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Exhibit No. 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.,
AMTRS CORP.
AND
XXXXXXXXXXXX.XXX INC.
DATED AS OF FEBRUARY 14, 2001
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TABLE OF CONTENTS
Page
ARTICLE I THE OFFER.......................................................... 2
Section 1.1 The Offer.................................................... 2
Section 1.2 Offer Documents.............................................. 3
Section 1.3 Company Actions.............................................. 4
Section 1.4 Directors.................................................... 6
ARTICLE II THE MERGER 7
Section 2.1 The Merger................................................... 7
Section 2.2 Effect of the Merger......................................... 7
Section 2.3 Closing...................................................... 7
Section 2.4 Consummation of the Merger................................... 7
Section 2.5 Certificate of Incorporation; By-Laws; Directors
and Officers............................................... 7
Section 2.6 Effect on Capital Stock...................................... 8
Section 2.7 Payment for Shares........................................... 9
Section 2.8 No Further Rights or Transfers............................... 10
Section 2.9 Stock Options................................................ 10
Section 2.10 Dissenting Shares............................................ 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................... 11
Section 3.1 Organization and Qualification............................... 11
Section 3.2 Subsidiaries................................................. 12
Section 3.3 Authority Relative to Agreements............................. 13
Section 3.4 Non-Contravention............................................ 13
Section 3.5 Capitalization............................................... 14
Section 3.6 SEC Filings.................................................. 15
Section 3.7 Financial Statements......................................... 15
Section 3.8 Absence of Certain Changes or Events......................... 16
Section 3.9 Governmental Approvals....................................... 16
Section 3.10 Compliance with Laws; No Default............................. 16
Section 3.11 Information Supplied......................................... 18
Section 3.12 Litigation................................................... 18
Section 3.13 Intellectual Property Rights................................. 18
Section 3.14 Taxes........................................................ 21
Section 3.15 Employee Benefit Plans; Employment; Labor.................... 22
Section 3.16 Environmental Matters........................................ 25
Section 3.17 State Takeover Statutes; Rights Agreement.................... 25
Section 3.18 Opinion of Financial Advisor................................. 26
Section 3.19 Brokers...................................................... 26
Section 3.20 Beneficial Interests in Trusts............................... 26
Section 3.21 Leasing Contracts............................................ 26
Section 3.22 Warehouse Lines.............................................. 26
Section 3.23 Securitization Transactions.................................. 27
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Section 3.24 Leasing-Contract-Level Representations and Warranties........ 27
Section 3.25 No Recourse.................................................. 28
Section 3.26 Sufficiency of and Title to Assets........................... 28
Section 3.27 Properties; Leases; Tangible Assets.......................... 28
Section 3.28 Contracts.................................................... 29
Section 3.29 Related Party Transactions................................... 31
Section 3.30 Inapplicability of Section 2115 of California
Corporations Code.......................................... 31
Section 3.31 Certain Business Practices................................... 31
Section 3.32 Insurance.................................................... 32
Section 3.33 Non-Regulated Industry....................................... 32
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER............ 32
Section 4.1 Organization and Qualification............................... 32
Section 4.2 Authorization of Agreement, Non-Contravention................ 32
Section 4.3 Information Supplied......................................... 33
Section 4.4 Operations and Assets of Purchaser........................... 34
Section 4.5 Brokers...................................................... 34
Section 4.6 Availability of Funds........................................ 34
ARTICLE V CERTAIN AGREEMENTS................................................. 34
Section 5.1 Conduct of the Company's Business............................ 34
Section 5.2 Stockholders' Meeting........................................ 37
Section 5.3 Access to Information........................................ 38
Section 5.4 Further Actions.............................................. 38
Section 5.5 Inquiries and Negotiations................................... 39
Section 5.6 Notification of Certain Matters.............................. 41
Section 5.7 Indemnification.............................................. 42
Section 5.8 Employee Benefits............................................ 42
Section 5.9 FIRPTA Matters............................................... 43
ARTICLE VI CONDITIONS TO THE MERGER.......................................... 43
Section 6.1 Conditions to the Obligations of the Parties................. 43
ARTICLE VII TERMINATION AND ABANDONMENT...................................... 44
Section 7.1 Termination and Abandonment.................................. 44
Section 7.2 Effect of Termination........................................ 45
ARTICLE VIII MISCELLANEOUS................................................... 45
Section 8.1 Nonsurvival of Representations and Warranties................ 45
Section 8.2 Expenses..................................................... 45
Section 8.3 Publicity.................................................... 46
Section 8.4 Execution in Counterparts.................................... 47
Section 8.5 Notices...................................................... 47
Section 8.6 Waivers...................................................... 48
Section 8.7 Entire Agreement............................................. 48
Section 8.8 Applicable Law............................................... 48
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Section 8.9 Binding Effect, Benefits..................................... 49
Section 8.10 Assignability................................................ 49
Section 8.11 Amendments................................................... 49
Section 8.12 Interpretation............................................... 49
ANNEX I CONDITIONS OF THE OFFER.............................................. A-1
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of February
14, 2001, by and among American Express Travel Related Services Company, Inc., a
New York corporation ("Parent"), AMTRS Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Purchaser"), and XxxxxxXxxxxx.xxx Inc., a
Delaware corporation (the "Company" and, together with Purchaser, hereinafter
sometimes referred to as the "Constituent Corporations").
WHEREAS, each of the Boards of Directors of the Company, Parent and
Purchaser has determined that it is in the best interests of its respective
stockholders for Parent to acquire the Company on the terms and subject to the
conditions set forth herein (the "Acquisition");
WHEREAS, as a first step in the Acquisition, the Company, Parent and
Purchaser each desire that Parent cause Purchaser to commence a cash tender
offer (as described herein and as it may be amended from time to time as
permitted hereunder, the "Offer") to purchase all of the issued and outstanding
Common Stock, par value $.01 per share, of the Company ("Company Common Stock")
(such shares of Company Common Stock, together with the Rights (as defined in
Section 3.5 hereof) associated with such shares, being hereinafter collectively
referred to herein as the "Shares"), for $5.68 per Share, or such higher price
as may be paid in the Offer (the "Per Share Amount"), net to the seller in cash,
on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, to complete the Acquisition, the respective Boards of
Directors of the Company, Parent, on its own behalf as a party to this Agreement
and as the sole stockholder of Purchaser, and Purchaser has approved this
Agreement and the merger of Purchaser with and into the Company (the "Merger"),
with the Company as the surviving corporation of the Merger, wherein any issued
and outstanding Shares not tendered and purchased by Purchaser pursuant to the
Offer (other than Shares described in Section 2.6(b) hereof and Dissenting
Shares described in Section 2.10 hereof) will be converted into the right to
receive the Merger Consideration (as hereinafter defined), on the terms and
subject to the conditions of this Agreement and in accordance with the Delaware
General Corporation Law (the "DGCL");
WHEREAS, the Board of Directors of the Company (the "Company Board")
has declared that this Agreement is advisable and resolved to recommend that all
holders of Shares (the "Stockholders") accept the Offer and approve this
Agreement and the Merger, and has determined that the Offer and the Merger are
fair to and in the best interests of the Company and the Stockholders;
WHEREAS, concurrently with the execution and delivery of this
Agreement, certain Stockholders (collectively, the "Identified Stockholders")
have duly executed and delivered to Parent Tender Agreements pursuant to which,
among other things, each of the Identified Stockholders has agreed to tender in
the Offer all Shares held, or later acquired, by such Identified Stockholder,
granted an irrevocable proxy to Parent and a representative of Parent and agreed
to vote all Shares owned, or later acquired, by such Identified Stockholder in
favor of the Merger, each on the terms set forth in such Tender Agreement (each
a "Tender Agreement"); and
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WHEREAS, the parties desire to make certain representations, warranties
and covenants in connection with the Offer and the Merger and also to prescribe
various conditions to the Offer and the Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Purchaser hereby
agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 7.1 hereof, as promptly as practicable
(but in any event not later than eight business days after the public
announcement of Purchaser's intention to commence the Offer), Parent shall cause
Purchaser to commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934 (the "Exchange Act")) the Offer whereby Purchaser shall
offer to purchase for cash all of the Shares at the Per Share Amount, net to the
seller in cash (subject to reduction for any stock transfer taxes payable by the
seller if payment is to be made to an individual or entity other than the
Person, as hereinafter defined, in whose name the certificate for such Shares is
registered or any applicable federal back-up withholding). For purposes of this
Agreement, "Person" shall mean an individual, corporation, limited liability
company, partnership, limited partnership, limited liability partnership,
association, trust, unincorporated organization or other entity, organization or
group (as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act),
including a Governmental Entity (as hereinafter defined). Notwithstanding the
foregoing, if between the date of this Agreement and the Effective Time (as
hereinafter defined), the outstanding Shares shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the Per Share Amount shall be correspondingly adjusted on a
per-share basis to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares. The obligation of
Parent to cause Purchaser to consummate the Offer and to accept for payment and
to pay for Shares validly tendered in the Offer and not withdrawn in accordance
therewith shall be subject to those conditions set forth in Annex I hereto (the
"Offer Conditions"), the terms of which are incorporated herein by this
reference.
(b) Without the prior written consent of the Company,
Purchaser will not, and Parent will cause Purchaser not to,
(i) decrease or change the form of the Per Share
Amount,
(ii) decrease the number of Shares sought in the
Offer,
(iii) amend or waive the Minimum Condition (as
defined in Annex I hereto) or impose conditions other than the Offer
Conditions on the Offer,
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(iv) extend the expiration date of the Offer (the
date that the Offer, as it may be extended pursuant to this
Section 1.1(b), expires being hereinafter referred to as the
"Expiration Date"), which shall initially be 20 business days
following the commencement of the Offer except (A) as required
by law and (B) that, in the event that the Offer Conditions
are not satisfied or waived at the time that the Expiration
Date would otherwise occur, (1) Purchaser must extend the
Expiration Date for 10 additional business days to the extent
necessary to permit the Offer Conditions to be satisfied, (2)
if the Offer Conditions are not satisfied or waived following
the extension described in the preceding clause (1), Purchaser
must extend the Expiration Date for 10 additional business
days to the extent necessary to permit the Offer Conditions to
be satisfied and (3) if following the extension described in
the preceding clause (2) any Offer Condition other than the
Minimum Condition (and any Offer Condition that is not capable
of being satisfied) is then not satisfied or waived, Purchaser
must extend the Expiration Date for 10 additional business
days to the extent necessary to permit the Offer Conditions to
be satisfied, or
(v) amend any term of the Offer in any manner adverse
to the Stockholders (including to result in any extension that
would be inconsistent with the preceding provisions of this
Section 1.1(b)); provided, however, that (A) subject to
applicable legal requirements, Parent may cause Purchaser to
waive any Offer Condition, other than the Minimum Condition,
in Parent's sole discretion, and (B) the Offer may be extended
(but not beyond May 31, 2001) in connection with an increase
in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules and regulations of the Securities
and Exchange Commission (the "SEC"), with Parent hereby
expressly reserving the right, in its sole discretion, to
effect such an increase.
Except as set forth in clauses (i) through (v) above and subject to applicable
legal requirements, Purchaser may amend the Offer or waive any Offer Condition
in its sole discretion.
(c) Assuming the prior satisfaction or waiver of the Offer
Conditions, Purchaser will, and Parent will cause Purchaser to, accept for
payment and pay for, in accordance with the terms of the Offer, all Shares
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after the Expiration Date. Parent and Purchaser, at Parent's discretion, may
elect to provide a subsequent offering period pursuant to Rule 14d-11 under the
Exchange Act.
(d) If the Merger Agreement is terminated according to its
terms, Parent shall promptly terminate the Offer in accordance with applicable
legal requirements.
Section 1.2 Offer Documents.
(a) As promptly as practicable on the date of commencement of
the Offer, Parent and Purchaser shall file or cause to be filed with the SEC a
Tender Offer Statement on Schedule TO (together with all amendments and
supplements thereto, the "Schedule TO") which shall contain an offer to purchase
and related letter of transmittal and other ancillary Offer documents and
instruments pursuant to which the Offer will be made (collectively, with any
supplements or amendments thereto, the "Offer Documents"). Parent and Purchaser
represent, warrant and covenant to the Company that the Offer Documents will
comply in all material
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respects with the Exchange Act and any other applicable laws and will contain
all information that is required to be included therein in accordance with the
Exchange Act and the rules and regulations thereunder and other applicable laws;
provided, however, that no representation, warranty or covenant is made herein
or will be made by Parent or Purchaser with respect to information supplied by
the Company for inclusion in the Offer Documents ("Company Supplied
Information"). No representation, warranty or covenant is made herein or will be
made by the Company with respect to information contained in, or incorporated by
reference into, the Offer Documents other than Company Supplied Information.
(b) Parent, Purchaser and the Company shall each promptly
correct any information provided by them for use in the Offer Documents if and
to the extent that it becomes false or misleading in any material respect and
Parent and Purchaser shall jointly and severally take all lawful action
necessary to cause the Offer Documents as so corrected to be filed promptly with
the SEC and to be disseminated to the Stockholders, in each case as and to the
extent required by applicable law. In conducting the Offer, Parent and Purchaser
shall comply in all material respects with the provisions of the Exchange Act
and other applicable laws. Parent and Purchaser shall afford the Company and its
counsel a reasonable opportunity to review and comment on the Offer Documents,
including any amendments thereto, prior to the filing thereof with the SEC.
Parent and Purchaser agree to provide the Company and its counsel with any
comments Parent and Purchaser or their counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after receipt of such
comments.
(c) Parent and Purchaser shall disseminate to the Stockholders
the Offer Documents to the extent and within the time period required by
Regulation 14D promulgated under the Exchange Act.
Section 1.3 Company Actions.
(a) The Company hereby consents to the Offer and represents
the following: (i) the Company Board, at a meeting duly called and held, has by
the unanimous vote of all directors of the Company present (A) determined that
this Agreement and the transactions contemplated hereby, including the Offer and
the Merger, are fair to and in the best interests of the Company and the
Stockholders, (B) approved this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, and each Tender Agreement, each in
accordance with the requirements of the DGCL, (C) declared that this Agreement
is advisable, and (D) resolved to recommend that the Stockholders of the Company
accept the Offer and tender their Shares pursuant to the Offer and approve and
adopt this Agreement and the Merger; (ii) Credit Suisse First Boston ("CSFB")
has delivered to the Company Board the opinion described in Section 3.18 hereof;
(iii) the Company has been advised that all of its directors and executive
officers presently intend to tender their Shares pursuant to the Offer; and (iv)
Section 203 of the DGCL does not and will not prohibit the Company's
authorization, execution, delivery and performance of this Agreement and the
transactions contemplated hereby, including the Offer and the Merger. The
Company hereby consents to the inclusion in the Offer Documents of the
recommendations of the Company Board and the other matters described in this
Section 1.3(a).
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(b) As promptly as practicable on the date of commencement of
the Offer and simultaneously with the filing by Parent and Purchaser of the
Schedule TO, the Company shall file with the SEC a Tender Offer
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing the
recommendation of the Company Board in favor of the Offer and the Merger as
described in Section 1.3(a) hereof, subject to the rights of the Company Board
set forth in Section 5.5(b) hereof. The Company represents, warrants and
covenants that the Schedule 14D-9 will comply in all material respects with the
Exchange Act and any other applicable laws and will contain all information that
is required to be included therein in accordance with the Exchange Act and the
rules and regulations thereunder and other applicable laws; provided, however,
that no representation, warranty or covenant is made herein or will be made by
the Company with respect to information supplied by Parent or Purchaser for
inclusion in the Schedule 14D-9 (the "Parent Supplied Information"). No
representation, warranty or covenant is made herein or will be made by Parent or
Purchaser with respect to information contained in, or incorporated by reference
into, the Schedule 14D-9 other than the Parent Supplied Information (which
Parent Supplied Information shall include the information furnished by Parent as
contemplated by the following sentence). The Company will include (or
incorporate by reference) in the Schedule 14D-9 information furnished by Parent
in writing concerning Parent's designees for directors of the Company as
required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder and will
have the Schedule 14D-9 available for inclusion in the initial mailing of the
Offer Documents to the Stockholders.
(c) The Company, Parent and Purchaser shall each promptly
correct any information provided by them for use in the Schedule 14D-9 if and to
the extent that it becomes false or misleading in any material respect and the
Company shall take all lawful action necessary to cause the Schedule 14D-9 as so
corrected to be filed promptly with the SEC and disseminated to the
Stockholders, in each case as and to the extent required by applicable law. The
Company will afford Parent and its counsel a reasonable opportunity to review
and comment on the Schedule 14D-9, including any amendments thereto, prior to
the filing thereof with the SEC. The Company agrees to provide Parent and its
counsel with any comments the Company or its counsel may receive from the SEC or
its staff with respect to the Schedule 14D-9 promptly after receipt of such
comments.
(d) In connection with the Offer, the Company shall promptly
furnish Parent with mailing labels containing the names and addresses of the
record Stockholders and with security position listings of Shares held in stock
depositories, each as of the latest practicable date, together with all other
available listings and computer files containing names, addresses and security
position listings of recordholders and beneficial owners of Shares, and will
furnish Parent such information and assistance (including updated lists of the
Stockholders, mailing labels and listings of security positions) as Parent or
its agents may reasonably request in communicating the Offer to the record and
beneficial Stockholders. Subject to the requirements of applicable law, and
except for such actions as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Offer and the Merger, Parent and
Purchaser shall, and shall cause each of their respective affiliates,
associates, partners, employees, agents and advisors to, hold in confidence the
information contained in such labels, listings and files, shall use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated in accordance with Section 7.1 hereof or if the Offer is
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otherwise terminated, will deliver promptly to the Company all copies (whether
in human or machine readable form) of such information (and any copies,
compilations or extracts thereof or based thereon) then in their possession or
under their control.
Section 1.4 Directors.
(a) Effective upon the acceptance for payment of any Shares
pursuant to the Offer, and from time to time thereafter, Parent shall be
entitled to designate the number of directors (the "Parent Designees"), rounded
up to the next whole number, on the Company Board that equals the product of (i)
the total number of directors on the Company Board (giving effect to any
increase in the number of directors pursuant to this Section) multiplied by (ii)
the percentage that the number of Shares beneficially owned by Parent or
Purchaser following the acceptance for payment of Shares pursuant to the Offer
bears to the total number of Shares outstanding, and the Company shall promptly
take all action necessary to cause each of the Parent Designees to be elected or
appointed to the Company Board, including increasing the size of the Company
Board and seeking, accepting and securing resignations of incumbent directors.
At such time, and from time to time thereafter, to the extent requested by
Parent, the Company shall use its best efforts to cause individuals designated
by Parent to constitute the number of members, rounded up to the next whole
number, on (A) each committee of the Company Board and (B) each Board of
Directors of each Company Subsidiary (as hereinafter defined), and each
committee thereof, that represents the same percentage as the Parent Designees
represent on the Company Board. Notwithstanding the foregoing provisions of this
Section 1.4, the parties hereto shall use their respective best efforts to
ensure that at least two of the members of the Company Board shall, at all times
prior to the Effective Time, be directors of the Company who were directors of
the Company on the date hereof (the "Continuing Directors"), provided that if
there shall be in office fewer than two Continuing Directors for any reason, the
Company Board shall cause a person designated by the remaining Continuing
Director to fill such vacancy who shall be deemed to be a Continuing Director
for all purposes of this Agreement, or if no Continuing Directors then remain,
the other directors of the Company then in office shall designate two persons to
fill such vacancies who are not officers or employees or affiliates of the
Company, Parent or Purchaser or any of their respective affiliates and such
persons shall be deemed to be Continuing Directors for all purposes of this
Agreement.
(b) The Company's obligations to appoint the Parent Designees
to the Company Board shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions,
and shall include in the Schedule 14D-9 such information with respect to the
Company and its officers and directors, as such Section 14(f) and Rule 14f-1
require in order to fulfill its obligations under this Section 1.4, so long as
Parent shall have provided to the Company on a timely basis the information
referred to in the following sentence. Parent shall supply to the Company in
writing and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by such Section 14(f)
and Rule 14f-1.
(c) Following the election or appointment of the Parent
Designees pursuant to Section 1.4(a) hereof and until the earlier of the
termination of this Agreement or the Effective Time, the approval of a majority
of the Continuing Directors shall be required to authorize (and such
authorization shall constitute the authorization of the Company Board and no
other action
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on the part of the Company, including any action by any other director of the
Company, shall be required to authorize) any termination of this Agreement by
the Company, any amendment of this Agreement requiring action by the Company
Board, any consent to extension of time for performance of any obligation or
action hereunder by Parent or Purchaser, any waiver of compliance with any of
the agreements or conditions contained herein for the benefit of the Company,
any consent or action by the Company Board hereunder and any other action of the
Company hereunder which materially adversely affects the holders of Shares
(other than Parent or Purchaser).
ARTICLE II
THE MERGER
Section 2.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, in accordance with this Agreement and the
DGCL, Purchaser shall be merged with and into the Company. Following the Merger,
the separate existence of Purchaser shall cease and the Company shall continue
as the surviving corporation in the Merger (sometimes hereinafter referred to as
the "Surviving Corporation").
Section 2.2 Effect of the Merger. At the Effective Time, the Surviving
Corporation shall succeed to and assume all of the rights and obligations of the
Company and Purchaser in accordance with the DGCL, and the Merger shall
otherwise have the effects set forth in the applicable provisions of the DGCL.
Section 2.3 Closing. Subject to the satisfaction or waiver of the
conditions to the obligations of the parties to effect the Merger set forth
herein, the consummation of the Merger (the "Closing") shall take place as
promptly as practicable, but in no event later than 10:00 a.m. New York time on
the second business day following the satisfaction or waiver of all the
conditions (other than conditions which, by their nature are to be satisfied at
the Closing, but subject to those conditions) to the obligations of the parties
to effect the Merger set forth herein (the "Closing Date"), at the offices of
Xxxxx Xxxxxxxxxx XXX, Xxx Xxxx, Xxx Xxxx 00000, unless another time, date or
place is agreed to by the parties hereto.
Section 2.4 Consummation of the Merger. At the Closing, the parties
hereto shall cause the Merger to be consummated by (a) filing a certificate of
merger or a certificate of ownership and merger (the "Certificate of Merger") in
such form as is required by and executed in accordance with the relevant
provisions of the DGCL and (b) make all other filings or recordings required
under the DGCL, if any. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware (the time the Merger becomes effective being the "Effective Time").
Section 2.5 Certificate of Incorporation; By-Laws; Directors and
Officers.
(a) The Certificate of Incorporation of Purchaser in effect at
the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation (except that, by virtue of the Merger and without any further action
on the part of any holder of Shares or any shares of the capital stock of
Purchaser, Article I of such Certificate of Incorporation shall be amended to
provide that the name of the Surviving Corporation shall be the name of the
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Company) until thereafter amended in accordance with the provisions thereof and
as provided by the DGCL. The By-Laws of Purchaser in effect at the Effective
Time shall be the By-Laws of the Surviving Corporation until thereafter amended
in accordance with the provisions thereof, the Certificate of Incorporation of
the Surviving Corporation and the DGCL.
(b) The directors of Purchaser immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, each to hold
office until the expiration of the term for which such director was elected and
until his or her successor is elected and has qualified or as otherwise provided
in accordance with the Certificate of Incorporation and By-Laws of the Surviving
Corporation. The officers of Purchaser immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
until their respective successors are elected or appointed and have qualified or
as otherwise provided in accordance with the Certificate of Incorporation and
By-Laws of the Surviving Corporation.
Section 2.6 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of any party to this
Agreement or any holder of Shares, the shares of capital stock of the
Constituent Corporations shall be converted as follows:
(a) Common Stock of Purchaser. Each share of common stock of
Purchaser that is outstanding immediately prior to the Effective Time shall
automatically be converted into and become one fully paid and nonassessable
share of common stock of the Surviving Corporation, which shall constitute the
only outstanding shares of capital stock of the Surviving Corporation
immediately after the Effective Time.
(b) Cancellation of Excluded Shares. Each Share that is owned
of record by Parent or Purchaser or held in the treasury of the Company or owned
of record by any direct or indirect wholly owned subsidiary of Parent or the
Company, but not Shares held in any Company benefit plan (collectively, the
"Excluded Shares") shall automatically be canceled and retired and shall cease
to exist, and no cash or other consideration shall be delivered or deliverable
in exchange therefor.
(c) Conversion of Shares. Each Share that is issued and
outstanding immediately prior to the Effective Time (other than (i) Dissenting
Shares, as hereinafter defined, and (ii) Excluded Shares) shall automatically be
converted into and represent the right to receive (pursuant to Section 2.7
hereof) the Per Share Amount in cash payable to the holder thereof, without
interest (the "Merger Consideration"). All such Shares, when so converted, shall
no longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate formerly representing any
such Share shall cease to have any rights with respect thereto, except the right
to receive the Merger Consideration therefor upon the surrender of such
certificate in accordance with Section 2.7 hereof. Any payment made pursuant to
this Section 2.6(c) and Section 2.7 hereof shall be made net of applicable
withholding taxes to the extent such withholding is required by law.
Notwithstanding the foregoing, if between the date of this Agreement and the
Effective Time, the outstanding Shares shall have been changed into a different
number of shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of Shares, the Merger Consideration shall be correspondingly adjusted on a per
share basis to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
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Section 2.7 Payment for Shares.
(a) Prior to the Effective Time, Parent or Purchaser will
designate a bank or other financial institution reasonably acceptable to the
Company (the "Disbursing Agent") to receive cash in an amount equal to the
product of (i) the number of Shares issued and outstanding immediately prior to
the Effective Time (other than Excluded Shares) and (ii) the Merger
Consideration (such amount being hereinafter referred to as the "Exchange
Fund"). At the Effective Time, Parent shall deposit the Exchange Fund, in
immediately available funds, with the Disbursing Agent.
(b) (i) At or before the Effective Time, Parent shall deliver
irrevocable written instructions to the Disbursing Agent in form and
substance reasonably satisfactory to the Company to make, out of the
Exchange Fund, the payments referred to in Section 2.6(c) hereof in
accordance with Section 2.7(c) hereof. Such irrevocable instructions
may authorize the Disbursing Agent to invest amounts in the Exchange
Fund as Parent directs, provided that all such investments shall be in
obligations of or guaranteed by the United States of America, in
commercial paper obligations receiving the highest rating from either
Xxxxx'x Investors Service, Inc. or Standard & Poor's Corporation, or in
certificates of deposit, bank repurchase agreements or bankers'
acceptances of commercial banks with capital, surplus and undivided
profits exceeding $500,000,000 (collectively, "Permitted Investments");
provided, however, that the maturities of Permitted Investments shall
be such as to permit the Disbursing Agent to make prompt payments to
Persons entitled thereto pursuant to this Section 2.7. The Exchange
Fund shall not be used for any other purpose except as provided in this
Agreement. Any net profit resulting from, or interest or income
produced by, such investments shall remain in the Exchange Fund. Parent
and the Surviving Corporation jointly and severally agree to cause the
Exchange Fund to be promptly replenished to the extent of any net
losses incurred as a result of the Permitted Investments.
(ii) If after the Effective Time any Person holding
of record or beneficially owning Dissenting Shares shall become
entitled to receive payment for such Dissenting Shares pursuant to
Section 262 of the DGCL, Parent shall deliver irrevocable written
instructions to the Disbursing Agent to pay either to such Person or to
the Surviving Corporation the amount to which such Person is entitled,
provided that the payment from the Exchange Fund with respect to any
Dissenting Share shall not exceed the Merger Consideration, and
provided further that such instructions shall, if sums are to be paid
to the Surviving Corporation, be accompanied by a certificate of the
Surviving Corporation that any sums so paid shall be remitted by the
Surviving Corporation to the Stockholder or beneficial owner entitled
thereto in accordance with Section 262 of the DGCL.
(iii) Any amount remaining in the Exchange Fund one
year after the Closing Date may be refunded to the Surviving
Corporation, at its option; provided, however, that Parent and the
Surviving Corporation (subject to applicable abandoned property,
escheat and similar laws) shall jointly and severally continue to be
liable for any payments required to be made thereafter pursuant to
Section 2.6(c) hereof or Section 262 of the DGCL.
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(c) As soon as practicable after the Effective Time, the
Disbursing Agent shall mail to each holder of record (other than any holder of
any Excluded Shares) of a certificate or certificates which, immediately prior
to the Effective Time, represented issued and outstanding Shares (other than
Dissenting Shares) a letter of transmittal in form reasonably acceptable to
Parent (a "Letter of Transmittal") for return to the Disbursing Agent, and
instructions for use in effecting the surrender of such certificate or
certificates and the receipt of cash for each of such holder's Shares pursuant
to Section 2.6(c) hereof. The Disbursing Agent, as soon as practicable following
receipt of any such certificate or certificates together with a duly executed
Letter of Transmittal and any other items specified in the Letter of
Transmittal, shall pay by cashier's check of the Disbursing Agent to the Persons
entitled thereto (subject to any required withholding of taxes by the Surviving
Corporation) the amount determined by multiplying (i) the number of Shares
represented by the certificate or certificates so surrendered by (ii) the Merger
Consideration. No interest shall be paid or accrued on the cash payable upon the
surrender of any such certificate or certificates.
(d) In the event any such certificate or certificates shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such certificate or certificates to have been lost,
stolen or destroyed, the amount to which such Person would have been entitled
under Section 2.7(c) hereof but for failure to deliver such certificate or
certificates to the Disbursing Agent will nevertheless be paid to such Person;
provided, however, that the Surviving Corporation may, in its sole discretion
and as a condition precedent to such payment, require such Person to give the
Surviving Corporation a written indemnity agreement in form and substance
reasonably satisfactory to the Surviving Corporation and, if reasonably deemed
advisable by the Surviving Corporation, a bond in such sum as it may reasonably
direct as indemnity against any claim that may be had against the Surviving
Corporation or Parent with respect to the certificate or certificates alleged to
have been lost, stolen or destroyed.
Section 2.8 No Further Rights or Transfers. At the Effective Time, all
Shares issued and outstanding immediately prior to the Effective Time shall be
canceled and retired and cease to exist, and each holder of a certificate or
certificates that represented Shares issued and outstanding immediately prior to
the Effective Time shall cease to have any rights as a stockholder of the
Company with respect to the Shares represented by such certificate or
certificates, except for the right to surrender such certificate or certificates
in exchange for the payment provided pursuant to Section 2.7 hereof or to
preserve and perfect such holder's right to receive payment for such holder's
shares pursuant to Section 262 of the DGCL and Section 2.10 hereof if such
holder has validly exercised and not withdrawn or lost such right, and no
transfer of Shares issued and outstanding immediately prior to the Effective
Time shall be made on the stock transfer books of the Surviving Corporation.
Section 2.9 Stock Options.
(a) As of the Effective Time, each outstanding option to
purchase capital stock of the Company (each a "Company Stock Option"), whether
or not exercisable and whether or not vested, under any plan or arrangement of
the Company providing for the grant of options to purchase Shares (collectively,
the "Company Stock Plans"), shall be canceled in exchange for a single lump sum
cash payment (less any applicable tax withholdings) payable by the Surviving
Corporation, equal to the amount, if any, by which the Merger Consideration
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exceeds the per share exercise price of such Company Stock Option, multiplied by
the number of Shares then subject to such Company Stock Option.
(b) The Company, the Company Board and each committee thereof
shall promptly after the date of this Agreement, take all such actions as it is
permitted or required to take under the terms of the Company Stock Plans to give
effect to Section 2.9(a) hereof, and Parent and Purchaser shall cooperate with
the Company therewith.
Section 2.10 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, any Shares held by a Person (a "Dissenting
Stockholder") who does not vote to approve the Merger and complies with all the
provisions of the DGCL concerning the right of holders of Shares to dissent from
the Merger and demands an appraisal of such Person's Shares ("Dissenting
Shares") shall not be converted as described in Section 2.6 hereof, but shall be
converted into the right to receive such consideration as may be determined to
be due to such Dissenting Stockholder pursuant to the DGCL. If, after the
Effective Time, such Dissenting Stockholder withdraws such Dissenting
Stockholder's demand or fails to perfect or otherwise loses such Dissenting
Stockholder's rights as a Dissenting Stockholder to payment of fair value, in
any case pursuant to the DGCL, such Dissenting Stockholder's Shares shall be
deemed to be converted as of the Effective Time into the right to receive the
Merger Consideration. The Company shall give Parent (a) prompt notice of any
demands for appraisal of Shares received by the Company and (b) the opportunity
to participate in and direct all negotiations and proceedings with respect to
any such demands. The Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser, except as
set forth in the Company SEC Filings (as hereinafter defined) or the Schedules
hereto (provided, however, that any matter that is disclosed in any Schedule
hereto in such a manner as to make its relevance to the information called for
by another Section of the Schedules hereto readily apparent shall be deemed to
have been included in such other Section, notwithstanding the omission of an
appropriate cross-reference thereto, and except as otherwise specified,
capitalized terms used but not defined in the Schedules hereto shall have the
meanings ascribed to such terms in this Agreement), as follows:
Section 3.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own or lease and operate its properties and assets and to carry on its business
as it is now being conducted. The Company is, and at all times has been, duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction in which the character of its properties and assets owned or
leased or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified would not constitute a Material
Adverse Effect (as hereinafter defined) on the Company or impair its ability to
enforce any material contract or agreement to which it is a party. As used
herein, "Material Adverse Effect" shall mean, with respect to any party, one or
more events,
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occurrences, states or actions that, individually or in the aggregate, have had
or are reasonably likely to have a material adverse effect on (a) the business,
financial condition, assets, liabilities or results of operations of such party
and its subsidiaries, taken as a whole, other than effects due to (i) general
economic, market or political conditions or (ii) matters generally affecting the
industries in which such Person operates or (iii) the announcement or
expectation of this Agreement or (b) the ability of such party to consummate the
transactions contemplated by this Agreement. The Company has heretofore made
available to Parent complete and correct copies of its minute books, stock
records and its Certificate of Incorporation and By-Laws. Such minute books
accurately reflect all actions (including written actions) of the Company Board
and stockholders of the Company.
Section 3.2 Subsidiaries.
(a) Schedule 3.2(a) hereto lists each corporation,
partnership, limited liability company, joint venture and other entity in which
the Company, directly or indirectly, including through any subsidiary or
otherwise, owns any capital stock or other ownership interest (each a "Company
Subsidiary"), and such Schedule 3.2(a) also lists, for each Company Subsidiary,
(i) the Company's ownership therein, whether directly or indirectly, including
through any Company Subsidiary or otherwise and (ii) its jurisdiction of
incorporation or organization. Each Company Subsidiary is a corporation,
partnership or limited liability company duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization and has all requisite corporate, partnership or limited liability
company power and authority to own or lease and operate its properties and
assets and to carry on its business as it is now being conducted. Each Company
Subsidiary is, and at all times has been, duly qualified as a foreign
corporation, partnership or limited liability company (as applicable) to do
business, and is in good standing, in each jurisdiction in which the character
of its properties and assets owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not constitute a Material Adverse Effect on the Company or such Company
Subsidiary or impair such Company Subsidiary's ability to enforce any material
contract or agreement to which it is a party. The Company has heretofore made
available to Parent complete and correct copies of the minute books, stock
records (if applicable) and the charter and by-laws (or other organizational
documents) of each Company Subsidiary. Such minute books accurately reflect all
actions (including written actions) of the board of directors and stockholders
of each Company Subsidiary, if a corporation, or of the partners, if a
partnership, or of the members, managers, governors or similar Persons, if a
limited liability company. Except for shares of, or other ownership interests
in, the Company Subsidiaries, the Company does not own of record or
beneficially, directly or indirectly, any shares of outstanding capital stock
of, or other ownership interest in, any other corporation, partnership, limited
liability company, joint venture or other entity.
(b) All the outstanding shares of capital stock of, or other
ownership interests in, each Company Subsidiary are validly issued, fully paid
and nonassessable and are owned by the Company or by a wholly owned Company
Subsidiary, free and clear of any liens, mortgages, rights of third parties,
restrictions, claims, charges, security interests, pledges, encumbrances or
other impairments to title of any kind (collectively, "Liens"), and there are no
proxies outstanding or restrictions on voting with respect to any such shares.
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(c) There are not outstanding (i) any options, warrants or
other rights to purchase from the Company or any Company Subsidiary any capital
stock or other securities of the Company or any Company Subsidiary, (ii) any
securities, notes or other indebtedness convertible into or exchangeable for
shares of such capital stock or securities, (iii) any other commitments or
rights of any kind for the Company or any Company Subsidiary to issue additional
shares of capital stock, options, warrants or other securities or (iv) any
equity equivalent or other ownership interests in the Company or any Company
Subsidiary or similar rights.
(d) There are no stockholder agreements, voting trusts or
other agreements or understandings to which the Company or any Company
Subsidiary is a party or by which any of them is bound or of which the Company
has knowledge relating to the voting or registration of any shares of capital
stock of the Company or restricting any stockholders of the Company from selling
or otherwise disposing of any Shares.
Section 3.3 Authority Relative to Agreements. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and, subject to the approval and adoption of this Agreement by the affirmative
vote of the holders of two-thirds of the outstanding Shares pursuant to the DGCL
and the Certificate of Incorporation and By-Laws of the Company (the "Company
Stockholder Approval"), to perform its obligations hereunder and consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Company Board and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement and the transactions contemplated hereby, other than the Company
Stockholder Approval. This Agreement has been duly executed and delivered by the
Company and, subject to the Company Stockholder Approval, constitutes the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equitable principles.
Section 3.4 Non-Contravention.
(a) The execution and delivery of this Agreement by the
Company does not and the consummation by the Company of the transactions
contemplated hereby will not (a) conflict with any provision of the Certificate
of Incorporation or By-Laws of the Company or the comparable charter or
organizational documents of any of the Company Subsidiaries, (b) result (with or
without the giving of notice or the lapse of time or both) in any violation or
breach of or default or loss of a benefit under, or permit the acceleration,
cancellation or termination of any obligation under, or require the consent of
any third party under, or create any entitlement to any payment or benefit
under, any mortgage, indenture, lease, contract, agreement or other instrument,
permit, concession, grant, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to the Company, any Company
Subsidiary or any Trust (as defined hereinafter) or their respective properties,
including those to which the Company or any Company Subsidiary or their
respective properties are bound, or (c) result in the creation or imposition of
any Lien upon any asset of the Company, any Company Subsidiary or
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any Trust, other than (in the case of clauses (b) and (c) above) such as would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
(b) Schedule 3.4(b) hereto lists each material mortgage,
indenture, lease, contract, agreement or other instrument, permit, concession,
grant, franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation under which the execution and delivery of this Agreement by
the Company does or the consummation of the transactions contemplated hereby
would result in any violation or breach of or default or loss of a benefit, or
would permit the acceleration, cancellation or termination of any obligation or
require notice to or the consent of any third party, or create any entitlement
to any payment or benefit (each a "Required Consent"). Except as listed on
Schedule 3.4(b) hereto as a Required Consent, neither the Company nor any of the
Company Subsidiary was, is or will be required to make any filing with, or
obtain any consent from, any Person in connection with the execution or delivery
of this Agreement and the consummation by the Company of the transactions
contemplated hereby.
(c) Except as listed on Schedule 3.4(c) hereto, neither the
execution, delivery or performance of this Agreement, nor the consummation of
the Offer, the Merger or any of the other transactions contemplated by this
Agreement, will result in any bonus, golden parachute, severance or other
payment or obligation to any current or former employee or director of the
Company or any Company Subsidiary (whether or not under any Company Plan, as
hereinafter defined), or materially increase the benefits payable or provided
under any Company Plan, or result in any acceleration of the time of payment or
vesting of any such benefits.
Section 3.5 Capitalization. The authorized capital stock of the Company
consists of 100,000,000 shares of Company Common Stock and 1,000,000 shares of
preferred stock. As of February 12, 2001, 18,968,640 Shares were outstanding,
all of which were duly and validly issued, are fully paid and nonassessable and
were not issued in violation of any preemptive or similar right, and no
preferred shares were outstanding. As of February 13, 2001, 2,126,246 Shares
were issuable under the Company Stock Plans. Except as set forth herein or for
Shares issued under the Company Stock Plans since such date pursuant to Company
Stock Options granted prior to such date and the preferred share purchase rights
(the "Rights") issued pursuant to the Rights Agreement (as defined in Section
3.17 hereof), no subscription, warrant, option, convertible security, stock
appreciation right, phantom stock, performance share or other right (contingent
or other) to purchase or acquire, or any securities convertible into or
exchangeable or exercisable for, any shares of or other interest in any class of
capital stock of the Company or any Company Subsidiary is authorized or
outstanding and there is not any commitment of the Company or any Company
Subsidiary to issue any share, warrant, option or convertible security, stock
appreciation right, phantom stock, performance share or other right or to
distribute to holders of any class of its capital stock any evidences of
indebtedness or assets. Schedule 3.5 hereto lists all outstanding options
granted under the Company Stock Plans, including the identity of the Company
Stock Plan under which each such option was granted, the date of each grant, the
identity of each optionee, the number of Shares for which such option may be
exercised and the exercise price and vesting schedule for each such option.
Complete and accurate copies of the material agreements relating to the Company
Stock Options have been provided to Parent. Neither the Company nor any Company
Subsidiary has any obligation (contingent or other) to purchase, redeem or
otherwise acquire any shares of its capital stock, option to purchase capital
stock or any interest in any such capital stock or option or to pay any
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dividend or make any other distribution in respect thereof. No Rights are
currently exercisable or will become exercisable because of the execution and
delivery of this Agreement or the Tender Agreements or the consummation of the
transactions contemplated hereby or thereby and no holder of Rights is currently
entitled to trade any Rights separately from the Company Common Stock held by
such holder or will become entitled to separately trade any Rights because of
the execution and delivery of this Agreement or the Tender Agreements or the
consummation of the transactions contemplated hereby or thereby. All convertible
preferred shares of the Company have been correctly converted into the number of
Shares provided under the Certificates of Designations for such preferred stock.
There are no existing registration covenants of the Company with respect to any
outstanding Shares except those listed in Schedule 3.5, and all holders of
Shares subject to registration rights have received timely notice of the right
to exercise those rights in accordance with the requirements of the agreements
providing for such registration rights.
Section 3.6 SEC Filings. The Company has made available to Parent true
and complete copies of each form, report, schedule, definitive proxy statement
and registration statement (and all amendments thereto) filed by the Company
with the SEC subsequent to January 1, 1997 and on or prior to the date hereof
(collectively, the "Company SEC Filings"), which are all forms, reports,
schedules, statements, amendments and other documents (other than preliminary
material) that the Company was required to file with the SEC. The Company SEC
Filings (including any financial statements or schedules included therein) (a)
were prepared in material compliance with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), or the Exchange Act, as the case may
be, and all regulations of the SEC promulgated thereunder, (b) included all
exhibits required by such laws and regulations and (c) did not at the time of
filing (or if amended, supplemented or superseded by a filing prior to the date
hereof, on the date of that filing) contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
Section 3.7 Financial Statements. Schedule 3.7 hereto includes the
unaudited consolidated balance sheet of the Company as of December 31, 2000 and
the unaudited consolidated statement of operations for the year ended December
31, 2000. The consolidated financial statements of the Company included in the
Company SEC Filings or on Schedule 3.7 hereto (the "Consolidated Financial
Statements") have been prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied and consistent with prior periods,
subject, in the case of unaudited interim Consolidated Financial Statements, to
normal year-end adjustments (which consist of normal recurring accruals) and the
absence of certain footnote disclosures, and, in the case of the unaudited
Consolidated Financial Statements at and for the year ended December 31, 2000,
to immaterial year-end audit adjustments and the absence of required footnote
disclosures. The consolidated balance sheets of the Company included in the
Company SEC Filings or on Schedule 3.7 hereto fairly present in all material
respects the consolidated financial position of the Company as of their
respective dates, and the consolidated statements of operations, cash flows and
stockholders' equity included in the Company SEC Filings or on Schedule 3.7
hereto fairly present in all material respects the consolidated results of
operations, cash flows and stockholders' equity of the Company for the
respective periods then ended, subject, in the case of unaudited interim
Consolidated Financial Statements, to normal year-end adjustments (which consist
of normal recurring accruals) and the
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absence of certain footnote disclosures, and, in the case of the unaudited
Consolidated Financial Statements at and for the year ended December 31, 2000,
to immaterial year-end audit adjustments and the absence of required footnote
disclosures. Neither the Company nor any Company Subsidiary has any liabilities
or obligations (whether absolute, accrued, contingent or otherwise) of a nature
required by GAAP to be reflected in a consolidated balance sheet, except for
those that (a) are accrued or reserved against in the Company's financial
statements (or accurately reflected in the notes thereto) included in the
Company SEC Filings or on Schedule 3.7 hereto or (b) were incurred subsequent to
December 31, 2000 in the ordinary course of business and consistent with past
practice and do not constitute a Material Adverse Effect on the Company.
Section 3.8 Absence of Certain Changes or Events. Since December 31,
2000, (a) the Company and each Company Subsidiary has conducted its business
only in the ordinary course, (b) there has not been any Material Adverse Effect
with respect to the Company, (c) the Company and the Company Subsidiaries have
not made any capital expenditure which, when added to all other capital
expenditures made on behalf of them exceeds $150,000 in the aggregate, (d) the
Company and the Company Subsidiaries have not, other than in the ordinary course
of business, written off as uncollectible, or established any extraordinary
reserve with respect to, any account receivable or other indebtedness; and (e)
neither the Company nor any Company Subsidiary has taken any action which, had
it occurred on or after the date of this Agreement, would constitute a breach of
any covenant contained in Section 5.1 hereof.
Section 3.9 Governmental Approvals. Except as listed in Schedule 3.4(b)
hereto as a Required Consent, no consent, approval, order or authorization of,
or registration, declaration or filing with, any federal, state, local or
foreign governmental or regulatory authority (each a "Governmental Entity") is
required to be made or obtained by the Company or any Company Subsidiary in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby, except
for (a) compliance by the Company with the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (b) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the DGCL, (c) the filing with the SEC of the Schedule 14D-9 and
such reports under and such other compliance with the Exchange Act and
Securities Act and the rules and regulations thereunder as may be required in
connection with this Agreement and the transactions contemplated hereby and (d)
such consents, approvals, orders or authorizations of Governmental Entities
which if not obtained, or registrations, declarations or filings with
Governmental Entities which if not made, would not constitute a Material Adverse
Effect on the Company.
Section 3.10 Compliance with Laws; No Default.
(a) Neither the Company nor any Company Subsidiary is in
default under or in violation of any order, judgment or decree of any court,
governmental authority or arbitration board or tribunal to which the Company or
any Company Subsidiary is or was subject or in violation of any laws,
ordinances, governmental rules or regulations (including those relating to
export controls, labor and employment matters and foreign corrupt practices) to
which the Company or any Company Subsidiary is or was subject, except for such
defaults or violations that would not have a Material Adverse Effect on the
Company. Neither the Company nor any
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Company Subsidiary has, as of the date hereof, failed to obtain any licenses,
permits, franchises or other governmental authorizations necessary to the
ownership of its properties or assets or to the conduct of its business, which
failure would have a Material Adverse Effect on the Company.
(b) No violation of, default or event of default under, loss
of benefit under, or right to terminate, cancel or accelerate (each a
"Violation") exists under, and no event has occurred which (with or without
notice or the lapse of time or both) would constitute a Violation of, any term,
condition or provision of (i) the Certificate of Incorporation or by-laws (or
other organizational documents) of the Company or any Company Subsidiary, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease, Contract
(as hereinafter defined) or other agreement, obligation or commitment,
instrument, permit, concession, franchise or license to which the Company, any
Company Subsidiary or any Trust is now a party or by which the Company, any
Company Subsidiary or any Trust or any of their respective properties or assets
is bound except in the case of clause (ii) above for Violations which would not
have a Material Adverse Effect on the Company.
(c) The Company and each Company Subsidiary has all approvals,
authorizations, certificates, consents, licenses, orders, permits,
qualifications or other similar authorizations of all Governmental Authorities
(each a "Permit") that are required as of the date hereof by any Governmental
Authority to allow the Company and each Company Subsidiary to operate their
respective businesses in substantially the same manner as currently operated,
except for any Permit the failure of which to obtain would not constitute a
Material Adverse Effect on the Company. No notice, citation, summons or order
has been issued, no complaint has been filed, no penalty has been assessed and
no investigation or review is pending, of which the Company or any Company
Subsidiary has received formal or informal written notice or of which the
Company has knowledge, or, to the knowledge of the Company, is or has been
threatened by any Governmental Entity or other entity with respect to any
alleged failure by the Company or any Company Subsidiary to have any Permit
required in connection with its business or otherwise applicable to its business
or with respect to any proposed suspension, revocation, non-renewal or similar
action in respect of any Permit, except where the failure to have any such
permit would not constitute a Material Adverse Effect on the Company. Schedule
3.10(c) hereto lists each material federal, state, local and foreign Permit that
is currently in full force and effect relating to any such business. The Company
and the Company Subsidiaries have supplied Parent with true, complete and
accurate copies of all correspondence received, since January 1, 1997, by the
Company, the Company Subsidiaries or their respective predecessors in interest
from state, federal or foreign regulatory authorities that regulate the business
of the Company or of any Company Subsidiary.
(d) Schedule 3.10(d) hereto lists each governmental or other
registration, filing, application, notice, transfer, consent, approval, order,
qualification and waiver (each, a "Required Governmental Approval") required
under applicable law to be obtained by the Company or any of the Company
Subsidiaries by virtue of the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby pursuant to any Permit.
None of the Permits will be terminated or become terminable or impaired as a
result of the transactions contemplated hereby so as to have a Material Adverse
Effect on the Company.
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Section 3.11 Information Supplied.
(a) Each of the Schedule 14D-9 and the other documents
required to be filed by the Company with the SEC in connection with the Offer,
the Merger and the other transactions contemplated hereby and the information
supplied by the Company to Parent for inclusion or incorporation by reference in
any documents to be filed with the SEC (including any documents to be filed by
Parent or Purchaser with the SEC), will comply as to form in all material
respects with the requirements of the Exchange Act and the Securities Act, as
the case may be, and will not, on the date of its filing or dissemination, as
the case may be, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section
3.11, no representation or warranty is made by the Company with respect to
statements made or incorporated by reference in the Schedule 14D-9 based on
information supplied by Parent or Purchaser expressly for inclusion or
incorporation by reference therein or based on information which is not made in
or incorporated by reference in such documents but which should have been
disclosed pursuant to Section 4.3 hereof.
Section 3.12 Litigation. There is no action, suit, investigation,
proceeding or claim pending or, to the best knowledge of the Company, threatened
against or affecting the Company or any Company Subsidiary, or their respective
properties or rights, before any court or governmental body or arbitration board
or tribunal, either alone or together with other similar actions, the outcome of
which would reasonably be expected to have a Material Adverse Effect on the
Company. All material pending litigation involving the Company or any Company
Subsidiary, as of the date of this Agreement, is listed in Schedule 3.12 hereto.
Section 3.13 Intellectual Property Rights.
(a) Except as would not have a Material Adverse Effect on the
Company, the Company and each Company Subsidiary has good title to and is the
sole owner, free and clear of any Lien (except for (i) any Lien for current
taxes not yet due and payable and (ii) minor Liens that have arisen in the
ordinary course of business and that do not (individually or in the aggregate)
materially detract from the value of the Company Rights (as hereinafter defined)
subject thereto or materially impair the operations of the Company or any
Company Subsidiary), of, or has a valid license, without the payment of any
royalty, license fee or other amount to any Person except with respect to
off-the-shelf software, to, all (A) U.S. and foreign trademarks, service marks,
logos, designs, trade names, internet domain names and corporate names,
inventions, classes and types of patents, registered designs, copyrights,
computer software and databases, whether or not registered, including all
grants, registrations and applications relating thereto and (B) all other trade
secrets, know-how and intellectual property rights (collectively, the
"Intellectual Property Rights") now or formerly used in its respective business
or necessary for the conduct of its respective business as now conducted (such
Intellectual Property Rights owned by, or licensed to, the Company or one of the
Company Subsidiaries, subject to such exception, are referred to herein
collectively as the "Company Rights"). Schedule 3.13(a) hereto sets forth, with
respect to each Company Right owned by the Company or any Company
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Subsidiary and registered with any Governmental Authority or for which an
application has been filed with any Governmental Authority (x) a brief
description of such Company Rights and (y) the names of the jurisdictions
covered by the applicable registration or application. Schedule 3.13(a) hereto
identifies and provides a brief description of, and identifies any royalty or
payment obligations in excess of $10,000 individually or $25,000 in the
aggregate during the full term of such obligation with respect to, each Company
Right that is licensed or otherwise made available to the Company or any Company
Subsidiary by any Person and is material to the business of the Company or any
Company Subsidiary (except for any Company Right that is licensed to the Company
or any Company Subsidiary under any third party software license generally
available to the public), and identifies the Contract under which such Company
Right is being licensed or otherwise made available to the Company or any
Company Subsidiary. The Company's rights and the rights of each Company
Subsidiary in the Company Rights are valid and enforceable. Neither the Company
nor any Company Subsidiary has received any demand, claim, notice or inquiry
from any Person in respect of the Company Rights that challenges, threatens to
challenge or inquires as to whether there is any basis to challenge, the
validity of, or the rights of the Company in, or any Company Subsidiary in, any
Company Rights. Neither the Company nor any Company Subsidiary is in violation
or infringement of, or has violated or infringed, any Intellectual Property
Rights of any other Person, and, to the Company's knowledge, no Person is
infringing any Company Rights. Neither the Company nor any Company Subsidiary
has any agreement to indemnify any Person against any charge of infringement of
any Intellectual Property Rights, other than indemnification provisions usual
and customary for the Company's industry contained in purchase orders or license
agreements arising in the ordinary course of business.
(b) The Company has implemented measures in accordance with
industry practice to protect its Intellectual Property Rights, and those of each
Company Subsidiary, in relation to its employees, independent contractors and
consultants, and those of each Company Subsidiary, and has entered into
agreements with those employees, independent contractors and consultants who are
software developers assigned to the software development group of the Company,
as well as any other Person who has access to the source code of the Company
Rights, that (i) bind such Persons to keep confidential and not disclose to any
other Person any of the trade secrets, know-how and other confidential
Intellectual Property Rights of the Company and each Company Subsidiary and (ii)
assign to the Company or a Company Subsidiary all of the employee's,
contractor's or consultant's rights, including all Intellectual Property Rights,
in any Intellectual Property created or developed thereby that is used in
connection with, or that relates to, the business of the Company or any Company
Subsidiary. To the knowledge of the Company, no employee of the Company or any
Company Subsidiary has entered into any contract or other agreement with any
Person (other than the Company or the applicable Company Subsidiary) that
restricts or limits in any way the scope or type of work in which the employee
may be engaged for the Company or such Company Subsidiary or requires the
employee to transfer, assign or disclose information concerning the employee's
work with the Company or such Company Subsidiary to any other Person.
(c) The Company Rights constitute all the Intellectual
Property Rights necessary to enable the Company and each Company Subsidiary to
conduct its business in the manner in which such business has been, and is
being, conducted. Neither the Company nor any Company Subsidiary has (i)
licensed any of the Company Rights to any Person on an exclusive
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basis or (ii) entered into any covenant not to compete or Contract limiting or
purporting to limit the ability of the Company or any Company Subsidiary to
exploit fully any material Company Rights or to transact business in any market
or geographical area or with any Person.
(d) The source code with its embedded commentary, descriptions
and indicated authorships, the specifications and the other informational
materials that describe the operation, functions and technical characteristics
applicable to the Software Products and Internal Software Systems (each as
hereinafter defined) are complete in all material respects, have been faithfully
and accurately compiled in accordance with standards generally practiced by
companies whose principal business is the acquisition, origination, sale and
servicing of equipment leases and are sufficient to permit the Company and each
Company Subsidiary to support and maintain its products and services and enforce
its rights to control or prevent use of the Software Products and Internal
Software Systems by others. The Software Products and Internal Software Systems
under development by the Company or any Company Subsidiary are being developed
in accordance with standards generally practiced by companies whose principal
business is creation or development of software. "Internal Software Systems"
means the computer software (excluding the Software Products), computer
firmware, computer hardware (whether general or special purpose) and other
similar or related items of automated, computerized or software systems that are
used or relied on by the Company or any Company Subsidiary for its internal
operations. "Software Products" means the computer software programs licensed by
the Company or any Company Subsidiary to any other Person, including the
functional requirements, design specifications, documentation and all other
specifications applicable thereto. Schedule 3.13(d) hereto contains a true,
correct and complete list of all Software Products.
(e) The Software Products and Internal Software Systems
substantially conform to the Company's and each Company Subsidiary's functional
requirements, design specifications, documentation and other specifications and
perform substantially in accordance with the foregoing.
(f) The Company and each Company Subsidiary has taken all
actions which a reasonably prudent Person in the Company's or such Company
Subsidiary's business would take to protect against the existence of (i) any
protective, encryption, security or lock-out devices that might in any way
interrupt, discontinue or otherwise adversely affect the Software Products and
Internal Software Systems or the use thereof by the Company or any Company
Subsidiary and (ii) any so-called computer viruses, worms, trap or back doors,
Trojan horses or any other instructions, codes, programs, data or materials that
could improperly interfere with the operation or use of the Software Products
and Internal Software Systems, wrongfully or without authorization by the
Company or any Company Subsidiary. The Company and each Company Subsidiary has
been and continues to be in full compliance with the on-line data privacy policy
posted on the Company's web page.
(g) The Company and each Company Subsidiary has taken all
actions that a reasonably prudent Person in the Company's or such Company
Subsidiary's business would take to maintain its source code as confidential and
proprietary, to protect against the loss, theft or unauthorized use of such
source code, and to protect and preserve the confidentiality of all Intellectual
Property Rights not otherwise protected by patents, patent applications. Neither
the
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Company nor any Company Subsidiary has authorized the use, disclosure or
appropriation of Intellectual Property Rights to a third party except pursuant
to the terms of a written agreement between the Company and such third party.
The Company's and each Company Subsidiary's use, disclosure and appropriation of
Intellectual Property Rights not owned by the Company or such Company Subsidiary
has been pursuant to the terms of a written agreement between the Company or
such Company Subsidiary and the owner of such Intellectual Property Rights, or
is otherwise lawful.
Section 3.14 Taxes.
(a) The Company and each Company Subsidiary has (i) timely
filed all federal and all material other Tax Returns (as hereinafter defined)
required to be filed by it as of the date hereof in respect of any Taxes (as
hereinafter defined), which Tax Returns are true, correct and complete in all
material respects, (ii) timely paid all Taxes that were required to have been
paid, (iii) established reserves that are adequate for the payment of all Taxes
not yet due and payable with respect to the Company and the Company Subsidiaries
and the results of their operations through the date hereof and will not have
incurred any material liability for Taxes for the period commencing after the
date hereof and ending immediately prior to the Effective Time, other than in
the ordinary course of business and (iv) complied in all material respects with
all applicable laws, rules and regulations relating to the payment and
withholding of Taxes and timely withheld from employee wages and paid over to
the proper governmental authorities all amounts required to be so withheld and
paid over.
(b) There is no deficiency, claim, audit, action, suit,
proceeding or investigation now pending against or with respect to the Company
or any Company Subsidiary in respect of any material Taxes. There are no
requests for rulings or determinations in respect of any Taxes pending between
the Company or any Company Subsidiary and any taxing authority.
(c) Neither the Company nor any Company Subsidiary has ever
been a member of an affiliated group filing consolidated, combined or unitary
Tax Returns other than a group for which the Company was the common parent.
(d) Neither the Company nor any Company Subsidiary has
executed or entered into (or prior to the Effective Time will execute or enter
into) with the Internal Revenue Service or any taxing authority any agreement or
other document extending or having the effect of extending the period for
assessments or collection of any material Taxes for which the Company or any
Company Subsidiary would be liable, which period has not since expired.
(e) Neither the Company nor any Company Subsidiary is a party
to any agreement, contract, arrangement or plan that (i) has resulted or would
result, separately or in the aggregate, in connection with the transactions
contemplated by this Agreement or any change of control of the Company, in the
payment of any "excess parachute payments" within the meaning of Section 280G of
the Code or any payments that would not be deductible, in full or in part, by
reason of the limitation imposed by Section 162(m) of the Code or (ii) would
require the Company or any Company Subsidiary to pay, reimburse or indemnify any
Person against, any tax imposed pursuant to Section 4999 of the Code.
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(f) For purposes of this Agreement, "Tax" (and with
correlative meaning, "Taxes") shall mean (i) all income, franchise, sales, gross
receipts, use, ad valorem, property, payroll, FICA, withholding, excise,
severance, transfer, employment or unemployment, alternative or add-on minimum,
stamp, occupation, premium, environmental, windfall profits and other taxes,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any federal, state, local, foreign or other taxing authority,
(ii) any liability for payment of amounts described in clause (i) above, whether
as a result of transferee liability, of being a member of an affiliated,
consolidated, combined or unitary group for any period or otherwise through
operation of law and (iii) any liability for the payment of amounts described in
clauses (i) or (ii) as a result of any Tax sharing, Tax indemnity or Tax
allocation agreement. For purposes of this Agreement, "Tax Return" means all
federal, state, local and foreign tax returns, estimates, information statements
and reports relating to Taxes.
(g) There are no material Liens for Taxes (other than current
Taxes not yet due and payable or delinquent) on the assets of the Company or any
Company Subsidiary.
(h) No claim has ever been made in writing by a taxing
authority in a jurisdiction where either the Company or any Company Subsidiary
does not file a Tax Return that either the Company or any Company Subsidiary is,
or may be subject to, taxation in that jurisdiction.
(i) Neither the Company nor any Company Subsidiary has
constituted either a "distributing corporation" or "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under Section 355 of the
Code (i) in the two years prior to the date of this Agreement or (ii) in a
distribution that otherwise constitutes part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code) in conjunction
with the Merger.
(j) Neither the Company nor any Company Subsidiary is a party
to any Tax sharing, Tax indemnification or Tax allocation agreement.
(k) No property of the Company or any Company Subsidiary is
"tax exempt use property" within the meaning of Section 168(h) of the Code.
(l) Neither the Company nor any Company Subsidiary has filed a
consent pursuant to Section 341(f) of the Code.
(m) Neither the Company nor any Company Subsidiary has granted
a power of attorney to any Person that currently is in effect with respect to
any open tax period.
(n) The Company has made available to Parent true and correct
copies of all requested Federal, state, local and foreign income tax returns
with respect to the Company and each Company Subsidiary.
Section 3.15 Employee Benefit Plans; Employment; Labor.
(a) Schedule 3.15(a) hereto sets forth a true and correct list
of each deferred compensation, stock option, bonus, stock appreciation, phantom
stock or other incentive compensation plan, equity compensation plan, "welfare
plan" (within the meaning of Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), "pension plan" (within the meaning
of
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Section 3(2) of ERISA), each employment, termination or severance agreement and
each other fringe benefit or employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained or contributed to or
required to be contributed to by the Company or any Company Subsidiary for the
benefit of any employee or former employee (or any of their dependants) of the
Company or any Company Subsidiary. Such plans are referred to collectively
herein as the "Company Plans".
(b) The Company has heretofore made available to Parent with
respect to each of the Company Plans true and correct copies of each of the
following documents if applicable: (i) the Company Plan document including all
amendments thereto, and all related trust documents, insurance contracts and
annuity contracts, (ii) the most recent determination letter from the Internal
Revenue Service for such Company Plan, (iii) the most recent summary plan
description and related summaries of material modifications, (iv) the Form 5500
tax forms for each of the last two years and (v) all registration statements,
annual reports and prospectuses prepared in connection with each Company Plan.
(c) Each of the Company Plans is in material compliance with
its terms and with the applicable provisions of the Code and ERISA. Each of the
Company Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code has received a determination letter from the Internal Revenue Service
that the Company Plan is qualified and the Company knows of no condition or
event that could reasonably be expected to adversely affect such status. Neither
the Company, any Company Subsidiary nor any trade or business, whether or not
incorporated, which together with the Company would be deemed a "single
employer" within the meaning of Section 4001 of ERISA (an "ERISA Affiliate") has
had in the previous six years (i) any liability, contingent or otherwise, under
Title IV of ERISA or Section 412 of the Code, or (ii) an obligation to
contribute to any "multiemployer plan" (as defined in Section 3(37) of ERISA).
There are no pending, or to the knowledge of the Company, threatened or
anticipated disputes, suits, investigations, audits, complaints or claims (other
than routine claims for benefits) by, on behalf of or against any of the Company
Plans or any trusts related thereto except as, individually or in the aggregate,
would not be reasonably likely to have a Material Adverse Effect on the Company.
(d) With respect to each Company Plan, there has not occurred,
and no person or entity is contractually bound to enter into, any nonexempt
"prohibited transaction" within the meaning of Section 4975 of the Code or
Section 406 of ERISA, nor any transaction that would result in a civil penalty
being imposed under Section 409 or 502(i) of ERISA, except for any such
transactions which would not be reasonably likely to have a Material Adverse
Effect on the Company.
(e) Neither the Company nor any Company Subsidiary is party to
any agreement with any employee the benefits of which (including severance
benefits) are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company or any Company Subsidiary of
the nature of any of the transactions contemplated by this Agreement.
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(f) No Company Plan provides, or reflects or represents any
liability to provide, retiree life insurance, retiree health or other retiree
employee welfare benefits to any Person for any reason, except as may be
required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA") or other applicable statute, and neither the Company nor an
ERISA Affiliate has ever represented, promised or contracted to any employee
(either individually or to employees as a group) or any other Person that such
employee(s) or other Person would be provided with retiree life insurance,
retiree health or other retiree employee welfare benefit, except to the extent
required by statute.
(g) The Company and each ERISA Affiliate has, on and prior to
the Effective Time, complied in all material respects with the health care
continuation requirements of COBRA, the requirements of Family Medical Leave Act
of 1993, as amended, or any similar provisions of state law applicable to its
employees.
(h) No union or other collective bargaining unit has been
certified as representing any of the employees of the Company or any Company
Subsidiary, nor has the Company or any Company Subsidiary agreed to recognize
any union or other collective bargaining unit. There are no pending or, to the
Company's knowledge, threatened organizational efforts or representation
petitions to certify any such union or unit. There are no labor disputes pending
or threatened involving strikes, work stoppages, slowdowns or lockouts with
respect to employees of the Company or any Company Subsidiary. There are no
grievance proceedings or claims of unfair labor practices filed or, to the
Company's knowledge, threatened to be filed with the National Labor Relations
Board against the Company or any Company Subsidiary.
(i) Since December 31, 1998, neither the Company nor any
Company Subsidiary has received any citation or other notification for the
violation of occupational and health safety laws or regulations.
(j) All individuals who are performing or, since December 31,
1998, have performed services for the Company or any of the Company Subsidiaries
and are or were classified by the Company or any of the Company Subsidiaries as
"independent contractors" qualify for such classification under Section 530 of
the Revenue Act of 1978, as amended by Section 1706 of the Tax Reform Act of
1986, as applicable, except for such instances which are not, in the aggregate,
material.
(k) There are no complaints, charges or claims against the
Company or any Company Subsidiary pending, or, to the Company's knowledge,
threatened to be brought or filed, with any Governmental Entity or arbitrator
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment of any individual by the Company or any
Company Subsidiary that would reasonably be expected to have a Material Adverse
Effect on the Company.
(l) The Company and each Company Subsidiary is in compliance
in all material respects with all laws relating to the employment of labor,
including all such laws and orders relating to wages, hours, collective
bargaining, discrimination, civil rights, safety and health and workers'
compensation.
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(m) There has been no "mass layoff' or "plant closing" as
defined by the Worker Adjustment and Retraining Notification Act or any similar
state or local "plant closing" law with respect to the Company or any Company
Subsidiary or similar acts that would trigger notification requirements or
liability to employees under any federal, state, local or foreign law or
regulation relating to plant closings.
Section 3.16 Environmental Matters. The Company and each Company
Subsidiary conducts its business and operations in material compliance with all
applicable environmental laws, ordinances and regulations, and neither the
Company nor any Company Subsidiary has received notice of, or, to the knowledge
of the Company is subject to, any pending or threatened claim, action, suit,
proceeding, hearing or investigation, based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling, or the emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant or hazardous or toxic material or
waste (collectively, an "Environmental Event") by the Company or any Company
Subsidiary, the outcome of which would reasonably be expected to have a Material
Adverse Effect on the Company. To the best knowledge of the Company, no notice
of any material Environmental Event was given to any Person that occupied any of
the premises occupied by or used by the Company or any Company Subsidiary prior
to the date such premises were so occupied. Without limiting the generality of
the foregoing, to the best knowledge of the Company, neither the Company nor any
Company Subsidiary has disposed of or placed on or in any property or facility
used in its business any waste materials, hazardous materials or hazardous
substances in violation of law, which would have a Material Adverse Effect on
the Company.
Section 3.17 State Takeover Statutes; Rights Agreement.
(a) The Company Board has approved this Agreement, the Offer,
the Merger, the Tender Agreements and the other transactions contemplated
hereby, and such approval is sufficient to render inapplicable to the Offer, the
Merger, the Tender Agreements, the other transactions contemplated hereby and
any other transaction with the Company or any Company Subsidiary by Parent,
Purchaser or any of Parent's other affiliates the provisions of Section 203 of
the DGCL.
(b) The Rights Agreement, dated as of December 30, 1998 (the
"Rights Agreement"), between the Company and Xxxxxx Trust and Savings Bank, as
rights agent, has been amended to (i) render the Rights Agreement inapplicable
to this Agreement, the Offer, the Merger, the Tender Agreements and the other
transactions contemplated hereby and (ii) ensure that (A) none of Parent,
Purchaser or its other subsidiaries is an Acquiring Person and (B) a
Distribution Date, a Triggering Event or Stock Acquisition Date (as such terms
are defined in the Rights Agreement) does not occur by reason of the execution
of this Agreement or the Tender Agreements, the consummation of the Offer or the
Merger, or the consummation of the other transactions contemplated by this
Agreement. No Distribution Date, Triggering Event or Stock Acquisition Date has
occurred at any time under the Rights Agreement, and no Person is, or at any
time has been, an Acquiring Person under the Rights Agreement.
(c) The only stockholder vote necessary to consummate the
Merger under the DGCL and the Company's Certificate of Incorporation and By-Laws
is the affirmative vote of
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the holders of two-thirds of the outstanding Shares constituting the Company
Stockholder Approval.
Section 3.18 Opinion of Financial Advisor. The Company has received the
opinion of CSFB, dated as of the date hereof, to the effect that, as of the date
hereof, the consideration to be received by the holders of Shares pursuant to
the Offer and the Merger is fair to such holders, other than Parent, from a
financial point of view, a copy of which opinion has been (or promptly will be)
delivered to Parent.
Section 3.19 Brokers. No Person is entitled to any brokerage or
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement and as a result of any
action taken by or on behalf of the Company or any Company Subsidiary, other
than CSFB pursuant to an engagement letter, dated May 3, 2000, and an amendment
thereto, dated September 18, 2000, copies of which have been made available to
Parent.
Section 3.20 Beneficial Interests in Trusts. Schedule 3.20 hereto sets
forth (i) a complete and accurate list of all common law trusts, owner trusts or
business trusts in which the Company or any Company Subsidiary, directly or
indirectly, owns a beneficial interest (the "Trusts") and (ii) the percentage
interest directly or indirectly owned by the Company and each such Company
Subsidiary in each Trust. Each Trust was organized for the purpose of acquiring
and holding Leasing Contracts (as hereinafter defined) or beneficial interests
in other Trusts and for the purpose of financing Contracts through Warehouse
Lines or through Securitization Transactions. For all purposes of this
Agreement, "Leasing Contract" means each of the agreements evidencing the
indebtedness of the related obligor(s), including, as applicable, schedules,
supplements and amendments thereto, under which the Company, a Company
Subsidiary or a third party from whom the Company or a Company Subsidiary
acquired any such agreements or on behalf of whom the Company or any Company
Subsidiary services any such agreement, as applicable, leases or finances
specified equipment or other assets to an obligor. For all purposes of this
Agreement, "Warehouse Line" means any line of credit, loan agreement or other
credit facility (other than any Securitization Transaction) pursuant to which
Leasing Contracts are financed. For all purposes of this Agreement,
"Securitization Transaction" means any transaction, however named, between the
Company, a Company Subsidiary or a Trust and any one or more purchasers or
investors that provides for the monetization of a discrete pool or pools of
Leasing Contracts through debt securities or ownership interests issued by a
trust, corporation, partnership or other entity (including a Trust) that owns
Leasing Contracts in connection with a Securitization Transaction for the
benefit of the securities holders (a "Securitization Entity") supported or
backed by Leasing Contracts that have been transferred to such Securitization
Entity by the Company, a Company Subsidiary or a Trust.
Section 3.21 Leasing Contracts. The Company has previously delivered to
the Parent and Purchaser a data tape on which certain information regarding the
pools of Leasing Contracts subject to the Warehouse Lines and the Securitization
Transactions as of December 31, 2000 is recorded. The information contained in
such tape is true and correct in all material respects.
Section 3.22 Warehouse Lines. Schedule 3.22 hereto sets forth a list of
each Warehouse Line as of January 1, 2001, together with the aggregate
discounted principal balance
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of Leasing Contracts subject to each such Warehouse Line as of such date
(discounted in the manner specified in the agreements and arrangements pursuant
to which it is bound under a Warehouse Line (such agreements and arrangements
are collectively referred to herein as the "Warehouse Instruments")). Each
Warehouse Line is in full force and effect at the date hereof.
Section 3.23 Securitization Transactions.
(a) Schedule 3.23 hereto sets forth a list of each
Securitization Transaction as of January 1, 2001, together with the aggregate
discounted principal balance of Leasing Contracts subject to each such
Securitization Transaction as of such date (discounted in the manner specified
in the related Securitization Instruments).
(b) Each of the Company, the Company Subsidiaries and the
Trusts has complied, in all material respects, with (i) all obligations and all
conditions to be performed or satisfied by it with respect to all agreements and
arrangements pursuant to which it is bound under a Securitization Transaction
(such agreements and arrangements are collectively referred to as the
"Securitization Instruments") and (ii) all applicable laws relating to
Securitization Transactions.
(c) All required federal, state and local tax and information
returns and elections relating to any Securitization Transaction for which the
Company, any Company Subsidiary or any Trust is responsible under the
Securitization Instruments have been accurately prepared and properly and timely
filed, and any taxes required to have been paid with respect to any
Securitization Entity or Securitization Transaction have been paid as of the
date hereof.
Section 3.24 Leasing-Contract-Level Representations and Warranties. The
Company makes the representations and warranties set forth in this Section 3.24
regarding each Leasing Contract subject to a Warehouse Line or Securitization
Transaction:
(a) To the knowledge of the Company, each Leasing Contract was
eligible (as determined in accordance with the provisions of the related
Securitization Instruments or Warehouse Instruments, as the case may be, at the
time of such financing or sale) for financing or sale under the applicable
Warehouse Line or Securitization Transaction or has been repurchased. To the
knowledge of the Company, there exists no fact or circumstance that would
entitle, in accordance with the provisions of the related Securitization
Instruments or Warehouse Instruments, as the case may be, (i) any entity that is
a trustee for the benefit of securities holders in any Securitization
Transaction, (ii) any lender under any Warehouse Line or (iii) any holder of
securities issued in a Securitization Transaction to demand from the Company,
any Company Subsidiary or any Trust either the repurchase of any Leasing
Contract or indemnification for losses.
(b) The origination, sale and servicing of the Leasing
Contracts comply, in all material respects, with (i) all contractual obligations
of the Company, any Company Subsidiary or any Trust with respect to any
Securitization Transaction or Warehouse Line, (ii) all underwriting guidelines
of the Company or any Company Subsidiary and (iii) all applicable federal, state
and local legal and regulatory requirements applicable to the Company, any
Company Subsidiary or any Trust (including usury, truth-in-lending, consumer
protection and
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equal credit opportunity laws), except where the failure to comply with such
legal or regulatory requirement would not have a Material Adverse Effect on the
Company.
(c) No Leasing Contract is (i) a "consumer" lease under
Article 2A of the Uniform Commercial Code or (ii) a consumer credit contract
subject to the provisions of 16 CFR Part 433.
Section 3.25 No Recourse. None of the Securitization Instruments or the
Warehouse Lines or any other arrangement provides for Recourse (as hereinafter
defined) to the Company or any Company Subsidiary. "Recourse" means any
arrangement pursuant to which the Company or any Company Subsidiary bears the
risk of any part of the ultimate credit losses incurred in connection with a
default under or realization against a Leasing Contract not owned by the Company
or any Company Subsidiary, except to the extent such risk of loss (i) is based
upon a breach by the Company or any Company Subsidiary of any of their
contractual representations, warranties or covenants contained in any Warehouse
Line or Securitization Instrument or (ii) arises out of the beneficial ownership
of the Company or any Company Subsidiary in a Trust.
Section 3.26 Sufficiency of and Title to Assets. Except as set forth in
Schedule 3.26 hereto, each of the Company and the Company Subsidiaries has title
to, or the right to use, all material assets, whether tangible or intangible,
used in the operation of its business and such material assets constitute all
material assets necessary to operate the business (the "Business") of the
Company and the Company Subsidiaries as a going concern consistent with past
practice.
Section 3.27 Properties; Leases; Tangible Assets.
(a) Neither the Company nor any of the Company Subsidiaries
owns any real property other than the real property listed in Schedule 3.27(a)
hereto (the "Owned Real Property"). Neither the Company nor any of the Company
Subsidiaries has a leasehold interest in any real property other than the real
property listed in Schedule 3.27(a) hereto (the "Leased Real Property", and the
Owned Real Property and the Leased Real Property are, collectively, the "Real
Property"). The Real Property constitutes all of the real property used in the
Business. True, complete and correct copies of all lease agreements and
amendments thereto with respect to the Leased Real Property have been supplied
to Parent prior to the date hereof. True, complete and correct copies of the
legal descriptions of each parcel of Owned Real Property and all title insurance
policies issued to the Company or any Company Subsidiary with respect to any
Owned Real Property have been supplied to Parent prior to the date hereof. The
Company and each of the Company Subsidiaries has, and, upon consummation of the
transactions contemplated hereby, will continue to have, good and marketable
title to the Owned Real Property and a good and valid leasehold interest in the
Leased Real Property being leased by it, in either case free and clear of all
Liens except Permitted Liens (as hereinafter defined). None of the assets of the
Company or any Company Subsidiary is owned jointly with any other Person,
including any affiliates of the Company.
(b) For purposes of this Agreement, "Permitted Liens" means
(i) Liens for Taxes or governmental assessments or similar obligations the
payment of which is not yet due and payable or delinquent, or for Taxes the
validity of which are being contested in good faith by appropriate proceedings,
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
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mechanics, materialmen and other similar Persons imposed by applicable law
incurred in the ordinary course of business for sums not yet delinquent or being
contested in good faith, (iii) Liens relating to deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, (iv) Liens specifically identified
as such on Schedule 3.27(b) hereto, and (v) Liens securing executory obligations
under any lease that constitutes an "operating lease" under GAAP.
(c) Schedule 3.27(c) hereto sets forth a true and complete
list, as of the date hereof, of (i) all personal property leases or licenses
other than Leasing Contracts (A) to which the Company or any of the Company
Subsidiaries is a party or by which the Company or any of the Company
Subsidiaries is bound and (B) that provide for annual payments by the Company or
any of the Company Subsidiaries in excess of $100,000 that cannot be terminated
by the Company or the relevant Company Subsidiary within 30 days without a
charge of $25,000 or more to the Company or any of the Company Subsidiaries (the
"Personal Property Leases") and (ii) all leases or licenses affecting any of the
Real Property to which the Company or any Company Subsidiary is bound (including
as lessor or lessee) that provide for annual payments by the Company or any of
the Company Subsidiaries in excess of $100,000 that cannot be terminated by the
Company or the relevant Company Subsidiary within 30 days without a charge of
$25,000 or more to the Company or any of the Company Subsidiaries (the "Real
Property Leases" and collectively with the Personal Property Leases, the
"Leases"). With respect to the Leases, except as set forth on Schedule 3.27(c)
hereto, there exist no defaults, in any material respect, by the Company or any
of the Company Subsidiaries, or, to the knowledge of the Company, any default or
threatened default, in any material respect, by any lessor or third party
thereunder. The consummation of the transactions contemplated hereby will not
result in a violation or breach of, or give any Person the right to terminate
(or accelerate any obligation under), any Lease to which the Company or any of
the Company Subsidiaries is a party or by which it is bound.
(d) As of the date hereof, neither the Company nor any of the
Company Subsidiaries has received notice of any pending zoning or other land-use
regulation proceedings or any proposed change in any applicable laws that could
reasonably be expected to adversely affect, in any material respect, the use or
operation of any Real Property, nor has the Company or any of the Company
Subsidiaries received notice of any special assessment proceedings affecting the
Real Property, or applied for any change to the zoning or land use status of the
Real Property. To the Company's knowledge, all buildings and other structures
located on the Real Property are in compliance with existing zoning regulations
and do not encroach upon any adjoining property.
Section 3.28 Contracts.
(a) Schedule 3.28 hereto sets forth a complete list, as of the
date hereof, of the following contracts, agreements, options, leases, licenses,
sales and purchase orders, commitments and other instruments of any kind,
whether written or oral, including all amendments thereto, to which the Company
or any Company Subsidiary is a party on the date hereof, containing commitments
and obligations (whether written or oral) of the Company or any of the Company
Subsidiaries that have not terminated or expired in accordance with their terms
(collectively, the "Contracts", and the Contracts, together with the Leases are,
collectively, the "Scheduled Contracts"):
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(i) any relating to any partnership, joint venture or
other similar contracts, arrangements or agreements;
(ii) any employment, consulting, severance, change of
control or management services contract, commitment or plan;
(iii) any agreement relating to the acquisition or
disposition of any division, business or subsidiary;
(iv) any material indemnity or guaranty issued by the
Company or any Company Subsidiary;
(v) any contract or agreement restricting the right
of the Company or any Company Subsidiary to engage in any business
activity or compete with any business or Person;
(vi) any material royalty or license agreement (as
licensee or licensor), other than those relating to off-the-shelf,
commercially available software;
(vii) to the extent that any of the following provide
for annual payments by the Company or any of the Company Subsidiaries
in excess of $100,000 and cannot be terminated by the Company within 30
days without a charge to the Company or any of the Company
Subsidiaries, all license, distribution, commission, marketing, agent,
franchise, technical assistance or similar agreements relating to or
providing for the marketing or sale of the products or services to
which the Company or any of the Company Subsidiaries is a party or by
which the Company or any of the Company Subsidiaries is otherwise
bound;
(viii) each contract or agreement between the Company
or any of the Company Subsidiaries and any supplier of services or
products to the Company, under which the remaining, unfulfilled dollar
volume of required purchases by the Company or any of the Company
Subsidiaries exceeds $100,000 as of the date hereof that cannot be
terminated by the Company or the relevant Company Subsidiary within 30
days without a charge of $25,000 or more to the Company or any of the
Company Subsidiaries;
(ix) each other contract or agreement of the Company
or any of the Company Subsidiaries that requires the payment or
incurrence of liabilities or the rendering of services by the Company
or any of the Company Subsidiaries, subsequent to the date of this
Agreement, valued at more than $100,000 that cannot be terminated by
the Company or any of the Company Subsidiaries within 30 days without a
charge to the Company or any of the Company Subsidiaries;
(x) each agreement (other than Leasing Contract
subject to a Warehouse Line or Securitization Transaction) evidencing
the indebtedness of the related obligor(s), including, as applicable,
schedules, supplements and amendments thereto, under which the Company,
a Company Subsidiary or a third party from whom the Company or a
Company Subsidiary acquired any such agreements or on behalf of whom
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the Company or any Company Subsidiary services any such agreement, as
applicable, leases or finances specified equipment to an obligor;
(xi) all agreements or instruments evidencing,
securing or guaranteeing indebtedness for borrowed money; and
(xii) all other material contracts, agreements,
commitments and obligations of the Company and the Company Subsidiaries
(other than any Leasing Contracts, Leases, Securitization Transaction
or Warehouse Lines).
(b) As of the date hereof, each Scheduled Contract is a legal,
valid and binding obligation of the Company or the relevant Company Subsidiary,
as the case may be, and, to the knowledge of the Company, each other party
thereto, enforceable against the Company or the relevant Company Subsidiary, as
the case may be, and, to the knowledge of the Company, each such other party in
accordance with its terms, and neither the Company or any of the Company
Subsidiaries, as the case may be, nor, to the knowledge of the Company, any
other party thereto is in default or has failed to perform in any material
respect thereunder.
(c) The origination, sale and servicing of the Leasing
Contracts that are not subject to a Warehouse Line or Securitization Transaction
comply, in all material respects, with (i) all underwriting guidelines of the
Company or any Company Subsidiary as of the related date of origination, sale or
servicing and (ii) all applicable federal, state and local legal and regulatory
requirements applicable to the Company or any Company Subsidiary (including
usury, truth-in-lending, consumer protection and equal credit opportunity laws)
as of the related date of origination, sale or servicing.
(d) No Leasing Contract that is not subject to a Warehouse
Line or Securitization Transaction is (i) a "consumer" lease under Article 2A of
the Uniform Commercial Code or (ii) a consumer credit contract subject to the
provisions of 16 CFR Part 433.
Section 3.29 Related Party Transactions. No Related Party (as defined
below), as of the date hereof: (i) has any contractual or other claim, express
or implied, or of any kind whatsoever against the Business, the Company or any
Company Subsidiary (other than pursuant to the express terms of an employment
agreement listed in Schedule 3.15(a) hereto); (ii) has any interest in the
Business, the Company or any Company Subsidiary (other than through the
ownership of Shares or Company Stock Options); or (iii) is or has been during
the last twelve months engaged in any other transaction with the Business, the
Company or any Company Subsidiary. As used herein, "Related Party" means any
officer or director of the Company or any Company Subsidiary, or any affiliate
or associate of any the foregoing.
Section 3.30 Inapplicability of Section 2115 of California Corporations
Code. The Company is not subject to Section 2115 of the California Corporations
Code.
Section 3.31 Certain Business Practices. None of the Company, any
Company Subsidiary, or (to the best of the knowledge of the Company) no
director, officer, agent or employee of the Company or any Company Subsidiary,
has (a) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity,
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(b) made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (c)
made any other unlawful payment.
Section 3.32 Insurance. The Company has made available to Parent a copy
of all material insurance policies and all material self insurance programs and
arrangements relating to the business, assets and operations of the Company and
the Company Subsidiaries. Each of such insurance policies is in full force and
effect. Such insurance policies are adequate for the conduct of the business of
the Company and each Company Subsidiary as conducted on the date hereof and
similar in all material respects to that of similarly-situated companies. Since
January 1, 1998, neither the Company nor any Company Subsidiary has received any
notice or other communication regarding any actual or possible (a) cancellation
or invalidation of any insurance policy, (b) refusal of any coverage or
rejection of any material claim under any insurance policy or (c) material
adjustment in the amount of the premiums payable with respect to any insurance
policy. There is no pending workers' compensation or other claim under or based
upon any insurance policy of the Company or any Company Subsidiary.
Section 3.33 Non-Regulated Industry. Neither the Company nor any
Company Subsidiary is, or is required to be, or has any application pending to
be, chartered, registered, licensed or qualified as a bank, bank holding
company, trust company, insurance company, public utility or public utility
holding company under the laws of the United States, any state or other
subdivision thereof, any foreign country or any other jurisdiction.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company that:
Section 4.1 Organization and Qualification. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and has all requisite corporate
power and authority to own or lease and operate its properties and assets and to
carry on its business as it is now being conducted. Each of Parent and Purchaser
is duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction in which the character of its properties and
assets owned or leased or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would constitute a
Material Adverse Effect on Parent.
Section 4.2 Authorization of Agreement, Non-Contravention. Each of
Parent and Purchaser has all requisite corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder. The
execution, delivery and performance of this Agreement by each of Parent and
Purchaser and the consummation by each of them of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of each of Parent and Purchaser. This Agreement has been duly executed and
delivered by each of Parent and Purchaser and constitutes the legal, valid and
binding obligation of each of Parent and Purchaser, enforceable against each of
Parent and Purchaser in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
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equitable principles. The execution and delivery of this Agreement by each of
Parent and Purchaser does not, and the consummation by Purchaser of the
transactions contemplated hereby will not, (a) conflict with any provision of
the Certificate of Incorporation or By-Laws of Parent or the Certificate of
Incorporation or By-Laws of Purchaser, (b) result (with or without the giving of
notice or the lapse of time or both) in any violation or breach of or default or
loss of a benefit under, or permit the acceleration, cancellation or termination
of any obligation under, or require notice to or the consent of any third party
under, or create any entitlement to any payment or benefit under, any mortgage,
indenture, lease, contract, agreement or other instrument, permit, concession,
grant, franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Parent, its subsidiaries or their respective
properties, including those to which Parent or Purchaser or their respective
properties are bound, or (c) result in the creation or imposition of any Lien
upon any asset of Parent, its subsidiaries or their respective properties, other
than (in the case of clauses (b) and (c) above) such as would not, individually
or in the aggregate, have a Material Adverse Effect on Parent. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required to be made or obtained by Parent or
Purchaser in connection with the execution and delivery of this Agreement by
Parent or Purchaser or the consummation by Parent or Purchaser of the
transactions contemplated hereby, except for (i) compliance by Parent with the
HSR Act, (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware in accordance with the DGCL, (iii) the filing
with the SEC of the Offer Documents and such reports under and such other
compliance with the Exchange Act and Securities Act and the rules and
regulations thereunder as may be required in connection with this Agreement and
the transactions contemplated hereby and (iv) such consents, approvals, orders
or authorizations of Governmental Entities which if not obtained, or
registrations, declarations or filings with Governmental Entities which if not
made, would not constitute a Material Adverse Effect on Parent. Except pursuant
to the Tender Agreements, as of the date hereof, Parent does not beneficially
own any Shares.
Section 4.3 Information Supplied.
(a) Each of the Offer Documents and the other documents
required to be filed by Parent with the SEC in connection with the Offer, the
Merger and the other transactions contemplated hereby, and the information
supplied by Parent to the Company for inclusion or incorporation by reference in
any documents to be filed with the SEC (including any documents to be filed by
the Company with the SEC), will comply as to form in all material respects with
the requirements of the Exchange Act and the Securities Act, as the case may be,
and will not, on the date of its filing or dissemination, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(b) Notwithstanding the foregoing provisions of this Section
4.3, no representation or warranty is made by Parent or Purchaser with respect
to statements made or incorporated by reference in the Offer Documents based on
information supplied by the Company expressly for inclusion or incorporation by
reference therein or based on information which is not made in or incorporated
by reference in such documents but which should have been disclosed pursuant to
Section 3.11 hereof.
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Section 4.4 Operations and Assets of Purchaser. Purchaser was formed
solely for the purpose of the Offer, the Merger and engaging in the transactions
contemplated hereby and has no assets or liabilities except as contemplated
herein, and will have no assets or liabilities, except as necessary for such
purpose. Purchaser has not engaged, and will not engage, in any other business
or activity of any kind or type whatsoever and has conducted and will conduct
its operations only as contemplated hereby.
Section 4.5 Brokers. Except for First Union Securities, Inc., no Person
is entitled to any brokerage or finder's, financial advisor's or other similar
fee or commission in connection with the transactions contemplated by this
Agreement and as a result of any action taken by or on behalf of Parent or any
of its subsidiaries.
Section 4.6 Availability of Funds. Parent has available cash or unused
availability under existing borrowing facilities that are sufficient to enable
it and Purchaser to consummate the transactions contemplated herein.
ARTICLE V
CERTAIN AGREEMENTS
Section 5.1 Conduct of the Company's Business. The Company covenants
and agrees that from the date of this Agreement to the time that the Parent
Designees constitute a majority of the members of the Company Board, unless
Parent shall otherwise consent in advance in writing or to the extent described
in Schedule 5.1 hereto or as otherwise expressly contemplated by this Agreement:
(a) the business of the Company and each Company Subsidiary
shall be conducted only in, and the Company and each Company Subsidiary shall
not take any action except in, the ordinary course of business and consistent
with past practice and each of the Company and the Company Subsidiaries shall
use its best efforts to maintain its relationships with its suppliers, customers
and employees and maintain the goodwill of the Company and each Company
Subsidiary;
(b) neither the Company nor any Company Subsidiary shall: (i)
except as contemplated hereby, amend its Certificate of Incorporation or By-Laws
(or similar organizational documents), (ii) issue, sell, pledge or dispose of
any shares of, or securities convertible or exchangeable for, or any options,
warrants or rights of any kind to acquire any shares of, its capital stock or
any stock appreciation rights, performance shares or phantom stock based upon
the value of any capital stock or designate any class or series of preferred
stock, provided that the Company may issue Shares upon the exercise of currently
outstanding Company Stock Options listed in Schedule 3.5 hereto, (iii) split,
combine or reclassify any outstanding shares of its capital stock, or declare,
set aside or pay any dividend payable in cash, stock, property or otherwise with
respect to such shares (except for any dividends paid to the Company or to any
wholly owned subsidiary), (iv) redeem, purchase, acquire or offer to acquire any
shares of, or securities convertible into or exchangeable for, or any options,
warrants or rights of any kind to acquire any shares of, its capital stock or
any options, warrants or rights of any kind to acquire any shares of its capital
stock or (v) amend or waive any of its rights under, or accelerate the vesting
under, any provision of any of the Company Stock Plans, any provision
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of any agreement evidencing any outstanding stock option or any restricted stock
purchase agreement, or otherwise modify any of the terms of any outstanding
option, warrant or other security;
(c) neither the Company nor any Company Subsidiary shall: (i)
sell, pledge, dispose of or encumber any material assets of the Company or any
Company Subsidiary, except Leasing Contracts or inventory in the ordinary course
of business and consistent with past practice, (ii) acquire (by merger,
consolidation, acquisition of stock or assets or otherwise) any corporation,
partnership or other business organization or division thereof or other business
(except an existing wholly owned subsidiary), (iii) incur any indebtedness for
borrowed money or issue any debt securities (including capital leases), except
for (A) indebtedness incurred to extend, refinance or restructure current
financing facilities with existing warehouse lenders on terms substantially
similar to the existing terms of such facilities or (B) indebtedness resulting
from the origination and financing of lease contracts through existing
origination channels in the ordinary course of business and consistent with past
practice; provided, however, that any indebtedness incurred to finance the
acquisitions of lease portfolios shall be limited to $2,000,000 (calculated by
aggregate principal amount of the portfolios purchased) for each individual
lease portfolio purchase and $10,000,000 (calculated by aggregate principal
amount of the portfolios purchased) for all lease portfolio purchases in the
aggregate, (iv) enter into, terminate, renew, amend or modify any material
contract, lease, agreement or commitment, except in the ordinary course of
business and consistent with past practice or, with respect to the settlement of
real property leases, that does not cause the Company to incur any obligations
other than the payment of monies of less than $25,000 individually and $100,000
in the aggregate or (v) terminate, modify, amend, assign, waive, release or
relinquish any material contract rights or amend any material rights or claims
except in the ordinary course of business and in a manner that does not have a
Material Adverse Effect on the Company;
(d) neither the Company nor any Company Subsidiary shall grant
any increase in the salary or other compensation of its employees or directors,
or grant any bonus to any employee or director or enter into any employment
agreement or make any loan to or enter into any material transaction of any
other nature with any employee or director of the Company or any Company
Subsidiary, except (i) pursuant to applicable law or regulation, (ii) as
required by the terms of an employment agreement in effect on the date hereof
and listed in Schedule 3.15(a) hereto (each a "Listed Employment Agreement"),
(iii) if accrued for on the consolidated balance sheet of the Company as of
December 31, 2000 listed on Schedule 3.7 hereto, provided that such increase
would not increase the amount of, or eligibility for, any severance or
termination payment, payment related to a change in control of the Company or
any Company Subsidiary or similar payment that could be due to such person or
(iv) in the case of employees who are not executive officers or directors of the
Company or any Company Subsidiary and who are not a party to a Listed Employment
Agreement and the payment of which would not increase the amount of, or
eligibility for, any severance or termination payment, payment related to a
change in control of the Company or any Company Subsidiary or similar payment
that could be due to such person, in the ordinary course of business and
consistent with past practice;
(e) neither the Company nor any Company Subsidiary shall adopt
or amend, in any respect, any collective bargaining, bonus, profit sharing,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment or other employee
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benefit plan, agreement, trust, fund, plan or arrangement for the benefit or
welfare of any directors, officers or employees (including any such plan or
arrangement relating to severance or termination pay) or enter into or amend any
employment agreement; except (i) pursuant to applicable law or regulation, (ii)
as required by the terms of a Listed Employment Agreement or (iii) in the case
of employees who are not executive officers or directors of the Company or any
Company Subsidiary and who are not a party to a Listed Employment Agreement and
the payment of which would not increase the amount of, or eligibility for, any
severance or termination payment, payment related to a change in control of the
Company or any Company Subsidiary or similar payment that could be due to such
person, in the ordinary course of business and consistent with past practice;
(f) neither the Company nor any Company Subsidiary shall
change any accounting principles used by it except as required by GAAP;
(g) neither the Company nor any Company Subsidiary shall
settle any litigation or proceeding that causes the Company or any Company
Subsidiary to incur any obligation, other than the payment of monies in an
amount less than $150,000;
(h) except as permitted under Section 5.1(c)(iii) hereof,
neither the Company nor any Company Subsidiary shall incur any liability or
obligation (except of the Company to a Company Subsidiary or of a Company
Subsidiary to the Company or another Company Subsidiary), other than in the
ordinary course of business, or assume, guarantee, endorse (other than
endorsements of checks in the ordinary course of business) or otherwise as an
accommodation become responsible for the obligations of any other Person (except
of the Company with respect to obligations of the Company or any Company
Subsidiary with respect to the Company or any Company Subsidiary), other than in
the ordinary course of business, provided that notwithstanding anything stated
herein, in no event shall the Company or any Company Subsidiary make any loan or
advance to any Person (including those in the ordinary course of business) in
excess of $200,000 that is not committed by a responsible Person other than the
Company or a Company Subsidiary to be purchased or otherwise funded by such
party on a non-recourse basis;
(i) neither the Company nor any Company Subsidiary shall make
any capital expenditures, which, together with all capital expenditures of the
Company and each Company Subsidiary, exceed $250,000 in the aggregate, other
than those required under any Scheduled Contract;
(j) neither the Company nor any Company Subsidiary shall enter
into any agreement or arrangement with any Related Party, other than the payment
of compensation at the same level as payment immediately prior to the date of
this Agreement and the providing of advances and reimbursement for reasonable
expenses incurred by directors and employees in such capacities in the ordinary
course of business consistent with past practices;
(k) neither the Company nor any Company Subsidiary shall make
any tax election or settle or compromise any material federal, state, and local
or foreign income tax liability;
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(l) neither the Company nor any Company Subsidiary shall
purchase or otherwise acquire material tangible or intangible assets from any
other Person other than Leasing Contracts or in the ordinary course of business;
(m) neither the Company nor any Company Subsidiary shall enter
into any Securitization Transaction; and
(n) neither the Company nor any Company Subsidiary shall
commit to do any of the foregoing or take any action that would make any
representation or warranty of the Company hereunder inaccurate in any respect
at, or as of any time prior to, the Effective Time, or omit to take any action
necessary to prevent any such representation or warranty from being inaccurate
in any respect at any such time.
Section 5.2 Stockholders' Meeting.
(a) The Company shall call a meeting of the Stockholders to be
held as promptly as practicable upon the purchase of Shares by Purchaser
pursuant to the Offer (provided the Minimum Condition has been satisfied) (the
"Offer Completion") for the purpose of voting upon the approval of this
Agreement and the Merger (the "Stockholders' Meeting").
(b) Except as provided in Section 5.2(c) hereof, the Company
(i) as promptly as reasonably practicable following the Offer Completion, will
prepare and file with the SEC a proxy statement, together with a form of proxy,
with respect to the Stockholders' Meeting (such proxy statement, together with
any amendments thereof or supplements thereto, being referred to herein as the
"Proxy Statement"), (ii) will use its best efforts to have the Proxy Statement
cleared by the SEC as soon as reasonably practicable, if such clearance is
required, and (iii) as soon as reasonably practicable thereafter, will cause
copies of such Proxy Statement and form of proxy to be mailed to the
Stockholders in accordance with the provisions of the DGCL. Prior to the filing
of the Proxy Statement and form of proxy with the SEC, the Company shall provide
reasonable opportunity for Parent to review and comment upon the contents of the
Proxy Statement and form of proxy. The Proxy Statement and form of proxy will
comply as to form in all material respects with the applicable requirements of
the Exchange Act and the rules and regulations of the SEC. The Proxy Statement
shall include the recommendation of the Company Board that the Stockholders
approve this Agreement, unless the Company Board, following receipt of a
Superior Proposal (as hereinafter defined) and after consultation with outside
legal counsel, shall determine that such recommendation should not be made to
satisfy its fiduciary duties. After the delivery to the Stockholders of copies
of the Proxy Statement and form of proxy, the Company shall use its best efforts
to solicit proxies in connection with the Stockholders' Meeting in favor of
approval of this Agreement, unless the Company Board, following receipt of a
Superior Proposal and after consultation with outside legal counsel, shall
determine that such solicitation should not be made to satisfy its fiduciary
duties. Parent and Purchaser will vote all Shares owned or controlled by them in
favor of the approval of this Agreement. Each of Parent, Purchaser and the
Company shall use its best efforts, after consultation with the other parties
hereto, to respond promptly to all comments and requests of the SEC with respect
to the Proxy Statement and to file all required supplements and amendments to
the Proxy Statement with the SEC and cause them to be mailed to the Stockholders
at the earliest practicable time.
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(c) Notwithstanding Sections 5.2(a) or 5.2(b) hereof, in the
event that Parent, Purchaser or any other subsidiary of Parent acquires,
directly or indirectly, at least 90% of the outstanding Shares pursuant to the
Offer or otherwise, the parties hereto will take all necessary and appropriate
action to cause the Merger to become effective in accordance with Section 253 of
the DGCL without a meeting of the Stockholders as soon as practicable after the
acceptance for payment and purchase of the Shares by Parent and Purchaser
pursuant to the Offer.
Section 5.3 Access to Information.
(a) The Company shall, and shall cause the Company Subsidiaries
and its and their respective officers, directors, employees, counsel,
representatives and agents to, afford, from the date hereof to the Effective
Time, the officers, employees, counsel, representatives and agents of Parent
reasonable access during regular business hours to its officers, employees,
counsel, agents, properties, books, records and workpapers (including tax
returns and insurance policies) and shall promptly furnish to Parent all
financial, operating and other information and data as Parent, through its
officers, employees, counsel, representatives or agents, may reasonably request.
The Company shall confer from time to time with Parent at Parent's request to
discuss the status of the operations of the Company and the Company
Subsidiaries.
(b) Except as required by law, the Company and Parent shall
hold, and will cause its respective officers, employees, representatives and
agents to hold, any confidential information of the Company or any Company
Subsidiaries in accordance with the Confidentiality Agreement between the
Company and Parent.
(c) The Company shall (i) reasonably cooperate with and
respond in writing within three business days to any reasonable request by
Parent (in writing or otherwise) for information relating to Taxes, and (ii)
promptly inform Parent of any deficiency, claim, audit, suit, proceeding or
investigation, in each case relating to Taxes, that arises between the date
hereof and the Effective Time.
(d) No investigation pursuant to this Section 5.3 shall
affect, add to or subtract from any representations or warranties of the parties
hereto or the conditions to the obligations of the parties hereto to effect the
Offer, the Merger or the other transactions contemplated hereby.
(e) No later than 10 business days following the date hereof,
the Company shall provide to Parent a list of (i) each account or safe deposit
box maintained by the Company or any Company Subsidiary with any bank or other
financial institution and (ii) the names of all Persons authorized to draw
thereon or have access thereto.
Section 5.4 Further Actions. Subject to the terms and conditions
provided herein, each of the parties hereto agrees to use its best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things reasonably necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement as promptly as practicable, including (a) cooperating in the
preparation and filing of the Offer Documents and the Schedule 14D-9, any
filings that may be required under the HSR Act or similar governmental legal
requirements, and any amendments to any of the foregoing, (b) obtaining consents
of all third parties and Governmental Entities necessary, proper
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or advisable for the consummation of the transactions contemplated by this
Agreement, (c) contesting any legal proceeding relating to the Offer or the
Merger and (d) executing any additional instruments necessary to consummate the
transactions contemplated hereby. Parent and the Company each shall make its
respective required filing under the HSR Act no later than five business days
following the date hereof. The parties shall respond to any comments of the
staff of the SEC regarding the Offer Documents or the Schedule 14D-9 as soon as
practicable but no later than within five business days following the receipt
thereof. Subject to the terms and conditions of this Agreement, Parent and the
Company each agrees to use its best efforts to cause the Effective Time to occur
as soon as practicable. In case at any time after the Effective Time any further
action is necessary to carry out the purposes of this Agreement, the proper
officers and directors of each party hereto shall take all such necessary
action. Without limiting the foregoing, but in furtherance thereof, the Company
designates Xxxxxx Xxxxxxx, and Parent and Purchaser designate Xxxxxxx Xxxxxx, to
serve as a contact person for the respective parties hereto for the purpose of
facilitating certain transitional matters related to the Acquisition, including
with respect to employees of the Company and the Company Subsidiaries. Parent
shall cause Purchaser to comply with its obligations under this Agreement.
Section 5.5 Inquiries and Negotiations.
(a) From and after the date hereof until the termination of
this Agreement and except as expressly permitted by the following provisions of
this Section 5.5, the Company will not, and will not permit any Company
Subsidiary to, and will not authorize any officer, director or employee of or
any investment banker, attorney, accountant or other advisor or representative
of, the Company or any Company Subsidiary to (and will instruct such Persons not
to), directly or indirectly, (i) solicit, initiate or encourage the submission
of a proposal for any Alternative Transaction (as hereinafter defined) or (ii)
participate in any discussions or negotiations regarding, or furnish to any
Person (which includes a "person" as such term is defined in Section 13(d)(3) of
the Exchange Act) other than Parent or Purchaser (a "Third Party") any
information with respect to, or take any other action knowingly to facilitate,
any Alternative Transaction, any inquiries, any access or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Alternative Transaction; provided, however, that nothing contained in this
Section 5.5(a) shall prohibit the Company Board from furnishing information to,
or entering into discussions or negotiations with, any Third Party that makes an
unsolicited bona fide written proposal of an Alternative Transaction if, and
only to the extent that, (A) the Company Board, after consultation with outside
legal counsel, determines in good faith that such action is necessary for the
Company Board to comply with its fiduciary duties to the Stockholders under
applicable law, (B) the Company Board determines in good faith, after
consultation with a financial advisor of nationally recognized reputation, that
such Alternative Transaction would, if consummated, constitute or be reasonably
likely to constitute a Superior Proposal and (C) prior to taking such action,
the Company (x) provides reasonable notice to Parent to the effect that it is
taking such action (including the material terms and conditions of the
Alternative Proposal and the identity of the Person making it) as promptly as
practicable (but in no case later than 24 hours) after its receipt thereof, (y)
provides Parent with a copy of any Alternative Transaction or amendments or
supplements thereto and (z) receives from such Third Party an executed
confidentiality agreement in reasonably customary form and in any event
containing terms at least as favorable to the Company as those between Parent
and the Company, provided that such confidentiality agreement need not contain
any "standstill" provisions.
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Subsequent to furnishing information to, or entering into discussions or
negotiations with, any Third Party in accordance with this Section 5.5, the
Company shall inform Parent on a prompt basis of the status of any discussions
or negotiations with such Third Party and any material changes to the terms and
conditions of such Alternative Transaction. Promptly after the execution and
delivery of this Agreement, the Company will, and will cause each Company
Subsidiary to, and will instruct their respective officers, directors,
employees, investment bankers, attorneys, accountants and other agents to, cease
and terminate any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any possible Alternative
Transaction. The Company shall not release any Third Party from, or waive any
provision of, and agrees to enforce each provision of, any confidentiality
agreement or any other confidentiality or standstill agreement to which the
Company is or becomes a party with any Third Party who has made, or is
reasonably expected to make, a proposal for an Alternative Transaction, unless
the Company Board determines in good faith, after consultation with its outside
legal counsel, that it is necessary to release the Third Party, waive the
provision or refrain from such enforcement to satisfy its fiduciary duties as a
matter of law.
(b) The Company Board shall not (i) withdraw, or propose to withdraw,
modify or amend, or propose to modify or amend, in a manner adverse to Parent,
its approval or recommendation of the Offer, the Merger or this Agreement or
(ii) approve, recommend or endorse, or propose to approve, recommend or endorse,
an Alternative Transaction unless the Company Board, after consultation with
outside legal counsel, determines in good faith that such action is necessary
for the Company Board to comply with its fiduciary duties to the Stockholders
under applicable Law; provided, however, that the Company Board may not take any
action contemplated by clause (ii) (and in connection therewith, withdraw,
modify or amend its approval or recommendation of this Agreement, the Merger or
the Offer) unless (A) such Alternative Transaction is proposed after the date
hereof and is a Superior Proposal, (B) the Company Board shall have first
consulted with outside legal counsel and have determined that such action is
necessary for the Company Board to comply with its fiduciary duties to the
Stockholders, (C) the Company Board has provided written notice to Parent (a
"Notice of Superior Proposal") advising Parent that the Company Board has
received a Superior Proposal, specifying the material terms and conditions of
such Superior Proposal and identifying the Person making such Superior Proposal,
and (D) three business days have elapsed after Parent's receipt of the Notice of
Superior Proposal and, if Parent has proposed an amendment to this Agreement,
the Company Board has determined in its good faith judgment (after consultation
with a financial adviser of nationally recognized reputation and consultation
with outside legal counsel) that the Alternative Transaction remains a Superior
Proposal, after taking into account the amendment proposed by Parent. If Parent
proposes an amendment as contemplated by clause (D) of the preceding sentence,
upon the Company's request, Parent shall execute an amendment to this Agreement
to implement the terms contemplated by such proposal. The Company shall not be
entitled to enter into any agreement (other than a confidentiality agreement)
with respect to an Alternative Transaction unless and until this Agreement is
terminated by its terms pursuant to Section 7.1(c) hereof and the Company has
paid all amounts due to Parent pursuant to Section 8.2 hereof.
Nothing contained in this Section 5.5(b) shall prohibit the
Company from taking and disclosing to the Stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Stockholders which, in the good faith
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reasonable judgment of the Company Board, based on the advice of outside legal
counsel, is required under applicable law; provided, however, that except as
otherwise permitted in this Section 5.5(b), the Company shall not withdraw, or
propose to withdraw, modify or amend, or propose to modify or amend, its
position with respect to the Offer, the Merger or this Agreement or approve,
recommend or endorse, or propose to approve, recommend or endorse, an
Alternative Transaction. Notwithstanding anything contained in this Agreement to
the contrary, any action by the Company Board permitted by, and taken in
accordance with, this Section 5.5(b) shall not constitute a breach of this
Agreement by the Company. Notwithstanding anything in this Agreement to the
contrary, nothing in this Agreement shall (x) limit the Company Board's ability
to make any disclosure to the Stockholders that the Company Board determines in
good faith (after consultation with outside legal counsel) is required to be
made to satisfy its fiduciary duties under applicable law or (y) limit the
Company's ability to make any disclosure required by applicable law, and such
actions shall not be considered a breach of this Agreement, provided that the
Company shall use its best efforts to give Parent an opportunity to review and
discuss the proposed disclosure before making such disclosure public.
(c) For all purposes of this Agreement, "Alternative
Transaction" means the occurrence of any of the following events: (i) the
acquisition of the Company by merger or otherwise by any Third Party, (ii) the
acquisition by a Third Party of 20% or more of the assets of the Company and the
Company Subsidiaries taken as a whole, (iii) the acquisition by a Third Party of
20% or more of the outstanding Shares or the issuance by the Company of capital
stock containing terms which are inconsistent with the consummation of the
transactions contemplated by this Agreement, (iv) the adoption by the Company of
a plan of liquidation or the declaration or payment of an extraordinary dividend
representing 20% or more of the value of the Company and the Company
Subsidiaries taken as a whole, (v) the repurchase by the Company or any of the
Company Subsidiaries of more than 20% of the outstanding Shares or (vi) any
other merger, consolidation, recapitalization, tender or exchange offer or
similar transaction involving the Company. For all purposes of this Agreement, a
"Superior Proposal" means any bona fide written unsolicited proposal of an
Alternative Transaction (except that, for purposes of the definition of Superior
Proposal, 50% shall be substituted for 20% wherever it appears in the definition
of Alternative Transaction) that the Company Board determines in its good faith
judgment (after consultation with a financial advisor of nationally recognized
reputation and consultation with outside legal counsel) (A) would result in a
transaction, if consummated, that would be superior to the Stockholders from a
financial point of view as compared to the transactions contemplated hereby and
any alternative offer or amendment proposed by Parent or Purchaser in accordance
with Section 5.5(b) hereof and (B) to be reasonably capable of being consummated
in accordance with its terms (including that any financing required to
consummate the transaction contemplated by such proposal is capable of being,
and is reasonably likely to be, obtained), in each case taking into account all
factors the Company Board considers relevant, including all legal, financial,
regulatory and other aspects of the proposal and the Third Party.
Section 5.6 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(a) the occurrence, or failure to occur, of any event that such party believes
would be likely to cause any of its representations or warranties contained in
this Agreement to be untrue or inaccurate in any material respect (ignoring any
materiality qualifiers in such representations and warranties) at any time from
the date hereof to the Effective Time, (b) any material failure of the Company
or Parent, as the case
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may be, or any officer, director, employee or agent thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder (ignoring any materiality qualifiers in such covenants, conditions
and agreements), provided, however, that failure to give such notice shall not
constitute a waiver of any defense that may be validly asserted, (c) any
comments it or its counsel may receive from any Governmental Entity with respect
to the transactions contemplated hereby and (d) the commencement of any action,
suit, hearing, arbitration, proceedings (public or private), governmental
investigations, audit, subpoena or notice of violation, brought by or against
any Governmental Entity or any other Person, involving the Company or any
Company Subsidiary that would constitute a Material Adverse Effect on the
Company.
Section 5.7 Indemnification.
(a) Parent shall provide, or cause the Company to provide,
until the sixth anniversary of the Closing Date, the directors and officers of
the Company who are currently covered by the Company's existing insurance and
indemnification policy an insurance and indemnification policy that provides
coverage for events occurring prior to the Effective Time (the "D&O Insurance")
that is no less favorable than the Company's existing policy or, if
substantially equivalent coverage is unavailable, the best available coverage,
provided, that Parent or the Company may, in lieu of such policy, purchase a
six-year extended reporting period endorsement (i.e., "tail" coverage) under the
Company's existing insurance and indemnification policy for such individuals,
and provided further that neither the Company nor Parent shall be required to
pay an annual premium for the D&O Insurance in excess of 150% of the last annual
premium paid by the Company prior to the date hereof, but in such case shall
purchase as much coverage as possible for such amount.
(b) All rights to indemnification existing in favor of those
individuals who are or prior to the date hereof were directors and officers of
the Company or any Company Subsidiary (the "Indemnified Persons") for their acts
and omissions occurring prior to the Effective Time, as provided in the
Company's Certificate of Incorporation or By-Laws (or similar organizational
documents of the relevant Company Subsidiary) (as in effect as of the date of
this Agreement) and as provided in the indemnification agreements between the
Company and said Indemnified Persons (as in effect as of the date of this
Agreement) in the forms disclosed by the Company to Parent prior to the date of
this Agreement, shall survive the Merger and shall be observed by the Surviving
Corporation to the fullest extent available under Delaware law for a period of
six years from the Effective Time (or, if any claims are pending on such date,
until the resolution thereof). From and after the Effective Time, Parent shall
cause the Surviving Corporation to comply with its obligations under this
Section 5.7(b).
(c) This Section 5.7 shall survive the consummation of the
Merger, is intended to benefit the Indemnified Persons and their heirs and
representatives, and shall be binding on the successors and assigns of Parent
and the Surviving Corporation.
Section 5.8 Employee Benefits.
(a) Until the first anniversary of the Effective Time, Parent
shall cause the Surviving Corporation to provide health and welfare benefits
that are no less favorable, in the
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aggregate, than those that are available on the date hereof to similarly
situated employees of the Parent under health and welfare benefit plans
maintained by the Parent, provided that nothing in this Section 5.8(a) shall be
deemed to prevent the Surviving Corporation or any of its subsidiaries from
making any change in benefits required by applicable law.
(b) To the extent permitted under applicable law, each
employee of the Company or any Company Subsidiary shall be given credit for all
service with the Company or any Company Subsidiary (or service credited by the
Company or any Company Subsidiary for purposes of the Company Plans) under all
employee benefit plans, programs, policies and arrangements maintained by Parent
or the Surviving Corporation in which they participate or in which they become
participants for purposes of eligibility and vesting, but not for benefit
accrual, including for purposes of determining eligibility and vesting for (i)
short-term and long-term disability benefits, (ii) severance benefits, (iii)
vacation benefits and (iv) benefits under any defined contribution retirement
plan.
(c) The Company agrees to cause all Company Plans that are
intended to be "qualified" within the meaning of Section 401(a) of the Code to
terminate before the Effective Time. The Company shall, effective at or
immediately prior to the Effective Time, cause any Company Plans that it may
have to be amended, to the extent, if any, reasonably requested by Parent, for
the purpose of permitting the Company Plans to continue to operate in conformity
with ERISA subsequent to the Merger.
Section 5.9 FIRPTA Matters. On the Expiration Date, the Company shall
deliver to (a) Parent a statement (in such form as may reasonably be requested
by counsel to Parent) conforming to the requirements of Sections
1.1445-2(c)(3)(i) and 1.897-2(h)(1)(i) of the United States Income Tax
Regulations and (b) the Internal Revenue Service the notification required under
Section 1.897-2(h)(2) of the United States Income Tax Regulations.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 Conditions to the Obligations of the Parties. The
respective obligations of the parties to consummate the Merger are subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) if required by applicable law, this Agreement shall have
been duly approved and adopted by the holders of at least two-thirds of the
outstanding Shares, in accordance with applicable law and the Certificate of
Incorporation and By-Laws of the Company;
(b) no statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or enforced
by any United States court or United States governmental authority that
prohibits, restrains or enjoins the consummation of the Merger; and
(c) Purchaser shall have accepted for payment and paid for
Shares pursuant to the Offer, provided that Parent and Purchaser may not assert
this condition if the failure to accept Shares for payment resulted from a
breach by Parent or Purchaser.
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ARTICLE VII
TERMINATION AND ABANDONMENT
Section 7.1 Termination and Abandonment. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after approval by the Stockholders:
(a) by mutual action of the Boards of Directors of Parent and
the Company;
(b) by either the Company or Parent if (i) any statute, rule,
regulation, executive order, decree, ruling or permanent injunction of or by any
Governmental Entity of competent jurisdiction that makes the consummation of the
Merger illegal shall be in effect and shall have become final and nonappealable,
(ii) the Offer shall have expired without the prompt acceptance for payment of
Shares thereunder or (iii) the acceptance for payment of Shares pursuant to the
Offer shall not have occurred on or prior to the close of business on May 31,
2001, unless, in any case set forth in such clause (ii) or (iii), such event has
been caused by the breach of this Agreement by the party seeking such
termination;
(c) by the Company, prior to acceptance for payment of Shares
in the Offer, to enter into a definitive written agreement with respect to an
Alternative Transaction with a Third Party, provided that, prior to entering
into such definitive agreement, the Company shall have given Parent the Notice
of Superior Proposal as required by Section 5.5 hereof, abided in all material
respects by all applicable provisions of Section 5.5 hereof, paid all amounts
owed to Parent pursuant to Section 8.2(a) hereof and paid the fee payable to
Parent under Section 8.2(b) hereof;
(d) by Parent, if, prior to the acceptance for payment of
Shares in the Offer, the Company Board shall have publicly withdrawn, or
proposed to withdraw, or modified or amended, or proposed to modify or amend, in
a manner adverse to Purchaser its approval or recommendation of the Merger, the
Offer or this Agreement (or shall have failed to make such favorable
recommendation) or publicly approved, recommended or endorsed any proposal for,
or authorized the Company to enter into, an Alternative Transaction;
(e) by the Company if, prior to the acceptance for payment of
Shares in the Offer, Parent shall have failed to perform in all material
respects its covenants and obligations contained in this Agreement, which
failure to perform has not been cured within 15 business days after the giving
of notice to Parent;
(f) by Parent if, prior to the acceptance for payment of
Shares in the Offer, the Company shall have failed to perform in all material
respects its covenants and obligations contained in this Agreement, which
failure to perform has not been cured within 15 business days after the giving
of notice to the Company; or
(g) by Parent, if any Person other than Parent or an affiliate
of Parent acquires 20% or more of the Shares.
Any party desiring to terminate this Agreement pursuant to this Section 7.1
shall give notice to the other party in accordance with Section 8.5 hereof.
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Section 7.2 Effect of Termination. Except as provided in Sections 5.3
and 8.2 hereof, in the event of the termination of this Agreement and the
abandonment of the Merger pursuant to Section 7.1 hereof, this Agreement shall
thereafter become void and have no effect, and no party hereto shall have any
liability to any other party hereto or its stockholders or directors or officers
in respect thereof, except that nothing herein shall relieve any party from
liability for any breach hereof.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant hereto shall survive the Effective Time, provided that this Section 8.1
shall not limit any covenant or agreement of the parties, which covenants and
agreements shall survive in accordance with their terms.
Section 8.2 Expenses.
(a) (i) Except as expressly provided in this Section 8.2, in
the event that the transactions contemplated by this Agreement are not
consummated, neither the Company, on the one hand, nor Parent or
Purchaser, on the other hand, shall have any obligation to pay any of
the fees and expenses of the other incident to the negotiation,
preparation and execution of this Agreement, including the fees and
expenses of counsel, accountants, investment bankers and other experts,
provided, however, that if this Agreement shall have been terminated as
a result of the willful and material misrepresentations by a party or
the willful and material breach by a party of any of its covenants and
agreements contained herein, such party shall pay the costs and
expenses incurred by the other parties in connection with this
Agreement.
(ii) Parent and the Company shall share equally all
fees and expenses, other than attorneys' fees, incurred in connection
with (A) the filing, printing and mailing of the Offer Documents and
the Schedule 14D-9 and any amendments or supplements thereto and (B)
the filing by the parties hereto of the premerger notification and
report forms relating to the Merger under the HSR Act.
(iii) Notwithstanding the foregoing clauses (a)(i)
and (a)(ii), no fees and expenses shall be payable by the Company under
this Section 8.2(a) if the Company has paid Parent the fee provided
under Section 8.2(b) hereof. Furthermore, if any expenses have been
previously paid by the Company under this Section 8.2(a) (the "Expense
Payment"), any amount subsequently paid by the Company under Section
8.2(b) hereof shall be decreased by the Expense Payment.
(b) If a Payment Event (as hereinafter defined) occurs, the
Company shall pay to Parent at the time of such Payment Event a fee of $4.3
million in cash.
(c) For purposes of this Agreement, the term "Payment Event"
shall mean
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(i) the termination of this Agreement by the Company
pursuant to Section 7.1(c) hereof,
(ii) the termination of this Agreement by Parent
pursuant to Section 7.1(d) hereof, or
(iii) a termination of this Agreement pursuant to
Section 7.1(b)(ii) (except where the expiration of the Offer is due to
a breach by Parent), 7.1(b)(iii) (except where the failure to accept
for payment of Shares by the close of business on May 31, 2001 is due
to a breach by Parent), 7.1(f) or 7.1(g) hereof if (A) prior to such
termination (and after the date of this Agreement) (x) any Third Party
shall have informed the Company (or the Company Board or any officer or
director of the Company) that such Person proposes, intends to propose,
or will, if the Offer, Merger or any transaction contemplated herein is
delayed, abandoned or not approved by the Stockholders or if any other
condition occurs, propose, an Alternative Transaction, or (y) any Third
Party or the Company publicly announces (including any filing with any
Governmental Entity) that such Person has proposed, intends to propose,
or will or may, if the Offer, Merger or any transaction contemplated
herein is delayed, abandoned or not approved by the Stockholders or if
any other condition occurs, propose, an Alternative Transaction, and
(B) within one year after such termination the Company enters into an
agreement for, or consummates, an Alternative Transaction (substituting
50% for 20% in the definition thereof) with any Third Party. If a
Payment Event occurs pursuant to this Section 8.2(c)(iii), then
notwithstanding anything stated in Section 8.2(b) hereof, the payment
required by Section 8.2(b) hereof shall be made at the time of the
first to occur of the execution of the agreement for, or consummation
of, such Alternative Transaction.
In no event shall more than one fee be payable under Section 8.2(b) hereof.
(d) The Company acknowledges that the agreements contained in
this Section 8.2 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter into this
Agreement, accordingly, if the Company fails to promptly pay any amount due
pursuant to this Section 8.2, and, in order to obtain such payment, Parent
commences a suit that results in a judgment against the Company for any amount
set forth in this Section 8.2, the Company shall also pay to Parent its
reasonable costs and expenses incurred in connection with such litigation. If
Parent commences such a suit and it does not result in such a judgment, Parent
shall pay to the Company its reasonable costs and expenses incurred in
connection with such litigation.
Section 8.3 Publicity. Company and Parent shall agree on the form and
content of the initial press release regarding the transactions contemplated
hereby and thereafter shall consult with each other before issuing, and use
reasonable efforts to agree upon, any press release or other public statement
with respect to any of the transactions contemplated hereby and shall not issue
any such press release or make any such public statement prior to such
consultation; provided, however, that subject to the obligation to consult with
respect to the content of such notice, as provided above, nothing contained in
this Section 8.3 is intended to prevent any party from making any public
disclosure it believes in good faith after consultation with its outside legal
advisors is required by applicable law or any listing or trading agreement
concerning its
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publicly traded securities. Each of Parent and the Company shall promptly notify
the other of each report, schedule and other document filed by it with the SEC
pertaining to the Offer, the Merger or the other transactions contemplated
hereby.
Section 8.4 Execution in Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
Section 8.5 Notices. All notices that are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
delivered by hand or national overnight courier service, transmitted by telecopy
(if also given contemporaneously by national overnight courier service) or
mailed by registered or certified mail, return receipt requested, postage
prepaid, as follows (each such notice to be effective upon receipt):
If to Parent or Purchaser to:
American Express Travel Related Services Company, Inc.
000 Xxxxx Xxxxxx
World Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Small Business Services
with a copy to:
Faegre & Xxxxxx LLP
2200 Xxxxx Fargo Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
If to the Company, to:
XxxxxxXxxxxx.xxx Inc.
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
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with a copy to:
XxxxxxXxxxxx.xxx Inc.
000 Xxxxxxxxx Xxxx, Xxxxx X-00
Xxxxx Xxxxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx
and
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto.
Section 8.6 Waivers. The Company, on the one hand, and Parent, on the
other hand, may, by written notice to the other, (a) extend the time for the
performance of any of the obligations or other actions of the other under this
Agreement, (b) waive any inaccuracies in the representations or warranties of
the other contained in this Agreement or in any document delivered pursuant to
this Agreement, (c) waive compliance with any of the conditions of the other
contained in this Agreement or (d) waive performance of any of the obligations
of the other under this Agreement. Except as provided in the preceding sentence,
no action taken pursuant to this Agreement, including any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
Section 8.7 Entire Agreement. This Agreement, its Schedules and the
Confidentiality Agreement constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral and written, between the parties hereto with
respect to the subject matter hereof. No representation, warranty, promise,
inducement or statement of intention has been made by any party that is not
embodied in this Agreement or such other documents, and none of the parties
shall be bound by, or be liable for, any alleged representation, warranty,
promise, inducement or statement of intention not embodied herein or therein.
Section 8.8 Applicable Law.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to principles
of conflicts of law.
(b) The parties hereto agree that any suit, action or
proceeding seeking to enforce any provision of, or based on any matter arising
out of, this Agreement may be brought
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in any state or federal court sitting in the United States District Court for
the District of Delaware or any other Delaware state court (and in the
appropriate appellate courts), and each of the parties hereby (i) consents to
the jurisdiction of such courts in any such suit, action or proceeding, (ii)
irrevocably waives any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient forum and (iii) agrees not to bring any action
related to this agreement or the transactions contemplated hereby in any other
court (except to enforce the judgment of such courts). Process in any such suit,
action or proceeding may be served on any party anywhere in the world, whether
within or without the jurisdiction of any such court. Without limiting the
foregoing, each party agrees that service of process on such party in the manner
provided for notices in Section 8.5 hereof shall be deemed effective service of
process on such party. Each of Parent, Purchaser and the Company hereby
irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Agreement or the actions of Parent, Purchaser or the Company in
the negotiation, administration, performance and enforcement hereof.
Section 8.9 Binding Effect, Benefits. Except as otherwise stated
herein, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective permitted successors and assigns. Nothing in
this Agreement, expressed or implied, is intended to confer on any Person other
than the parties hereto or their respective permitted successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, provided, however, that the provisions of Section 5.7 hereof shall
accrue to the benefit of, and shall be enforceable by, each of the Indemnified
Persons.
Section 8.10 Assignability. Neither this Agreement nor any of the
parties' rights hereunder shall be assignable by any party hereto without the
prior written consent of each other party hereto, and any attempted assignment
without such consent shall be void.
Section 8.11 Amendments. This Agreement may be amended or supplemented
at any time before or after the approval and adoption of this Agreement by the
Stockholders by action of Parent, Purchaser and the Company, without action by
the stockholders thereof, provided that, after approval and adoption of this
Agreement by the Stockholders, no such amendment or supplement shall, without
the required affirmative vote of the Stockholders, reduce the amount or alter
the form of the consideration that the holders of the capital stock of the
Company shall be entitled to receive upon the Effective Time pursuant to Article
II hereof. Without limiting the generality of the foregoing, this Agreement may
only be amended or supplemented by an instrument in writing signed by the
parties hereto.
Section 8.12 Interpretation. As used herein, "best efforts" or similar
formulations shall mean "all commercially reasonable best efforts". References
to the "knowledge" of the Company, or similar formulations, shall mean to the
actual knowledge of any executive officer or director of the Company or of any
Company Subsidiary after reasonable inquiry in the exercise of due care. The
term "affiliate" shall have the meaning set forth in Rule 12b-2 of the General
Rules and Regulations promulgated under the Exchange Act. As used herein,
"include", "includes", "including" or similar formulations shall be deemed to be
followed by the words "without limitation". Unless the context shall indicate
otherwise, "or" shall be non-exclusive.
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All references herein to "dollars" (including the use of "$") shall mean U.S.
dollars. All references herein to "pay" or "payment" shall mean payment by wire
transfer in immediately available funds. The words "hereof", "herein", "hereto"
or words of similar import refer to this Agreement. This Agreement shall be
deemed drafted jointly by all the parties hereto and shall not be construed
against any party based on a claim that such party or its counsel drafted this
Agreement.
* * * * *
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement and Plan of Merger as of the day and year first above written.
AMERICAN EXPRESS TRAVEL RELATED
SERVICES COMPANY, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Its: Executive Vice President & General
Manager, Small Business Services
AMTRS CORP.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Its: Vice President and Secretary
XXXXXXXXXXXX.XXX INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Its: Chief Executive Officer
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ANNEX I
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer or this Agreement, and
in addition to (and not in limitation of) Purchaser's rights to extend and amend
the Offer (subject to the provisions of this Agreement), and subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) relating to
Purchaser's obligation to pay for or return tendered shares after termination of
the Offer, Purchaser shall not be required to accept for payment or pay for any
Shares tendered pursuant to the Offer and may postpone the acceptance for
payment of payment for any Shares tendered, and may amend or terminate (if, when
and as permitted by this Agreement) the Offer, if (1) there have not been
validly tendered and not withdrawn before the Expiration Date a number of Shares
which, together with the Shares then beneficially owned by Parent or Purchaser,
represents at least two-thirds of the outstanding Shares calculated on a fully
diluted basis (the "Minimum Condition") ("on a fully diluted basis" having the
following meaning, as of any date: the number of Shares outstanding, together
with the number of Shares the Company is then required to issue pursuant to
obligations outstanding at that date under stock option or other benefit plans
or otherwise), (2) any applicable waiting period under the HSR Act has not
expired or been terminated before the Expiration Date or (3) at any time after
the date of this Agreement, and before acceptance for payment of any Shares, any
of the following events shall occur and be continuing:
(a) there shall have been any action taken, or any statute,
rule, regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, issued or deemed applicable to the Offer or the Merger by any domestic
or foreign court or other Governmental Entity which directly or indirectly (i)
prohibits, or makes illegal, the acceptance for payment of or payment for Shares
or the consummation of the Offer or the Merger, (ii) renders Purchaser unable to
accept for payment or pay for some or all of the Shares, (iii) imposes material
limitations on the ability of Parent or Purchaser effectively to exercise full
rights of ownership of the Shares, including the right to vote the Shares
purchased by it on all matters properly presented to the Stockholders, (iv)
prohibits or imposes any material limitations on Parent's direct or indirect
ownership or operation (or that of any of its affiliates) of all or a material
portion of their or the Company's businesses or assets, (v) compels Parent or
its affiliates to dispose of or hold separate any portion of the business or
assets of the Company or Parent and their respective subsidiaries which would be
material in the context of the Company and the Company Subsidiaries taken as a
whole, (vi) obliges the Company, Parent or any of their respective subsidiaries
to pay material damages in connection with the transactions contemplated by the
Agreement or (vii) otherwise constitutes a Material Adverse Effect on the
Company or, as a result of the transactions contemplated by the Agreement,
Parent;
(b) there shall be instituted by any Governmental Entity and
pending any action or proceeding before any United States or foreign court or
governmental entity or authority of competent jurisdiction seeking any order,
decree or injunction having any effect set forth in Section (a) above;
(c) (i) the representations and warranties of the Company
contained in Section 3.5 of this Agreement shall not be true and correct in all
material respects either when made or on and as of the Expiration Date with the
same effect as though such representations and
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warranties had been made on and as of such date (except for representations and
warranties expressly made as of an earlier date, in which case as of such date),
(ii) the representations and warranties of the Company in this Agreement (other
than those in Section 3.5 hereof) shall not be true and correct either when made
or on and as of the Expiration Date with the same effect as though such
representations and warranties had been made on and as of such date (except for
representations and warranties expressly made as of an earlier date, in which
case as of such date), except for such failures to be true and correct (without
giving effect to any materiality qualifiers) which, individually or in the
aggregate, would not constitute a Material Adverse Effect on the Company or
(iii) the Company shall have failed to perform in any material respects its
covenants and obligations contained in this Agreement, which failure to perform
has not been cured within ten business days after the giving of written notice
to the Company;
(d) except as disclosed in the Company SEC Filings or Schedule
3.8 hereto supplied on the date hereof, there shall have occurred since December
31, 0000 xxx or more events, occurrences, states or actions that, individually
or in the aggregate, have had or are reasonably likely to have a Material
Adverse Effect on the Company;
(e) the Company Board shall have publicly withdrawn, or
modified or changed in a manner adverse to Parent and Purchaser (including by
amendment of the Schedule 14D-9), its approval or recommendation of the Offer,
the Merger or this Agreement, or shall have failed to make such favorable
recommendation, or accepted, approved or recommended an Alternative Transaction,
or the Company Board shall have resolved to do any of the foregoing, or publicly
announced an intention to do any of the foregoing;
(f) any Person or "group" (as defined in Section 13(d)(3) of
the Exchange Act), other than Parent or its affiliates or any group of which any
of them is a member, shall have acquired or announced its intention to acquire
beneficial ownership (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the Shares; or
(g) this Agreement shall have terminated in accordance with
its terms;
which in the reasonable judgment of Parent, in any such case, and regardless of
the circumstances (including any action or inaction by Parent or Purchaser)
giving rise to such condition makes it inadvisable to proceed with the Offer or
the acceptance for payment of or payment for the Shares.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be waived by Parent and Purchaser, in whole or in part at any
time and from time to time, in the sole discretion of Parent and Purchaser. The
failure by Parent and Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
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