultation with outside legal counsel) that the failure to
take such action would be inconsistent with their fiduciary duties to the
stockholders of the Company under applicable Laws, and unless the Company first
gives the Parent three (3) business days written notice of the material terms
and provisions of any Superior Proposal, during which three (3) day period the
Parent may submit a revised proposal that matches or exceeds the Superior
Proposal. If at the end of such three (3) day period the Company's Board of
Directors continues to reasonably believe in good faith, after receiving the
advice of outside legal counsel, that an Acquisition Proposal continues to be a
Superior Proposal, and the Company has satisfied its obligations pursuant to
SECTIONS 8.4 and 8.5, then the Company may withdraw the Company Recommendation
by written notice to the Parent.
(c) Unless the Company's Board of Directors has previously withdrawn or
modified, or is concurrently withdrawing or modifying, the Company
Recommendation in accordance with this section, the Company's Board of Directors
will not recommend any Acquisition Proposal to the Company stockholders.
Notwithstanding the foregoing, nothing
28
contained in this Agreement will prevent the Company's Board of Directors from
complying with Rule 14e-2(a) or Rule 14d-9 under the Exchange Act with respect
to any Acquisition Proposal or making any disclosure required by applicable Law.
SECTION 6.5 DIRECTOR AND OFFICER LIABILITY.
(a) From and after the Closing Date, the Parent will cause the Surviving
Corporation to indemnify, defend and hold harmless each person who is now, or
has been at any time prior to the Effective Time, a director or officer of the
Company or any of its Subsidiaries (collectively, the "INDEMNIFIED PARTIES")
from and against all losses, claims, damages and expenses (including reasonable
attorney's fees and expenses) arising out of or relating to actions or
omissions, or alleged actions or omissions, occurring at or prior to the
Effective Time to the fullest extent permitted from time to time by the Delaware
Act.
(b) Any initial determination required to be made with respect to whether
any Indemnified Party may be entitled to indemnification will, if requested by
such Indemnified Party, be made by independent legal counsel selected by the
Indemnified Party and reasonably satisfactory to the Surviving Corporation.
(c) For a period of six (6) years after the Closing Date, the Parent will
use commercially reasonable efforts to cause to be maintained in effect policies
of directors and officers liability insurance and fiduciary liability insurance
substantially equivalent in scope and amount of coverage to the policies
maintained by the Company as of the date hereof with respect to claims arising
from or relating to actions or omissions, or alleged actions or omissions,
occurring on or prior to the Effective Time; provided, that the Parent will not
be obligated to make annual premium payments with respect to such policies of
insurance to the extent that such premiums exceed 200% of the last annual
premium paid by the Company prior to the date of this Agreement. If the annual
premium costs necessary to maintain such insurance coverage exceed the foregoing
amount, the Parent will use commercially reasonable efforts to maintain the most
advantageous policies of directors and officers liability insurance and
fiduciary liability insurance reasonably obtainable for an annual premium not
exceeding the foregoing amount, provided that the Indemnified Parties may be
required to make application and provide customary representations and
warranties to the insurance carrier for the purpose of obtaining such insurance.
(d) Subject to the remainder of this section, to the fullest extent
permitted from time to time under the Delaware Act, the Parent will cause the
Surviving Corporation to pay on an as-incurred basis the reasonable fees and
expenses of each Indemnified Party (including reasonable attorney's fees and
expenses) in advance of the final disposition of any action, suit, proceeding or
investigation that is the subject of the right to indemnification, subject to
the receipt of satisfactory undertakings to reimburse the Surviving Corporation
in the event such Indemnified Party is not entitled to indemnification.
(e) The provisions providing for director and officer indemnification,
abrogation of liability and advancement of expenses set forth in the certificate
of incorporation or bylaws of the Company or any other applicable existing
agreement in effect as of the date hereof, will apply to each Indemnified Party
with respect to all matters occurring on or prior to the
29
Effective Time. The foregoing will not be deemed to restrict the right of the
Surviving Corporation to modify the provisions of its certificate of
incorporation relating to director and officer indemnification, abrogation of
liability or advancement of expenses with respect to events or occurrences after
the Closing Date, but such modifications will not adversely affect the rights of
the Indemnified Parties hereunder. The Parent will cause the Surviving
Corporation to honor the provisions of this subsection (e).
(f) Subject to any requirements pursuant to applicable insurance policies
that might conflict with the provisions of this subsection, in the event any
action, suit, investigation or proceeding is brought against any Indemnified
Parties and under applicable standards of professional conduct there is a
conflict of interest on any significant issue between the position of the Parent
(or the Surviving Corporation) and an Indemnified Party, the Indemnified Parties
may retain counsel, which counsel will be reasonably satisfactory to the Parent,
and the Parent will cause the Surviving Corporation to pay all reasonable fees
and expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that (i) the Parent or the Surviving
Corporation will have the right to assume the defense thereof (which right will
not affect the right of the Indemnified Parties to be reimbursed for separate
counsel as specified in the preceding sentence); (ii) the Parent and the
Indemnified Parties will cooperate in the defense of any such matter; and (iii)
neither the Parent nor the Surviving Corporation will be liable for any
settlement effected without its prior written consent which requires either such
party to pay any sum of money.
(g) Upon learning of any loss, claim, damage or expense that may give rise
to a claim for indemnity hereunder, any Indemnified Party will promptly notify
the Parent thereof in writing, but any failure to give such notice will not
affect the indemnification obligations of any party under this section unless
such failure jeopardizes or prejudices the Parent or the Surviving Corporation
in any material respect.
(h) The rights of each Indemnified Party hereunder will be in addition to
any other rights such Indemnified Party may have under the certificate of
incorporation or bylaws of the Surviving Corporation or any of their respective
Subsidiaries, under the Delaware Act, under agreements in effect as of the date
hereof or otherwise. Notwithstanding anything to the contrary contained in this
Agreement or otherwise, the provisions of this section will survive the
consummation of the Merger, and each Indemnified Party will, for all purposes,
be a third party beneficiary of the covenants and agreements contained in this
section and, accordingly, will be treated as a party to this Agreement for
purposes of the rights and remedies relating to enforcement of such covenants
and agreements and will be entitled to enforce any such rights and exercise any
such remedies directly against the Parent and the Surviving Corporation.
SECTION 6.6 EMPLOYEE BENEFITS.
(a) During the period commencing on the date of the Effective Time and
ending on the first anniversary thereof, the Parent will provide (or will cause
the Surviving Corporation to provide) employees that were employees of the
Company and its Subsidiaries immediately prior to the Effective Time ("COMPANY
EMPLOYEES") with salary equivalent to that provided by the Company and its
Subsidiaries to such employees immediately prior to the Effective Time, and with
benefits under the Employee Plans of the Parent that are no less
30
favorable in the aggregate than those provided by the Parent to the employees of
the Parent and its Subsidiaries (including, without limitation, benefits
pursuant to retirement plans, medical, vacation, dental, disability and life
insurance plans and programs and bonus and incentive compensation plans). For
purposes of all Employee Plans of the Parent, the Parent will recognize (or
cause to be recognized) service with the Company and its Subsidiaries and any
predecessor entities (and any other service credited by the Company under
similar benefit plans) for all purposes (including, without limitation, for
vesting, eligibility to participate, severance and benefit accrual, other than
benefit accrual under a defined benefit plan).
(b) From and after the Effective Time, the Parent will, and will cause its
Subsidiaries to, waive any pre-existing condition limitations and credit any
deductibles and out-of-pocket expenses that are applicable and/or covered under
the Company Employee Plans, that are incurred by the employees and their
beneficiaries during the portion of the calendar year prior to participation in
the Employee Plans of the Parent.
(c) The provisions of this section will not create in any Company Employee
any rights to employment or continued employment with the Parent or the
Surviving Corporation or any of their respective Subsidiaries or Affiliates.
SECTION 6.7 PUBLIC ANNOUNCEMENTS. The initial press release announcing the
transactions contemplated by this Agreement will be the Joint Press Release.
Thereafter, the Parent and the Company will consult with one another before
issuing any press releases or otherwise making any public announcements with
respect to the transactions contemplated by this Agreement, and except as may be
required by fiduciary duties, applicable Law or by the rules and regulations of
the Nasdaq Stock Market, will not issue any such press release or make any such
announcement prior to such consultation.
SECTION 6.8 ACCESS TO INFORMATION. The Company covenants and agrees that
it will afford to the Parent and its representatives full access during normal
business hours throughout the period prior to the Effective Time to all of its
properties upon reasonable prior notice and shall use commercially reasonable
efforts to make its directors, management, other employees and authorized
representatives (including counsel and independent public accountants) available
to confer with the Parent and its authorized representatives (provided that the
Parent shall give the Chief Executive Officer of the Company reasonable notice)
and, during such period, the Company will (a) make available all papers and
records of the Company relating to the assets, properties, operations,
obligations and liabilities of the Company, including but not limited to, all
books of account (including the general ledger), tax records and returns, minute
books of directors', committees' and stockholders' meetings, organizational
documents, bylaws, Company Contracts, filings with and communications from any
Governmental Entity, accountants' work papers, litigation files, plans affecting
employees, and any other business activities or prospects as the Parent may from
time to time reasonably request, and (b) promptly furnish to the Parent all
other information concerning its business, properties and personnel as the
Parent may reasonably request provided that the provision of such materials does
not require the expenditure of a material amount of resources by the Company.
Throughout the period prior to the Effective Time, the Company will cause one or
more of its designated representatives to be available to confer on a reasonably
frequent basis with representatives of the Parent and to report the general
status of the ongoing operations of the Company and its Subsidiaries. Any
31
information disclosed will be subject to the provisions of the Confidentiality
Agreement. Notwithstanding anything to the contrary contained herein, the
Company shall not be required to take any actions pursuant to this section that
might (x) result in a violation of Law or breach or conflict with any material
Company Contract, or (y) result in the loss of any attorney/client privilege.
SECTION 6.9 NOTICE OF DEVELOPMENTS. The Company and the Parent will give
prompt written notice to the other of the occurrence of any event that would
reasonably be expected to result in a Material Adverse Effect on either party.
Each of the Company and the Parent will give prompt written notice to the other
of the occurrence or failure to occur of an event that would, or, with the lapse
of time would reasonably be expected to cause any condition to the consummation
of the Merger not to be satisfied.
SECTION 6.10 PARENT'S BOARD OF DIRECTORS. Promptly after the Effective
Time, the Parent will take all action necessary to cause Xxxx X. Xxxxx to be
elected or appointed a member of the Parent's Board of Directors, including, if
necessary, increasing the size of the Parent's Board of Directors and appointing
Xxxx X. Xxxxx to the vacancy created thereby.
SECTION 6.11 FURTHER ASSURANCES. Prior to the Closing Date, each of the
parties will (a) give all required notices to third parties and Governmental
Entities and will use commercially reasonable efforts to obtain all third party
and governmental consents and approvals that it is required to obtain in
connection the consummation of the transactions contemplated by this Agreement
and (b) use commercially reasonable efforts to prevent any preliminary or
permanent injunction or other order by a Governmental Entity that seeks to
modify, delay or prohibit the consummation of the transactions contemplated by
this Agreement and, if issued, to appeal any such injunction or order through
the appellate court or body for the relevant jurisdiction. Within five (5)
business days following the execution of this Agreement, each of the parties
will file any required Notification and Report Form and related material with
the Federal Trade Commission and the Antitrust Division of the United States
Department of Justice under the HSR Act, will use its respective commercially
reasonable efforts to obtain early termination of the applicable waiting period
under all Antitrust Laws, and will take all further actions and make all further
filings pursuant to the Antitrust Laws that may be necessary, proper or
advisable. In connection with the foregoing, each party (y) will promptly notify
the other party in writing of any communication received by that party or its
Affiliates from any Governmental Entity, and subject to applicable Law, provide
the other party with a copy of any such written communication (or written
summary of any oral communication), and (z) not participate in any substantive
meeting or discussion with any Governmental Entity in respect of any filing,
investigation or inquiry concerning the transactions contemplated by this
Agreement unless it consults with the other party in advance, and to the extent
permitted by such Governmental Entity, give the other party the opportunity to
attend and participate thereat.
ARTICLE VII
CONDITIONS TO THE CONSUMMATION OF THE MERGER
SECTION 7.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The respective
obligations of each party to consummate the Merger and the other transactions
contemplated
32
hereby are subject to the satisfaction at or prior to the Closing Date of each
of the following conditions, any of which may be waived by the written agreement
of the parties:
(a) if required by applicable Law, the Company will have obtained the
Company Stockholder Approval;
(b) Consummation of the Offer will have occurred; and
(c) no order, decree, ruling, judgment or injunction will have been
enacted, entered, promulgated or enforced by any Governmental Entity of
competent jurisdiction that prohibits the Merger and the consummation of the
transactions contemplated by this Agreement substantially on the terms
contemplated hereby, and continue to be in effect.
SECTION 7.2 FRUSTRATION OF CLOSING CONDITIONS. Neither the Company, the
Parent nor the Purchaser may rely on the failure of any condition set forth in
SECTION 7.1, to be satisfied if such party's breach of this Agreement has been a
principal reason that such condition has not been satisfied.
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual written agreement of the Parent and the Company, provided
that any such agreement that occurs after the Consummation of the Offer must
have been duly and unanimously authorized by all of the Independent Directors;
(b) by either the Parent or the Company, if:
(i) the Consummation of the Offer has not occurred by the Outside
Date, provided that the party seeking to terminate this Agreement pursuant to
this clause has not breached in any material respect its obligations under this
Agreement in any manner that has contributed to the failure of the Consummation
of the Offer on or before the Outside Date;
(ii) (A) there is any Law that prohibits or makes the Consummation
of the Offer or the Merger illegal, or if an order, decree, ruling, judgment or
injunction has been entered by a Governmental Entity of competent jurisdiction
permanently restraining, enjoining or otherwise prohibiting the Offer or the
Merger and such order, decree, ruling, judgment or injunction has become final
and non-appealable, and (B) the party seeking to terminate this Agreement
pursuant to this clause has used its respective commercially reasonable efforts
to resist, resolve or remove such Law, order, decree, ruling, judgment or
injunction; or
(iii) at the Company Stockholder Meeting (including any adjournment
or postponement thereof), the Company Stockholder Approval has not been
obtained, if required by applicable Law, unless such failure to obtain the
Company Stockholder Approval is the result of a material breach of this
Agreement by the party seeking to terminate this Agreement;
33
(c) by the Company prior to the Consummation of the Offer if:
(i) the Parent or the Purchaser (A) fails to commence the Offer
within the period of time specified in SECTION 1.1(A) or (B) makes any change to
the Offer in contravention of the provisions of this Agreement;
(ii) (A) the representations and warranties of the Parent and/or the
Purchaser contained in ARTICLE V of this Agreement fail to be true and correct
in any material respect either (x) as of the date referred to in any
representation or warranty that addresses matters as of a particular date or (y)
as to all other representations and warranties, as of the date of determination,
or (B) the Parent or the Purchaser materially breaches or materially fails to
perform its covenants and other agreements contained herein; provided that, in
each of the foregoing clauses (A) and (B), such breach or failure cannot be or
has not been cured in all material respects within ten (10) days after the
Company's written notice thereof to the Parent or the Purchaser; or
(iii) the Company's Board of Directors has withdrawn the Company
Recommendation or has recommended or entered into a definitive agreement with
respect to a Superior Proposal in accordance with SECTION 6.4;
(d) by the Parent prior to the Consummation of the Offer, if:
(i) the representations and warranties of the Company contained in
ARTICLE IV of this Agreement fail to be true and correct in any respect that
causes a failure of the conditions set forth in clause (ii) of ANNEX I, which
breach or failure cannot be or has not been cured in all material respects
within ten (10) days after the Parent's written notice thereof to the Company;
or
(ii) the Company's Board of Directors has withdrawn the Company
Recommendation or has recommended or entered into a definitive agreement with
respect to a Superior Proposal.
SECTION 8.2 EFFECT OF TERMINATION. If any party terminates this Agreement
pursuant to SECTION 8.1 above, all rights and obligations of the parties
hereunder will terminate without any liability of any party to any other party,
except for any liability of any party then in breach, provided that the
provisions of this section, SECTION 8.3, ARTICLE IX, the final sentence of
SECTION 1.2(A), and the final sentence of SECTION 6.8 of this Agreement will
remain in full force and effect and survive any termination of this Agreement.
SECTION 8.3 FEES AND EXPENSES. Except as set forth in SECTION 8.4, all
fees and expenses incurred in connection with the transactions contemplated
hereby will be paid by the party incurring such expenses, whether or not the
Merger is consummated. The Parent will be solely responsible for payment of all
(i) applicable filing fees payable in connection with the filing of the Offer
Documents; (ii) expenses relating to the preparation (other than the fees of
auditors and counsel to the Company), filing, printing and distribution of the
Offer Documents, the Schedule 14D-9 and the Proxy Statement; and (iii)
applicable filing fees payable in connection with any filing with respect to the
Antitrust Laws.
34
SECTION 8.4 TERMINATION FEE AND EXPENSE REIMBURSEMENT. Notwithstanding
any other provision of this Agreement:
(a) if this Agreement is validly terminated pursuant to SECTION
8.1(C)(III) or SECTION 8.1(D)(II), then the Company shall (i) pay to the Parent
a fee of $750,000 (the "TERMINATION FEE"), and (ii) reimburse up to an aggregate
of $500,000 for the Parent's documented out-of-pocket expenses in connection
with the transactions contemplated by this Agreement (the "EXPENSE
REIMBURSEMENT"); and
(b) if this Agreement is validly terminated pursuant to SECTION 8.1(D)(I),
then (i) the Company shall pay to the Parent the Expense Reimbursement, and, if
(ii)(A) prior to such termination there exists an Acquisition Proposal (whether
or not such offer or proposal has been rejected or has been withdrawn prior to
the time of such termination), and (B) within six (6) months of such
termination, the Company or any of its Subsidiaries accepts a written offer for,
or otherwise enters into an agreement to consummate or consummates, that
Acquisition Proposal (which, solely for purposes of this clause (B) shall mean
an "Acquisition Proposal" as defined in SECTION 6.4(A), except that all
references therein to "20%" shall be deemed instead to be "50%"), then upon the
signing of a definitive agreement relating to such Acquisition Proposal, or, if
no such agreement is signed, then upon consummation of any such Acquisition
Proposal, the Company shall pay to the Parent the Termination Fee.
SECTION 8.5 OTHER TERMINATION FEE AND EXPENSE REIMBURSEMENT MATTERS. The
Company shall make all payments required by SECTION 8.4 promptly (and in any
event within two (2) business days of receipt by the Company of written notice
from the Parent) by wire transfer of immediately available funds to an account
designated by the Parent in writing. The Company acknowledges that the
agreements regarding the Termination Fee and Expense Reimbursement contained in
this Agreement are an integral part of the transactions contemplated hereby, and
that in the absence of such agreements, the Parent and the Purchaser would not
have entered into this Agreement. The parties hereby agree and acknowledge that,
except in the event of a breach by the Company of SECTION 6.4 or a willful
material breach by the Company of any of the representations or warranties set
forth in ARTICLE IV or any of the other covenants set forth in ARTICLE VI, the
amounts payable pursuant to SECTION 8.4 will constitute liquidated damages and
not a penalty and will be the sole and exclusive remedy for any loss, liability,
damage or claim arising out of or related to any termination of this Agreement
on the bases specified in this ARTICLE VIII.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 NONSURVIVAL OF REPRESENTATIONS. None of the representations
and warranties contained in this Agreement or in any certificate, instrument or
other writing delivered pursuant to this Agreement will survive the Merger or
the termination of this Agreement. Only the covenants contained in ARTICLE I,
ARTICLE II and ARTICLE IX, and SECTIONS 6.5, 6.6 and 8.4 will survive the
Effective Time.
SECTION 9.2 SPECIFIC PERFORMANCE. Except under such circumstances as
shall cause a Termination Fee to become payable, the parties agree that
irreparable damage would
35
occur in the event any of the provisions of this Agreement were not performed in
accordance with their specific terms, and it is accordingly agreed that the
parties will be entitled to specific performance of the terms of this Agreement,
without posting a bond or other security, this being in addition to any other
remedy to which they are entitled at law or in equity.
SECTION 9.3 SUCCESSORS AND ASSIGNS. Neither this Agreement nor any of the
rights, interests or obligations provided by this Agreement will be assigned by
any of the parties (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
SECTION 9.4 AMENDMENT. This Agreement may be amended in accordance with
its terms by the execution and delivery of a written instrument by or on behalf
of the Parent, the Purchaser and the Company at any time before or after the
Company Stockholders Approval, provided that after obtaining the Company
Stockholder Approval, no amendment to this Agreement will be made without the
approval of the stockholders of the Company if and to the extent such approval
is required under the Delaware Act.
SECTION 9.5 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable Law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable Law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
SECTION 9.6 EXTENSION OF TIME; WAIVER. Except as set forth elsewhere in
this Agreement, at any time prior to the Effective Time, the parties may extend
the time for performance of or waive compliance with any of the covenants,
agreements or conditions of the other parties to this Agreement, and may waive
any breach of the representations or warranties of such other parties. No
agreement extending or waiving any provision of this Agreement will be valid or
binding unless it is in writing and is executed and delivered by or on behalf of
the party against which it is sought to be enforced.
SECTION 9.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all such
counterparts taken together will constitute one and the same Agreement.
SECTION 9.8 DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and will not constitute a part of
this Agreement.
SECTION 9.9 NOTICES. Any notice, request, instruction or other document to
be given hereunder will be in writing and delivered personally or sent by
registered or certified mail (postage prepaid) or by facsimile, according to the
instructions set forth below. Such notices will be deemed given: at the time
delivered by hand, if personally delivered; three business days after being sent
by registered or certified mail; and at the time when receipt is confirmed by
the receiving facsimile machine if sent by facsimile:
36
if to the Parent or the Purchaser, to:
SBI And Company
0000 Xxxx Xxxxxxxxxx Xxxxxxx, Xxxxx000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy (which will not constitute
notice) to:
Xxxx Xxxxxxxx Xxxxx Xxx & Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
if to the Company, to:
Lante Corporation
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy (which will not constitute
notice) to:
Jenner & Block, LLC
Xxx XXX Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
or to such other address or to the attention of such other party that the
recipient party has specified by prior written notice to the sending party in
accordance with the preceding.
SECTION 9.10 NO THIRD-PARTY BENEFICIARIES. Except as provided pursuant to
SECTION 2.9, SECTION 6.5 and SECTION 6.6, the terms and provisions of this
Agreement will not confer third-party beneficiary rights or remedies upon any
person or entity other than the parties hereto and their respective successors
and permitted assigns.
SECTION 9.11 ENTIRE AGREEMENT. This Agreement, the Confidentiality
Agreement, the Company Disclosure Letter and the other documents referred to
herein collectively constitute the entire agreement among the parties and
supersede any prior and contemporaneous understandings, agreements or
representations by or among the parties, written or oral, that may have related
in any way to the subject matter hereof.
37
SECTION 9.12 CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent
and no rule of strict construction will be applied against any party. The use of
the word "including" in this Agreement means "including without limitation" and
is intended by the parties to be by way of example rather than limitation.
SECTION 9.13 CONSENT TO JURISDICTION. Each of the parties to this
Agreement consents to submit to the personal jurisdiction of any state or
federal court sitting in the State of Delaware, in any action or proceeding
arising out of or relating to this Agreement, agrees that all claims in respect
of the action or proceeding may be heard and determined in any such court, and
agrees not to bring any action or proceeding arising out of or relating to this
Agreement in any other court. Each of the parties to this Agreement agrees not
to assert in any action or proceeding arising out of relating to this Agreement
that the venue is improper, and waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety
or other security that might be required of any other party with respect
thereto.
SECTION 9.14 GOVERNING LAW. THIS AGREEMENT AND THE COMPANY DISCLOSURE
LETTER WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY LAW OR RULE THAT WOULD CAUSE THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED.
SECTION 9.15 COMPANY DISCLOSURE LETTER. The representations and warranties
of the Company set forth in this Agreement are made and given subject to the
disclosures contained in the Company Disclosure Letter. The Company will not be
or be deemed to be in breach of any such representations and warranties (and no
claim will lie in respect thereof) in respect of any such matter so disclosed in
the Company Disclosure Letter. Where only brief particulars of a matter are set
out or referred to in the Company Disclosure Letter, or a reference is made only
to a particular part of a disclosed document, full particulars of the matter and
the full contents of the document are deemed to be disclosed. The specific
disclosures set forth in the Company Disclosure Letter have been organized to
correspond to section references in this Agreement to which the disclosure may
be most likely to relate, but such disclosure will apply to and will be deemed
to be disclosed for the purposes of this Agreement generally, and will be deemed
to be exceptions to or modifications or qualifications of all of the
representations and warranties contained herein to the extent applicable. The
Parent will be deemed to be aware of and there are deemed to have been disclosed
to the Parent as if herein set forth (a) all matters fairly disclosed or
referred to or contained in this Agreement and in all documents specifically
referred to therein, and (b) the contents of and all matters referred to in the
documents specifically listed in the Company Disclosure Letter. In the event
that there is any inconsistency between this Agreement and matters disclosed in
the Company Disclosure Letter, information contained in the Company Disclosure
Letter will prevail and will be deemed to be the relevant disclosure.
* * * * *
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
LANTE CORPORATION
By: /s/ C. Xxxx Xxxxxxx
---------------------------------
Its: Chief Executive Officer
---------------------------------
SBI AND COMPANY
By: /s/ L. Xxx Xxxxxx
---------------------------------
Its: Executive Vice President
---------------------------------
SBI ACQUISITION CORP.
By: /s/ L. Xxx Xxxxxx
---------------------------------
Its: Executive Vice President
---------------------------------
39
ANNEX I
-------
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Purchaser will not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) promulgated under the Exchange
Act (relating to the Purchaser's obligations to pay for or return tendered
Company Shares promptly after termination or withdrawal of the Offer), pay for
any Company Shares tendered pursuant to the Offer, and may (subject to SECTION
1.1 of the Agreement) terminate or amend the Offer in accordance with the
Agreement; if immediately prior to any scheduled or extended expiration date of
the Offer (a) the Minimum Condition will not have been satisfied, (b) the
applicable waiting period, if any, under the HSR Act will not have expired or
been terminated or (c) any of the following conditions exists as of the
expiration date of the Offer:
(i) any order, decree, ruling, judgment, injunction, statute, rule or
regulation has been promulgated, entered, enforced, enacted or
issued by any Governmental Entity of competent jurisdiction, that
has the effect of (A) prohibiting or materially limiting the
ownership or operation by the Company, the Parent, the Purchaser or
any of their Subsidiaries of all or any material portion of the
business or assets of the Company or any of its Subsidiaries or
compelling the Company, the Parent, the Purchaser or any of their
Subsidiaries to dispose of or hold separate all or any material
portion of the business or assets of the Company, the Parent, the
Purchaser or any of their Subsidiaries, (B) prohibiting or making
illegal the Consummation of the Offer or consummation of the Merger
or the other transactions contemplated by the Agreement, or (C)
materially limiting the rights of ownership of the Parent, the
Purchaser or any other Affiliate of the Parent with respect to the
Company Shares; provided that the Parent and the Purchaser will have
used commercially reasonable efforts to resist, resolve, defend
against or lift, as applicable, such order, decree, ruling,
judgment, injunction, statute, rule, regulation or legislation;
(ii) (A) the representations of the Company contained in ARTICLE IV of
the Agreement will not be true and correct as of the expiration date
of the Offer or if such representations speak as of an earlier date,
as of such earlier date, or (B) the Company will have failed to
comply in all material respects with its covenants and agreements
contained in the Agreement, except, in either such case to the
extent that the breach thereof would not reasonably be expected to
have a Company Material Adverse Effect;
(iii) any applicable waiting period, if any, under the HSR Act relating to
the Offer and the Merger will not have expired or been terminated
and all material consents, approvals and authorizations required to
be obtained prior to the consummation of the Offer and the Merger,
by the parties hereto from any Governmental Entity, will not have
been made or obtained, as the case may be;
A-1
(iv) (A) any general suspension of, or limitation on prices for, trading
in securities on the New York Stock Exchange or on the Nasdaq
National Market (B) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (C)
a commencement of or material: acceleration or worsening of a war,
armed hostilities, acts of terrorism or other national or
international crisis involving the United States, that individually
or in the aggregate, has a Company Material Adverse Effect, or (D) a
material limitation (whether or not mandatory) by any Governmental
Entity that materially and adversely affects the extension of credit
by banks or other lending institutions in the United States; or
(v) the Agreement will have been terminated in accordance with its
terms;
which, in any such case, make it inadvisable, in the sole discretion of the
Parent and the Purchaser, to proceed with such acceptance for payment of or
payment for the Company Shares.
Subject to the provisions of the Agreement, the foregoing conditions are
for the sole benefit of the Parent and the Purchaser and may be asserted by the
Purchaser or, subject to the terms of the Agreement, may be waived by the Parent
or the Purchaser, in whole or in part at any time and from time to time in the
sole discretion of the Parent or the Purchaser.
A-2
