EXHIBIT 1
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AGREEMENT AND PLAN OF MERGER
among
E. I. DU PONT DE NEMOURS AND COMPANY,
PURPLE ACQUISITION CORPORATION
and
CHEMFIRST INC.
Dated as of July 23, 2002
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TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger............................................1
SECTION 1.02. Closing.............................................. 1
SECTION 1.03. Effective Time........................................2
SECTION 1.04. Effects of the Merger.................................2
SECTION 1.05. Articles of Incorporation and By-laws.................2
SECTION 1.06. Directors.............................................2
SECTION 1.07. Officers..............................................2
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock...............................2
SECTION 2.02. Exchange of Certificates..............................3
SECTION 2.03. Adjustment to Merger Consideration....................5
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company.........5
SECTION 3.02. Representations and Warranties of Parent and Sub.....23
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business..................................25
SECTION 4.02. No Solicitation......................................30
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Proxy Statement...................32
Contents, p. ii
SECTION 5.02. Company Shareholders Meeting.........................33
SECTION 5.03. Access to Information................................33
SECTION 5.04. Reasonable Best Efforts..............................34
SECTION 5.05. Employee Matters.....................................34
SECTION 5.06. Stock Based Awards...................................36
SECTION 5.07. Fees and Expenses; Termination Fee...................37
SECTION 5.08. Indemnification, Exculpation and Insurance...........38
SECTION 5.09. Shareholder Litigation...............................39
SECTION 5.10. Rights Agreement.....................................39
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation
To Effect the Merger...............................39
SECTION 6.02. Conditions to Obligations of Parent
and Sub To Effect the Merger.......................39
SECTION 6.03. Conditions to Obligation of the Company
To Effect the Merger...............................40
SECTION 6.04. Frustration of Closing Conditions....................40
ARTICLE VII
Termination and Amendment
SECTION 7.01. Termination...........................................41
SECTION 7.02. Effect of Termination.................................42
SECTION 7.03. Amendment.............................................42
SECTION 7.04. Extension; Waiver.....................................42
SECTION 7.05. Procedure for Termination, Amendment,
Extension or Waiver.................................42
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties.........43
SECTION 8.02. Notices 43
SECTION 8.03. Definitions; Interpretation...........................44
SECTION 8.04. Counterparts..........................................45
SECTION 8.05. Entire Agreement; No Third-Party Beneficiaries........45
SECTION 8.06. Governing Law.........................................45
SECTION 8.07. Publicity.............................................45
SECTION 8.08. Assignment............................................46
SECTION 8.09. Enforcement...........................................46
SECTION 8.10. Severability.........................................46
ANNEX I - Index of Defined Terms
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated
as of July 23, 2002, among E. I. DU PONT DE NEMOURS AND
COMPANY, a Delaware corporation ("Parent"), PURPLE
ACQUISITION CORPORATION, a Mississippi corporation and a
wholly owned subsidiary of Parent ("Sub"), and CHEMFIRST
INC., a Mississippi corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of common stock, par
value $1.00 per share, of the Company ("Company Common Stock") not owned by
Parent, Sub or the Company will be converted into the right to receive $29.20
in cash;
WHEREAS the respective Boards of Directors of Sub and the Company
have adopted this Agreement;
WHEREAS, simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Parent and
Sub to enter into this Agreement, Parent and a certain shareholder of the
Company are entering into a shareholder agreement (the "Shareholder
Agreement") pursuant to which, among other things, such shareholder has agreed
to vote to approve this Agreement and to take certain other actions in
furtherance of the Merger, upon the terms and subject to the conditions set
forth therein;
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Mississippi
Business Corporation Act (the "MBCA"), Sub shall be merged with and into the
Company at the Effective Time. Following the Merger, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to all the rights
and obligations of Sub in accordance with the MBCA.
SECTION 1.02. Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties (the
"Closing Date"), which shall be no later than the second business day
following the satisfaction or waiver of the conditions set forth in Article VI
(other than those conditions that by their terms are to be satisfied at the
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Closing, but subject to the satisfaction or waiver of those conditions), at
the offices of Cravath, Swaine & Xxxxx, Worldwide Plaza, 000 Xxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, unless another time, date or place is agreed to in
writing by the parties.
SECTION 1.03. Effective Time. Prior to the Closing, the parties
shall prepare and execute articles of merger in accordance with Section
79-4-11.06(a) of the MBCA (the "Articles of Merger"), and as soon as
practicable on the Closing Date, the Surviving Corporation shall deliver the
Articles of Merger to the Secretary of State of the State of Mississippi for
filing in accordance with the relevant provisions of the MBCA. The Merger
shall become effective at such time as the Articles of Merger are duly filed
in accordance with Section 79-4-11.06(b) of the MBCA, or at such other time as
Parent and the Company shall agree and shall specify in the Articles of Merger
(the time the Merger becomes effective being hereinafter referred to as the
"Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 79-4-11.07 of the MBCA.
SECTION 1.05. Articles of Incorporation and By-laws. (a) The
articles of incorporation of Sub, as in effect immediately prior to the
Effective Time, shall be the articles of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The by-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Sub immediately prior to
the Effective Time shall be the directors of the Surviving Corporation to hold
office until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation to hold
office until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of the Company, Parent or Sub:
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(a) Capital Stock of Sub. Each issued and outstanding share of
common stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancelation of Certain Stock. Each share of Company Common Stock
that is owned by the Company, as treasury stock, or by any direct or indirect
wholly owned subsidiary of the Company, or by Parent or Sub, in each case
immediately prior to the Effective Time, shall automatically be canceled and
retired and shall cease to exist and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Company Common Stock. Each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time (other
than shares to be canceled in accordance with Section 2.01(b)) shall be
converted into the right to receive $29.20 in cash, without interest (the
"Merger Consideration"). At the Effective Time, all such shares shall no
longer be outstanding and shall automatically be canceled and shall cease to
exist, and each holder of a certificate that immediately prior to the
Effective Time represented any such shares (a "Certificate") shall cease to
have any rights with respect thereto, except the right to receive the Merger
Consideration. The right of any holder of any share of Company Common Stock to
receive the Merger Consideration shall be subject to and reduced by the amount
of any withholding that is required under applicable tax law.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent. Prior to
the Effective Time, Parent shall appoint a bank or trust company that is
reasonably satisfactory to the Company to act as paying agent (the "Paying
Agent") for the payment of the Merger Consideration. At or immediately prior
to the Effective Time, Parent shall deliver, or cause the Surviving
Corporation to deliver, to the Paying Agent immediately available funds in the
amount necessary for the payment of the Merger Consideration pursuant to
Section 2.01(c) upon surrender of Certificates (such funds, the "Exchange
Fund"). Subject to Section 2.02(d), the Paying Agent shall, pursuant to
irrevocable instructions, deliver the Merger Consideration out of the Exchange
Fund in accordance with this Article II. Except as contemplated by this
Article II, the Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Paying Agent to mail to each holder of
record of a Certificate (i) a form of letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Paying Agent and which shall be in customary form and contain customary
provisions) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancelation to the Paying Agent, together with such letter of
transmittal, duly completed and validly executed, and such other documents as
may reasonably be required by the Paying Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor the amount of cash into
which the shares formerly represented by such Certificate shall have been
converted pursuant to Section 2.01(c), and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of shares
that is not registered in the stock transfer books of the Company, payment may
be made to a person other than the person in whose name the Certificate so
surrendered is registered if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person
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requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of such
Certificate or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. No interest shall be paid or
shall accrue on the cash payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. All cash
paid upon the surrender of Certificates in accordance with the terms of this
Article II shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Company Common Stock formerly represented
by such Certificates. At the close of business on the day on which the
Effective Time occurs, the stock transfer books of the Company shall be
closed, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Common
Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, any Certificate is presented to the Surviving Corporation
for transfer or any other reason, it shall be canceled against delivery of
cash to the holder thereof as provided in this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of the Certificates for six months
after the Effective Time shall be delivered to the Surviving Corporation, upon
demand, and any holders of the Certificates who have not theretofore complied
with this Article II shall thereafter look only to the Surviving Corporation
or Parent for payment of their claim for the Merger Consideration.
(e) No Liability. None of Parent, Sub, the Company, the Surviving
Corporation or the Paying Agent shall be liable to any person in respect of
any cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(f) Investment of Exchange Fund. The Paying Agent shall invest any
cash included in the Exchange Fund as directed by Parent provided, however,
that any such investments shall be in (i) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof and having maturities of not more than one month from
the date of investment, (ii) certificates of deposit, eurodollar time deposits
and bankers' acceptances with maturities not exceeding one month and overnight
bank deposits with any commercial bank, depository institution or trust
company incorporated or doing business under the laws of the United States of
America, any state thereof or the District of Columbia, provided that such
commercial bank, depository institution or trust company has, at the time of
investment, (A) capital and surplus exceeding $500,000,000 and (B) outstanding
short-term debt securities which are rated at least A-1 by Standard & Poor's,
a division of The XxXxxx-Xxxx Companies, Inc., or at least P-1 by Xxxxx'x
Investors Services, Inc., (iii) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clauses (i)
and (ii) above entered into with any financial institution meeting the
qualifications specified in clause (ii) above, (iv) commercial paper having a
rating in the highest rating categories from Standard & Poor's, a division of
The XxXxxx-Xxxx Companies, Inc., or Xxxxx'x Investors Services, Inc. and in
each case maturing within one month from the date of investment and (v) money
market mutual or similar funds having assets in excess of $1,000,000,000. Any
interest and other income resulting from such investments shall be paid to
Parent.
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(g) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable
and customary amount as Parent may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Paying Agent
shall deliver in exchange for such lost, stolen or destroyed Certificate the
applicable Merger Consideration with respect thereto.
(h) Withholding Rights. Parent shall be entitled to deduct and
withhold from the consideration otherwise payable to any holder of Company
Common Stock pursuant to this Agreement such amounts as may be required to be
deducted and withheld with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), or under any provision
of state, local or foreign tax law. To the extent that amounts are so withheld
and paid over to the appropriate taxing authority by Parent, the Surviving
Corporation or the Paying Agent, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the shares
of Company Common Stock in respect of which such deduction and withholding was
made by Parent, the Surviving Corporation or the Paying Agent.
SECTION 2.03. Adjustment to Merger Consideration. Without limiting
or in any way modifying the covenant of the Company set forth in Section
4.01(a)(i), in the event that, prior to the Effective Time, the outstanding
shares of Company Common Stock are changed into a different number of shares
as a result of a stock split, stock dividend, recapitalization, subdivision,
reclassification, combination, exchange of shares or similar transaction, the
Merger Consideration shall be proportionately adjusted to reflect such stock
split, stock dividend, recapitalization, subdivision, reclassification,
combination, exchange of shares or similar transaction.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Company. Except
as set forth on the disclosure schedule (with specific reference to the
particular subsection of this Agreement to which the information set forth in
such disclosure schedule relates; provided, however, that to the extent it is
reasonably apparent on the face of such exception that such exception also
relates to another subsection of this Section 3.01, each such other subsection
shall also be qualified by such exception) delivered by the Company to Parent
prior to the execution of this Agreement (the "Company Disclosure Schedule")
and except as disclosed in the Company SEC Documents filed and publicly
available prior to the date of this Agreement (the "Company Filed SEC
Documents"), the Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. The Company and each
of its subsidiaries is a corporation or other legal entity duly organized,
validly existing and in good standing (with respect to jurisdictions that
recognize such concept) under the laws of the jurisdiction in which it is
organized and has all requisite corporate or other power, as the case may be,
and authority to carry on its business as now being conducted. The Company and
each
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of its subsidiaries is duly qualified or licensed to do business and is in
good standing (with respect to jurisdictions that recognize such concept) in
each jurisdiction in which the nature of its business or the ownership,
leasing or operation of its assets makes such qualification or licensing
necessary, except for those jurisdictions where the failure to be so qualified
or licensed or to be in good standing, individually or in the aggregate, has
not had and would not reasonably be expected to have a Material Adverse
Effect. The Company has made available to Parent prior to the execution of
this Agreement complete and correct copies of its articles of incorporation
and by-laws, each as amended to the date of this Agreement.
(b) Subsidiaries. Section 3.01(b) of the Company Disclosure Schedule
sets forth a complete and correct list of each of the Company's subsidiaries
and the jurisdiction of incorporation or organization of each such subsidiary.
All the outstanding shares of capital stock of, or other equity interests in,
each subsidiary of the Company have been validly issued, are fully paid and
nonassessable and are owned directly or indirectly by the Company, free and
clear of all pledges, claims, liens, charges, encumbrances, mortgages and
security interests of any kind or nature whatsoever (collectively, "Liens")
and free of any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other equity interests. Except for the capital stock of
its subsidiaries, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any person.
(c) Capital Structure. (i) The authorized capital stock of the
Company consists of (A) 100,000,000 shares of Company Common Stock, par value
$1.00 per share, and (B) 20,000,000 shares of preferred stock, without a set
par value, of the Company ("Company Preferred Stock"), of which 1,000,000
shares have been designated Series X Junior Participating Preferred Stock, par
value $1.00 per share (the "Rights Plan Preferred Stock"), 97,000 shares have
been designated 1987-A Series Convertible Preferred Stock, par value $1.00 per
share, 156,000 shares have been designated 1988-A Series Convertible Preferred
Stock, par value $1.00 per share, 11,000 shares have been designated 1988-1
Series Convertible Preferred Stock, par value $1.00 per share, 103,000 shares
have been designated 1989-A Series Convertible Preferred Stock, par value
$1.00 per share, 45,000 shares have been designated 1989-1 Series Convertible
Preferred Stock, par value $1.00 per share, 11,000 shares have been designated
1989-2 Series Convertible Preferred Stock, par value $1.00 per share, 138,000
shares have been designated 1990-1 Series Convertible Preferred Stock, par
value $1.00 per share, 11,000 shares have been designated 1990-2 Series
Convertible Preferred Stock, par value $1.00 per share, 155,000 shares have
been designated 1991-1 Series Convertible Preferred Stock, par value $1.00 per
share, 11,000 shares have been designated 1991-2 Series Convertible Preferred
Stock, par value $1.00 per share, 11,000 shares have been designated 1992-1
Series Convertible Preferred Stock, par value $1.00 per share, and 1,000
shares have been designated 1994-1 Series Convertible Preferred Stock, par
value $1.00 per share. At the close of business on July 19, 2002, (A)
14,184,806 shares of Company Common Stock were issued and outstanding, (B) no
shares of Company Common Stock were held by the Company in its treasury, (C)
no shares of Company Preferred Stock were issued and outstanding, (D)
3,128,736 shares of Company Common Stock were reserved and available for
issuance pursuant to the Company's 1988 Long-Term Incentive Plan, 1995
Long-Term Incentive Plan and 1998 Long-Term Incentive Plan (such plans,
collectively, the "Company Stock Plans"), of which 2,450,055 shares were
subject to outstanding options under the Company Stock Plans, (E) 61,593
shares of Company Common Stock were reserved and available for issuance
pursuant to the Company's 1997 Employee Stock
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Purchase Plan (the "ESPP") and (F) 1,000,000 shares of Rights Plan Preferred
Stock were reserved for issuance in connection with the rights (the "Rights")
issued pursuant to the Rights Agreement between the Company and KeyCorp
Shareholder Services, Inc. ("KeyCorp"), dated as of October 30, 1996, as
amended by the First Amendment to Rights Agreement, effective May 1, 1997, by
and among the Company, KeyCorp and The Bank of New York and the Second
Amendment to Rights Agreement, effective October 1, 2001, by and among the
Company, The Bank of New York and American Stock Transfer & Trust Company (as
so amended, the "Rights Agreement"). The Company has delivered to Parent a
complete and correct list, as of the close of business on July 19, 2002, of
all outstanding stock options or other rights to purchase Company Common Stock
granted under the Company Stock Plans or otherwise (collectively, the "Company
Stock Options"), the number of shares of Company Common Stock subject to each
such Company Stock Option, the grant dates and exercise prices and vesting
schedule of each such Company Stock Option and the names of the holders
thereof. As of the close of business on July 19, 2002, there were outstanding
Company Stock Options to purchase 2,450,055 shares of Company Common Stock
with exercise prices on a per share basis lower than the Merger Consideration,
and the weighted average exercise price of such Company Stock Options was
equal to approximately $22.003 per share of Company Common Stock. The maximum
number of shares of Company Common Stock that could be purchased with
accumulated payroll deductions under the ESPP as of July 19, 2002 (assuming
for such purpose that the fair market value of a share of Company Common Stock
on such date is equal to the Merger Consideration) is 4,500.
(ii) Except as set forth above, at the close of business on
July 19, 2002, no shares of capital stock or other voting securities
of the Company were issued, reserved for issuance or outstanding,
and there were no outstanding stock appreciation rights, rights to
receive shares of Company Common Stock on a deferred basis or other
rights that are linked to the value of Company Common Stock, granted
under the Company Stock Plans or otherwise. Since July 19, 2002,
until the date of this Agreement, (A) there have been no issuances
by the Company of shares of capital stock or other voting securities
of the Company other than issuances of shares of Company Common
Stock pursuant to the exercise of Company Stock Options or the
settlement of purchase rights under the ESPP, in each case
outstanding at such date as required by their terms as in effect on
the date of this Agreement and (B) there have been no issuances by
the Company of options, warrants or other rights to acquire shares
of capital stock or other voting securities from the Company, other
than rights that may have arisen under the ESPP.
(iii) All outstanding shares of capital stock of the Company
are, and all shares which may be issued pursuant to the Company
Stock Plans and the ESPP will be, when issued in accordance with the
terms thereof, duly authorized, validly issued, fully paid and
nonassessable, and not subject to preemptive rights. There are no
bonds, debentures, notes or other indebtedness of the Company or any
of its subsidiaries, and no securities or other instruments or
obligations of the Company or any of its subsidiaries the value of
which is in any way based upon or derived from any capital or voting
stock of the Company, having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any
matters on which shareholders of the Company may vote. Except as set
forth above and except as expressly permitted under Section 4.01(a),
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there are no outstanding securities, options, warrants, calls,
rights, contracts, commitments, agreements, instruments,
arrangements, understandings, obligations or undertakings of any
kind to which the Company or any of its subsidiaries is a party, or
by which the Company or any of its subsidiaries is bound, obligating
the Company or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital
stock or other voting securities of, or securities convertible into,
or exchangeable or exercisable for, shares of capital stock or other
voting securities of, the Company or of any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue, grant,
extend or enter into any such security, option, warrant, call,
right, contract, commitment, agreement, instrument, arrangement,
understanding, obligation or undertaking. There are no outstanding
contractual obligations of the Company or any of its subsidiaries to
(A) repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its subsidiaries or (B) vote or
dispose of any shares of the capital stock of any of its
subsidiaries.
(d) Authorization; Noncontravention. The Company has the requisite
corporate power and authority to execute and deliver this Agreement, to
consummate the transactions contemplated by this Agreement, subject, in the
case of the Merger, to obtaining the Company Shareholder Approval, and to
comply with the provisions of this Agreement. The execution and delivery of
this Agreement by the Company, the consummation by the Company of the
transactions contemplated by this Agreement and the compliance by the Company
with the provisions of this Agreement have been duly authorized by all
necessary corporate action on the part of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated by this Agreement,
subject, in the case of the Merger, to obtaining the Company Shareholder
Approval. This Agreement has been duly executed and delivered by the Company
and, assuming the due authorization, execution and delivery by Parent and Sub,
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms. The Board of Directors of the
Company, at a meeting duly called and held at which all directors of the
Company were present either in person or by telephone, duly and unanimously
adopted resolutions (i) adopting this Agreement, (ii) declaring that it is in
the best interests of the Company's shareholders that the Company enter into
this Agreement and consummate the Merger on the terms and subject to the
conditions set forth in this Agreement, (iii) declaring that the consideration
to be paid to the Company's shareholders in the Merger is fair to such
shareholders, (iv) directing that this Agreement be submitted to a vote at a
meeting of the Company's shareholders to be held as promptly as practicable
following the date of this Agreement and (v) recommending that such
shareholders approve this Agreement, which resolutions have not been modified,
supplemented or rescinded and remain in full force and effect. The execution
and delivery by the Company of this Agreement and the consummation of the
transactions contemplated by this Agreement and compliance by the Company with
the provisions of this Agreement do not and will not conflict with, or result
in any violation or breach of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of, or result in, termination,
cancelation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien in or upon any of the properties
or assets of the Company or any of its subsidiaries under, or give rise to any
increased, additional, accelerated or guaranteed rights or entitlements under,
any provision of (i) the articles of incorporation or by-laws of the Company
or comparable organizational documents of any
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subsidiary of the Company, (ii) any loan or credit agreement, bond, debenture,
note, mortgage, indenture, lease or other contract, commitment, agreement,
instrument, arrangement, understanding, obligation, undertaking, permit,
concession, franchise or license to which the Company or any of its
subsidiaries is a party or any of their respective properties or assets is
subject or (iii) subject to obtaining or making the consents, approvals,
orders, authorizations, registrations, declarations and filings referred to in
the following sentence, any (A) statute, law, ordinance, rule or regulation or
(B) judgment, order or decree, in each case, applicable to the Company or any
of its subsidiaries or their respective properties or assets, other than, in
the case of clauses (ii) and (iii), any such conflicts, violations, breaches,
defaults, rights, losses, Liens or entitlements that individually or in the
aggregate would not reasonably be expected to (x) have a Material Adverse
Effect, (y) impair in any material respect the ability of the Company to
perform its obligations under this Agreement or (z) prevent or materially
impede, interfere with, hinder or delay the consummation of the transactions
contemplated by this Agreement. No consent, approval, order or authorization
of, or registration, declaration or filing with, any domestic or foreign
governmental entity, including any Federal, state or local government or any
court, administrative agency or commission or other governmental or regulatory
authority or agency (each, a "Governmental Entity") is required by or with
respect to the Company or any of its subsidiaries in connection with the
execution and delivery of this Agreement by the Company, the consummation by
the Company of the transactions contemplated by this Agreement or the
compliance by the Company with the provisions of this Agreement, except for
(1) the filing of a premerger notification and report form by the Company
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), or similar filings under any other applicable competition,
merger control, antitrust or similar law, (2) the filing with the Securities
and Exchange Commission (the "SEC") of a proxy statement relating to the
meeting of the shareholders of the Company to be called and convened for such
shareholders to consider the approval of this Agreement (such proxy statement
as amended or supplemented from time to time, the "Proxy Statement") and such
reports under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as may be required in connection with this Agreement, the Shareholder
Agreement and the other transactions contemplated hereby and thereby, (3) the
delivery to the Secretary of State of the State of Mississippi for filing in
accordance with Section 79-4-11.06(b) of the MBCA of the Articles of Merger
and the filing of appropriate documents with the relevant authorities of other
states in which the Company or any of its subsidiaries is qualified to do
business, (4) any filings required under the rules and regulations of the New
York Stock Exchange (the "NYSE"), (5) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required as
a result of the status of Parent or Sub and (6) such other consents,
approvals, orders, authorizations, registrations, declarations and filings,
the failure of which to be obtained or made, individually or in the aggregate,
would not reasonably be expected to (x) have a Material Adverse Effect, (y)
impair in any material respect the ability of the Company to perform its
obligations under this Agreement or (z) prevent or materially impede,
interfere with, hinder or delay the consummation of any of the transactions
contemplated by this Agreement.
(e) SEC Documents; Financial Statements; Undisclosed Liabilities.
The Company has filed all reports, schedules, forms, statements and other
documents (including exhibits and other information incorporated therein)
required to be filed by the Company with the SEC since January 1, 2000 (the
"Company SEC Documents"). As of their respective dates, each of the Company
SEC Documents complied in all material respects with the requirements of
10
the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Documents, and none of the Company
SEC Documents at the time it was filed contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements (including, in each case, any related notes thereto) of the Company
included in the Company SEC Documents, as of their respective dates of filing,
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, in effect at the time of filing, have been prepared in accordance
with generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set
forth in the most recent financial statements included in the Company Filed
SEC Documents, and except for liabilities incurred in the ordinary course of
business consistent with past practice or in connection with this Agreement or
the transactions contemplated hereby, neither the Company nor any of its
subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) (i) of a nature required to be
disclosed on a balance sheet or in the related notes to financial statements
prepared in accordance with GAAP or (ii) which, individually or in the
aggregate, have had or would reasonably be expected to have a Material Adverse
Effect.
(f) Information Supplied. The Proxy Statement will not, at the date
the Proxy Statement is first mailed to the shareholders of the Company or at
the time of the Company Shareholders Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by or
on behalf of Parent or Sub specifically for inclusion or incorporation by
reference therein.
(g) Absence of Certain Changes or Events. Since the date of the most
recent audited financial statements included in the Company Filed SEC
Documents, the Company and its subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice, and
there has not been:
(i) any Material Adverse Change;
(ii) any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with
respect to any shares of capital stock of the Company or any of its
subsidiaries or any repurchase for value by the Company or any of
its subsidiaries of any shares of capital stock of the Company or
any of its subsidiaries, other than (A) dividends or distributions
by a direct or indirect wholly owned subsidiary of the Company to
its parent and (B)
11
regular quarterly cash dividends with respect to the Company Common
Stock in the amount of $0.10 per share with usual declaration,
record and payment dates;
(iii) any split, combination or reclassification of any shares
of capital stock of the Company or any of its subsidiaries or any
issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares
of capital stock of the Company or any of its subsidiaries;
(iv) (A) any granting by the Company or any of its subsidiaries
to any current or former director, officer or employee of the
Company or any of its subsidiaries of any increase in compensation,
bonus or other benefits, except for normal increases in compensation
in the ordinary course of business consistent with past practice or
as was required under any employee benefit plan or employment
agreement set forth in Section 3.01(m) or Section 3.01(n)(i) of the
Company Disclosure Schedule, as the case may be, or applicable law,
(B) any granting by the Company or any of its subsidiaries to any
current or former director, officer or employee of the Company or
any of its subsidiaries of any increase in severance or termination
pay, except as was required under any employee benefit plan or
employment, severance or termination agreement set forth in Section
3.01(m) or Section 3.01(n)(i) of the Company Disclosure Schedule, as
the case may be, or applicable law, (C) any entry by the Company or
any of its subsidiaries into, or any amendment of, (1) any
employment, deferred compensation, consulting, severance,
termination or indemnification agreement, arrangement or
understanding with any current or former director, officer or
employee or (2) any agreement with any current or former director,
officer or employee the benefits of which are contingent, or the
terms of which are materially altered, upon the occurrence of a
transaction involving the Company of a nature contemplated by this
Agreement (all such agreements under this clause (C), collectively,
"Benefit Agreements") or (D) any amendment to, or modification of,
any Company Stock Option or Company Stock-Based Award;
(v) any change in accounting methods, principles or practices
by the Company or any of its subsidiaries materially affecting the
consolidated assets, liabilities or results of operations of the
Company, except insofar as may have been required by a change in
GAAP, or any material revaluation of any material assets of the
Company or any of its subsidiaries;
(vi) any material election with respect to taxes by the Company
or any of its subsidiaries or settlement or compromise by the
Company or any of its subsidiaries of any material tax liability; or
(vii) any damage, destruction or loss, whether or not covered
by insurance, that individually or in the aggregate has had or would
reasonably be expected to have a Material Adverse Effect.
(h) Litigation. There is no suit, action or proceeding pending or,
to the knowledge of the Company, threatened against or affecting the Company
or any of its
12
subsidiaries that individually or in the aggregate has had or would reasonably
be expected to have a Material Adverse Effect, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against, or, to the knowledge of the Company, investigation by any
Governmental Entity involving, the Company or any of its subsidiaries that
individually or in the aggregate has had or would reasonably be expected to
have a Material Adverse Effect.
(i) Taxes. (i) Each of the Company and its subsidiaries has timely
filed all Federal, state and local, domestic and foreign, income and franchise
tax returns and reports and all other tax returns and reports required to be
filed by it and all such returns and reports are complete and correct, except
for such failures to file or to be complete and correct that individually or
in the aggregate has not had and would not reasonably be expected to have a
Material Adverse Effect. Each of the Company and its subsidiaries has timely
paid all taxes due with respect to the taxable periods covered by such returns
and reports and all other material taxes, except where the failures so to pay
individually or in the aggregate has not had and would not reasonably be
expected to have a Material Adverse Effect, and the most recent financial
statements contained in the Company Filed SEC Documents reflect an adequate
reserve for all taxes payable by the Company and its subsidiaries for all
taxable periods and portions thereof through the date of such financial
statements, whether or not any such taxes are shown as being due on any tax
return of the Company or any of its subsidiaries.
(ii) No Federal, state or local, domestic or foreign,
income or franchise tax return or report or any other material tax
return or report of the Company or any of its subsidiaries is
currently under audit or examination by any taxing authority, and no
written or, to the knowledge of the Company, unwritten notice of
such an audit or examination has been received by the Company or any
of its subsidiaries, except for such audits or examinations that
individually or in the aggregate have not had and would not
reasonably be expected to have a Material Adverse Effect. There is
no deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any taxes due and owing by the Company
or any of its subsidiaries, other than those that individually or in
the aggregate have not had and would not reasonably be expected to
have a Material Adverse Effect. Each deficiency resulting from any
audit or examination or any concluded litigation relating to taxes
by any taxing authority has been timely paid, except where the
failures so to pay individually or in the aggregate has not had and
would not reasonably be expected to have a Material Adverse Effect.
No issues relating to taxes were raised in writing by the relevant
taxing authority during any presently pending audit or examination
that would reasonably be expected to recur in a later taxable
period, other than those that individually or in the aggregate have
not had and would not reasonably be expected to have a Material
Adverse Effect. All assessments for taxes due and owing by the
Company or any of its subsidiaries with respect to completed and
settled audits or examinations or concluded litigation have been
paid.
(iii) There is no currently effective agreement or other
document extending, or having the effect of extending, the period of
assessment or collection of any material taxes, and no power of
attorney with respect to any taxes has been executed or filed with
any taxing authority.
13
(iv) No Liens for taxes exist with respect to any assets
or properties of the Company or any of its subsidiaries, except for
statutory Liens for taxes that are not yet due or are being
contested in good faith in appropriate proceedings and any other
Liens that individually or in the aggregate have not had and would
not reasonably be expected to have a Material Adverse Effect.
(v) None of the Company or any of its subsidiaries is a
party to or bound by any tax sharing agreement, tax indemnity
obligation or similar agreement, arrangement or practice with
respect to taxes (including any advance pricing agreement, closing
agreement or other agreement relating to taxes with any taxing
authority).
(vi) The Company and its subsidiaries have complied with
all applicable statutes, laws, ordinances, rules and regulations
relating to the payment and withholding of taxes (including
withholding of taxes pursuant to Sections 1441, 1442, 3121 and 3402
of the Code or similar provisions under any Federal, state or local,
domestic or foreign, laws) and have, within the time and the manner
prescribed by law, withheld from and paid over to the proper taxing
authorities all amounts required to be so withheld or paid over
under applicable laws, except where the failures so to comply,
withhold and pay over individually or in the aggregate has not had
and would not reasonably be expected to have a Material Adverse
Effect.
(vii) Neither the Company nor any of its subsidiaries has
constituted either a "distributing corporation" or a "controlled
corporation" in a distribution of stock qualifying for tax-free
treatment under Section 355 of the Code in the two years prior to
the date of this Agreement.
(viii) To the knowledge of the Company, neither the
Company nor any of its subsidiaries (A) has been a member of an
affiliated group filing a consolidated, combined or unitary tax
return (other than a group the common parent of which was the
Company) in any open tax year or (B) has any liability for taxes of
any person (other than the Company or any of its subsidiaries) under
Treasury Regulation Section 1.1502-6 (or any other similar provision
of state, local or foreign law), as a transferee or successor, by
contract or otherwise.
(ix) Neither the Company nor any of its subsidiaries is or
has been a United States real property holding corporation (as
defined in Section 897(c)(2) of the Code) during the applicable
period specified in Section 897(c)(1)(ii) of the Code.
(x) Neither the Company nor any of its subsidiaries has
been the subject of an IRS tax ruling that has had or would
reasonably be expected to have a Material Adverse Effect with
respect to any open tax year.
(xi) Neither the Company nor any of its subsidiaries has
agreed to include, or, to the knowledge of the Company, is required
to include, in income any material adjustment under Section 481(a)
of the Code (or an analogous provision of state, local or foreign
law) by reason of a change in accounting method or otherwise that
has had or would reasonably be expected to have a Material Adverse
Effect.
14
(xii) As used in this Agreement, "tax" or "taxes" shall
include all Federal, state and local, domestic and foreign, income,
franchise, property, sales, excise, employment, payroll, social
security, value-added, ad valorem, transfer, withholding and other
taxes, including taxes based on or measured by gross receipts,
profits, sales, use or occupation, tariffs, levies, impositions,
assessments or governmental charges of any nature whatsoever,
including any interest penalties or additions with respect thereto,
and any obligations under any agreements or arrangements with any
other person with respect to such amounts.
(j) Contracts. (i) Section 3.01(j) of the Company Disclosure
Schedule sets forth each contract, commitment, agreement, lease, instrument,
arrangement, understanding, obligation or undertaking to which the Company or
any of its subsidiaries is a party or by or to which any of their properties
are bound or subject that is material to the business of the Company and its
subsidiaries, taken as a whole, including any such contract, commitment,
agreement, lease, instrument, arrangement, understanding, obligation or
undertaking:
(A) pursuant to which the Company or any of its subsidiaries
has agreed not to compete with any person, or to actively engage, in
any line of business;
(B) pursuant to which the Company or any of its subsidiaries
has entered into an exclusive distributorship arrangement;
(C) with (1) any beneficial owner of more than one percent of
the outstanding Company Common Stock or more than one percent of the
capital stock of any of the Company's subsidiaries, (2) any
affiliate of the Company or any of its subsidiaries or (3) any
current or former director, officer, employee or consultant of the
Company or any of its subsidiaries or of any affiliate of the
Company or any of its subsidiaries (other than pursuant to Benefit
Agreements or Benefit Plans);
(D) that grants exclusive license rights to material
Intellectual Property of the Company;
(E) under which the Company or any of its subsidiaries has (1)
incurred any indebtedness for borrowed money that is currently owing
or (2) given any guarantee in respect of indebtedness for repayment
of borrowed money, in each case having an aggregate principal amount
in excess of $100,000;
(F) that contains any guarantees as to the Company's or any of
its subsidiaries future revenues or operating income;
(G) that is otherwise material and that requires any consent
(including any consent to assignment) of or notice to a third party,
or any approval, authorization, qualification or order of any
Governmental Entity, in connection with this Agreement or the
consummation of the transactions contemplated hereby in order to
avoid termination of or loss of benefits thereunder;
(H) providing for payments of royalties to third parties at a
current rate in excess of $100,000 per year;
15
(I) not made in the ordinary course of business granting a
third party any license to any material Intellectual Property rights
of the Company or any of its subsidiaries, other than "shrink-wrap"
licenses or licenses granted in connection with the sale of
products;
(J) providing confidential treatment by the Company or any of
its subsidiaries of third party information, other than (1)
nondisclosure agreements entered into by the Company or any of its
subsidiaries in the ordinary course of business or (2) the
Confidentiality Agreement;
(K) granting the other party thereto or a third party "most
favored nation" status that, following consummation of the Merger,
would in any way apply to Parent or any of its subsidiaries (other
than the Company and its subsidiaries and their products);
(L) pursuant to which the Company or any of its subsidiaries
receives or has a continuing obligation to purchase any information
technology services or information technology products that are
material to the conduct of the business of the Company and its
subsidiaries, taken as a whole.
(ii) Each contract of the Company and its subsidiaries
required to be listed in Section 3.01(j) of the Company Disclosure
Schedule is in full force and effect and is a legal, valid and
binding agreement of the Company or such subsidiary and, to the
knowledge of the Company, of each other party thereto, enforceable
against the Company or such subsidiary, as the case may be, and, to
the knowledge of the Company, against the other party or parties
thereto, in each case, in accordance with its terms, except for such
failures to be in full force and effect or enforceable that
individually or in the aggregate have not had and would not
reasonably be expected to have a Material Adverse Effect. Each of
the Company and its subsidiaries has performed or is performing in
all material respects all material obligations required to be
performed by it under such contracts and is not (with or without
notice or lapse of time or both) in breach or default in any
material respect thereunder, and, to the knowledge of the Company,
no other party to any of such contracts is (with or without notice
or lapse of time or both) in breach or default in any material
respect thereunder except, in each case, for such instances of
nonperformance and such breaches that individually or in the
aggregate have not had and would not reasonably be expected to have
a Material Adverse Effect.
(k) Compliance with Laws. The Company and its subsidiaries are, and
since December 31, 2000 have been, in compliance with all statutes, laws,
ordinances, rules, regulations, judgments, orders and decrees of any
Governmental Entity applicable to their businesses or operations, except for
instances of noncompliance that individually or in the aggregate have not had
and would not reasonably be expected to have a Material Adverse Effect, impair
in any material respect the ability of the Company to perform its obligations
under this Agreement or prevent or materially impede, interfere with, hinder
or delay the consummation of any of the transactions contemplated by this
Agreement. None of the Company or any of its subsidiaries has received, since
December 31, 2000, a written notice or other written communication alleging a
violation of any statute, law, ordinance, rule, regulation, judgment, order or
decree of any Governmental Entity applicable to its businesses or operations,
except for
16
such violations that individually or in the aggregate have not had and would
not reasonably be expected to have a Material Adverse Effect. The Company and
its subsidiaries have in effect all Federal, state and local, domestic and
foreign, governmental consents, approvals, orders, authorizations,
certificates, filings, notices, permits, concessions, franchises, licenses and
rights (collectively "Permits") necessary for them to own, lease or operate
their properties and assets and to carry on their businesses as now conducted
and there has occurred no violation of, or default under, any such Permit,
except for the lack of Permits and for violations of, or defaults under,
Permits, which lack of Permits, violations or defaults individually or in the
aggregate have not had and would not reasonably be expected to have a Material
Adverse Effect. The consummation of the Merger, in and of itself, would not
reasonably be expected to cause the revocation or cancelation of any such
Permit, which revocation or cancelation would reasonably be expected to have a
Material Adverse Effect.
(l) Environmental Matters. Except as has not had and would not
reasonably be expected to have a Material Adverse Effect, (i) to the knowledge
of the Company, each of the Company and its subsidiaries are, and within the
period of all applicable statutes of limitations has been, in compliance with
all applicable Environmental Laws, including with respect to the use and
disposal of Hazardous Materials; (ii) each of the Company and its subsidiaries
has received all air, water and waste Permits required under any Environmental
Law for the emission and/or disposal of solid, liquid and gaseous materials
from its operations at all its sites, including any Permits for construction
under the Clean Air Act, and is operating in compliance with such Permits;
(iii) to the knowledge of the Company, no property currently or formerly owned
or operated by the Company or any of its subsidiaries (including soils,
groundwater, surface water, buildings or other structures) has been
contaminated with any Hazardous Materials which would subject the Company to
any liability under Environmental Laws or require any expenditure for
remediation to meet applicable standards thereunder; (iv) to the knowledge of
the Company, neither the Company nor any of its subsidiaries is subject to any
liability for Hazardous Materials disposal or contamination on any third party
property; (v) neither the Company nor any of its subsidiaries has received,
since December 31, 1997, any written notice, demand, letter, claim or request
for information from any Governmental Entity indicating that it is or may be
in violation of or subject to liability under any Environmental Law, other
than written notices, demands, letters, claims, or requests for information
that relate to matters that have been resolved with the appropriate
Governmental Entity with no further anticipated liability to the Company or
its subsidiaries; (vi) neither the Company nor any of its subsidiaries is
subject to any order, decree, injunction or other arrangement with any
Governmental Entity or any indemnity or other agreement with any person, in
each case relating to liability under any Environmental Law; (vii) Section
3.01(l) of the Company Disclosure Schedule sets forth a complete and correct
list of each property of the Company or any of its subsidiaries that contains
any underground storage tanks; and (viii) there are no other circumstances or
conditions involving the Company or any of its subsidiaries that would
reasonably be expected to result in any claims, liability, investigations,
costs or restrictions on the ownership, use, or transfer of any property of
the Company or any of its subsidiaries in connection with any Environmental
Law. The representations and warranties set forth in this Section 3.01(1) are
the Company's sole and exclusive representations in this Agreement relating to
environmental matters. The term "Environmental Laws" means all statutes, laws,
rules, regulations, codes, ordinances, orders, decrees, judgments,
injunctions, Permits or binding agreements issued, promulgated or entered into
by any Governmental Entity, relating in any way to the environment,
preservation or reclamation of natural resources, the
17
presence, management, Release or threat of Release of, or exposure to,
Hazardous Materials, or to human health and safety. The term "Hazardous
Materials" means (A) petroleum products and by-products, asbestos and
asbestos-containing materials, urea formaldehyde foam insulation, medical or
infectious wastes, polychlorinated biphenyls, radon gas, chlorofluorocarbons
and all other ozone-depleting substances or (B) any chemical, material,
substance, waste, pollutant or contaminant that is prohibited, limited or
regulated by or pursuant to any Environmental Law. The term "Release" means
any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, disposing or migrating into or through
the environment.
(m) Absence of Changes in Benefit Plans; Labor Relations. Except as
required to comply with applicable law, since the date of the most recent
audited financial statements included in the Company Filed SEC Documents,
there has not been any adoption or amendment in any material respect by the
Company or any of its subsidiaries of any collective bargaining agreement or
any employment, bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock appreciation,
restricted stock, stock option, phantom stock, performance, retirement,
thrift, savings, stock bonus, paid time off, perquisite, fringe benefit,
vacation, severance, disability, death benefit, hospitalization, medical,
welfare benefit or other plan, program, policy, arrangement or understanding
(whether or not legally binding) maintained, contributed to or required to be
maintained or contributed to by the Company or any of its subsidiaries or any
other person or entity that, together with the Company, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (each, a "Commonly
Controlled Entity"), in each case providing benefits to any current or former
director, officer, employee or consultant of the Company or any of its
subsidiaries (collectively, the "Benefit Plans"), or any material change in
any actuarial or other assumption used to calculate funding obligations with
respect to any Pension Plans, or any change in the manner in which
contributions to any Pension Plans are made or the basis on which such
contributions are determined. Section 3.01(m) of the Company Disclosure
Schedule contains a complete and correct list of (i) each currently binding
Benefit Agreement and (ii) each collective bargaining agreement or other labor
union contract to which the Company or any of its subsidiaries are a party as
of the date of this Agreement. There is no labor dispute, strike or work
stoppage against the Company or any of its subsidiaries pending or, to the
knowledge of the Company, threatened which would interfere with the respective
business activities of the Company or its subsidiaries, except where such
dispute, strike or work stoppage has not had and would not reasonably be
expected to have a Material Adverse Effect. None of the Company, any of its
subsidiaries or, to the knowledge of the Company, any of their respective
representatives or employees has committed an unfair labor practice in
connection with the operation of the respective businesses of the Company or
any of its subsidiaries, there is no charge or complaint against the Company
or any of its subsidiaries by the National Labor Relations Board or any
comparable Governmental Entity pending or threatened in writing and there are
no other pending, or, to the knowledge of the Company, threatened lawsuits,
grievances or claims involving the Company or any of its subsidiaries related
to labor or employment matters, in each case other than any such matter that
has not had and would not reasonably be expected to have a Material Adverse
Effect.
(n) ERISA Compliance. (i) Section 3.01(n)(i) of the Company
Disclosure Schedule contains a complete and correct list of each Benefit Plan
that is an "employee pension benefit plan" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of
18
1974, as amended ("ERISA")) (a "Pension Plan"), each Benefit Plan that
provides severance benefits, vacation, paid time off or bonus leave, each
Benefit Plan that provides for the purchase or issuance of shares of capital
stock, warrants, options, stock appreciation rights or other rights in respect
of any shares of capital stock of any entity or any securities convertible or
exchangeable into such shares, each "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA) that provides for medical, dental, life and
disability insurance benefits, and each other material Benefit Plan. The
Company has made available to Parent complete and correct copies of (A) each
Benefit Plan required to be listed on Section 3.10(n)(i) of the Company
Disclosure Schedule (or, in the case of any such Benefit Plan that is
unwritten, descriptions thereof), (B) the two most recent annual reports on
Form 5500 required to be filed with the Internal Revenue Service (the "IRS")
with respect to each Benefit Plan (if any such report was required), (C) the
most recent summary plan description for each Benefit Plan for which such
summary plan description is required and (D) each trust agreement and
insurance or group annuity contract relating to any Benefit Plan. Each Benefit
Plan maintained, contributed to or required to be contributed to by the
Company or any of its subsidiaries has been administered in all material
respects in accordance with its terms. The Benefit Plans have been established
and administered in compliance in all material respects with the applicable
provisions of ERISA, the Code and all other applicable laws, including laws of
foreign jurisdictions.
(ii) All Pension Plans maintained, contributed to or
required to be contributed to by the Company or any of its
subsidiaries intended to be tax-qualified have been the subject of
determination letters from the IRS to the effect that such Pension
Plans are qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, no such
determination letter has been revoked (or, to the knowledge of the
Company, has revocation been threatened) and, to the knowledge of
the Company, (A) no event has occurred since the date of the most
recent determination letter or application therefor relating to any
such Pension Plan that would adversely affect the qualification of
such Pension Plan and (B) no event has occurred since the date of
the most recent audited financial statements included in the Company
Filed SEC Documents that would reasonably be expected to materially
increase the costs relating to such Pension Plan or require security
under Section 307 of ERISA. All Pension Plans maintained,
contributed to or required to be contributed to by the Company or
any of its subsidiaries required to have been approved by any
foreign Governmental Entity have been so approved, no such approval
has been revoked (or, to the knowledge of the Company, has
revocation been threatened) and, to the knowledge of the Company,
(A) no event has occurred since the date of the most recent approval
or application therefor relating to any such Pension Plan that would
materially affect any such approval relating thereto and (B) no
event has occurred since the date of the most recent audited
financial statements included in the Company Filed SEC Documents
that would reasonably be expected to materially increase the costs
relating to any such Pension Plan. The Company has made available to
Parent a complete and correct copy of the most recent determination
letter received with respect to each Pension Plan maintained,
contributed to or required to be contributed to by the Company or
any of its subsidiaries, as well as a complete and correct copy of
each pending application for a determination letter, if any. The
Company has also made available to Parent a complete and correct
list of all amendments to any Pension Plan maintained, contributed
to or required to be contributed
19
to by the Company or any of its subsidiaries as to which a favorable
determination letter has not yet been received.
(iii) Neither the Company nor any Commonly Controlled
Entity (A) maintains, contributes to or is required to contribute to
any Benefit Plan that is subject to Title IV of ERISA or (B) has any
unsatisfied liability under Title IV of ERISA.
(iv) All material reports, returns and similar documents
with respect to all Benefit Plans required to be filed with any
Governmental Entity or distributed to any Benefit Plan participant
have been duly and timely filed or distributed. The Company has
received no notice of, and to the knowledge of the Company, there
are no investigations by any Governmental Entity with respect to,
termination proceedings or other claims (except claims for benefits
payable in the normal operation of the Benefit Plans), suits or
proceedings against or involving any Benefit Plan or asserting any
rights or claims to benefits under any Benefit Plan that could give
rise to any material liability, and, to the knowledge of the
Company, there are not any facts that could give rise to any
material liability in the event of any such investigation, claim,
suit or proceeding.
(v) All contributions, premiums and benefit payments under
or in connection with the Benefit Plans that are required to have
been made as of the date hereof in accordance with the terms of the
Benefit Plans have been timely made or have been reflected on the
most recent consolidated balance sheet filed or incorporated by
reference into the Company Filed SEC Documents. No Pension Plan has
an "accumulated funding deficiency" (as such term is defined in
Section 302 of ERISA or Section 412 of the Code), whether or not
waived.
(vi) With respect to each Benefit Plan, (A) there has not
occurred any prohibited transaction in which the Company or any of
its subsidiaries or any of their respective employees has engaged
that could subject the Company or any of its subsidiaries or any of
their respective employees, or, to the knowledge of the Company, a
trustee, administrator or other fiduciary of any trust created under
any Benefit Plan, to the tax or penalty on prohibited transactions
imposed by Section 4975 of ERISA or the sanctions imposed under
Title I of ERISA and (B) neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any trustee,
administrator or other fiduciary of any Benefit Plan nor any agent
of any of the foregoing, has engaged in any transaction or acted in
a manner that could, or failed to act so as to, subject the Company
or any of its subsidiaries or, to the knowledge of the Company, any
trustee, administrator or other fiduciary, to any liability for
breach of fiduciary duty under ERISA or any other applicable law. No
Pension Plan or related trust has been terminated, nor has there
been any "reportable event" (as that term is defined in Section 4043
of ERISA) for which the 30-day reporting requirement has not been
waived with respect to any Benefit Plan during the last five years,
and no advance notice of a reportable event will be required to be
filed in connection with the transactions contemplated by this
Agreement.
(vii) Each Benefit Plan that is an employee welfare
benefit plan and which is required to be listed in Section
3.01(n)(i) of the Company Disclosure Schedule may be amended or
terminated (including with respect to benefits provided to retirees
20
and other former employees) without material liability to the
Company or any of its subsidiaries at any time after the Effective
Time (subject to any applicable notice periods). Each of the Company
and its subsidiaries complies in all material respects with the
applicable requirements of Section 4980B(f) of the Code or any
similar state statute with respect to each Benefit Plan that is a
group health plan, as such term is defined in Section 5000(b)(1) of
the Code or such state statute. Neither the Company nor any of its
subsidiaries has any material obligations for retiree health or life
insurance benefits under any Benefit Plan that is required to be
listed in Section 3.01(n)(i) of the Company Disclosure Schedule.
(viii) None of the execution and delivery of this
Agreement, the obtaining of the Company Shareholder Approval or the
consummation of the Merger or any other transaction contemplated by
this Agreement (including as a result of any termination of
employment during a fixed period following the Effective Time) will
(A) entitle any current or former director, officer, employee or
consultant of the Company or any of its subsidiaries to severance or
termination pay, (B) accelerate the time of payment or vesting or
trigger any payment or funding (through a grantor trust or
otherwise) of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any
Benefit Plan or (C) result in any breach or violation of, or a
default under, any Benefit Plan.
(ix) Neither the Company nor any of its subsidiaries has
any material liability or obligations under or on account of a
Benefit Plan and arising out of the hiring of persons to provide
services to the Company or any of its subsidiaries and treating such
persons as consultants or independent contractors and not as
employees of the Company or any of its subsidiaries.
(o) No Excess Parachute Payments. Other than payments or benefits
that may be made pursuant to the agreements and plans listed in Section
3.01(o) of the Company Disclosure Schedule, no amount or other entitlement or
economic benefit that could be received (whether in cash or property or the
vesting of property) by or for the benefit of any director, officer, employee
or consultant of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any Benefit Plan, Benefit Agreement or otherwise would be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code). Section 3.01(o) of the Company Disclosure
sets forth a complete and correct list of the name and title of each person
entitled to receive any additional payment from the Company or any of its
subsidiaries, the Surviving Corporation or any other person in the event that
the excise tax required by Section 4999(a) of the Code is imposed on such
person.
(p) Vote Required. The affirmative vote of holders of a majority of
the shares represented in person or by proxy at a meeting at which a quorum
consisting of at least a majority of the outstanding shares of Company Common
Stock to approve this Agreement (the "Company Shareholder Approval") is the
only vote of the holders of any class or series of capital stock of the
Company necessary to approve this Agreement and the transactions contemplated
hereby.
21
(q) State Takeover Statutes. The Board of Directors of the Company
has unanimously approved the terms of this Agreement and the consummation of
the Merger and the other transactions contemplated by this Agreement, and such
approval represents all action necessary to render inapplicable to this
Agreement, the Merger and the other transactions contemplated by this
Agreement, the provisions of the Mississippi Shareholder Protection Act and
paragraph (A) of Article V of the Company's articles of incorporation to the
extent, if any, the Mississippi Shareholder Protection Act or such paragraph
(A) would otherwise be applicable to this Agreement, the Merger and the other
transactions contemplated by this Agreement. The Mississippi Control Share Act
is not applicable to this Agreement, the Merger and the other transactions
contemplated by this Agreement pursuant to Article X of the Company's articles
of incorporation. No other fair price, moratorium, control share acquisition
or other form of antitakeover statute, rule or regulation of the State of
Mississippi applies or purports to apply to this Agreement, the Merger or the
other transactions contemplated by this Agreement.
(r) Rights Agreement. The Company and the Board of Directors of the
Company have taken all action necessary to cause the Rights Agreement to be
amended to (i) render the Rights inapplicable to this Agreement, the
Shareholder Agreement, the Merger and the other transactions contemplated by
this Agreement and the Shareholder Agreement and (ii) ensure that (A) none of
Parent, Sub or any of their respective affiliates or associates is or will
become an "Acquiring Person" or "Adverse Person" (each, as defined in the
Rights Agreement) by reason of this Agreement, the Shareholder Agreement, the
Merger or any other transaction contemplated by this Agreement and the
Shareholder Agreement and (B) a "Distribution Date" (as defined in the Rights
Agreement) shall not occur by reason of this Agreement, the Shareholder
Agreement, the Merger or any other transaction contemplated by this Agreement
and the Shareholder Agreement.
(s) Brokers. No broker, investment banker, financial advisor or
other person, other than Credit Suisse First Boston Corporation, the fees and
expenses of which will be paid by the Company, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company. The Company has delivered to Parent
complete and correct copies of all agreements under which any such fees or
expenses are payable and all indemnification and other agreements related to
the engagement of the persons to whom such fees are payable.
(t) Opinion of Financial Advisor. The Board of Directors of the
Company has received the opinion of Credit Suisse First Boston Corporation,
dated the date of this Agreement, to the effect that, as of such date, the
Merger Consideration is fair, from a financial point of view, to holders of
Company Common Stock, and a signed copy of such opinion has been, or will
promptly be, delivered to Parent solely for informational purposes.
(u) Title to Properties. (i) The Company and each of its
subsidiaries has good and valid title to, or valid leasehold interests in, all
of its material properties and assets except for such as are no longer used or
useful in the conduct of its business or as have been disposed of in the
ordinary course of business and except for defects in title, easements,
restrictive covenants and similar encumbrances that individually or in the
aggregate have not materially interfered with, and would not reasonably be
expected to materially interfere with, its ability to conduct its
22
business as presently conducted. All such material assets and properties,
other than assets and properties in which the Company or any of its
subsidiaries has a leasehold interest, are free and clear of all Liens, except
for Liens that individually or in the aggregate have not materially interfered
with, and would not reasonably be expected to materially interfere with, the
ability of the Company or any of its subsidiaries to conduct its business as
presently conducted.
(ii) Each of the Company and its subsidiaries has complied
in all material respects with the terms of all material leases to
which it is a party and under which it is in occupancy, and all such
leases are in full force and effect, except for such instances of
noncompliance or failures to be in full force and effect that
individually or in the aggregate have not had and would not
reasonably be expected to have a Material Adverse Effect. Each of
the Company and its subsidiaries enjoys peaceful and undisturbed
possession under all such material leases, except for failures to do
so that, individually or in the aggregate, have not had and would
not reasonably be expected to have a Material Adverse Effect.
(v) Intellectual Property. (i) Section 3.01(v) of the Company
Disclosure Schedule lists all patents, patent applications, registrations of
or applications for trademarks, trade names, service marks and registered
copyrights and applications therefor, if any, owned by or licensed to the
Company or any of its subsidiaries, and all material license agreements
relating to any Intellectual Property (other than "shrink-wrap" licenses or
licenses granted in connection with the sale of products) to which the Company
or any of its subsidiaries is a party, in each case as of the date of this
Agreement.
(ii) Except as has not had and would not reasonably be
expected to have a Material Adverse Effect:
(A) the Company and each of its subsidiaries owns, or is
licensed or otherwise has the right to use (in each case, free and
clear of any Liens), all Intellectual Property used in carrying on
its business as presently being conducted;
(B) to the knowledge of the Company, neither the Company nor
any of its subsidiaries is, in the conduct of its business as
presently being conducted, infringing on any valid and/or
enforceable patent or patent application or otherwise violating any
other valid and/or enforceable Intellectual Property owned or
controlled by any other person;
(C) the Company and each of its subsidiaries is in substantial
compliance with the terms of all material licenses, agreements and
contracts pursuant to which the Company or such subsidiary has the
right to use any Intellectual Property owned by any other person,
and the consummation of the Merger will not impair or adversely
affect the rights of the Company to use any such Intellectual
Property;
(D) there is no suit, claim, action, investigation or
proceeding pending or, to the knowledge of the Company, threatened
orally or in writing by any other person naming or accusing the
Company or any of its subsidiaries of possible infringement of any
patent or patent application or of otherwise violating any
Intellectual Property owned or controlled by any other person;
23
(E) to the knowledge of the Company, no person is infringing on
or otherwise violating any right of the Company or any of its
subsidiaries with respect to any Intellectual Property owned by,
licensed to or otherwise used by the Company or any of its
subsidiaries;
(F) to the knowledge of the Company, none of the former or
current research scientists, technicians or other personnel of the
Company or any of its subsidiaries, including all former and current
employees, agents, consultants and contractors who have contributed
to or participated in the conception and development of the material
Intellectual Property of the Company or any of its subsidiaries,
have asserted in writing or, to the Company's knowledge, threatened
to assert a valid claim against the Company or any of its
subsidiaries in connection with the involvement of such persons in
the conception and development of any such Intellectual Property;
(G) the Company and each of its subsidiaries has taken
commercially reasonable steps to protect their material Intellectual
Property and their rights thereunder, and to the knowledge of the
Company no material rights to such Intellectual Property have been
lost, diluted or otherwise materially impaired or are in jeopardy of
being lost, diluted or otherwise materially impaired through failure
to act by the Company or any of its subsidiaries.
(iii) As used in this Agreement, "Intellectual Property" means
trademarks (registered or unregistered), service marks, brand names,
certification marks, trade dress, assumed names, trade names, domain names and
other indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of
any such registration or application; inventions, discoveries and ideas,
whether patented, patentable or not in any jurisdiction; chemical formulas and
manufacturing processes; computer programs and software (including source
code, object code and data), know-how and any other technology; trade secrets
and confidential information and rights in any jurisdiction to limit the use
or disclosure thereof by any person; writings and other works, whether
copyrighted, copyrightable or not in any jurisdiction; registration or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; any similar intellectual property or
proprietary rights similar to any of the foregoing; and licenses, immunities,
covenants not to xxx and the like relating to any of the foregoing.
SECTION 3.02. Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization and Authority. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all requisite corporate
power and authority to conduct its business as presently conducted. Parent has
made available to the Company prior to the execution of this agreement
complete and correct copies of the articles of incorporation and by-laws of
Sub, as amended to the date of this Agreement.
24
(b) Authorization; Noncontravention. Parent and Sub have the
requisite corporate power and authority to execute and deliver this Agreement,
to consummate the transactions contemplated by this Agreement and to comply
with the provisions of this Agreement. The execution and delivery of this
Agreement by Parent and Sub, the consummation by Parent and Sub of the
transactions contemplated by this Agreement and the compliance by Parent and
Sub with the provisions of this Agreement have been duly authorized by all
necessary corporate action on the part of Parent and Sub (including approval
of this Agreement by the sole shareholder of Sub) and no other corporate
proceedings on the part of Parent or Sub are necessary to authorize this
Agreement or to consummate the transactions contemplated by this Agreement.
This Agreement has been duly executed and delivered by Parent and Sub, as
applicable, and, assuming the due authorization, execution and delivery by the
Company, constitutes a valid and binding obligation of Parent and Sub, as
applicable, enforceable against Parent and Sub, as applicable, in accordance
with its terms. The execution and delivery by Parent and Sub of this Agreement
and the consummation of the transactions contemplated by this Agreement and
compliance by Parent and Sub with the provisions of this Agreement do not and
will not conflict with, or result in any violation or breach of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of, or result in, termination, cancelation or acceleration of any
obligation or to loss of a material benefit under, or result in the creation
of any Lien in or upon any of the properties or assets of Parent or Sub under,
or give rise to any increased, additional, accelerated or guaranteed rights or
entitlements under, any provision of (i) the certificate of incorporation or
by-laws of Parent or the articles of incorporation or by-laws of Sub, (ii) any
loan or credit agreement, bond, debenture, note, mortgage, indenture, lease or
other contract, commitment, agreement, instrument, arrangement, understanding,
obligation, undertaking, permit, concession, franchise or license to which
Parent or Sub is a party or any of their respective properties or assets is
subject or (iii) subject to obtaining or making the consents, approvals,
orders, authorizations, registrations, declarations and filings referred to in
the following sentence, any (A) statute, law, ordinance, rule or regulation or
(B) judgment, order or decree, in each case, applicable to Parent or Sub or
any of their respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, breaches, defaults,
rights, losses, Liens or entitlements that individually or in the aggregate
would not reasonably be expected to impair in any material respect the ability
of each of Parent and Sub to perform its obligations under this Agreement or
prevent or materially impede, interfere with, hinder or delay the consummation
of any of the transactions contemplated by this Agreement. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Parent or Sub
in connection with the execution and delivery of this Agreement by Parent and
Sub, the consummation by Parent and Sub of the transactions contemplated by
this Agreement or the compliance by Parent or Sub with the provisions of this
Agreement, except for (1) the filing of a premerger notification and report
form under the HSR Act or similar filings under any other applicable
competition, merger control, antitrust or similar law, (2) the filing with the
SEC of such reports under the Exchange Act as may be required in connection
with this Agreement and the transactions contemplated hereby, (3) the delivery
to the Secretary of State of the State of Mississippi for filing in accordance
with Section 79-4-11.06(b) of the MBCA of the Articles of Merger and the
filing of appropriate documents with the relevant authorities of other states
in which the Company or any of its subsidiaries is qualified to do business
and (4) such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made
25
individually or in the aggregate would not reasonably be expected to impair in
any material respect the ability of each of Parent and Sub to perform its
obligations under this Agreement or prevent or materially impede, interfere
with, hinder or delay the consummation of any of the transactions contemplated
by this Agreement.
(c) Information Supplied. None of the information supplied or to be
supplied by or on behalf of Parent or Sub for inclusion or incorporation by
reference in the Proxy Statement will, at the date the Proxy Statement is
first mailed to shareholders of the Company or at the time of the Company
Shareholders Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(d) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transactions contemplated by this Agreement, and has
engaged in no business other than in connection with the transactions
contemplated by this Agreement.
(e) Financing. Parent has sufficient funds available to pay the
aggregate amount of Merger Consideration and to pay all fees and expenses
related to the transactions contemplated by this Agreement.
(f) Ownership of Company Common Stock. Neither Parent nor Sub nor
any affiliate or associate (as such terms are defined under the Mississippi
Shareholder Protection Act) thereof beneficially owns, directly or indirectly,
any shares of Company Common Stock or is a party to any agreement, arrangement
or understanding (other than this Agreement and the Shareholder Agreement) for
the purpose of acquiring, holding, voting or disposing of any shares of
Company Common Stock.
(g) Brokers. No broker, investment banker, financial advisor or
other person, other xxxx Xxxxxxx Xxxxx & Co., Inc., the fees and expenses of
which will be paid by Parent, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Sub.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the
Company. During the period from the date of this Agreement to the Effective
Time, except as contemplated by this Agreement or as consented to in advance
in writing by Parent, the Company shall, and shall cause each of its
subsidiaries to, carry on its business in the ordinary course consistent with
past practice and in compliance in all material respects with all applicable
laws and regulations and, to the extent consistent therewith, use its
reasonable best efforts to preserve intact its current business organizations,
keep available the services of its current officers, employees and consultants
and preserve its relationships with customers, suppliers, licensors,
licensees, distributors, contract manufacturers and others having business
dealings with it with the intention that its goodwill and ongoing business
shall be unimpaired at the Effective Time. Without
26
limiting the generality of the foregoing, during the period from the date of
this Agreement to the Effective Time, except as contemplated by this Agreement
or expressly set forth in Section 4.01(a) of the Company Disclosure Schedule,
the Company shall not, and shall not permit any of its subsidiaries to,
without Parent's prior written consent:
(i) (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect
of, any of its capital stock, other than (1) dividends or
distributions by a direct or indirect wholly owned subsidiary of the
Company to its parent and (2) regular quarterly cash dividends with
respect to the Company Common Stock, not in excess of $0.10 per
share, with usual declaration, record and payment dates and in
accordance with the Company's past dividend policy, (y) split,
combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (z) purchase, redeem
or otherwise acquire any shares of capital stock of the Company or
any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other
securities;
(ii) issue, deliver, sell, grant, pledge or otherwise encumber
any shares of its capital stock, any other voting securities or any
securities convertible into, or exchangeable for, or any rights,
warrants or options to acquire, any such shares, voting securities
or convertible securities, or any "phantom" stock, "phantom" stock
rights, stock appreciation rights or stock-based performance units,
other than (1) the issuance of shares of Company Common Stock (and
associated Rights) upon the exercise of Company Stock Options or
Company Stock-Based Awards or the settlement of purchase rights
under the ESPP, in each case outstanding on the date of this
Agreement and in accordance with their present terms and (2) the
granting of rights that may arise under the ESPP, as the ESPP is in
effect on the date of this Agreement;
(iii) (x) amend its articles of incorporation or by-laws or
comparable charter or organizational documents or alter through
merger, liquidation, reorganization, restructuring or in any other
manner the corporate structure or ownership of any subsidiary of the
Company that does not constitute an inactive subsidiary as of the
date of this Agreement, or (y) adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, recapitalization or
other reorganization of the Company or any of its subsidiaries that
does not constitute an inactive subsidiary as of the date of this
Agreement, other than the Merger;
(iv) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by purchasing all of or a substantial equity interest
in, or by any other manner, any business or any corporation,
partnership, limited liability company, joint venture, association
or other business organization or division thereof or (y) except as
permitted by Section 4.01(a)(vii), any assets other than inventory,
supplies, raw materials or other immaterial assets, in each case in
the ordinary course of business consistent with past practice;
27
(v) sell, lease, license, mortgage, sell and leaseback or
otherwise encumber or subject to any Lien or otherwise dispose of
any of its properties or assets or any interests therein (including
securitizations), except sales of inventory in the ordinary course
of business consistent with past practice;
(vi) (x) other than (A) Yen-denominated short-term borrowings
incurred in the ordinary course of business consistent with past
practice not to exceed JPY2,500,000,000 at any time outstanding and
(B) borrowings to satisfy letter of credit obligations not to exceed
$1,000,000 at any time outstanding, incur or suffer to exist any
indebtedness for borrowed money or guarantee any such indebtedness
of another person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities of the Company or any of
its subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing or
(y) make any loans, advances or capital contributions to, or
investments in, any other person, other than to or in the Company or
any direct or indirect wholly owned subsidiary of the Company;
(vii) make any new capital expenditure or capital expenditures,
or incur any obligations or liabilities in connection therewith, (A)
that are not included in the Company's capital expenditure budget
provided to Parent prior to the date of this Agreement or (B) that
are included in such capital expenditure budget but that are in
excess of $1,000,000 on an individual basis;
(viii) except as required by law, (w) pay, discharge, settle or
satisfy any claims, liabilities, obligations or litigation (whether
absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary
course of business consistent with past practice or in accordance
with their terms as in effect on the date of this Agreement, of
liabilities reflected or reserved against in the most recent audited
financial statements (or the notes thereto) of the Company included
in the Company Filed SEC Documents (for amounts not in excess of
such reserves) or incurred since the date of such financial
statements in the ordinary course of business consistent with past
practice, (x) cancel any material indebtedness, (y) waive, release,
grant or transfer any claims or rights of substantial value or (z)
waive any benefit of, or agree to modify in any respect, or fail to
enforce, the confidentiality provisions relating to the Company's
information in any agreement to which the Company or any of its
subsidiaries is a party;
(ix) except in the ordinary course of business consistent with
past practice, modify, amend or terminate any material contract or
agreement to which the Company or any of its subsidiaries is a party
or waive, release or assign any material rights or claims
thereunder;
(x) enter into any contract, agreement, binding arrangement or
understanding (w) relating to research and development, or to the
distribution of,
28
or the supply of raw materials for, or the manufacturing by third
parties of, products of the Company, other than any such contracts,
agreements, arrangements or understandings that (A) individually,
has aggregate future payment or other obligations of no greater than
$250,000 and, in the aggregate, have future payment or other
obligations of no greater than $1,000,000 or (B) relate to the
supply of raw materials, are entered into in the ordinary course of
business consistent with past practice and in each case have a term
of no greater than three months, (x) that limits in any material
respect the ability of the Company or any of its subsidiaries to
engage in any business activities or operations or that, following
consummation of the Merger, would restrict in any way the ability of
Parent or any of its subsidiaries (other than the Company and its
subsidiaries) to engage in any business activities or operations,
(y) that is of a nature that would be required to be filed as an
exhibit to Form 10-K under the Exchange Act or (z) if consummation
of the transactions contemplated hereby or compliance by the Company
with the provisions of this Agreement will violate or conflict with,
or result in any violation or breach of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of,
or result in, termination, cancelation or acceleration of any
obligation or to loss of a material benefit under, or result in the
creation of any Lien in or upon any of the properties or assets of
the Company or Parent or any of their respective subsidiaries under,
any provision of such contract, agreement, binding arrangement or
understanding;
(xi) except as otherwise contemplated by this Agreement or as
required in accordance with the terms of any agreement or plan as in
effect on the date hereof or to comply with applicable law, (A)
adopt, enter into, terminate or amend in any material respect (I)
any collective bargaining agreement or other labor union contract or
Benefit Plan or (II) any other agreement, plan or policy involving
the Company and one or more of its current or former directors,
officers, employees or consultants, (B) increase in any manner the
compensation, bonus or fringe or other benefits of, or pay any bonus
to, any current or former officer, director or employee (except for
normal increases of cash compensation or cash bonuses in the
ordinary course of business consistent with past practice that, in
the aggregate, do not materially increase the benefits or
compensation expenses of the Company), (C) pay any benefit or amount
under any Benefit Plan or Benefit Agreement not required under such
Benefit Plan or Benefit Agreement or any other benefit plan or
arrangement of the Company as in effect on the date of this
Agreement, (D) increase in any manner the severance or termination
pay of any current or former director, officer or employee, (E)
enter into or amend any Benefit Agreement, (F) grant any awards
under any bonus, incentive, performance or other compensation plan
or arrangement or Benefit Plan (including the grant of stock
options, "phantom" stock, stock appreciation rights, "phantom" stock
rights, stock based or stock related awards, performance units or
restricted stock or the removal of existing restrictions in any
Benefit Plans or agreements or awards made thereunder), (G) amend or
modify any Company Stock Option or Company Stock-Based Award, (H)
take any action to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement,
contract or arrangement or Benefit Plan, (I) other than as
29
contemplated in Section 5.06, take any action to accelerate the
vesting or payment of any compensation or benefit under any Benefit
Plan or (J) materially change any actuarial or other assumption used
to calculate funding obligations with respect to any Pension Plan or
change the manner in which contributions to any Pension Plan are
made or the basis on which such contributions are determined;
(xii) except as required by GAAP or otherwise required by law,
revalue any material assets of the Company or any of its
subsidiaries or make (A) any change in accounting principles or (B)
any material change in accounting methods or practices;
(xiii) sell, transfer or license to any person or otherwise
extend, amend or modify any rights to the material Intellectual
Property rights of the Company, other than in the ordinary course of
business consistent with past practice; or
(xiv) authorize any of, or commit, resolve or agree to take any
of, the foregoing actions to the extent prohibited by the terms of
this Agreement.
(b) Other Actions. None of the Company, Parent or Sub shall, nor
shall any of them permit any of its subsidiaries to, knowingly take any action
(or omit to take any action) if such action (or omission) would, or would
reasonably be expected to, result in (i) any of the representations and
warranties of such party set forth in this Agreement that are qualified as to
materiality becoming untrue at or before the Effective Time, (ii) any of such
representations and warranties that are not so qualified becoming untrue in
any material respect at or before the Effective Time or (iii) any of the
conditions to the Merger set forth in Article VI not being satisfied.
(c) Advice of Changes; Filings. The Company and Parent shall
promptly advise the other party in writing of (i) any representation or
warranty made by it (and, in the case of Parent, made by Sub) contained in
this Agreement that is qualified as to materiality becoming untrue or
inaccurate in any respect or any such representation or warranty that is not
so qualified becoming untrue or inaccurate in any material respect or (ii) the
failure of it (or, in the case of Parent, Sub) to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied with
or satisfied by it (or, in the case of Parent, Sub) under this Agreement;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties (or remedies with respect
thereto) or the conditions to the obligations of the parties under this
Agreement. The Company and Parent shall promptly provide the other with copies
of all filings made by such party with any Governmental Entity in connection
with this Agreement and the transactions contemplated hereby, other than the
portions of such filings that include confidential information not directly
related to the transactions contemplated by this Agreement.
(d) Certain Tax Matters. During the period from the date of this
Agreement to the Effective Time, (i) the Company shall, and shall cause each
of its subsidiaries to, timely file all Federal, state and local, domestic and
foreign, income and franchise tax returns and reports and all other material
tax returns and reports ("Post-Signing Returns") required to be filed by each
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such entity (after taking into account any applicable extensions); (ii) the
Company and its subsidiaries shall timely pay all taxes due and payable with
respect to such Post-Signing Returns that are so filed; (iii) the Company
shall accrue a reserve in its books and records and financial statements in
accordance with past practice for all taxes payable by the Company or any of
its subsidiaries for which no Post-Signing Return is due prior to the
Effective Time; (iv) the Company shall promptly notify Parent of any material
action, suit, proceeding, claim or audit pending against or with respect to
the Company or any of its subsidiaries in respect of any tax matter and shall
not settle or compromise any such action, suit, proceeding, claim or audit
without Parent's prior written consent; and (v) none of the Company or any of
its subsidiaries shall make or change any material tax election without
Parent's prior written consent.
SECTION 4.02. No Solicitation. (a) The Company shall not, nor shall
it permit any of its subsidiaries to, nor shall it authorize any director,
officer or employee of the Company or any of its subsidiaries or any
investment banker, attorney, accountant or other advisor or representative of
the Company or any of its subsidiaries to, directly or indirectly, (i)
solicit, initiate or encourage, or take any other action knowingly to
facilitate, any Takeover Proposal (as defined below) or any inquiries or the
making of any proposal that constitutes or could reasonably be expected to
lead to a Takeover Proposal or (ii) enter into, continue or otherwise
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or otherwise cooperate in any way
with, any Takeover Proposal; provided, however, that, at any time prior to
obtaining the Company Shareholder Approval, the Company may, in response to a
bona fide written Takeover Proposal that the Board of Directors of the Company
determines in good faith constitutes or is reasonably likely to lead to a
Superior Proposal (as defined below), and which Takeover Proposal did not
result from a breach of this Section 4.02, and subject to compliance with
paragraphs (c) and (d) of this Section 4.02, participate in discussions or
negotiations regarding such Takeover Proposal and furnish information with
respect to the Company and its subsidiaries to the person making such Takeover
Proposal (and its representatives) pursuant to a customary confidentiality
agreement. Without limiting the foregoing, it is understood that any violation
of the restrictions set forth in the preceding sentence by any director,
officer or employee of the Company or any of its subsidiaries or any
investment banker, attorney, accountant or other advisor or representative of
the Company or any of its subsidiaries shall be deemed to be a breach of this
Section 4.02(a) by the Company.
For purposes of this Agreement (except as set forth in Section
5.07(b)), the term "Takeover Proposal" means any inquiry, proposal or offer
from any person relating to, or that is reasonably likely to lead to, any
direct or indirect acquisition, in one transaction or a series of
transactions, including any merger, tender offer, exchange offer, stock
acquisition, asset acquisition, statutory share exchange, business
combination, recapitalization, liquidation, dissolution, joint venture or
similar transaction, other than the transactions contemplated by this
Agreement, of (A) assets or businesses that constitute or represent 20% or
more of the total revenue, operating income, EBITDA or assets of the Company
and its subsidiaries, taken as a whole, (B) 20% or more of the outstanding
shares of Company Common Stock or (C) 20% or more of the outstanding shares of
capital stock of, or other equity or voting interests in, any of the Company's
subsidiaries directly or indirectly holding, individually or taken together,
the assets or businesses referred to in clause (A) above.
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(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw (or modify in a manner adverse to Parent) or
propose publicly to withdraw (or modify in a manner adverse to Parent) the
recommendation by such Board of Directors or any such committee to the
shareholders of the Company that such shareholders approve this Agreement and
the Merger, or resolve or agree to take any such action (each such action
being referred to as an "Adverse Recommendation Change"), unless the Board of
Directors determines in good faith, based on such matters as it deems
appropriate, after consulting with legal counsel, that the failure to make an
Adverse Recommendation Change would be reasonably likely to result in a breach
of its fiduciary duties under applicable law, (ii) adopt or approve, or
propose publicly to adopt or approve, any Takeover Proposal, or resolve or
agree to take any such action or (iii) cause or permit the Company to enter
into any letter of intent, memorandum of understanding, agreement in
principle, acquisition agreement, merger agreement, option agreement, joint
venture agreement, partnership agreement or other agreement (other than a
confidentiality agreement referred to in Section 4.02(a)) (an "Acquisition
Agreement") constituting or related to, or which is intended to or is
reasonably likely to lead to, any Takeover Proposal, or resolve or agree to
take any such action. Notwithstanding the foregoing, at any time prior to
obtaining the Company Shareholder Approval, the Board of Directors of the
Company may, in response to a Superior Proposal, cause the Company to
terminate this Agreement pursuant to Section 7.01(f) and concurrently enter
into an Acquisition Agreement; provided, however, that the Company shall not
have the right to terminate this Agreement pursuant to Section 7.01(f) unless
the Company shall have paid to Parent the Termination Fee prior to or
concurrently with such termination; and provided further, however, that the
Company shall not be entitled to exercise its right to terminate this
Agreement pursuant to Section 7.01(f) until after the third business day
following Parent's receipt of a written notice (a "Notice of Superior
Proposal") from the Company advising Parent that the Board of Directors of the
Company has received a Superior Proposal and specifying the terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal (it being understood and agreed that any amendment to the
price or any other material term of a Superior Proposal shall require a new
Notice of Superior Proposal and a new three business day period). It is
understood and agreed that the termination of this Agreement in accordance
with the previous sentence shall not constitute a breach of any provision of
this Agreement.
The term "Superior Proposal" means any bona fide written offer made
by a third party that if consummated would result in such third party (or its
shareholders) owning, directly or indirectly, more than 80% of the shares of
Company Common Stock then outstanding (or of the shares of the surviving
entity in a merger involving the Company or the direct or indirect parent of
the surviving entity in a merger involving the Company) or all or
substantially all the assets of the Company and its subsidiaries, taken as a
whole, and otherwise on terms that the Board of Directors of the Company
determines in its good faith judgment (after consultation with a financial
advisor of nationally recognized reputation) to be more favorable to the
Company's shareholders than the Merger, taking into account, among other
things, (x) any changes to the terms of this Agreement proposed by Parent in
response to such third-party written offer or otherwise and (y) the conditions
to consummating such third-party written offer (including those relating to
financing).
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company shall promptly advise
Parent orally and in writing of any
32
Takeover Proposal or any request for information or inquiry that the Company
reasonably believes could lead to a Takeover Proposal, the material terms and
conditions of such Takeover Proposal, request or inquiry (including any
subsequent material amendments or modifications to such terms and conditions)
and the identity of the person making any such Takeover Proposal, request or
inquiry. The Company shall keep Parent informed in all material respects as to
the status and details (including material amendments or proposed amendments)
of any such Takeover Proposal, request or inquiry.
(d) Nothing contained in this Section 4.02 or elsewhere in this
Agreement shall prohibit the Company from (i) taking and disclosing to its
shareholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or (ii) making any disclosure to the Company's shareholders if,
in the good faith judgment of the Board of Directors of the Company, after
consultation with outside counsel, failure to do so would be inconsistent with
its obligations under applicable law; provided, however, that in no event
shall the Company or its Board of Directors or any committee thereof take,
agree or resolve to take, any action prohibited by Section 4.02(b)(i) or
4.02(b)(ii) pursuant to this Section 4.02(d).
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Proxy Statement. As promptly as
practicable following the date of this Agreement, the Company shall prepare
and file with the SEC the Proxy Statement. Each of the parties shall furnish
all information concerning itself and its affiliates that is required to be
included in the Proxy Statement or that is customarily included in proxy
statements prepared in connection with transactions of the type contemplated
by this Agreement. The Company shall use its reasonable best efforts to
respond as promptly as practical to any comments of the SEC with respect to
the Proxy Statement and to cause the Proxy Statement to be mailed to the
Company's shareholders as promptly as practicable after the date of this
Agreement. The Company shall promptly notify Parent upon the receipt of any
comments from the SEC or its staff or any request from the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and shall provide Parent with copies of all correspondence between
the Company and its representatives, on the one hand, and the SEC and its
staff, on the other hand. If at any time prior to the Effective Time any
information relating to the Company or Parent, or any of their respective
directors, officers or affiliates, should be discovered by the Company or
Parent which should be set forth in an amendment or supplement to the Proxy
Statement, so that the Proxy Statement would not include any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly
notify the other parties and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and, to the extent
required by law, disseminated to the shareholders of the Company.
Notwithstanding anything to the contrary stated above, prior to filing or
mailing the Proxy Statement (or any amendment or supplement thereto) or
responding to any comments of the SEC with respect thereto, the Company shall
(i) provide Parent an opportunity to review, comment on and approve such
document or response, (ii) include in such document or response all comments
33
reasonably proposed by Parent and (iii) not file or mail such document or
respond to the SEC prior to receiving Parent's approval, which approval shall
not be unreasonably withheld or delayed. The Company agrees that the Proxy
Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder.
SECTION 5.02. Company Shareholders Meeting. The Company shall, as
soon as practicable following the date of this Agreement, establish a record
date (which will be as soon as practicable following the date of this
Agreement) for, duly call, give notice of, convene and hold a meeting of its
shareholders (the "Company Shareholders Meeting") for the purpose of obtaining
the Company Shareholder Approval. The Company shall cause the Company
Shareholders Meeting to be held as promptly as practicable after the date of
this Agreement. Subject to Section 4.02(b)(i), the Company shall, through its
Board of Directors, recommend to its shareholders that they approve this
Agreement and shall include such recommendation in the Proxy Statement.
Without limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to this Section 5.02 shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to the
Company or any other person of any Takeover Proposal or (ii) the withdrawal or
modification by the Board of Directors of the Company or any committee thereof
of such Board of Directors' or such committee's approval or recommendation of
the Merger or this Agreement.
SECTION 5.03. Access to Information. Except as set forth in Section
5.03 of the Company Disclosure Schedule, upon reasonable notice, the Company
shall, and shall cause each of its subsidiaries to (in order to permit Parent
to evaluate the transactions contemplated by this Agreement), (i) at
reasonable intervals from time to time, confer with Parent to report on
operational matters and other matters reasonably requested by Parent and (ii)
afford to Parent and to its officers, employees, accountants, counsel and
other representatives, reasonable access, during normal business hours during
the period prior to the Effective Time, to their respective properties, books,
contracts, commitments, directors, officers, attorneys, accountants, auditors
(and, to the extent within the Company's control, former auditors), other
advisors and representatives, records and personnel, but only to the extent
that such access does not unreasonably interfere with the business or
operations of the Company or any such subsidiary, and, during such period, the
Company shall, and shall cause each of its subsidiaries to, furnish promptly
to Parent (a) a copy of each material report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of Federal, state or local, domestic or foreign, laws and (b)
such other information concerning its business, properties and personnel as
Parent may reasonably request; provided, however, that the Company shall not
be required to (or to cause any of its subsidiaries to) so confer, afford such
access or furnish such copies or other information if doing so would, or would
reasonably be expected to, subject the Company to liability under, or
constitute a violation of, applicable laws or confidentiality obligations to a
third party. All such information shall constitute Information (as such term
is defined in the Confidentiality Agreement dated as of November 6, 2001,
between the Company and Parent (the "Confidentiality Agreement")) and shall be
subject thereto as provided therein, and Parent shall, and shall cause its
advisors and representatives who receive Information to agree to, hold all
such Information in confidence to the extent required by, and in accordance
with, the terms of the Confidentiality Agreement. The Confidentiality
Agreement shall survive any termination of this Agreement.
34
SECTION 5.04. Reasonable Best Efforts. Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties agrees to use
its reasonable best efforts to take, or cause to be taken, all actions, that
are necessary, proper or advisable to consummate and make effective the Merger
and the other transactions contemplated by this Agreement and the Shareholder
Agreement, including using its reasonable best efforts to accomplish the
following: (i) the taking of all reasonable acts necessary to cause the
conditions precedent set forth in Article VI to be satisfied, (ii) the
obtaining of all necessary actions or nonactions, waivers, consents,
approvals, orders and authorizations from Governmental Entities and the making
of all necessary registrations, declarations and filings (including
registrations, declarations and filings with Governmental Entities, if any),
(iii) the taking of all reasonable steps as may be necessary to avoid any
suit, claim, action, investigation or proceeding by a Governmental Entity and
(iv) the obtaining of all necessary consents, approvals or waivers from third
parties. In connection with and without limiting the foregoing, the Company
and its Board of Directors shall, if any state takeover statute or similar
statute or regulation is or becomes applicable to this Agreement, the
Shareholder Agreement, the Merger or any of the other transactions
contemplated hereby or thereby, use their reasonable best efforts to ensure
that the Merger and the other transactions contemplated hereby or thereby may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation
on this Agreement, the Shareholder Agreement, the Merger and the other
transactions contemplated hereby or thereby. If any objections are asserted
with respect to the transactions contemplated by this Agreement under any
antitrust or competition law, each of Parent and the Company shall use its
reasonable best efforts and cause its subsidiaries to use their reasonable
best efforts to resolve any such objections so as to permit consummation of
the transactions contemplated by this Agreement. Notwithstanding the foregoing
or any other provision of this Agreement to the contrary, in no event shall
any party hereto be obligated to (A) agree to, or proffer to, divest or hold
separate, or enter into any licensing or similar arrangement with respect to,
any assets (whether tangible or intangible) or any portion of any business of
Parent, the Company or any of their respective subsidiaries or (B) litigate
any suit, claim, action, investigation or proceeding, whether judicial or
administrative, brought by any Governmental Entity (1) challenging or seeking
to restrain or prohibit the consummation of the Merger; (2) seeking to
prohibit or limit the ownership or operation by the Company, Parent or any of
their respective affiliates of any portion of the business or assets of the
Company or its subsidiaries or Parent or its subsidiaries or to require any
such person to dispose of or hold separate any portion of the business or
assets of the Company or its subsidiaries, or Parent or its subsidiaries, as a
result of the Merger; or (3) seeking to prohibit Parent or any of its
affiliates from effectively controlling the business or operations of the
Company or its subsidiaries. The Company and Parent will provide such
assistance, information and cooperation to each other as is reasonably
required to obtain any such nonactions, waivers, consents, approvals, orders
and authorizations and, in connection therewith, will notify the other person
promptly following the receipt of any comments or requests from any
Governmental Entity for amendments, supplements or additional information in
respect of any registration, declaration or filing with such Governmental
Entity and will supply the other person with copies of all correspondence
between such person or any of its representatives, on the one hand, and any
Governmental Entity, on the other hand.
SECTION 5.05. Employee Matters. (a) For a period of not less than
one year after the Effective Time, employees of the Company and its
subsidiaries who continue their
35
employment after the Effective Time (the "Affected Employees") shall be
provided cash compensation (including bonus opportunity) and employee benefits
that are substantially comparable in the aggregate to those provided to the
Affected Employees immediately prior to the Effective Time; provided that
Parent agrees to cause the Surviving Corporation to continue the Company's
annual incentive program in effect for the remainder of 2002 calendar year on
the same terms and conditions as in effect immediately before the Effective
Time. Neither Parent nor the Surviving Corporation shall have any obligation
to issue, or adopt any plans or arrangements providing for the issuance of,
shares of capital stock, warrants, options, stock appreciation rights or other
rights in respect of any shares of capital stock of any entity or any
securities convertible or exchangeable into such shares pursuant to any such
plans or arrangements. Any plans or arrangements of the Company providing for
such issuance shall be disregarded in determining whether employee benefits
are substantially comparable in the aggregate.
(b) Parent shall cause the service of each Affected Employee to be
recognized (i) for purposes of eligibility and vesting (but not benefit
accrual) under any pension program in which the Affected Employee
participates, (ii) for purposes of eligibility under any vacation and/or sick
leave program in which the Affected Employee participates and (iii) for
eligibility and benefit accrual purposes under any severance plan in which the
Affected Employee participates. Notwithstanding the foregoing, such service
shall be recognized only to the extent such Affected Employee participated in
a comparable plan of the Company and its subsidiaries prior to the Effective
Time and only to the extent such service was recognized under such plan.
(c) With respect to any welfare plan in which Affected Employees are
eligible to participate after the Effective Time, Parent shall, and shall
cause the Surviving Corporation to, (i) waive all limitations as to
preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to such Affected Employees
to the extent such conditions were satisfied under the welfare plans of the
Company and its subsidiaries prior to the Effective Time and (ii) provide each
such Affected Employee with credit for any co-payments and deductibles paid
prior to the Effective Time in satisfying any analogous deductible or
out-of-pocket requirements to the extent applicable under any such plan.
(d) Except as provided in subsection (f) below, nothing contained
herein shall be construed as requiring Parent or the Surviving Corporation to
continue any specific plans or to continue the employment of any specific
person.
(e) The Company shall amend the ESPP on the date of this Agreement
to provide that (i) participants may not increase their payroll deductions or
purchase elections from those in effect on the date of this Agreement, (ii) no
offering periods shall be commenced after the date of this Agreement, (iii)
each participant's outstanding right to purchase shares of Company Common
Stock under the ESPP shall terminate immediately prior to the Effective Time
in exchange for a cash payment in an amount equal to the excess, if any, of
(A) the product of (1) the number of shares of Company Common Stock that could
have been purchased with such participant's accumulated payroll deductions
immediately prior to the Effective Time (the "Applicable ESPP Shares") at the
applicable option price determined in accordance with the terms of the ESPP
(the "Applicable ESPP Price") and (2) the Merger Consideration, over (B) the
36
product of the number of Applicable ESPP Shares and the Applicable ESPP Price
and (iv) the ESPP shall terminate at the Effective Time.
(f) Parent shall, and shall cause the Surviving Corporation to,
honor all Benefit Agreements and Company severance policies identified or
described in Section 5.05(f) of the Company Disclosure Schedule in accordance
with their terms as in effect immediately before the Effective Time, subject
to any right to amend or terminate any Benefit Agreement as permitted in
accordance with such terms. Parent will recalculate the cutback provided for
in Section 5 of such Benefit Agreements on the third anniversary of the
termination of any employee party thereto whose compensation or benefits were
reduced as a result of the application of such Section 5 to take into account
the termination prior to the recalculation date of the continued medical
benefits provided under such Benefit Agreement. Parent will make any payment
that it determines can be made to any such employee consistently with such
Section 5; provided that Parent shall not be required to make any payment that
Parent determines, in its sole and absolute discretion, could result in any
such employee receiving any "excess parachute payment" (as contemplated by
Section 280G of the Code). For the avoidance of doubt, Parent shall not be
required to make any payment or take any action that it determines in its sole
and absolute discretion, could jeopardize the deductibility of any "parachute
payment" (as contemplated by Section 280G of the Code) made to any such
employee.
SECTION 5.06. Stock Based Awards. On or as soon as practicable
following the date of this Agreement, the Board of Directors of the Company
(or, if appropriate, any committee administering the Company Stock Plans)
shall adopt such resolutions or take such other actions (if any), including
amending such Company Stock Plans and obtaining appropriate consents thereto,
as may be required to cause:
(i) each holder of each Company Stock Option outstanding
immediately prior to the Effective Time, whether vested or unvested,
to become entitled to receive as promptly as practicable after the
Effective Time an amount in cash equal to (A) the excess, if any, of
(1) the Merger Consideration over (2) the exercise price per share
of Company Common Stock subject to such Company Stock Option,
multiplied by (B) the number of shares of Company Common Stock for
which such Company Stock Option shall not theretofore have been
exercised, plus (C) to the extent applicable, an additional payment
in accordance with the Company policy described in Section 5.06(i)
of the Company Disclosure Schedule; and
(ii) rights of any kind, whether vested or unvested, contingent
or accrued, to acquire or receive shares of Company Common Stock or
to receive benefits measured by the value of a number of shares of
Company Common Stock, that may be held, awarded, outstanding,
credited, payable or reserved for issuance under the Company Stock
Plans and any other Benefit Plan, except for Company Stock Options
converted in accordance with clause (i) above (each, a "Company
Stock-Based Award"), that are outstanding immediately prior to the
Effective Time (other than pursuant to the agreements identified in
Section 5.06(ii) of the Company Disclosure Schedule) to be converted
into a fully-vested right to receive cash in an amount equal to the
product of (A) the Merger Consideration and
37
(B) the number of shares of Company Common Stock subject to such
Company Stock-Based Award. The cash value of any converted Company
Stock-Based Award shall be distributed in accordance with the terms
of such Company Stock-Based Award. To the extent the cash value of
such Company Stock-Based Award is not paid or distributed at the
Effective Time, the value of such Company Stock-Based Award after
the Effective Time shall be measured without regard to the value of
Company Common Stock and shall instead be credited with earnings or
losses by reference to, at the holder's election, either any other
alternative deemed investment or investments that may be generally
available immediately prior to the Effective Time under the plan or
other arrangement under which the Company Stock-Based Award is
outstanding at such time or such other deemed investment or
investments as the appropriate officers of the Surviving Corporation
may from time to time establish for such purpose.
SECTION 5.07. Fees and Expenses; Termination Fee. (a) Whether or not
the Merger is consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs or expenses.
(b) In the event that (i) (A) a Takeover Proposal has been made to
the Company or its shareholders or any person has announced an intention
(whether or not conditional) to make a Takeover Proposal, and such Takeover
Proposal or announced intention remains outstanding at the date of the Company
Shareholders Meeting, (B) thereafter this Agreement is terminated by either
Parent or the Company (x) pursuant to Section 7.01(b)(i) without the Company
Shareholder Approval having been obtained prior to the date of such
termination or (y) pursuant to Section 7.01(b)(iv) and (C) within 12 months
after such termination, the Company or any of its subsidiaries enters into any
Acquisition Agreement with respect to, or consummates, any Takeover Proposal
(solely for purposes of this Section 5.07(b)(i)(C), the term "Takeover
Proposal" shall have the meaning set forth in the definition of Takeover
Proposal contained in Section 4.02(a) except that all references to 20%
therein shall be deemed references to 40%), (ii) this Agreement is terminated
by Parent pursuant to Section 7.01(c) or (iii) this Agreement is terminated by
the Company pursuant to Section 7.01(f), then the Company shall pay Parent a
fee equal to $12,500,000 (the "Termination Fee") by wire transfer of same day
funds to an account designated by Parent (x) in the case of a termination by
the Company pursuant to Section 7.01(f), prior to or concurrently with such
termination, (y) in the case of a termination by Parent pursuant to Section
7.01(c), within two business days after such termination and (z) in the case
of a payment as a result of any event referred to in Section 5.07(b)(i)(C),
upon the first to occur of such events.
(c) The Company acknowledges and agrees that the agreement contained
in Section 5.07(b) is an integral part of the transactions contemplated by
this Agreement, and that, without such agreement, Parent would not enter into
this Agreement; accordingly, if the Company fails promptly to pay any amount
due pursuant to Section 5.07(b), and, in order to obtain such payment, Parent
commences a suit that results in a judgment against the Company for any of the
amounts due to Parent pursuant to Section 5.07(b), the Company shall pay to
Parent its costs and expenses (including attorneys' fees and expenses) in
connection with such suit, together with interest on the amounts due to Parent
pursuant to Section 5.07(b) from the date such payment was required to be made
until the date of payment at the prime rate of Citibank, N.A. in effect on the
date such payment was required to be made.
SECTION 5.08. Indemnification, Exculpation and Insurance. (a) All
rights to indemnification and exculpation from liability for acts or omissions
occurring at or prior to the Effective Time and rights to advancement of
expenses relating thereto now existing in favor of the current or former
directors or officers of the Company and its subsidiaries (such persons,
"Indemnified Persons"), as provided in their respective articles of
incorporation or by-laws (or comparable organizational documents) and any
existing indemnification agreements or arrangements of the Company or any of
its subsidiaries shall survive the Merger and shall not be amended, repealed
or otherwise modified in any manner that would adversely affect the rights
thereunder of any such Indemnified Persons. The parties agree that the
Surviving Corporation shall maintain, for a period of six years from the
Effective Time, the run-off policy (including any excess limits coverage
purchased in connection therewith) that the Company contemplates purchasing
prior to the Effective Time under the Company's current directors' and
officers' insurance and indemnification policy (the "D&O Insurance") to
provide coverage for events occurring at or prior to the Effective Time for
all Indemnified Persons (the "Run-Off D&O Policy"). The Company covenants and
agrees that the total premium for the Run-Off D&O Policy (including any excess
limits coverage purchased in connection therewith) will not exceed the sum of
(x) 250% of the last annual premium payable with respect to the D&O Insurance
prior to the date of this Agreement, which the Company represents and warrants
was $190,000, and (y) the amount of any pro rata return premium with respect
to the D&O Insurance received by the Company in connection with the purchase
of the Run-Off D&O Policy (such sum, the "Maximum Premium"); provided,
however, that the Surviving Corporation may, in lieu of maintaining the
Run-Off D&O Policy as provided above, cause comparable coverage to be provided
under any policy issued by a reputable insurance company, so long as the
material terms thereof, including coverage and amount, are no less favorable
to the Indemnified Persons than the existing D&O Insurance. If the Company is
unable to obtain the Run-Off D&O Policy or the Run-Off D&O Policy expires, is
terminated or is canceled during such six-year period, the Surviving
Corporation shall cause to be obtained as much directors' and officers'
insurance covering the Indemnified Persons as can be obtained for the
remainder of such period for an aggregate premium not in excess of the Maximum
Premium.
(b) The parties agree that the provisions of this Section 5.08 are
(i) intended to be for the benefit of, and shall be enforceable by, each
Indemnified Person and each Indemnified Person's heirs and representatives and
(ii) in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by contract or
otherwise. The parties agree that in the event that the Surviving Corporation
or any of its successors or assigns (i) consolidates with or merges into any
other person and is not the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers or conveys all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made by such person so that the successors and
assigns of the Surviving Corporation assume the obligations of the parties and
the Surviving Corporation set forth in this Section 5.08. In the event that
the Surviving Corporation transfers any material portion of its assets, in a
single transaction or in a series of transactions, Parent shall take such
action as may be necessary to ensure that the ability of the Surviving
Corporation, legal and financial, to satisfy
39
the indemnification obligations set forth in this Section 5.08(a) will not be
diminished in any material respect.
SECTION 5.09. Shareholder Litigation. The Company shall give Parent
the opportunity to participate in the defense or settlement of any shareholder
litigation against the Company and/or its directors relating to the
transactions contemplated by this Agreement or the Shareholder Agreement, and
no such settlement shall be agreed to without Parent's prior written consent,
which consent shall not be unreasonably withheld.
SECTION 5.10. Rights Agreement. The Board of Directors of the
Company shall take all further action (in addition to that referred to in
Section 3.01(r)) requested by Parent in order to render the Rights
inapplicable to the Merger and the other transactions contemplated by this
Agreement and the Shareholder Agreement. Except as provided above with respect
to the Merger and the other transactions contemplated by this Agreement and
the Shareholder Agreement, the Board of Directors of the Company shall not,
without the prior written consent of Parent, (i) amend the Rights Agreement
(other than any such amendment solely to ensure that the Rights remain
redeemable) or (ii) take any action with respect to, or make any determination
under, the Rights Agreement, including a redemption of the Rights or any
action to facilitate a Takeover Proposal.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Company Shareholder Approval. The Company Shareholder Approval
shall have been obtained.
(b) Antitrust. The waiting period applicable to the Merger under
each of the HSR Act and the Federal Republic of Germany's Act Against
Restraints of Competition 1957 (GWB), as amended, shall have expired or been
terminated. Any other consents, approvals and filings under any foreign
antitrust law, the absence of which would prohibit the consummation of the
Merger, shall have been obtained or made, except for those the failure of
which to be obtained or made would not reasonably be expected to have a
Material Adverse Effect.
(c) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order or
decree issued by any court of competent jurisdiction or other legal restraint
or prohibition (collectively, "Legal Restraints") that has the effect of
preventing the consummation of the Merger shall be in effect.
SECTION 6.02. Conditions to Obligations of Parent and Sub To Effect
the Merger. The obligations of Parent and Sub to effect the Merger are further
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
40
(a) Representations and Warranties. The representations and
warranties of the Company shall be true and correct as of the Closing Date as
though made on and as of the Closing Date (except to the extent any such
representations and warranties expressly relate to an earlier date, in which
case as of such earlier date), except where the failure of such
representations and warranties to be so true and correct (without giving
effect to any limitation as to materiality or Material Adverse Effect set
forth therein) would not reasonably be expected to have a Material Adverse
Effect, and Parent shall have received a certificate to such effect signed on
behalf of the Company by its chief executive officer and its chief financial
officer.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate to such effect signed on behalf of
the Company by its chief executive officer and its chief financial officer.
(c) No Litigation. There shall not be pending any suit, action or
proceeding brought by any Governmental Entity (i) challenging or seeking to
restrain or prohibit the consummation of the Merger, (ii) seeking to prohibit
or limit the ownership or operation by the Company, Parent or any of their
respective affiliates of any portion of the business or assets of the Company,
Parent or any such affiliate, or to require any such person to divest or hold
separate any portion of its business or assets, as a result of the Merger or
(iii) seeking to impose limitations on the ability of Parent or any of its
affiliates to acquire or hold, or exercise full rights of ownership of, any
shares of Company Common Stock, including the right to vote the Company Common
Stock on all matters properly presented to the shareholders of the Company or
(iv) seeking to prohibit Parent or any of its affiliates from effectively
controlling the business or operations of the Company or its subsidiaries.
SECTION 6.03. Conditions to Obligation of the Company To Effect the
Merger. The obligation of the Company to effect the Merger is further subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub set forth in this Agreement that are qualified as
to materiality shall be true and correct, and the representations and
warranties of Parent and Sub that are not qualified as to materiality shall be
true and correct in all material respects, in each case as of the Closing Date
as though made on and as of the Closing Date (except to the extent any such
representations and warranties expressly relate to an earlier date, in which
case as of such earlier date), and the Company shall have received a
certificate to such effect signed on behalf of Parent by an executive officer
of Parent.
(b) Performance of Obligations of Parent and Sub. Each of Parent and
Sub shall have performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the Closing Date, and
the Company shall have received a certificate to such effect signed on behalf
of Parent by an executive officer of Parent.
SECTION 6.04. Frustration of Closing Conditions. None of Parent, Sub
or the Company may rely on the failure of any condition set forth in Section
6.01, 6.02 or 6.03, as the
41
case may be, to be satisfied if such failure was
caused by such party's failure to use its reasonable best efforts to
consummate the Merger and the other transactions contemplated by this
Agreement and the Shareholder Agreement, as required by and subject to Section
5.04.
ARTICLE VII
Termination and Amendment
SECTION 7.01. Termination. This Agreement may be terminated, and the
Merger contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether before or after the Company Shareholder Approval has
been obtained:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated on or before
December 31, 2002 (as such date may be extended pursuant to this
clause (i), the "Outside Date"); provided, however, that the right
to terminate this Agreement pursuant to this Section 7.01(b)(i)
shall not be available to any party whose action or failure to act
has been a principal cause of or resulted in the failure of the
Merger to occur on or before such date and such action or failure to
act constitutes a breach of this Agreement; and provided further,
however, that, in the event that the conditions set forth in
Sections 6.01(b) or 6.01(c) (to the extent, but only to the extent,
that the underlying Legal Restraint was issued upon the application
of a person other than a Governmental Entity) shall not have been
satisfied by such date, either Parent or the Company may
unilaterally extend the Outside Date by written notice to the other
by December 31, 2002, in which case the Outside Date shall instead
be March 31, 2003;
(ii) upon the receipt by either party of notice from any
Governmental Entity of its intent to file or bring any suit, action
or proceeding, whether administrative or judicial, seeking to
restrain, prohibit or enjoin the consummation of the Merger;
(iii) if (A) any Legal Restraint having the effect set forth in
Section 6.01(c) issued upon the application of any Governmental
Entity shall be in effect or (B) any such Legal Restraint issued
upon the application of any other person shall be in effect and
shall have become final and nonappealable; or
(iv) if the Company Shareholder Approval shall not have been
obtained at the Company Shareholders Meeting duly convened therefor
or at any adjournment or postponement thereof;
(c) by Parent in the event an Adverse Recommendation Change has
occurred;
(d) by Parent if the Company shall have breached or failed to
perform any of its representations, warranties, covenants or other agreements
contained in this Agreement, which
42
breach or failure to perform (i) would give rise to the failure of a condition
set forth in Section 6.02(a) or 6.02(b) and (ii) has not been or is incapable
of being cured by the Company within 30 calendar days after its receipt of
written notice thereof from Parent;
(e) by the Company if Parent shall have breached or failed to
perform any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform (i) would give
rise to the failure of a condition set forth in Section 6.03(a) or 6.03(b) and
(ii) has not been or is incapable of being cured by Parent within 30 calendar
days after its receipt of written notice thereof from the Company; or
(f) by the Company in accordance with the terms and subject to the
conditions of Section 4.02(b).
SECTION 7.02. Effect of Termination. In the event of termination of
this Agreement by either Parent or the Company as provided in Section 7.01,
this Agreement shall forthwith become void and have no effect, and there shall
be no liability or obligation on the part of Parent, Sub or the Company,
except with respect to Section 3.01(s), Section 3.02(g), the second and third
sentences of Section 5.03, Section 5.07, this Section 7.02 and Article VIII
(except Section 8.07 therein), which provisions shall survive such
termination; provided, however, that no such termination shall relieve any
party hereto from any liability or damages resulting from the willful and
material breach by a party of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be amended by the
parties at any time, whether before or after the Company Shareholder Approval
has been obtained; provided, however, that after the Company Shareholder
Approval has been obtained, no amendment shall be made which by law requires
further approval by the shareholders of the Company without such further
approval having been obtained. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) subject to the proviso to the first sentence
of Section 7.03, waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party to any such extension
or waiver shall be valid only if set forth in a written instrument signed on
behalf of such party. The failure of any party to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of those
rights nor shall any single or partial exercise by any party to this Agreement
of any of its rights under this Agreement preclude any other or further
exercise of such rights or any other rights under this Agreement.
SECTION 7.05. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 7.01 or an
amendment of this Agreement pursuant to Section 7.03 shall, in order to be
effective, require, in the case of Parent or the Company, action by its Board
of Directors or, with respect to any amendment of this Agreement
43
pursuant to Section 7.03, the duly authorized committee or other designee of
its Board of Directors to the extent permitted by law.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. Notices. Except for notices that are specifically
required by the terms of this Agreement to be delivered orally, all notices
and other communications hereunder shall be in writing and shall be deemed
given if delivered personally, telecopied (with confirmation) or sent by
overnight or same-day courier (providing proof of delivery) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to the Company, to:
ChemFirst Inc.
000 Xxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxxx 00000-0000
Attention of J. Xxxxx Xxxxxx, Esq.
General Counsel
Facsimile: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois)
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention of Xxxxxxx X. Xxxxxxx, Xx., Esq.
Facsimile: (000) 000-0000; and
(b) if to Parent or Sub, to:
E. I. du Pont de Nemours and Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention of Xxxx X. Xxxx, Esq.
Corporate Counsel
Facsimile: (000) 000-0000
with a copy to:
44
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention of Xxxxxx Cami, Esq.
Facsimile: (000) 000-0000.
SECTION 8.03. Definitions; Interpretation. (a) As used in this
Agreement:
(i) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such
first person, where "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of
voting securities, by contract or otherwise;
(ii) "business day" means any day on which banks are not
required or authorized to close in the City of New York;
(iii) as it relates to the Company or any subsidiary of the
Company, "knowledge" means, with respect to any matter in question,
that any executive officer of the Company has knowledge of such
matter;
(iv) "Material Adverse Change" or "Material Adverse Effect"
means any change, effect, event, occurrence, state of facts or
development that is materially adverse to the business, properties,
assets, liabilities (contingent or otherwise), financial condition
or results of operations of the Company and its subsidiaries, taken
as a whole, other than any change, effect, event, occurrence, state
of facts or development (i) relating to economic, market (including
securities market), regulatory or political conditions in general,
(ii) relating to the industry or markets in which the Company or any
of its subsidiaries operates in general and not specifically
relating to the Company or any of its subsidiaries or (iii)
resulting from the execution or announcement of this Agreement or
the Shareholder Agreement or the consummation of the Merger;
(v) "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust,
unincorporated organization or other entity; and
(vi) a "subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a
majority of its board of directors or other governing body (or, if
there are not such voting interests, more than 50% of the equity
interests of which) is owned directly or indirectly by such first
person.
(b) When a reference is made in this Agreement to a party or to an
Article, Section, Exhibit or Schedule, such reference shall be to a party to,
an Article or Section of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated. The table of contents and
45
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement. The term "or" when used
in this Agreement is not exclusive. All terms defined in this Agreement shall
have the defined meanings when used in any certificate or other document made
or delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the
plural forms of such terms. Any agreement, instrument or statute defined or
referred to herein or in any agreement or instrument that is referred to
herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession
of comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a person are also to its
permitted successors and assigns.
SECTION 8.04. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party.
SECTION 8.05. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, together with the Confidentiality Agreement, (a) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof;
provided that the Confidentiality Agreement shall survive the execution and
delivery of this Agreement, and (b) other than Section 5.08, is not intended
to confer upon any person other than the parties any rights or remedies
hereunder.
SECTION 8.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to any principles of conflicts of law of such State, except to the extent that
the laws of the State of Mississippi are mandatorily applicable to the Merger.
SECTION 8.07. Publicity. Except as otherwise permitted by this
Agreement or required by law or the rules of the NYSE, so long as this
Agreement is in effect, none of Parent, Sub or the Company shall, or shall
permit any of their respective affiliates to, issue or cause the publication
of any press release or other public announcement or statement (any of the
foregoing, a "Public Statement") with respect to this Agreement or the
transactions contemplated hereby without first obtaining the consent of the
Company, in the case of Parent or Sub, or Parent, in the case of the Company;
provided that, if any such Public Statement is required by law or the rules of
the NYSE, the party subject to such requirement will use its reasonable best
efforts to consult in good faith with and obtain the consent of the Company,
in the case of Parent or Sub, or Parent, in the case of the Company, prior to
publication of such Public Statement . The parties agree that the initial
press release to be issued with respect to the transactions contemplated by
this Agreement shall be in the form heretofore agreed to by the parties.
46
SECTION 8.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or in
part, by any of the parties (whether by operation of law or otherwise) without
the prior written consent of the other parties, and any such assignment that
is not so consented to shall be null and void.
SECTION 8.09. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any Federal court
located in the State of New York, this being in addition to any other remedy
to which they are entitled at law or in equity. In addition, each of the
parties (a) consents to submit itself to the personal jurisdiction of any
Federal court located in the State of New York in the event any dispute arises
out of this Agreement or any of the transactions contemplated by this
Agreement and (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such
court.
SECTION 8.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
47
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first above written.
E. I. DU PONT DE NEMOURS AND COMPANY,
by
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Director - Merger & Acquisitions
PURPLE ACQUISITION CORPORATION,
by
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
CHEMFIRST INC.,
by
/s/ J. Xxxxxx Xxxxxxxx
-----------------------------------
Name: J. Xxxxxx Xxxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
ANNEX I
TO THE MERGER AGREEMENT
Index of Defined Terms
Term
Acquisition Agreement..........................................Section 4.02(b)
Adverse Recommendation Change................................. Section 4.02(b)
Affected Employees.............................................Section 5.05(a)
affiliate......................................................Section 8.03(a)
Applicable ESPP Price..........................................Section 5.05(e)
Applicable ESPP Shares.........................................Section 5.05(e)
Agreement.............................................................Preamble
Articles of Merger................................................Section 1.03
Benefit Agreements.............................................Section 3.01(g)
Benefit Plans..................................................Section 3.01(m)
business day...................................................Section 8.03(a)
Certificate....................................................Section 2.01(c)
Closing...........................................................Section 1.02
Closing Date......................................................Section 1.02
Code...........................................................Section 2.02(h)
Commonly Controlled Entity.....................................Section 3.01(m)
Company...............................................................Preamble
Company Common Stock..................................................Recitals
Company Disclosure Schedule.......................................Section 3.01
Company Filed SEC Document........................................Section 3.01
Company Preferred Stock........................................Section 3.01(c)
Company SEC Documents..........................................Section 3.01(e)
Company Shareholder Approval...................................Section 3.01(p)
Company Shareholders Meeting......................................Section 5.02
Company Stock-Based Award.........................................Section 5.06
Company Stock Options .........................................Section 3.01(c)
Company Stock Plans............................................Section 3.01(c)
Confidentiality Agreement.........................................Section 5.03
control........................................................Section 8.03(a)
D&O Insurance..................................................Section 5.08(a)
Effective Time....................................................Section 1.03
Environmental Laws.............................................Section 3.01(l)
ERISA..........................................................Section 3.01(n)
ESPP...........................................................Section 3.01(c)
Exchange Act...................................................Section 3.01(d)
Exchange Fund..................................................Section 2.02(a)
GAAP...........................................................Section 3.01(e)
Governmental Entity............................................Section 3.01(d)
Hazardous Materials............................................Section 3.01(l)
HSR Act........................................................Section 3.01(d)
Indemnified Persons............................................Section 5.08(a)
Intellectual Property..........................................Section 3.01(v)
IRS............................................................Section 3.01(n)
KeyCorp Section 3.01(c)
knowledge......................................................Section 8.03(a)
Legal Restraints...............................................Section 6.01(c)
Liens..........................................................Section 3.01(b)
Material Adverse Change........................................Section 8.03(a)
Material Adverse Effect........................................Section 8.03(a)
Maximum Premium................................................Section 5.08(a)
MBCA..............................................................Section 1.01
Merger................................................................Recitals
Merger Consideration...........................................Section 2.01(c)
Notice of Superior Proposal....................................Section 4.02(b)
NYSE...........................................................Section 3.01(d)
Outside Date...................................................Section 7.01(b)
Parent................................................................Preamble
Paying Agent...................................................Section 2.02(a)
Pension Plan...................................................Section 3.01(n)
Permits........................................................Section 3.01(k)
person.........................................................Section 8.03(a)
Post-Signing Returns...........................................Section 4.01(d)
Proxy Statement................................................Section 3.01(d)
Public Statement..................................................Section 8.07
Release........................................................Section 3.01(l)
Rights.........................................................Section 3.01(c)
Rights Agreement...............................................Section 3.01(c)
Rights Plan Preferred Stock....................................Section 3.01(c)
Run-Off D&O Policy................................................Section 5.08
SEC............................................................Section 3.01(d)
Securities Act.................................................Section 3.01(e)
Shareholder Agreement.................................................Recitals
Sub...................................................................Preamble
subsidiary.....................................................Section 8.03(a)
Superior Proposal..............................................Section 4.02(b)
Surviving Corporation.............................................Section 1.01
Takeover Proposal..............................................Section 4.02(a)
tax............................................................Section 3.01(i)
Termination Fee................................................Section 5.07(b)
