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EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 22, 2001
BY AND AMONG
INVERESK RESEARCH GROUP LIMITED,
INDIGO ACQUISITION CORP.
AND
CLINTRIALS RESEARCH INC.
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ARTICLE I THE OFFER...................................................2
Section 1.1 The Offer...............................................2
Section 1.2 Company Actions.........................................3
Section 1.3 Stockholder Lists.......................................4
Section 1.4 Directors; Section 14(f)................................4
Section 1.5 Adjustment to Common Stock Price........................6
ARTICLE II THE MERGER..................................................6
Section 2.1 The Merger..............................................6
Section 2.2 Effective Time of the Merger............................6
Section 2.3 Effects of the Merger...................................6
Section 2.4 Closing.................................................6
ARTICLE III THE SURVIVING AND PARENT CORPORATIONS.......................7
Section 3.1 Certificate of Incorporation............................7
Section 3.2 Bylaws..................................................7
Section 3.3 Directors...............................................7
Section 3.4 Officers................................................7
ARTICLE IV EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT
CORPORATIONS; SURRENDER OF CERTIFICATES.....................7
Section 4.1 Conversion of Company Common Stock in the Merger........7
Section 4.2 Conversion of Subsidiary Shares.........................8
Section 4.3 Surrender and Exchange of Certificates..................8
Section 4.4 Tax Withholding.........................................9
Section 4.5 Closing of the Company's Transfer Books.................9
Section 4.6 Option Plans; Restricted Stock..........................9
Section 4.7 Dissenting Shares......................................10
Section 4.8 Further Assurances.....................................10
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............10
Section 5.1 Organization and Qualification.........................10
Section 5.2 Capitalization.........................................11
Section 5.3 Subsidiaries...........................................12
Section 5.4 Authority; Non-Contravention; Approvals................12
Section 5.5 Reports and Financial Statements.......................14
Section 5.6 Absence of Undisclosed Liabilities; Affiliate
Transactions...........................................15
Section 5.7 Absence of Certain Changes or Events...................15
Section 5.8 Litigation.............................................15
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Section 5.9 Information Supplied...................................15
Section 5.10 Compliance With Laws...................................16
Section 5.11 Compliance with Agreements.............................16
Section 5.12 Taxes..................................................16
Section 5.13 Employee Benefit Plans; ERISA..........................19
Section 5.14 Labor Controversies....................................21
Section 5.15 Environmental Matters..................................21
Section 5.16 Title to Assets........................................22
Section 5.17 Intellectual Property; Software........................22
Section 5.18 Brokers and Finders....................................23
Section 5.19 Opinion of Company Financial Advisor...................23
Section 5.20 Vote Required..........................................24
Section 5.21 Insurance..............................................24
Section 5.22 Contracts..............................................24
Section 5.23 Significant Customers..................................25
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY....25
Section 6.1 Organization and Qualification.........................25
Section 6.2 Authority; Non-Contravention; Approvals................25
Section 6.3 Information Supplied...................................26
Section 6.4 Financing..............................................26
Section 6.5 Subsidiary.............................................27
Section 6.6 Brokers and Finders....................................27
ARTICLE VII COVENANTS OF THE PARTIES...................................27
Section 7.1 Mutual Covenants.......................................27
Section 7.2 Conduct of the Company's Business......................29
ARTICLE VIII ADDITIONAL AGREEMENTS OF THE PARTIES.......................31
Section 8.1 Access to Information..................................31
Section 8.2 Acquisition Proposals..................................31
Section 8.3 Expenses and Fees......................................33
Section 8.4 Directors' and Officers' Indemnification...............33
Section 8.5 Employee Benefits......................................34
Section 8.6 Litigation.............................................34
Section 8.7 Additional Securities Regulatory Matters...............35
Section 8.8 2000 Form 10-K.........................................35
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ARTICLE IX CONDITIONS.................................................35
Section 9.1 Conditions to Each Party's Obligation to Effect
the Merger.............................................35
ARTICLE X TERMINATION, AMENDMENT AND WAIVER..........................35
Section 10.1 Termination............................................35
Section 10.2 Effect of Termination..................................36
Section 10.3 Amendment..............................................37
Section 10.4 Extension; Waiver......................................37
ARTICLE XI GENERAL PROVISIONS.........................................38
Section 11.1 Non-Survival of Representations and Warranties.........38
Section 11.2 Notices................................................38
Section 11.4 Third Party Beneficiaries..............................39
Section 11.5 Severability...........................................39
Section 11.6 Assignment.............................................39
Section 11.7 Enforcement............................................39
Section 11.8 Counterparts...........................................39
Section 11.9 Entire Agreement.......................................39
ACQUISITION PROPOSAL..................32 CONTRACT..........................24
AGREEMENT..............................1 DESIGNATED PLAN...................20
ANTITRUST DIVISION....................27 DGCL...............................3
BASIC PLAN............................20 DISSENTING SHARES.................10
CANADIAN PLANS........................20 DISSENTING STOCKHOLDER............10
CLOSING................................6 EFFECTIVE TIME.....................6
CLOSING DATE...........................6 ENVIRONMENT.......................22
CODE...................................9 ENVIRONMENTAL EVENT...............21
COMMON STOCK PRICE.....................1 ENVIRONMENTAL LAW.................21
COMPANY................................1 ERISA.............................21
COMPANY CERTIFICATES...................8 ERISA AFFILIATE...................21
COMPANY COMMON STOCK...................1 EXCHANGE ACT.......................2
COMPANY DISCLOSURE SCHEDULE...........10 FTC...............................27
COMPANY FINANCIAL ADVISOR..............4 GAAP..............................14
COMPANY FINANCIAL STATEMENTS..........14 GOVERNMENTAL AUTHORITY............13
COMPANY INTELLECTUAL PROPERTY RIGHTS..23 GROUP..............................3
COMPANY MATERIAL ADVERSE EFFECT.......11 HSR ACT...........................13
COMPANY PERMITS.......................16 INDEPENDENT DIRECTORS..............5
COMPANY PLAN..........................21 INITIAL EXPIRATION DATE............2
COMPANY PREFERRED STOCK...............11 LIENS.............................12
COMPANY REGULATORY APPROVALS..........13 MERGER.............................1
COMPANY SEC REPORTS...................14 MERGER FILING......................6
COMPANY STOCK PLANS....................9 MINIMUM CONDITION..................1
COMPANY STOCKHOLDERS' APPROVAL........24 NASDAQ............................13
COMPANY SUBSIDIARY....................12 OFFER..............................1
CONFIDENTIALITY AGREEMENT.............31 OFFER DOCUMENTS....................3
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OPTION PAYMENT.........................9 STOCK RIGHTS......................11
OPTIONS................................9 STOCKHOLDER AGREEMENT..............1
OUTSIDE DATE..........................36 STOCKHOLDERS MEETING..............28
PARENT.................................1 SUBSIDIARY........................12
PARENT REPRESENTATIVES................31 SUBSIDIARY.........................1
PARENT REQUIRED STATUTORY APPROVALS...26 SUBSIDIARY COMMON STOCK............8
PAYING AGENT...........................8 SUPERIOR PROPOSAL.................33
PENSION PLAN..........................21 SURVIVING CORPORATION..............6
PROXY STATEMENT.......................29 TAX RETURN........................19
RELEASE...............................22 TAXES.............................18
SCHEDULE 14D9..........................4 TOP HAT PLAN......................20
SCHEDULE TO............................3 VIOLATION.........................16
SEC....................................2 WELFARE PLAN......................21
SECURITIES ACT........................12
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 22, 2001 (this
"AGREEMENT"), is made and entered into by and among Inveresk Research Group
Limited, a corporation incorporated under the laws of Scotland ("PARENT"),
Indigo Acquisition Corp., a Delaware corporation and an indirectly wholly-owned
subsidiary of Parent ("SUBSIDIARY"), and ClinTrials Research Inc., a Delaware
corporation (the "COMPANY").
BACKGROUND
WHEREAS, the Boards of Directors of Parent, Subsidiary and the Company
have approved the acquisition of the Company by Parent upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent, Subsidiary and the
Company have agreed that, upon the terms and subject to the conditions set forth
in this Agreement, Subsidiary shall commence an offer (as amended or
supplemented in accordance with this Agreement, the "OFFER") to purchase for
cash all of the issued and outstanding shares of common stock, par value $0.01
per share, of the Company (the "COMPANY COMMON STOCK"), at a price per share of
$6.00, net to the seller in cash (such price, or such other price per share as
may be paid in the Offer, the "COMMON STOCK PRICE");
WHEREAS, the boards of directors of Parent, Subsidiary and the Company
have each approved this Agreement and the merger of Subsidiary with and into the
Company (the "MERGER"), upon the terms and subject to the conditions set forth
in this Agreement, whereby each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (as defined in Section 2.2),
other than shares of Company Common Stock owned directly or indirectly by
Parent, Subsidiary or the Company and Dissenting Shares (as defined in Section
4.7), will be converted into the right to receive the Common Stock Price;
WHEREAS, the Board of Directors of the Company has resolved to
recommend that the holders of shares of Company Common Stock tender their shares
pursuant to the Offer and has approved, adopted and declared advisable this
Agreement and the Merger; and
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to Parent's and Subsidiary's willingness to
enter into this Agreement, Parent, Subsidiary and certain stockholders of the
Company have entered into an agreement (the "STOCKHOLDER AGREEMENT") pursuant to
which those stockholders have agreed to tender their shares of Company Common
Stock in response to the Offer and to vote their shares of Company Common Stock
in favor of the Merger and against any competing transaction, subject to the
terms and conditions set forth therein; and
WHEREAS, Parent, Subsidiary and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, agree as follows:
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ARTICLE I
THE OFFER
Section 1.1 THE OFFER.
(a) Subject to the provisions of this Agreement, and provided that this
Agreement shall not have been terminated in accordance with Section 10.1 and so
long as none of the events or circumstances set forth in Annex A hereto shall
have occurred and be continuing, not later than the seventh business day
following the date of public announcement of the execution of this Agreement,
Parent shall cause Subsidiary to commence (within the meaning of Rule 14d-2
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), the
Offer at a price equal to the Common Stock Price for each share of Company
Common Stock. The obligations of Subsidiary to consummate the Offer, to accept
for payment and to pay for any shares of Company Common Stock tendered pursuant
to the Offer and not withdrawn prior to the expiration of the Offer shall be
subject solely to those conditions set forth in ANNEX A. It is agreed that the
conditions to the Offer set forth on ANNEX A are solely for the benefit of
Subsidiary and may be asserted only by Subsidiary and Subsidiary expressly
reserves the right, in its sole discretion, to waive any such condition;
PROVIDED, HOWEVER, that without the prior written consent of the Company,
Subsidiary shall not waive the Minimum Condition (as defined in ANNEX A). The
initial expiration date of the Offer (the "INITIAL EXPIRATION DATE") shall be
the 20th business day following the commencement of the Offer (within the
meaning of Rule 14d-2 under the Exchange Act).
(b) Subsidiary expressly reserves the right, in its sole discretion, to
modify and make changes to the terms and conditions of the Offer; PROVIDED,
HOWEVER, that without the prior written consent of the Company, no modification
or change may be made which (i) decreases the Common Stock Price (except as
permitted by Section 1.5); (ii) changes the form of consideration payable in the
Offer (other than by adding consideration); (iii) changes the Minimum Condition;
(iv) limits the number of shares of Company Common Stock sought pursuant to the
Offer; (v) changes the material conditions to the Offer in a manner adverse to
the holders of the Company Common Stock; or (vi) imposes additional material
conditions to the Offer. Notwithstanding the foregoing, Subsidiary may, without
the consent of the Company, (i) extend and re-extend the Offer on one or more
occasions for such period as may be determined by Subsidiary in its sole
discretion (each such extension period not to exceed 20 business days at a
time), if at the then-scheduled expiration date of the Offer any of the
conditions to Subsidiary's obligations to accept for payment and pay for shares
of Company Common Stock shall not be satisfied or waived; (ii) extend and
re-extend the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC")
or the staff thereof applicable to the Offer; and (iii) extend and re-extend the
Offer on one or more occasions for an aggregate period of not more than 15
business days if the Minimum Condition has been satisfied but less than 90% of
the outstanding Company Common Stock (on a fully diluted basis) has been validly
tendered and not properly withdrawn as of the Initial Expiration Date; provided,
however, that from and after any extension pursuant to this clause (iii),
Subsidiary shall be deemed to have waived the conditions to the Offer set forth
in ANNEX A, other than the Minimum Condition and except insofar as the
conditions relate to or are based upon (x) the illegality of the consummation of
the Offer or the Merger; (y) breach by the Company of any covenant contained in
this Agreement; or (z) failure of any representation or warranty made by the
Company in this Agreement to be true and correct as of the date of this
Agreement. Notwithstanding the foregoing, if requested by the Company,
Subsidiary shall, and Parent agrees to cause Subsidiary to, extend the Offer on
one or more occasions (but in no event beyond the Outside Date (as defined in
Section 10.1(b))) if at the then-scheduled expiration date of the Offer any of
the conditions to Subsidiary's obligations to accept for payment and pay for
shares of Company Common Stock shall not be satisfied or waived and all such
conditions are reasonably capable of being satisfied. Subject to the terms and
the conditions of the Offer and this Agreement, as soon as practicable after
expiration of the
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Offer, Subsidiary shall accept for payment and pay for, and Parent shall cause
Subsidiary to accept for payment and pay for, all shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer. Parent shall provide
or cause to be provided to Subsidiary the funds necessary to pay for such shares
of Company Common Stock on a timely basis. Notwithstanding the foregoing,
Subsidiary may in its sole discretion elect to provide for a subsequent offering
period pursuant to, and on the terms required by, Rule 14d-11 under the Exchange
Act.
(c) On the date of commencement of the Offer, Parent and Subsidiary
shall file with the SEC with respect to the Offer a Tender Offer Statement on
Schedule TO (together with all amendments and supplements thereto and including
all exhibits thereto, the "SCHEDULE TO") which will comply in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder and other applicable United States federal securities laws, and will
contain the offer to purchase relating to the Offer and forms of the related
letter of transmittal and summary advertisement (such Schedule TO and the
documents included therein pursuant to which the Offer shall be made, together
with any supplements or amendments thereto and including the exhibits thereto,
are referred to herein collectively as the "OFFER DOCUMENTS"). Parent shall
deliver copies of the proposed forms of the Offer Documents to the Company in
advance of the commencement of the Offer for review and comment by the Company
and its counsel prior to the commencement of the Offer. To the extent reasonably
practicable under the circumstances, the Company and its counsel shall be given
a reasonable opportunity to review any amendments and supplements to the initial
Offer Documents prior to their filing with the SEC or dissemination to the
Company's stockholders. Parent shall advise the Company and its counsel of any
comments that Subsidiary, Parent or their counsel may receive from the SEC or
its staff with respect to the Offer Documents promptly after the receipt thereof
and shall provide copies of any comments that are provided by the SEC or its
staff in writing. Each of the Company, Parent and Subsidiary shall promptly
correct any information provided by it for use in the Offer Documents that shall
have become false or misleading in any material respect and Parent and
Subsidiary further agree to take all steps necessary to cause the Schedule TO as
so corrected to be filed with the SEC and the other Offer Documents as so
corrected to be disseminated to the stockholders of the Company, in each case,
as and to the extent required by applicable United States federal securities
laws.
Section 1.2 COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that (i) its Board of Directors, at a meeting duly
called and held on February 22, 2001, has duly and unanimously adopted
resolutions declaring the advisability of this Agreement and approving the
Offer, the Merger, this Agreement and the transactions contemplated hereby,
determining that the terms of the Offer and the Merger are fair to, and in the
best interests of, the Company's stockholders and recommending that the
Company's Stockholders accept the Offer and tender their respective shares of
Company Common Stock to Subsidiary and, if required, adopt this Agreement and
approve the Merger and the other transactions contemplated hereby; and (ii) the
Company has approved the execution, delivery and performance of the Stockholder
Agreement and has taken all necessary action to ensure that the restrictions
contained in Section 203 of the Delaware General Corporation Law (the "DGCL")
applicable to an "interested stockholder" or a "business combination" (as
defined in Section 203 of the DGCL) will not apply to the Stockholder Agreement,
the Offer, the Merger, this Agreement or the transactions contemplated hereby or
thereby. Subject to Sections 7.1(d) and 8.2(b), the Company hereby consents to
the inclusion in the Offer Documents of the recommendations of the Company's
Board of Directors described in this Section 1.2(a). The Company has been
advised by each of the directors and executive officers listed on SCHEDULE 1.2
that such person intends to tender all shares of Company Common Stock owned by
such person pursuant to the Offer.
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(b) The Company shall file with the SEC on the date of the commencement
of the Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (together
with all amendments and supplements thereto and including the exhibits thereto,
the "SCHEDULE 14D-9"), which shall comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder and
other applicable United States federal securities laws, and, subject to Sections
7.1(d) and 8.2(b), will contain the recommendations of the Company's Board of
Directors referred to in subsection (a) above, and shall disseminate the
Schedule 14D-9 to the Company's stockholders. The Company shall deliver the
proposed forms of the Schedule 14D-9 to Parent and its counsel as far in advance
of the commencement of the Offer as is reasonably practicable under the
circumstances for review and comment by Parent and its counsel. Parent and its
counsel shall be given a reasonable opportunity to review and comment on any
amendments and supplements to the Schedule 14D-9 prior to their filing with the
SEC or dissemination to the Company's stockholders. The Company shall provide
Parent and its counsel in writing any comments that the Company or its counsel
may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after receipt thereof. Each of the Company, Parent and Subsidiary shall
promptly correct any information provided by it for use in the Schedule 14D-9
that shall have become false or misleading in any material respect and the
Company further agrees to take all steps necessary to cause such Schedule 14D-9
as so corrected to be filed with the SEC and disseminated to the Company's
stockholders, as and to the extent required by applicable United States federal
securities laws.
(c) ING Barings LLC (the "COMPANY FINANCIAL ADVISOR") has rendered to
the Company's Board of Directors its opinion to the effect that, as of the date
of this Agreement, the Common Stock Price to be received pursuant to the Offer
and the Merger by the holders of Company Common Stock is fair, from a financial
point of view, to such holders (other than Parent and its affiliates). The
Company has been informed that the Company Financial Advisor will permit the
inclusion of the opinion in its entirety and, subject to prior review and
consent by the Company Financial Advisor, a reference to the opinion, in the
Schedule 14D-9 and the Proxy Statement (as defined in Section 7.1(d)).
Section 1.3 STOCKHOLDER LISTS. In connection with the Offer, the
Company shall promptly furnish to, or cause to be furnished to, Parent and
Subsidiary mailing labels, security position listings, a list of non-objecting
beneficial owners and any available listing or computer file containing the
names and addresses of the record holders of the shares of Company Common Stock
as of a recent date and of those persons becoming record holders subsequent to
such date (to the extent available), together with all other relevant
information in the Company's possession or control regarding the beneficial
owners of shares of Company Common Stock and shall furnish Parent and Subsidiary
with such additional information and assistance as Parent, Subsidiary or their
respective agents may reasonably request in communicating the Offer to the
record and beneficial holders of shares of Company Common Stock. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Offer and the Merger (including, without limitation, the solicitation of
stockholder votes), Parent and Subsidiary shall, and shall cause each of their
agents to, hold the information contained in any of such labels and lists in
confidence, use such information only in connection with the Offer and the
Merger, and, if this Agreement is terminated, will, upon request, deliver, and
will use their reasonable efforts to cause their agents to deliver to the
Company or destroy, all copies of such information or extracts therefrom then in
their possession or under their control.
Section 1.4 DIRECTORS; SECTION 14(f).
(a) Effective upon the acceptance for payment of and payment for shares
of Company Common Stock by Subsidiary or any of its affiliates pursuant to the
Offer, Parent shall be entitled to designate such number of directors of the
Board of Directors as determined by Parent, rounded up to the next whole number,
for election or appointment to the Board of Directors of the Company as will
give
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Parent, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board of Directors of the Company equal to the product of
(i) the total number of directors on the Board of Directors of the Company and
(ii) the percentage that the number of shares of Company Common Stock
beneficially owned by Subsidiary and Parent (including shares of Company Common
Stock so accepted for payment and purchased) bears to the number of shares of
Company Common Stock then outstanding. In furtherance thereof, concurrently with
such acceptance for payment and payment for such shares of Company Common Stock
the Company shall, upon request of Parent or Subsidiary and in compliance with
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder,
promptly take all action necessary to cause such designees of Parent and
Subsidiary to be so elected or appointed to the Company's Board of Directors,
including seeking and accepting resignations of incumbent directors, and,
subject to applicable law, the Company shall cause such designees of Parent and
Subsidiary to be so elected or appointed. At such time, the Company shall, if
requested by Parent or Subsidiary and subject to applicable law, cause persons
designated by Parent and Subsidiary to constitute at least the same percentage
(rounded up to the next whole number) as is on the Company's Board of Directors
of (i) each committee of the Company's Board of Directors; (ii) each board of
directors (or similar body) of each subsidiary of the Company; and (iii) each
committee (or similar body) of each such board. Subject to applicable law, the
Company shall promptly take all action reasonably requested by Parent in order
to effect any such election or appointment, including mailing to its
stockholders the information required by Section 14(f) of the Exchange Act and
Rule 14(f)-1 promulgated thereunder as part of the Schedule 14D-9 initially
filed with the SEC and distributed to the stockholders of the Company (or, at
Parent's request, furnishing such information to Parent for inclusion in the
Offer Documents initially filed with the SEC and distributed to the stockholders
of the Company) as is necessary to enable Subsidiary's designees to be elected
to the Company's Board of Directors; provided, however, that Parent and
Subsidiary shall be solely responsible for providing information regarding
Parent and Subsidiary, their nominees, and their affiliates for inclusion in any
such filing or filings.
(b) Notwithstanding the foregoing, (i) the Company shall use its best
efforts to ensure that, if Parent's and Subsidiary's designees are elected to
the Board of Directors of the Company, such Board of Directors shall have, at
all times prior to the Effective Time (as defined in Section 2.2), at least two
directors (chosen by the existing directors to continue serving in such
capacity) who are directors on the date of this Agreement and who are not
officers or affiliates of the Company (it being understood that for purposes of
this sentence, a director of the Company shall not be deemed an affiliate of the
Company solely as a result of his status as a director of the Company), Parent
or any of their respective subsidiaries (the "INDEPENDENT DIRECTORS"); (ii) if
the number of Independent Directors shall be reduced below two for any reason
whatsoever, the remaining Independent Director may designate a person to fill
such vacancy who is not an officer, employee or affiliate of the Company,
Parent, or any of their respective subsidiaries and such person shall be deemed
to be an Independent Director for purposes of this Agreement; and (iii) if no
Independent Directors then remain, the other directors may designate two persons
to fill such vacancies who shall not be officers or affiliates of the Company,
Parent or any of their respective subsidiaries, and such persons shall be deemed
to be Independent Directors for purposes of this Agreement.
(c) Prior to the Effective Time and from and after the time that
Parent's and Subsidiary's designees constitute a majority of the Company's Board
of Directors, if applicable, (i) any amendment or any termination of this
Agreement by the Company; (ii) any extension of time for performance of any of
the obligations of Parent or Subsidiary pursuant to this Agreement for which the
Company's consent or approval is required; (iii) any amendment to the Company's
Certificate of Incorporation or Bylaws; (iv) any extension of time for
performance or waiver of compliance with any covenant of Parent or Subsidiary or
any condition to any obligation of the Company or of any of the Company's rights
under this Agreement; (v) any amendment or withdrawal by the Company's Board of
Directors of its recommendation of the Merger pursuant to Section 7.1(d); and
(vi) the removal or replacement of the
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Independent Directors may be effected only by the action of a majority of the
Independent Directors, which action shall be deemed to constitute the action of
the full Board of Directors of the Company (and any committee specifically
designated by the Board of Directors of the Company) to approve the actions
contemplated hereby and no other action on the part of the Company, including
any action by any other director of the Company shall be required for such
authorization; PROVIDED, HOWEVER, that, if there shall be no Independent
Directors, such actions may be effected by majority vote of the entire Board of
Directors of the Company.
Section 1.5 ADJUSTMENT TO COMMON STOCK PRICE. If, following the
date of this Agreement, (i) the Company shall split, combine or reclassify any
shares of Company Common Stock, or declare or pay any dividend or other
distribution or (ii) the Company shall have outstanding a number of shares of
Company Common Stock in excess of the number represented in Section 5.2 to be
issued and outstanding plus the number of shares permitted to be issued pursuant
to the express provisions of this Agreement; then, in any such event, and in
addition to any other rights and remedies that may be available to it, Parent
and Subsidiary may (but need not) proportionately adjust the Common Stock Price
to reflect that change.
ARTICLE II
THE MERGER
Section 2.1 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 2.2), in accordance with
this Agreement and the DGCL, Subsidiary shall be merged with and into the
Company and the separate existence of Subsidiary shall thereupon cease. The
Company in its capacity as the surviving corporation in the Merger is sometimes
referred to in this Agreement as the "SURVIVING CORPORATION."
Section 2.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective at the time (such time, the "EFFECTIVE TIME") of the filing of a
certificate of merger (in such form as required by and executed in accordance
with the relevant provisions of the DGCL) with the Secretary of State of the
State of Delaware in accordance with the DGCL (the "MERGER FILING"). The Merger
Filing shall be made simultaneously with or as soon as practicable following the
Closing (as defined in Section 2.4).
Section 2.3 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, at the Effective Time, except as otherwise provided
in this Agreement, all the property, rights, privileges, powers and franchises,
and all and every other interest, of Subsidiary and the Company shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Subsidiary
and the Company shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 2.4 CLOSING. Subject to the satisfaction or waiver of the
conditions to the obligations of the parties to effect the Merger set forth
herein, the consummation of the Merger (the "CLOSING") will take place as
promptly as practicable, but in no event later than 10:00 a.m. on the fifth
business day following the satisfaction or waiver of all the conditions (other
than conditions which by their nature are to be satisfied at Closing, but
subject to the satisfaction or waiver of those conditions) to the obligations of
the parties to effect the Merger set forth herein (the "CLOSING DATE"), at the
offices of Xxxxxxxx Chance Xxxxxx & Xxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, unless another time, date or place is agreed to by the parties hereto in
writing.
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ARTICLE III
THE SURVIVING AND PARENT CORPORATIONS
Section 3.1 CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Company as in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation
after the Effective Time until thereafter amended in accordance with its terms
and the DGCL.
Section 3.2 BYLAWS. The Bylaws of Subsidiary as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation after the Effective Time and (subject to Section 8.4(a) hereof)
thereafter may be amended in accordance with their terms and as provided by the
Certificate of Incorporation of the Surviving Corporation and the DGCL.
Section 3.3 DIRECTORS. From and after the Effective Time, the
directors of the Surviving Corporation shall be those individuals appointed by
Parent in its capacity as sole stockholder of the Surviving Corporation and
shall serve in accordance with the certificate of incorporation and bylaws of
the Surviving Corporation until their respective successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal.
Section 3.4 OFFICERS. From and after the Effective Time, the
officers of the Surviving Corporation shall be those individuals appointed by
the Board of Directors of the Surviving Corporation which has been appointed by
Parent in its capacity as sole stockholder of the Surviving Corporation and such
officers shall serve in accordance with the bylaws of the Surviving Corporation
until their respective successors are duly elected or appointed and qualified or
until their earlier death, resignation or removal.
ARTICLE IV
EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT CORPORATIONS;
SURRENDER OF CERTIFICATES
Section 4.1 CONVERSION OF COMPANY COMMON STOCK IN THE MERGER. At
the Effective Time, by virtue of the Merger and without any action on the part
of any holder of any capital stock of Parent, Subsidiary or the Company:
(a) each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares canceled pursuant to
Section 4.1(b) and any Dissenting Shares (as defined in Section 4.7)) shall be
converted into the right to receive the Common Stock Price, payable to the
holder thereof, in each case without interest, less any required withholding
taxes, upon surrender of the certificate formerly representing such share of the
Company Common Stock and such other documents as reasonably may be required in
accordance with Section 4.3. All such shares of Company Common Stock, when so
converted, no longer shall be outstanding and automatically shall be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to have any
rights with respect thereto, except the right to receive the Common Stock Price
per share therefor, without interest, upon the surrender of such certificate in
accordance with Section 4.3 or to perfect any rights of appraisal as a holder of
Dissenting Shares that such holder may have pursuant to the DGCL; and
(b) each share of capital stock of the Company, if any, owned by Parent
or Subsidiary or held in treasury by the Company or any subsidiary of the
Company immediately prior to the Effective Time automatically shall be canceled
and retired and shall cease to exist and no cash or other consideration shall be
delivered or deliverable in exchange therefor.
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Section 4.2 CONVERSION OF SUBSIDIARY SHARES. At the Effective Time,
by virtue of the Merger and without any action on the part of Parent as the sole
stockholder of Subsidiary, each issued and outstanding share of common stock,
par value $0.01 per share, of Subsidiary ("SUBSIDIARY COMMON STOCK") that is
issued and outstanding prior to the Effective Time shall be converted into and
become one fully paid and nonassessable share of common stock, par value $0.01
per share, of the Surviving Corporation.
Section 4.3 SURRENDER AND EXCHANGE OF CERTIFICATES.
(a) Prior to the Effective Time, Parent shall designate a bank or trust
company reasonably acceptable to the Company to act as paying agent in the
Merger (the "PAYING AGENT"), and prior to the Effective Time, Parent shall
deposit, or cause the Surviving Corporation to deposit with the Paying Agent,
cash in the amount necessary for the payment of the aggregate merger
consideration as provided in Section 4.1 upon surrender of certificates formerly
representing shares of Company Common Stock in the manner provided in Section
4.3(b). Funds made available to the Paying Agent shall be invested by the Paying
Agent as directed by Parent (it being understood that any and all interest or
income earned on funds deposited with the Paying Agent pursuant to this
Agreement shall be turned over to Parent).
(b) Promptly after the Effective Time, Parent shall cause the Paying
Agent to mail to each holder of record of a certificate or certificates that
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "COMPANY CERTIFICATES") whose shares were converted
into the right to receive the Common Stock Price pursuant to Section 4.1 (i) a
letter of transmittal which shall specify that delivery shall be effected, and
risk of loss and title to the Company Certificates shall pass, only upon actual
delivery of the Company Certificates to the Paying Agent and shall be in such
form and have such other provisions as Parent may reasonably specify, and (ii)
instructions for use in effecting the surrender of the Company Certificates in
exchange for the Common Stock Price. Upon surrender of Company Certificates for
cancellation to the Paying Agent, together with a duly executed letter of
transmittal and such other documents as the Paying Agent shall reasonably
require, the holder of such Company Certificates shall be entitled to receive in
exchange therefor the Common Stock Price for each share of Company Common Stock
formerly represented thereby, in accordance with Section 4.1(a), and the Company
Certificates so surrendered shall be canceled. In the event of a transfer of
ownership of shares of Company Common Stock that is not registered in the
transfer records of the Company, a check representing the proper amount of
merger consideration may be issued to a transferee if the Company Certificate
representing such shares of Company Common Stock is presented to the Paying
Agent accompanied by all documents and endorsements reasonably required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as provided in this Section
4.3, each Company Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the Common Stock
Price for each share of Company Common Stock represented thereby. No interest
will be paid or accrue on any amounts payable upon surrender of any Company
Certificate.
(c) Promptly following the date which is six months after the Effective
Time, the Paying Agent shall deliver to Parent all cash and any documents in its
possession relating to the transactions described in this Agreement, and the
Paying Agent's duties shall terminate. Thereafter, each holder of a Company
Certificate may surrender such Company Certificate to the Surviving Corporation
or Parent and (subject to applicable abandoned property, escheat or other
similar laws) receive in exchange therefor the Common Stock Price, payable upon
due surrender of their Company Certificates without any interest thereon.
Notwithstanding the foregoing, none of the Paying Agent, Parent, Subsidiary, the
Company or the Surviving Corporation shall be liable to a holder of shares of
Company Common Stock for any
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amounts properly delivered to a public official pursuant to any applicable
abandoned property, escheat or other similar laws.
(d) If any Company Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Company Certificate to be lost, stolen or destroyed, the Paying Agent shall
issue in exchange for such lost, stolen or destroyed Company Certificate the
Common Stock Price deliverable in respect thereof determined in accordance with
this Article IV; PROVIDED, HOWEVER, that Parent or the Paying Agent may, in its
discretion, require the delivery of a reasonable indemnity or bond against any
claim that may be made against the Surviving Corporation with respect to such
Company Certificate or ownership thereof.
Section 4.4 TAX WITHHOLDING. Each of Parent and Surviving
Corporation shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any former holder of shares of
Company Common Stock such amounts as Parent or Surviving Corporation is required
to deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "CODE"), or any other provision
of federal, state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or Surviving Corporation, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the former
holder of the shares of Company Common Stock in respect of which such deduction
and withholding was made by Parent.
Section 4.5 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At and after
the Effective Time, holders of Company Certificates shall cease to have any
rights as stockholders of the Company, except for the right to receive the
Common Stock Price pursuant to Section 4.1, without interest. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer of
shares of Company Common Stock which were outstanding immediately prior to the
Effective Time shall thereafter be made. If, after the Effective Time, subject
to the terms and conditions of this Agreement, Company Certificates formerly
representing shares of Company Common Stock are presented to the Surviving
Corporation, they shall be canceled and exchanged for the Common Stock Price in
accordance with this Article IV.
Section 4.6 OPTION PLANS; RESTRICTED STOCK.
(a) As of the Effective Time, each of the then outstanding stock
options, warrants and other rights to purchase Company Common Stock (the
"OPTIONS") granted under any stock option or compensation plan or arrangement of
the Company (the "COMPANY STOCK PLANS"), whether or not then vested or
exercisable, shall automatically be cancelled, and each holder of any Option
thereafter shall be entitled (subject to the provisions set forth in this
Section 4.6(a)) to be paid by the Surviving Corporation with respect to each
share subject to the Option an amount in cash (subject to any applicable
withholding taxes) equal to the excess, if any, of the Common Stock Price over
the applicable exercise price of such Option (the "OPTION PAYMENT"). The
Surviving Corporation shall make each Option Payment to the Option holder at the
Effective Time. Prior to the Effective Time, the Company will obtain all
consents and make all amendments, if any, to the terms of the Company Stock
Plans and each outstanding award agreement issued thereunder, as applicable,
that are necessary to give effect to the provisions of this Section 4.6(a).
(b) Upon the consummation of the Merger, each holder of a restricted
share of Company Common Stock outstanding at the Effective Time shall be
entitled to receive the Common Stock Price payable with respect to such
restricted share in accordance with the restricted stock agreement or other
agreement applicable to such restricted share. The Surviving Corporation shall
make such payment to the holder at the Effective Time.
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(c) The Company shall take all actions as may be necessary to
terminate, as of the Closing Date, any long-term incentive plan, employee stock
purchase plan or any other similar equity based plan or portion of such plan
providing for equity-based compensation.
Section 4.7 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary,
any issued and outstanding shares of Company Common Stock ("DISSENTING SHARES")
held by a Dissenting Stockholder (as defined below) shall not be converted into
the Common Stock Price but shall become the right to receive such consideration
as may be determined to be due to such Dissenting Stockholder pursuant to the
DGCL; PROVIDED, HOWEVER, that each share of Company Common Stock outstanding
immediately prior to the Effective Time and held by a Dissenting Stockholder
who, after the Effective Time, withdraws his demand or fails to perfect or
otherwise loses his right of appraisal, pursuant to the DGCL, shall be deemed to
be converted as of the Effective Time into the right to receive the Common Stock
Price, without interest. As used in this Agreement, "DISSENTING STOCKHOLDER"
means any record holder or beneficial owner of shares of Company Common Stock
who does not vote for the Merger and complies with all provisions of the DGCL
(including all provisions of Section 262 of the DGCL) concerning the right of
holders of Company Common Stock to dissent from the Merger and obtain fair value
for their shares.
(b) At all times prior to the Effective Time, the Company shall give
Parent (i) prompt notice of any demands for appraisal pursuant to the applicable
provisions of the DGCL received by the Company, withdrawals of such demands, and
any other instruments served pursuant to the DGCL and received by the Company
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under the DGCL. The Company shall not at any time prior
to the Effective Time, except with the prior written consent of Parent, make any
payment with respect to any such demands for appraisal, or settle, or offer to
settle, or otherwise negotiate any such demands.
Section 4.8 FURTHER ASSURANCES. At and after the Effective Time,
the officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Subsidiary, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Subsidiary, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Subsidiary that,
except as set forth in the disclosure schedule delivered by the Company to
Parent prior to the execution and delivery of this Agreement and referring to
the representations and warranties in this Agreement (the "COMPANY DISCLOSURE
SCHEDULE"):
Section 5.1 ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own, license, use, lease and operate its assets and properties and to carry on
its business as it is now being carried on. The Company is qualified to transact
business and is in good standing (with respect to jurisdictions that recognize
such concept) in each jurisdiction in which the properties owned, license, used,
leased or operated by it or the nature of the business conducted by it
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makes such qualification necessary, except where the failure to be so qualified,
would not have a Company Material Adverse Effect. As used in this Agreement, a
"COMPANY MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, assets, condition (financial or otherwise), prospects or results of
operations of the Company and its subsidiaries, taken as a whole, or on the
transactions contemplated by this Agreement. The Company has heretofore made
available to Parent and Subsidiary complete and correct copies of the
Certificate of Incorporation, Bylaws and minute books of the Company as in
effect on the date of this Agreement.
Section 5.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists solely of
50,000,000 shares of Company Common Stock and 1,000,000 shares of preferred
stock, par value $0.01 per share ("COMPANY PREFERRED STOCK"). As of the date of
this Agreement, (i) 18,402,172 shares of Company Common Stock were issued and
outstanding, all of which were duly and validly issued and are fully paid,
nonassessable and free of preemptive rights; (ii) no shares of Company Preferred
Stock were issued and outstanding; (iii) no shares of Company Common Stock and
no shares of Company Preferred Stock were held in the treasury of the Company;
and (iv) 2,179,504 shares of Company Common Stock were reserved for issuance
upon exercise, conversion or exchange of securities (the "STOCK RIGHTS") issued
and outstanding pursuant to the Company Stock Plans. Since February 22, 2001,
except as permitted by this Agreement, no shares of capital stock of the Company
have been issued except in connection with exercise, exchange or conversion of
the outstanding Stock Rights. SECTION 5.2 OF THE COMPANY DISCLOSURE SCHEDULE
completely and accurately sets forth (i) the name and principal features of each
Company Stock Plan and each restricted stock, phantom stock and other
equity-based compensation plan of the Company; (ii) the names of each holder of
Options, restricted stock or other rights awarded or held pursuant to any plan
described in clause (i); and (iii) for each holder described in clause (ii), the
number of shares issuable upon exercise of the holder's Options, the number of
shares of restricted stock held, the other rights held, and in each such
instance the applicable exercise price, vesting schedule, restrictions and other
equivalent provisions, including any acceleration of vesting, lapse of
restriction or other change that will or may be triggered by the Merger or the
occurrence of any other event contemplated by this Agreement.
(b) No bonds, debentures, notes or other indebtedness of the Company
having the right to vote on any matters on which stockholders of the Company may
vote are authorized, issued or outstanding.
(c) Except as otherwise set forth in this Section 5.2, there are no
outstanding subscriptions, options, calls, contracts, scrip, commitments,
understandings, restrictions, arrangements, rights, or warrants, stock
appreciation or other rights (contingent or other) including phantom stock
rights or preemptive rights, or rights of conversion or exchange under any
outstanding security, instrument or other agreement, obligating the Company or
any subsidiary of the Company to issue, deliver or sell, redeem or repurchase,
or cause to be issued, delivered or sold or repurchased, additional shares of
the capital stock of the Company or obligating the Company or any subsidiary of
the Company to grant, extend or enter into any such agreement or commitment and
there is no commitment of the Company or any subsidiary to distribute to holders
of any class of its capital stock, any dividends, distributions, evidences of
indebtedness or assets. Except as permitted by this Agreement, there are no
voting trusts, proxies or other agreements or understandings to which the
Company or any subsidiary of the Company is a party or is bound with respect to
the voting of any shares of capital stock of the Company and no shares of
capital stock of the Company are subject to transfer restrictions imposed by or
with the knowledge, consent or approval of the Company, or other similar
arrangements imposed by or with the knowledge, consent or approval of the
Company, except for restrictions on transfer imposed by the Securities Act of
1933, as amended (the "SECURITIES ACT"), and state securities laws. The Company
Common Stock constitutes the
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only class of equity securities of Company or its subsidiaries registered or
required to be registered under the Exchange Act.
Section 5.3 SUBSIDIARIES.
(a) The only subsidiaries of the Company (each a "COMPANY SUBSIDIARY")
are those set forth in SECTION 5.3 OF THE COMPANY DISCLOSURE SCHEDULE. Except
for shares of, or ownership interests in, the Company Subsidiaries, the Company
does not own of record or beneficially, directly or indirectly, (i) any shares
of outstanding capital stock or securities convertible into or exchangeable or
exercisable for capital stock of any other corporation or (ii) any equity
interest in any limited or unlimited liability company, partnership, joint
venture or other business enterprise. Each Company Subsidiary is a corporation,
partnership, limited liability company or similar business entity duly
organized, validly existing and in good standing (with respect to jurisdictions
that recognize such concept) under the laws of the jurisdiction of its
incorporation or organization and has all requisite corporate, partnership or
limited liability company power and authority to own, use, license, lease and
operate its properties and assets and to carry on its business as it is now
being conducted. Each Company Subsidiary is duly qualified as a foreign
corporation to do business and is in good standing (with respect to
jurisdictions that recognize such concept), in each jurisdiction in which the
character of its properties and assets owned or leased or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified, individually or in the aggregate, would not have a Company Material
Adverse Effect. The Company has heretofore made available to Parent and
Subsidiary complete and correct copies of the minute books and the charter and
by-laws (or other comparable organizational documents) of all Company
Subsidiaries as in effect on the date of this Agreement.
(b) All of the issued and outstanding shares of capital stock of or
other ownership interests in, each corporate subsidiary of the Company are
validly issued, fully paid, nonassessable and free of preemptive or similar
rights and are owned directly or indirectly by the Company free and clear of any
liens, claims, mortgages, hypothecs, pledges, charges, encumbrances, security
interests or adverse claims of any kind ("LIENS"). There are no subscriptions,
options, warrants, rights, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions or arrangements relating to the
issuance, sale, voting, transfer, ownership or other rights with respect to any
shares of capital stock of or other ownership interest in any Company
Subsidiary, including any right of conversion or exchange under any outstanding
security, instrument or agreement. As used in this Agreement, the term
"SUBSIDIARY" means with respect to any party any corporation or other business
entity (i) of which such party or any other subsidiary of such party is a
general partner or (ii) of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions with respect to such corporation or other
business entity are at the time owned by such party and/or one or more of such
party's subsidiaries.
Section 5.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) The Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby, subject, in the case of the consummation of the Merger, to the Company
Stockholders' Approval (as defined in Section 5.20), if required. This Agreement
and the consummation by the Company of the transactions contemplated hereby have
been approved by the Board of Directors of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize the execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby, except for the Company
Stockholders' Approval, if required. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery of this Agreement by Parent and Subsidiary, constitutes a valid and
legally binding agreement of the
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Company, enforceable against the Company in accordance with its terms except as
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium and similar laws, both state and federal, affecting
the enforcement of creditors' rights or remedies in general as from time to time
in effect or (ii) the exercise by courts of equity powers.
(b) Subject to obtaining the Company Stockholders' Approval, if
required, the execution, delivery and performance of this Agreement by the
Company and the consummation of the Offer, the Merger and the other transactions
contemplated hereby do not and will not violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which, with or
without notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or the loss of a benefit under or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any Lien upon any of the properties or
assets of the Company or any Company Subsidiary under any of the terms,
conditions or provisions of (i) the respective certificates of incorporation or
bylaws of the Company or any Company Subsidiary (or, in the case of any Company
Subsidiary that is not a corporation, its comparable organizational documents);
(ii) any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or Governmental Authority (as
defined in Section 5.4(c)) applicable to the Company or any of its subsidiaries
or any of their respective properties or assets; or (iii) any note, bond,
mortgage, indenture, deed of trust, loan, credit agreement, license, franchise,
permit, concession, contract, lease or other instrument, obligation or agreement
of any kind to which the Company or any Company Subsidiary is now a party or by
which the Company or any Company Subsidiary or any of their respective
properties or assets may be bound or affected; other than (in the case of
clauses (ii) and (iii) above), such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of Liens that would not, individually
or in the aggregate, have a Company Material Adverse Effect. None of the
Contracts (as defined in Section 5.22) described in Section 5.22(h), (i), (j) or
(l) requires the consent of a third party to enter into this Agreement or to
consummate the transactions contemplated hereby. Except for third party consents
the failure of which to obtain would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, neither the
Company nor any Company Subsidiary is a party to any contract (excluding for
purposes of this representation any Contract described in Section 5.22(h), (i),
(j) or (l)) requiring the consent of a third party to the Company's execution
and delivery of this Agreement or to the consummation of the transactions
contemplated hereby.
(c) Except for (i) the filings by the Company required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"); (ii) the filing of the Schedule 14D-9 and the Proxy Statement, if
required, with the SEC and such other reports under and such other compliance
with the Exchange Act and the Securities Act and the rules and regulations
thereunder as may be required in connection with this Agreement and the
transactions contemplated hereby; (iii) the making of the Merger Filing with the
Secretary of State of the State of Delaware in connection with the Merger; and
(iv) compliance with the rules and regulations of The NASDAQ Stock Market (the
"NASDAQ") (the filings and approvals referred to in clauses (i) through (iv) are
collectively referred to as the "COMPANY REGULATORY APPROVALS"), no declaration,
filing or registration with, or notice to, or authorization, consent, order or
approval of, any federal, state, local, municipal or foreign government, whether
national, regional or local, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing, importing
or other governmental or quasi-governmental authority (a "GOVERNMENTAL
AUTHORITY") is required to be obtained or made in connection with or as a result
of the execution and delivery of this Agreement by the Company or the
consummation by the Company of the Merger and the other transactions
contemplated hereby, other than such declarations, filings, registrations,
notices, authorizations, consents or approvals which, if not made or obtained,
as the case may be, would not, individually or in the aggregate, have a Company
Material Adverse Effect.
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Section 5.5 REPORTS AND FINANCIAL STATEMENTS.
(a) Since January 1, 1996, the Company has filed with the SEC all
forms, statements, reports and documents (including all exhibits, post-effective
amendments and supplements thereto) required to be filed by it under each of the
Securities Act, the Exchange Act and the respective rules and regulations
promulgated thereunder, all of which, as amended (if applicable), complied in
all material respects, when filed with all applicable requirements of the
appropriate act and the rules and regulations thereunder. The Company has
previously delivered or made available to Parent copies (including all exhibits,
post-effective amendments and supplements thereto) of its (i) Annual Reports on
Form 10-K for the years ended December 31, 1999, December 31, 1998 and December
31, 1997, as filed with the SEC; (ii) definitive proxy and information
statements relating to all meetings of its stockholders (whether annual or
special) from December 31, 1997 until the date hereof; and (iii) all other
reports, including quarterly reports, and registration statements filed by the
Company with the SEC since December 31, 1997 (other than registration statements
filed on Form S-8) (the documents referred to in clauses (i), (ii) and (iii)
being referred to as the "COMPANY SEC REPORTS"). As of their respective dates
(or to the extent amended or superseded by a subsequent filing, with respect to
the information in such subsequent filing, or as of the date of the subsequent
filing), the Company SEC Reports did not or will not (as the case may be)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. None
of the Company Subsidiaries is required to file any forms, reports, schedules,
statements or other documents with the SEC.
(b) The audited consolidated financial statements of the Company
included in the Company's Annual Report on Form 10-K for the years ended
December 31, 1999, December 31, 1998 and December 31, 1997 and the unaudited
consolidated interim financial statements included in the Company's Quarterly
Report on Form 10-Q for the quarter ending September 30, 2000 (collectively, the
"COMPANY FINANCIAL STATEMENTS") have been prepared in accordance with United
States generally accepted accounting principles ("GAAP") applied on a basis
consistent with prior periods and fairly presented the consolidated financial
position of the Company and the Company Subsidiaries as of the dates thereof and
the related consolidated statement of operations, cash flows and stockholders'
equity included in the Company SEC Reports fairly presented the consolidated
results of operations of the Company and the Company Subsidiaries for the
respective periods then ended (subject, in the case of unaudited interim
statements to normal year-end adjustments and the absence of certain footnote
disclosures).
(c) As of the date of this Agreement, except as set forth in the
Company's Annual Report for the year ended December 31, 1999 or in any other
Company SEC Report filed since that Annual Report and prior to the date of this
Agreement, neither the Company nor any of its subsidiaries is a party to or
bound by (i) any "material contract" (as such term is defined in Item 601(b)(10)
of Regulation S-K of the SEC) or (ii) any non-competition agreement or any other
agreement or arrangement that limits the Company or any of its subsidiaries or
any of their respective affiliates, or that would, after the Effective Time
similarly limit Parent or the Surviving Corporation or any successor thereto,
from engaging or competing in any line of business or in any geographic area
after giving effect to the Merger.
(d) The audited consolidated financial statements of the Company and
the Company Subsidiaries for the year ended December 31, 2000 will not differ in
any material respect from the unaudited consolidated financial statements of the
Company and the Company Subsidiaries for the year ended December 31, 2000
attached to SECTION 5.5(D) OF THE COMPANY DISCLOSURE SCHEDULE.
Section 5.6 ABSENCE OF UNDISCLOSED LIABILITIES; AFFILIATE
TRANSACTIONS.
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(a) Except for matters reflected or reserved against in the balance
sheet for the period ended September 30, 2000 included in the Company Financial
Statements, neither the Company nor any of the Company Subsidiaries had at such
date or has incurred since that date any liabilities, obligations (whether
absolute, accrued, contingent or otherwise) or contingencies of any nature,
except (i) liabilities, obligations or contingencies (A) which are accrued or
reserved against in the Company Financial Statements or reflected in the notes
thereto or (B) which were incurred after September 30, 2000 in the ordinary
course of business and consistent with past practices; or (ii) liabilities,
obligations or contingencies which are of a nature not required to be reflected
in the consolidated financial statements of the Company and the Company
Subsidiaries prepared in accordance with GAAP consistently applied and which
were incurred in the ordinary course of business.
(b) Except as specifically disclosed in the Company SEC Reports filed
prior to the date of this Agreement, there are no other transactions,
agreements, arrangements or understandings between the Company or the Company
Subsidiaries, on the one hand, and the Company's affiliates (other than
wholly-owned subsidiaries of the Company) or other Persons, on the other hand,
that would be required to be disclosed under Item 404 of Regulation S-K
promulgated under the Securities Act.
Section 5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December
31, 1999, (a) neither the Company nor any Company Subsidiary has suffered or
experienced any change, event or development which has had or would reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect; (b) the Company and the Company Subsidiaries have conducted
their respective businesses only in the ordinary course consistent with past
practice; and (c) neither the Company nor any of the Company Subsidiaries has
taken any action which, if taken after the date hereof, would constitute a
breach of any provision of Section 7.2
Section 5.8 LITIGATION. Except as disclosed in the Company's Annual
Report for the year ended December 31, 1999 or in any Company SEC Report filed
since that Annual Report and prior to the date of this Agreement, there are no
claims, suits, actions, investigations or proceedings pending or, to the best
knowledge of the Company, threatened, against the Company or any Company
Subsidiary or relating to or affecting their respective properties, assets or
rights (including, without limitation, any claim based on a theory of product
liability), or any of their respective directors or officers, before any court,
governmental department, commission, agency, instrumentality or authority, or
any arbitration board or tribunal that seek to restrain the consummation of the
Merger or which if adversely determined either alone or with other similar
actions would reasonably be expected to have, individually or in the aggregate,
a Company Material Adverse Effect or to materially adversely affect the
Company's ability to perform its obligations under this Agreement. Except as
disclosed in the Company's Annual Report for the year ended December 31, 1999 or
in any Company SEC Report filed since that Annual Report and prior to the date
of this Agreement, none of the Company, any Company Subsidiary or any of its or
their respective directors or officers is subject to any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator which prohibits or
restricts the consummation of the transactions contemplated hereby or would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
Section 5.9 INFORMATION SUPPLIED.
(a) Each of the Schedule 14D-9 and the other documents required to be
filed by the Company with the SEC in connection with the Offer, the Merger and
the other transactions contemplated hereby, including the Proxy Statement (as
defined in Section 7.1(d)(iii)) will comply in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder, and no such document, nor any of the written information supplied by
the Company to Parent for inclusion or incorporation by reference in the Offer
Documents and any other documents to be filed with
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the SEC or disseminated to stockholders in connection with the Offer will on the
date of its filing or dissemination or on the date it is supplied, as the case
may be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) Notwithstanding the foregoing, no representation or warranty is
made by the Company with respect to statements made or incorporated by reference
in any such documents filed by the Company with the SEC based on information
supplied in writing by Parent or any of its subsidiaries for inclusion or
incorporation by reference therein.
Section 5.10 COMPLIANCE WITH LAWS. Neither the Company nor any
Company Subsidiary is or, since December 31, 1997, has received a notice of
default or been in default under or in violation of or has been charged with any
violation of, any law, statute, order, rule, regulation, ordinance or judgment
(including, without limitation, any applicable environmental, labor, export
control and foreign corrupt practices law, ordinance, decree or regulation) of
any Governmental Authority to which the Company or any Company Subsidiary or any
of their respective assets or properties is or was subject, except for defaults
or violations which would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. The Company and the Company
Subsidiaries have all permits, licenses, franchises, variances, exemptions,
orders and other governmental authorizations, certificates, consents and
approvals necessary to conduct their businesses as presently conducted and to
own their assets and properties (collectively, the "COMPANY PERMITS"), except
for such permits, licenses, franchises, variances, exemptions, orders,
authorizations, certificates, consents and approvals the absence of which would
not have, individually or in the aggregate, a Company Material Adverse Effect.
All such material Company Permits are listed on SECTION 5.10 OF THE COMPANY
DISCLOSURE SCHEDULE. The Company and the Company Subsidiaries are not in
violation of the terms of any Company Permit, except for such violations which
have not had and would not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect.
Section 5.11 COMPLIANCE WITH AGREEMENTS. Neither the Company nor any
Company Subsidiary is in breach or violation of or in default in the performance
or observance of any term or provision of, and no event has occurred which, with
or without lapse of time, notice or action by a third party, would result in a
default under, or the loss of a benefit under, or the right to terminate or
accelerate (each a "VIOLATION") (a) the respective certificates of
incorporation, bylaws or similar organizational instruments of the Company or
any of the Company Subsidiaries, or (b) any contract, commitment, agreement,
indenture, mortgage, hypothec, loan agreement or credit agreement, note, lease,
bond, license, deed of trust, approval or other instrument to which the Company
or any of the Company Subsidiaries is a party or by which any of them is bound
or to which any of their properties or assets are subject, other than, in the
case of clause (b) of this Section 5.11, such breaches, violations and defaults
which have not had and would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.
Section 5.12 TAXES.
(a) Each of the Company and the Company Subsidiaries has (i) duly filed
with the appropriate Governmental Authorities all Tax Returns required to be
filed by it for all periods ending on or prior to the Effective Time, and (ii)
duly paid in full or made adequate provision in accordance with GAAP for the
payment of all Taxes for all past and current periods. All Tax Returns filed by
the Company or any Company Subsidiary were true, correct and complete in all
material respects. There are no unresolved issues of law or fact arising out of
a notice of deficiency, proposed deficiency or assessment from the United States
Internal Revenue Service or any other governmental taxing authority
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of the United States or any other country, whether national, regional or local,
with respect to Taxes of the Company or any of the Company Subsidiaries.
(b) Neither the Company nor any Company Subsidiary has obtained an
extension of the time within which to file any Tax Return (whether national,
regional or local) which has not yet been filed or entered into agreements
providing for the extension of waiver of deadlines with respect to the
assessment or reassessment of any taxes.
(c) The Company and the Company Subsidiaries have withheld and paid all
material Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, creditor or independent contractor.
(d) There are no material Liens for Taxes upon the assets of the
Company or any of the Company Subsidiaries other than Liens for Taxes not yet
due.
(e) Neither the Company nor any Company Subsidiary has any liability
for the Taxes of any other person which is not included in the Company's Tax
Returns (i) under Section 1.1502-6 of the Treasury regulations or any similar
provision of state, local or foreign law (other than for a consolidated,
combined or unitary group the common parent of which was the Company); (ii) as a
transferee or successor; (iii) by contract; or (iv) otherwise. Neither the
Company nor any Company Subsidiary has agreed to make nor is required to make
any adjustment under Section 481 of the Code by reason of a change in accounting
method.
(f) Neither the Company nor any Company Subsidiary is a party to or
bound by any obligations under any tax sharing, tax allocation, tax indemnity or
similar agreement or arrangement with any person or entity.
(g) Neither the Company nor any Company Subsidiary has made any
payments, is obligated to make any payments, or is a party to any contract that
could require it to make any payments, that are not deductible as a result of
the provisions set forth in Section 162(m) or Section 280G of the Code or the
proposed Treasury regulations thereunder or would result in an excise tax
liability with respect to any such payment under Section 4999 of the Code.
(h) No claim has ever been made by an authority in a jurisdiction where
any of the Company and the Company Subsidiaries does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction. No power of attorney
currently in force has been granted by the Company or any of the Company
Subsidiaries with respect to any Tax matter. None of the Company and the Company
Subsidiaries has waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or deficiency.
(i) None of the Company and its Subsidiaries has filed a consent under
Section 341(f) of the Code concerning collapsible corporations.
(j) SECTION 5.12 OF THE COMPANY DISCLOSURE SCHEDULE lists all
jurisdictions in which federal, state, provincial, local, and foreign Tax
Returns are filed with respect to any of the Company and the Company
Subsidiaries and indicates those Tax Returns that have been audited or that are
currently the subject of audit.
(k) SECTION 5.12 OF THE COMPANY DISCLOSURE SCHEDULE sets forth the
following information with respect to each of the Company and the Company
Subsidiaries (or, in the case of clause (A) below, with respect to each of the
Company Subsidiaries) as of the most recent practicable date: (A) the basis of
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the stockholder(s) of each Company Subsidiary in its stock (or the amount of any
excess loss account); (B) the amount of any net operating loss, net capital
loss, unused investment or other credit, unused foreign tax, or excess
charitable contribution allocable to the Company or any Company Subsidiary and
any limitations thereon; (C) the amount of any deferred gain or loss allocable
to the Company or any Company Subsidiary arising out of any deferred
intercompany transaction; (D) an estimate of the current and accumulated
earnings and profits of the Company and each Company Subsidiary; (E) any
partnership or other entity (other than the Company and the Company
Subsidiaries) in which the Company or any Company Subsidiary is an owner; (F)
all Tax rulings requested or received from any taxing authority.
(l) The unpaid Taxes of the Company and the Company Subsidiaries at
September 30, 2000 did not, as of that date, exceed the reserve for Tax
liabilities (disregarding for this purpose any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the balance sheet at September 30, 2000 included in the Company
Financial Statements.
(m) None of the Company or any of the Company Subsidiaries (A) has
participated in an international boycott as defined in Section 999 of the Code;
(B) has been the distributing corporation with respect to a transaction
described in Section 355 of the Code within the three-year period ending on the
date of this Agreement; (C) has a permanent establishment in any foreign country
as defined in any applicable Tax treaty or convention between the United States
and that foreign country; (D) has a material item of income or gain reported for
financial accounting purposes in a pre-Merger period which is required to be
included in taxable income for a post-Merger period; (E) has or is projected to
have an amount includible in its income for the current taxable year under
Section 551 of the Code or Section 951 of the Code; (F) has an unrecaptured
overall foreign loss within the meaning of Section 904(f) of the Code; or (G)
has disposed of any Company Subsidiary or branch operation within the current or
prior Tax year.
(n) All material elections with respect to income Taxes affecting the
Company and the Company Subsidiaries are set forth in SECTION 5.12 OF THE
COMPANY DISCLOSURE SCHEDULE.
(o) Neither the Company nor any Company Subsidiary is or has ever been
a United States real property holding corporation within the meaning of Section
897(c)(2) of the Code.
(p) There are no actions, suits, audits, proceedings or investigations
pending, or to the knowledge of the Company, threatened against any of the
Company or any Company Subsidiary in respect of any Taxes.
(q) For purposes of this Agreement, (i) the term "TAXES" means all
taxes, including, without limitation, income, gross receipts, excise, property
(including transfer duties), sales, withholding, social security, occupation,
use, service, license, payroll, franchise, transfer, value added and recording
taxes, fees and charges, windfall profits, severance, customs, import, export,
employment or similar taxes, charges, fees, levies or other assessments imposed
by the United States, or any Governmental Authority, whether computed on a
separate, consolidated, unitary, combined, or any other basis, and such term
shall include any interest, fines, penalties or additional amounts of any
interest in respect of any additions, fines or penalties attributable or imposed
or with respect to any such taxes, charges, fees, levies or other assessments,
and (ii) the term "TAX RETURN" means any return, report or other document
required to be supplied to a taxing authority in connection with Taxes,
including any schedule or attachment thereto, and any amendment thereof.
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Section 5.13 EMPLOYEE BENEFIT PLANS; ERISA.
(a) With respect to each Company Plan, the Company has made available
to Parent a true, correct and complete copy of: (i) any current plan documents,
trust agreements, insurance contracts and other funding vehicles, and amendments
thereto; (ii) for the most recently ended plan year, all IRS Form 5500 series
forms (and any financial statements and other schedules attached thereto) filed
with respect to any Company Plan; (iii) all current summary plan descriptions
and subsequent summaries of material modifications with respect to each Company
Plan for which such descriptions and modifications are required under ERISA; and
(iv) the most recent IRS determination letter for each Pension Plan which is
intended to be qualified under Section 401(a) of the Code.
(b) Neither the Company nor any of its ERISA Affiliates maintains or
has, within the previous six years, maintained a Pension Plan which is subject
to Section 412 of the Code or Title IV of ERISA.
(c) Neither the Company nor any of its ERISA Affiliates currently
maintains or has, within the previous six years, maintained or been obligated to
contribute to any multiemployer plan, as defined in Section 3(37) of ERISA.
(d) No Company Plan that is a "welfare benefit plan" as defined in
Section 3(1) of ERISA provides for continuing benefits or coverage for any
participant or beneficiary or covered dependent or a participant after such
participant's termination of employment, except to the extent required by law.
(e) With respect to any Welfare Plan, (i) no such plans are "multiple
employer welfare arrangements" within the meaning of Section 3(40) of ERISA,
(ii) with respect to any such plans that are self-insured, all claims made
pursuant to any such plan that have not yet been paid are set forth on SECTION
5.13(E) OF THE COMPANY DISCLOSURE SCHEDULE, together with an estimate thereof;
no such claim could, in the aggregate, result in an uninsured liability in
excess of $50,000 per participant or covered dependent, and all such claims
could not result in an uninsured liability of more than $250,000 in the
aggregate for all participants and covered dependents combined, and are
estimated as set forth on SECTION 5.13(E) OF THE COMPANY DISCLOSURE SCHEDULE and
(iii) no such plan is a "voluntary employees' beneficiary association" within
the meaning of Section 501(c)(9) of the Code or other funding arrangement for
the provision of welfare benefits (such disclosure to include the amount of any
such funding).
(f) Neither the Company nor any of its ERISA Affiliates is bound by any
collective bargaining agreement or similar agreement to maintain or contribute
to any Company Plan.
(g) Each Company Plan (i) has been administered in material compliance
with its terms and is in material compliance with the applicable provisions of
ERISA and has been administered in material compliance with the applicable
provisions of ERISA, the Code and other applicable laws; (ii) which is intended
to be a qualified plan within the meaning of Section 401(a) of the Code has a
favorable determination from the IRS as to its qualified status and no
circumstances exist that are likely to result in revocation of any such
favorable determination letter; and (iii) may, without liability, be amended,
terminated or otherwise discontinued, except as specifically prohibited by
applicable law.
(h) With respect to each Company Plan, (i) there are no inquiries or
proceedings pending or threatened by the IRS, the Department of Labor, or any
participant or beneficiary (other than claims for benefits in the ordinary
course) with respect to the design or operation of the Company Plans; (ii) the
Company has made or provided for all contributions required under the material
terms of such Company Plans and any applicable laws for all periods through the
Closing Date; and (iii) there have been no
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"prohibited transactions" (as described in Section 4975 of the Code or in Part 4
of Subtitle B of Title I of ERISA) for which a statutory, administrative, or
regulatory exemption is not available.
(i) SECTION 5.13(I) OF THE COMPANY DISCLOSURE SCHEDULE sets forth a
complete and accurate listing of all Canadian Plans (as hereinafter defined);
with respect to each Canadian Plan, (i) the Company has made available to Parent
a true, correct and complete copy of all current plan documents, trust
agreements, insurance contracts and other funding vehicles and amendments
thereto, as well as all financial statements, actuarial reports, tax
information, correspondence with regulatory authorities and professional
opinions for each Canadian Plan; (ii) all the Canadian Plans have been
administered in accordance with their terms and there are no outstanding
violations or defaults thereunder, nor any actions, claims, or other proceedings
pending or threatened in writing with respect to any of the Canadian Plans;
(iii) the Canadian Plans are duly registered where required by law and have at
all times complied with applicable laws and regulatory policy of the applicable
Governmental Authority; (iv) all the required contributions under each of the
Canadian Plans have been remitted in a timely manner; (v) neither the Company
nor the Company's Canadian Subsidiary have made promises, commitments or
undertakings whether written or unwritten to amend the Canadian Plans or improve
the benefits under any of the Canadian Plans; (vi) all employer contribution
holidays have been permitted by the terms of the Canadian Plans and have been
taken in accordance with applicable law, including contribution holidays taken
before the conversion of the Basic Plan (as hereinafter defined) and Designated
Plans (as hereinafter defined); (vii) the Designated Plan and the Top Hat Plan
(as hereinafter defined) are fully funded on a going concern basis and wind-up
basis; (viii) no event has occurred and no condition or circumstance exists that
could reasonably result in a Canadian Plan being required to pay any material
taxes or penalties under any applicable laws; (ix) Canadian Plans that are
registered pension plans created as a result of a division or merger of one or
more pension plans have received approval therefor from the appropriate
Governmental Authority; and (x) neither the Company nor the Company's Subsidiary
have made commitments to provide post-employment benefits other than pension
benefits to its former employees. For purposes of this Agreement, (w) "CANADIAN
PLANS" means all employee benefit plans and programs applicable to Canadian
employees, including all bonus, profit sharing, stock appreciation and stock
option, stock purchase, cafeteria, credit union, incentive and deferred
compensation, severance agreements and arrangements ("golden parachutes"),
supplemental retirement, pension, retirement and severance and salary
continuation plans and programs, and all medical, dental and other welfare plans
and programs and all insurance plans and policies, sick, holiday and vacation
day policies, fringe benefits, employee discounts, cars and loan programs and
all funding vehicles and agreements for employee pension or benefit plans,
policies or programs; (x) "BASIC PLAN" means the Company's Canadian Subsidiary
Pension Plan, as amended and restated as of January 1, 1997; (y) "DESIGNATED
PLAN" means the Pension Plan for Designated Employees of Company's Canadian
Subsidiary, as amended and restated as of January 1, 1997; and (z) "TOP HAT
PLAN" means the Agreement dated June 19, 1997 between the Company's Canadian
Subsidiary and Xxxxxxx Xxxxxxx.
(j) SECTION 5.13(J) OF THE COMPANY DISCLOSURE SCHEDULE contains a true
and complete summary or list of or otherwise describe all employment contracts,
and all employee benefit arrangements with "change of control" or similar
provisions and all severance agreements and arrangements, in each case with
officers or directors of the Company or any Company Subsidiary. Except as set
forth on SECTION 5.13(J) OF THE COMPANY DISCLOSURE SCHEDULE, the consummation of
the transactions contemplated by this Agreement will not (w) entitle any
employees of the Company or any Company Subsidiary to severance pay, (x)
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 of the Company Plans, (y) result in any payments under any of the
Company Plans which would not be deductible under Section 280G of the Code, or
(z) cause any payments under any Company Plan to cease to be excluded from
"applicable employee remuneration" for purposes of Section 162(m) of the Code.
Neither the Company nor any Company Subsidiary has any
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material obligations for the health and life benefits under any Company Plan,
nor any obligations under non-qualified retirement plans.
(k) For purposes of this Agreement, (i) "COMPANY PLAN" means (x) each
employee pension benefit plan (as such term is defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) ("PENSION
PLAN") and each employee welfare benefit plan (as such term is defined in
Section 3(1) of ERISA) ("WELFARE PLAN") maintained by the Company and any of its
ERISA Affiliates, and (y) each stock option, stock purchase, stock appreciation
right, phantom stock and stock based plan and each deferred compensation,
employment, severance, change in control, incentive, bonus, medical, fringe
benefit, life insurance, vacation, layoff, dependent care, legal services,
cafeteria plan, agreement, arrangement, policy or program maintained or
contributed to by the Company for the benefit of current or former employees or
current or former directors of the Company whether written or oral, and whether
or not subject to ERISA; and (ii) "ERISA AFFILIATE" means any trade or business
whether or not incorporated, under common control with the Company within the
meaning of Section 414(b), (c), (m), or (o) of the Code or Section 4001(b) of
ERISA. All Company Plans and all severance and change in control plans and
agreements of general applicability to the Company's executive officers and
other employees are listed in SECTION 5.13 OF THE COMPANY DISCLOSURE SCHEDULE.
Section 5.14 LABOR CONTROVERSIES. There are no controversies pending
or, to the knowledge of the Company, threatened between the Company or any
Company Subsidiary and any of their respective employees with a value of over
$100,000. The Company and its subsidiaries are in compliance in all material
respects with all applicable laws respecting employment and employment
practices, terms, and conditions of employment, and wages and hours and have not
engaged in any unfair labor practices. Neither the Company nor any of its
subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or its
subsidiaries, nor does the Company know of any activities or proceedings of any
labor union to organize any such employees. The Company has no knowledge of any
strikes, slowdowns, work stoppages, lockouts or threats thereof, by or with
respect to any employees of the Company or any of its subsidiaries. The Company
has no knowledge of any actions or events taken by it or its subsidiaries that
would give rise to obligations of the Company or any of its subsidiaries under
the Workers Adjustment and Retraining Notification Act, 29 U.S.C. ss. 2101, ET
SEQ.
Section 5.15 ENVIRONMENTAL MATTERS.
(a) Each of the Company and the Company Subsidiaries conducts its
business and operations in compliance with all material applicable Environmental
Laws (as defined below) and holds, and is in compliance with, all Company
Permits required under Environmental Laws. None of the Company or the Company
Subsidiaries has received written notice of, or is the subject of, any action,
cause of action, claim, suit, investigation, demand or notice based on or
related to the violation of Environmental Laws or the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge, release or threatened release into the environment, of any
pollutant, contaminant, or industrial, hazardous or toxic substances or waste
(collectively, an "ENVIRONMENTAL EVENT"). For purposes of this Agreement, the
term "ENVIRONMENTAL LAW" means any foreign, federal, state, provincial,
municipal or local law, statute, rule regulation, by-law, policy, directive,
standard, order, decree, other requirement of a Governmental Authority or the
common or civil law (collectively, "LAWS") relating to the environment or
occupational health and safety, including without limitation, any Laws
pertaining to (i) treatment, storage, disposal, generation or transportation of
waste or industrial, toxic or hazardous substances; (ii) soil, air, water and
noise pollution; (iii) surface water, groundwater and soil contamination; (iv)
the release or threatened release into the environment of waste or industrial,
toxic or hazardous substances, including without limitation emissions,
discharges, injections, spills, escapes or dumping of pollutants, contaminants
or chemicals; (v) the protection of animals, marine sanctuaries and
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wetlands, including without limitation all endangered and threatened species;
(vi) effluents and air emissions; (vii) underground and other storage tanks or
vessels, abandoned, disposed or discarded barrels, containers and other closed
receptacles; (viii) health and safety of employees and other persons; and (ix)
manufacture, processing, use, distribution, treatment, storage, disposal,
transportation or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or oil or petroleum products or waste. As used
above, the terms "RELEASE" and "ENVIRONMENT" shall have the meaning set forth in
the federal Comprehensive Environmental Compensation, Liability and Response Act
of 1980.
(b) To the best knowledge of the Company, no notice of any
Environmental Event was given to any person or entity that occupied any of the
premises occupied, owned or used by the Company or any Company Subsidiary prior
to the date such premises were so occupied, owned or used. Without limiting the
generality of the foregoing, neither the Company or any Company Subsidiary has
disposed of, released or placed on, under or in any property, facility or
equipment it occupies, owns or uses, any contaminant, pollutant, waste or
substances in violation of Environmental Laws. There are no PCBs, asbestos, urea
formaldehyde, radioactive substances or ozone-depleting substances on, under or
in any property, facility or equipment occupied, owned or used by the Company or
the Company Subsidiaries.
(c) SECTION 5.15 OF THE COMPANY DISCLOSURE SCHEDULE describes all
environmental reports, investigations and audits conducted by or on behalf of
the Company or any of the Company Subsidiaries and, to the knowledge of the
Company, conducted by or on behalf of a third party (whether done at the
initiative of the Company or directed by a Governmental Authority or other third
party) issued or conducted during the past five years relating to premises
currently or previously owned or operated by the Company or any of the Company
Subsidiaries. Complete and correct copies of each such report, or the results of
each such investigation or audit, have been provided to the Parent.
(d) There is no pending, or to the knowledge of the Company,
threatened, civil, penal or criminal litigation, written notice of violation,
administrative proceeding or investigation, inquiry or information request by
any Governmental Authority relating to any Environmental Law involving the
Company or any of the Company Subsidiaries.
Section 5.16 TITLE TO ASSETS. The Company and each of the Company
Subsidiaries has good and valid title to all of its owned assets and properties
as reflected in the most recent balance sheet included in the Company Financial
Statements, except for properties and assets that have been disposed of in the
ordinary course of business since the date of such balance sheet, free and clear
of all Liens, except (a) Liens for current taxes, payments of which are not yet
due or delinquent, (b) such imperfections or irregularities in title, if any, as
do not affect the use or marketability of the properties or assets subject
thereto or affected thereby, or otherwise materially impair the Company's
business operations. Any property or assets held or used under license or lease
by the Company or any of the Company Subsidiaries are held by them under valid,
subsisting and enforceable licenses or leases with such exceptions as are not
material and do not interfere with the use made of the property and assets. The
Company and each of the Company Subsidiaries own or have sufficient right to use
all assets and properties reasonably necessary to conduct their businesses in
the manner in which they are currently conducted.
Section 5.17 INTELLECTUAL PROPERTY; SOFTWARE.
(a) (i) Each of the Company and the Company Subsidiaries owns, or
possesses adequate licenses or other valid rights to use, all existing United
States and foreign patents, trademarks, trade names, service marks, domain
names, copyrights, trade secrets, know-how, software, databases and intellectual
property rights and all applications therefor that are material to its business
as currently conducted (the "COMPANY INTELLECTUAL PROPERTY RIGHTS") and a true
and complete list of all Company
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Intellectual Property Rights is set forth on SECTION 5.17(A) OF THE COMPANY
DISCLOSURE SCHEDULE; (ii) all Company Intellectual Property Rights are either
owned by the Company or its subsidiaries free and clear of all Liens or are used
pursuant to a license agreement or are otherwise being validly used; (iii) each
such license agreement is valid and enforceable and in full force and effect;
(iv) neither the Company nor any of the Company Subsidiaries is in default under
any such license agreement in any material respect, and to the knowledge of the
Company, no corresponding licensor is in default thereunder in any material
respect; (v) no Company Intellectual Property Right that is owned by the Company
infringes or otherwise conflicts with any material right of any person; (vi)
there is no pending or, to the knowledge of the Company, threatened litigation,
adversarial proceeding, administrative action or other challenge or claim
relating to any Company Intellectual Property Right that is owned by the
Company; (vii) there is no outstanding order of a Governmental Authority
relating to any Company Intellectual Property Right; (viii) to the knowledge of
Company, there is currently no infringement by any person of any Company
Intellectual Property Right; and (ix) the Company Intellectual Property Rights
owned, used or possessed by the Company and the Company Subsidiaries are
sufficient and adequate to conduct the business of the Company and the Company
Subsidiaries in all material respects as such business is currently conducted.
(b) The Company and the Company Subsidiaries have taken reasonable
steps to protect, maintain and safeguard the Company Intellectual Property
Rights, including any Company Intellectual Property Rights for which improper or
unauthorized disclosure would impair its value or validity, and have executed
and required nondisclosure agreements and made any required filings and
registrations in connection with the foregoing.
(c) The conduct of the business of the Company and the Company
Subsidiaries as now conducted does not, infringe any valid patents, trademarks,
trade names, service marks or copyrights of others. The consummation of the
transactions contemplated hereby will not result in the loss or impairment of
any Company Intellectual Property Rights.
(d) Neither the Company nor any Company Subsidiary has licensed (or
otherwise entered into any agreement permitting) any Person to use or market any
of the Company Intellectual Property Rights.
(e) Neither the Company nor any of the Company Subsidiaries considers
its computer software to be proprietary to it or to constitute its trade
secrets.
(f) To the knowledge of the Company, no employee of the Company or any
of the Company Subsidiaries is in material violation or breach of any term of
any employment contract, patent disclosure agreement or any other contract or
agreement with the Company or any other party, which is a breach or violation of
provisions relating to the nondisclosure or confidentiality of intellectual
property rights or of noncompete covenants designed to protect intellectual
property rights.
Section 5.18 BROKERS AND FINDERS. No agent, broker, investment
banker, financial advisor or other firm or person is entitled to any brokerage,
finder's, financial advisor's or other similar fee or commission for which
Parent or any of its subsidiaries could become liable in connection with the
transactions contemplated by this Agreement as a result of any action taken by
or on behalf of the Company or any of its subsidiaries, other than the Company
Financial Advisor, whose fees and expenses will be paid by the Company pursuant
to an engagement letter dated, August 16, 2000, a correct and complete copy of
which has been delivered to Parent.
Section 5.19 OPINION OF COMPANY FINANCIAL ADVISOR. The Company
Financial Advisor has rendered an opinion to the Board of Directors of the
Company, dated the date of this Agreement, to the effect that, as of such date,
the Common Stock Price is fair from a financial point of view to the holders of
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Company Common Stock. A correct and complete copy of that opinion (to the extent
reduced to or confirmed in writing) has been delivered to Parent or, if not yet
delivered to the Company, will be delivered to Parent upon request by the
Company.
Section 5.20 VOTE REQUIRED. The affirmative vote of holders of a
majority of the outstanding shares of Company Common Stock (the "COMPANY
STOCKHOLDERS' APPROVAL") is the only vote of the holders of any class or series
of the Company capital stock or debt instruments necessary to adopt this
Agreement and approve the transactions contemplated hereby.
Section 5.21 INSURANCE. The Company and the Company Subsidiaries
maintain policies of fire and casualty, liability and other forms of insurance
in such amounts, with such deductibles and against such risks and losses as are
customary for companies of similar size in the Company's industry, and also
maintain all policies of insurance which are required by their material
commercial contracts, in such amounts as specified in the respective contracts.
All such policies are in full force and effect, all premiums due and payable
thereon have been paid, and no notice of cancellation or termination has been
received with respect to any such policy. The insurance policies referred to in
this Section 5.21 will remain in full force and effect and will not be modified
or amended prior to Closing nor will they in any way be affected by or terminate
by reason of, any of the transactions contemplated hereby.
Section 5.22 CONTRACTS. SECTION 5.22 OF THE COMPANY DISCLOSURE
SCHEDULE lists, under the relevant heading, all oral or written contracts,
agreements, arrangements, guarantees, licenses, leases and executory commitments
(each, a "CONTRACT") other than Contracts previously filed as an exhibit to any
Company SEC Reports filed prior to the date of this Agreement, that exist as of
the date of this Agreement to which the Company or any Company Subsidiary is a
party or by which the Company or such Company Subsidiary is bound and which fall
within any of the following categories: (a) material Contracts not entered into
in the ordinary course of the Company's and the Company Subsidiaries'
businesses; (b) material joint venture and partnership agreements; (c) Contracts
which contain requirements for payments by the Company or a Company Subsidiary
in excess of $250,000; (d) Contracts relating to any outstanding commitment for
capital expenditures in excess of $250,000; (e) indentures, mortgages,
hypothecs, promissory notes, loan agreements or guarantees of borrowed money,
letters of credit or other agreements or instruments of the Company or the
Company Subsidiaries or commitments for the borrowing or the lending by the
Company or any Company Subsidiary of amounts in excess of $250,000 in the
aggregate or providing for the creation of any Lien upon any of the assets or
properties of the Company or any Company Subsidiary with an aggregate value in
excess of $250,000; (f) Contracts providing for "earn-outs" or other contingent
payments by the Company or any Company Subsidiary involving more than $250,000
per contract over the terms of all such Contracts; (g) Contracts associated with
off balance sheet financing by the Company or a Company Subsidiary in excess of
$250,000 in the aggregate, including but not limited to arrangements for the
sale by the Company or a Company Subsidiary of receivables; (h) supply or
distribution Contracts requiring a payment or a commitment by the Company or any
Company Subsidiary to make a payment in excess of $250,000; (i) supply Contracts
providing for payments by the Company or any Company Subsidiary; (j) Contracts
with customers of the Company or any Company Subsidiary involving payments being
made by or to the Company or any Company Subsidiary in excess of $250,000 in the
aggregate; (k) stock purchase agreements, asset purchase agreements or other
acquisition or divestiture agreements where the consideration in any individual
transaction exceeds $250,000; and (l) master service and master Contracts with
customers and each other agreement which is material to the Company or any
Company Subsidiary, irrespective of amount.
All Contracts to which the Company or any of the Company Subsidiaries
is a party or by which it or such subsidiary is bound are valid and binding
obligations of the Company or the Company Subsidiary and, to the knowledge of
the Company, the valid and binding obligation of each other party thereto except
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such Contracts which, if not so valid and binding, have not had and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Neither the Company nor, to the knowledge of the
Company, any other party thereto is in violation of or in default in respect of,
nor has there occurred an event or condition which with the passage of time or
giving of notice (or both) would constitute a default under or permit the
termination of, any such Contract except such violations or defaults under or
terminations which have not had and would not be reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 5.23 SIGNIFICANT CUSTOMERS. None of the customers of the
Company or any of the Company Subsidiaries listed on SECTION 5.22 OF THE COMPANY
DISCLOSURE SCHEDULE has delivered any notice to the Company or any of the
Company Subsidiaries, nor does the Company have any reason to believe, that any
such customer (i) has terminated, or will terminate any contract or agreement
with the Company or any of the Company Subsidiaries or (ii) has ceased, or will
cease, to use the services of the Company or the Company Subsidiaries, as the
case may be, except, in each case, for such terminations or cessations as have
not had and would not be reasonably expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY
Parent and Subsidiary each represent and warrant to the Company that:
Section 6.1 ORGANIZATION AND QUALIFICATION. Each of Parent and
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, license, use or lease and
operate its assets and properties and to carry on its business as it is now
being conducted. Each of Parent and Subsidiary is qualified to transact business
and is in good standing in each jurisdiction in which the properties owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification necessary, except where the failure to be so qualified and in
good standing could not reasonably be expected to prevent or delay the
consummation of the Offer or the Merger.
Section 6.2 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Parent and Subsidiary each has all requisite corporate power and
authority to enter into this Agreement and to consummate the Offer, the Merger
and the other transactions contemplated hereby. This Agreement has been approved
by the Boards of Directors of Parent and Subsidiary and the sole stockholder of
Subsidiary, and no other corporate proceedings on the part of Parent or
Subsidiary are necessary to authorize the execution and delivery of this
Agreement or the consummation by Parent and Subsidiary of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
of Parent and Subsidiary, and constitutes a valid and legally binding agreement
of each of Parent and Subsidiary enforceable against each of them in accordance
with its terms except as enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium and similar laws, both state and federal,
affecting the enforcement of creditors' rights or remedies in general as from
time to time in effect or (ii) the exercise by courts of equity powers.
(b) The execution, delivery and performance of this Agreement by each
of Parent and Subsidiary and the consummation of the Offer, the Merger and the
other transactions contemplated hereby do not and will not violate, conflict
with or result in a breach of any provision of, or constitute a default (or an
event which, with, or without notice or lapse of time or both, would constitute
a default) under, or result in the termination of or a loss of a benefit under,
or accelerate the performance required by, or result in a right of termination
or acceleration under, or result in the creation of any Lien upon any
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of the properties or assets of Parent or Subsidiary under any of the terms,
conditions or provisions of (i) the respective certificates of incorporation or
bylaws of Parent or any of its subsidiaries; (ii) any statute, law, ordinance,
rule, regulation, judgment, decree, order, injunction, writ, permit or license
of any court or Governmental Authority applicable to Parent or any of its
subsidiaries or any of their respective properties or assets; or (iii) any note,
bond, mortgage, indenture, deed of trust, loan, credit agreement, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which Parent or any of its subsidiaries is now a
party or by which Parent or any of its subsidiaries or any of their respective
properties or assets may be bound or affected; other than (in the case of
clauses (ii) and (iii) above), such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of Liens that could not reasonably be
expected to prevent or delay the consummation of the Offer or the Merger.
(c) Except for (i) the filings by Parent required by the HSR Act; (ii)
the filing of the Offer Documents with the SEC and such other reports under and
such compliance with the Exchange Act and the Securities Act and the rules and
regulations thereunder as may be required in connection with this Agreement and
the other transactions contemplated thereby; (iii) the making of the Merger
Filing with the Secretary of State of the State of Delaware in connection with
the Merger; (iv) the filing of reports with the U.S. Department of Commerce
regarding foreign direct investment in the United States; (v) compliance with
the rules and regulations of the NASDAQ; (vi) compliance with state securities
or Blue Sky Laws; and (vii) filings by Parent required by the Investment Canada
Act and by the Competition Act (Canada) (if any), (the filings and approvals
referred to in clauses (i) through (vii) are collectively referred to as the
"PARENT REQUIRED STATUTORY APPROVALS"), no declaration, filing or registration
with, or notice to, or authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of this Agreement by
Parent or Subsidiary or the consummation by Parent or Subsidiary of the
transactions contemplated hereby.
Section 6.3 INFORMATION SUPPLIED.
(a) Each of the Offer Documents and the other documents required to be
filed by Parent with the SEC in connection with the Offer, the Merger and the
other transactions contemplated hereby, will comply as to form, in all material
respects, with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder, and no such document, nor any of the written
information supplied by Parent to the Company for inclusion in the Schedule
14D-9, the Proxy Statement or another filing required to be made by the Company
with the SEC in connection with the transactions contemplated by this Agreement
will on the date of its filing or dissemination or on the date it is supplied,
as the case may be, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) Notwithstanding the foregoing, no representation or warranty is
made by Parent or Subsidiary with respect to statements made or incorporated by
reference in any such documents filed by Parent or Subsidiary with the SEC based
on information supplied in writing by the Company for inclusion or incorporation
by reference therein.
Section 6.4 FINANCING. Parent has and will have at each of (i) the
time of acceptance for purchase by Subsidiary of the shares of Company Common
Stock pursuant to the Offer and (ii) the Effective Time, and will make available
to Subsidiary (or cause to be made available), the funds necessary to consummate
the Offer and the Merger on the terms contemplated by this Agreement.
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Section 6.5 SUBSIDIARY. Subsidiary was formed solely for the purposes of
engaging in the transactions contemplated hereby, and has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
Section 6.6 BROKERS AND FINDERS. No agent, broker, investment
banker, financial advisor or other firm or person is entitled to any brokerage,
finder's, financial advisor's or other similar fee or commission for which the
Company or any of its subsidiaries could become liable in connection with the
transactions contemplated by this Agreement as a result of any action taken by
or on behalf of Parent or any of its subsidiaries, other than Bear, Xxxxxxx &
Co. Inc., whose fees and expenses will be paid by Parent.
ARTICLE VII
COVENANTS OF THE PARTIES
Section 7.1 MUTUAL COVENANTS.
(a) GENERAL. Subject to the terms and conditions of this Agreement,
each of the parties shall (and shall cause its respective subsidiaries to) use
its reasonable best efforts to take all actions and to do all things necessary,
proper or advisable to consummate the Offer and the Merger and the other
transactions contemplated by this Agreement as promptly as possible, including,
without limitation, using its reasonable best efforts to (i) prepare, execute
and deliver such instruments and take or cause to be taken such actions as any
other party shall reasonably request, and (ii) after consultation with the other
parties, obtain any consent, waiver, approval or authorization from any third
party reasonably requested by such other party in order to maintain in full
force and effect any of the Company's Contracts, Company Permits, licenses or
other rights following the Offer, the Merger and the other transactions
contemplated hereby.
(b) HSR ACT. Without limiting the generality of anything contained in
Section 7.1(a) or elsewhere in this Agreement, each of the parties undertakes
and agrees to file as soon as practicable, and in any event within seven
business days after the date hereof, a Notification and Report Form under the
HSR Act with the United States Federal Trade Commission (the "FTC") and the
United States Department of Justice, Antitrust Division (the "ANTITRUST
DIVISION") and other applicable antitrust or competition laws, rules or
regulations. Each of the parties shall (i) respond as promptly as practicable to
any inquiries received from the FTC, the Antitrust Division or other applicable
Governmental Authorities for additional information or documentation and to all
inquiries and requests received from any State Attorney General or other
Governmental Authority in connection with antitrust matters; and (ii) take all
commercially reasonable steps to avoid any extension of the waiting period under
the HSR Act and other applicable antitrust or competition laws, rules or
regulations; and (iii) refrain from entering into any agreement with the FTC,
the Antitrust Division or other applicable Governmental Authorities not to
consummate the transactions contemplated by this Agreement, except with the
prior written consent of the other parties hereto. Parent shall use its
reasonable best efforts to avoid or eliminate impediments under any antitrust,
competition, or trade regulation law that may be asserted by the FTC, the
Antitrust Division, any State Attorney General or any other Governmental
Authority with respect to the Offer or the Merger so as to enable the Closing to
occur as soon as reasonably possible; PROVIDED, HOWEVER, that nothing in this
Agreement shall require Parent or any of its affiliates to divest or hold
separate, or to agree to any material restrictions with respect to the operation
of, any business, division or operating unit of Parent or any of its affiliates.
Each of the parties or its counsel shall promptly notify the other party or its
counsel of any written or oral communication to that party or counsel from the
FTC, the Antitrust Division, any State Attorney General or any other
Governmental Authority and permit the other party or its counsel to review in
advance any proposed written communication to any of the foregoing.
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(c) OTHER GOVERNMENTAL MATTERS. Without limiting the generality of
anything contained in Section 7.1(a), Section 7.1(b) or elsewhere in this
Agreement, and subject to the terms and conditions of this Agreement, each of
the parties hereto shall (and shall cause its subsidiaries to) use its
reasonable best efforts to take any additional action that may be necessary,
proper or advisable to (i) obtain from any Governmental Authority any consent,
license, permit, waiver, approval, authorization (including, without limitation,
SEC "no-action" letters) required to be obtained by either Parent or the Company
or any of their subsidiaries in connection with the authorization, execution and
delivery of this Agreement and the consummation of the Offer and the Merger and
the other transactions contemplated hereby; (ii) make all necessary filings, and
thereafter make any required submissions with respect to the Offer and the
Merger and the other transactions contemplated hereby required under the
Securities Act and the Exchange Act and the rules and regulations thereunder,
and any other applicable federal, state securities or other laws, including
foreign law (whether national, regional or local); and (iii) effect all other
necessary registrations, filings and submissions. Each of the parties shall (and
shall cause each of their respective subsidiaries to) cooperate and use
reasonable best efforts vigorously to contest and resist any action, including
legislative, administrative or judicial action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order whether
temporary, preliminary or permanent that is in effect and restricts, prevents,
prohibits or otherwise bars the consummation of the Offer or the Merger or any
other transaction contemplated hereby.
(d) RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS; STOCKHOLDER
APPROVAL; PREPARATION OF PROXY STATEMENT.
(i) Subject to Section 8.2, the Company's Board of Directors shall not
withdraw or modify in any manner adverse to Parent its recommendations to the
Company's stockholders described in Section 1.2(a), and, as long as the
Company's Board of Directors shall not have withdrawn or modified in any manner
adverse to Parent and Subsidiary its recommendation to the Company's
stockholders described in Section 1.2(a) in accordance with Section 8.2(b), the
Company shall use its best efforts to solicit the acceptance of the Offer and,
if required, the Company Stockholders' Approval.
(ii) If the Company Stockholders' Approval is required by law to
consummate the Merger, the Company shall, in accordance with applicable law and
its Certificate of Incorporation and Bylaws, as promptly as practicable
following the expiration of the Offer duly call, give notice of, convene and
hold a meeting of its stockholders (the "STOCKHOLDERS MEETING") for the purpose
of obtaining such approval. The record date for determining eligibility to vote
at the Stockholders Meeting shall be after the date on which Subsidiary shall
have purchased and paid for, and been recognized by the Company as the record
owner of, the shares of Company Common Stock duly tendered in and not withdrawn
prior to the expiration of the Offer. Subject to the fiduciary duties of the
Company's Board of Directors under applicable law, the Company shall, through
its Board of Directors, recommend to its stockholders that the Company
Stockholders' Approval be given. Notwithstanding the foregoing, if Parent and
Subsidiary shall acquire in the aggregate 90% or more of the then outstanding
shares of Company Common Stock pursuant to the Offer or otherwise, the parties
shall take all necessary and appropriate actions to cause the Merger, pursuant
to the terms thereof, to become effective as soon as reasonably practicable
after such acquisition without a meeting of the stockholders of the Company and
otherwise in accordance with Section 253 of the DGCL (including, without
limitation, adoption by the board of directors of Subsidiary of a short-form
plan of merger in accordance with the DGCL and consistent with the terms of the
Merger).
(iii) If the Company Stockholders' Approval is required by law, the
Company shall, as soon as practicable following the expiration of the Offer,
prepare and file a preliminary proxy statement (as amended and supplemented, the
"PROXY STATEMENT") with the SEC and shall use its best efforts to respond to any
comments of the SEC or its staff, and to cause the Proxy Statement to be mailed
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to the Company's stockholders as promptly as practicable after responding to all
such comments to the satisfaction of the staff. The Company shall notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and shall supply Parent with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. If at any time prior to the Stockholders Meeting there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, the Company shall promptly prepare, and, after consultation
with Parent and mail to its stockholders such an amendment or supplement. Parent
shall cooperate with the Company in the preparation of the Proxy Statement or
any amendment or supplement thereto and shall furnish the Company with all
information required to be included therein with respect to Parent or
Subsidiary. Parent and its counsel shall be given a reasonable opportunity to
review and comment upon the Proxy Statement and related proxy materials and any
such correspondence with the SEC or its staff or any proposed amendment or
supplement to the Proxy Statement prior to its filing with the SEC or
dissemination to the Company's stockholders and the Company shall not transmit
any such material to which Parent reasonably objects.
(iv) Parent agrees to cause all shares of Company Common Stock
purchased pursuant to the Offer and all other shares of the Company Common Stock
owned by Parent or Subsidiary to be voted in favor of the Merger.
(v) Without limiting the generality of the foregoing, each of
the parties shall correct promptly any information provided by it to be used
specifically in the Proxy Statement, if required, that shall have become false
or misleading in any material respect and shall take all steps necessary to file
with the SEC and have declared effective or cleared by the SEC any amendment or
supplement to the Proxy Statement so as to correct the same and to cause the
Proxy Statement as so corrected to be disseminated to the stockholders of the
Company, in each case to the extent required by applicable law.
(e) NOTIFICATION OF CERTAIN MATTERS. Each of the parties agrees to (and
to cause their respective subsidiaries to) give prompt notice to each other of,
and to use reasonable best efforts to remedy, (i) the occurrence or failure to
occur of any event which occurrence or failure to occur would be likely to cause
any of such party's representations or warranties in this Agreement to be untrue
or inaccurate in any material respect at the Effective Time, and (ii) any
material failure on the part of the notifying party to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to this
Section 7.1(e) shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
(f) PUBLIC STATEMENTS. Unless otherwise required by applicable law or
by obligations pursuant to any listing agreement with or rules of the NASDAQ or
any securities exchange, (i) the initial press release with respect to the
Offer, the Merger and the other transactions contemplated by this Agreement
shall require the prior mutual agreement and approval of both Parent and the
Company and (ii) any subsequent press releases or other public statements with
respect to the Offer or the Merger or the other transactions contemplated by
this Agreement shall be made only following prior consultation between Parent
and the Company.
Section 7.2 CONDUCT OF THE COMPANY'S BUSINESS. During the period
from the date of this Agreement and continuing until the earlier of (i) the
Effective Time; (ii) the date designees of Parent or Subsidiary constitute a
majority of the members of the Board of Directors of the Company; or (iii)
termination of this Agreement pursuant to its terms, the Company covenants and
agrees that unless Parent shall otherwise consent in writing (such consent not
to be unreasonably withheld or delayed) or as
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set forth in SECTION 7.2 OF THE COMPANY DISCLOSURE SCHEDULE or as otherwise
expressly permitted by this Agreement:
(a) the business of the Company and the Company Subsidiaries shall be
conducted only in, and the Company and the Company Subsidiaries shall not take
any action, except in the ordinary course of business consistent with past
practice and the Company shall use reasonable best efforts to preserve intact
its and its subsidiaries present business organizations and goodwill and keep
available the services of its and its subsidiaries officers and key employees;
(b) neither the Company nor any Company Subsidiary shall, directly or
indirectly, do any of the following: (i) sell, pledge, lease, dispose of or
encumber (or permit any subsidiary to sell, pledge, lease dispose of or
encumber) any property or assets, except for dispositions of inventory and
immaterial assets and encumbrances and pledges in the ordinary course of
business consistent with past practice; (ii) except as contemplated hereby,
amend or propose to amend its certificate or articles of incorporation or
by-laws (or comparable organizational documents); (iii) split, combine, or
reclassify any shares of its capital stock, or declare, set aside or pay any
dividend on or make any other distributions (whether in cash, stock, property or
otherwise) with respect to such shares (except for any dividends paid by a
wholly-owned direct or indirect Company Subsidiary to such Company Subsidiary's
parent); (iv) redeem, purchase, acquire or offer to acquire (or permit any
subsidiary to redeem, purchase, acquire, or offer to acquire) any shares of its
capital stock; or (v) enter into any contract, agreement, commitment or
arrangement with respect to any of the matters set forth in this paragraph (b);
(c) neither the Company nor any Company Subsidiary shall (i) issue,
sell, pledge or dispose of, or agree to issue, sell, pledge or dispose of, any
additional shares of, or securities convertible or exchangeable for, or any
options, warrants or rights of any kind to acquire any shares of, its capital
stock of any class or other property or assets whether pursuant to the Company
Stock Plans or otherwise; PROVIDED, HOWEVER, that the Company may issue shares
of Company Common Stock upon exercise of Options that are outstanding on the
date hereof and are exercised in accordance with their respective terms as in
effect on the date hereof; (ii) acquire or agree to acquire (by merger,
consolidation or acquisition of stock or assets) any corporation, partnership or
other business organization or division thereof (except an existing wholly-owned
subsidiary); (iii) incur, create or assume any indebtedness for borrowed money
or issue any debt securities in an amount exceeding $250,000 in the aggregate;
(iv) except in the ordinary course of business, consistent with past practice,
make any loans, advances or capital contributions to, or investments in, any
other person, other than by the Company or a wholly owned subsidiary of the
Company to the Company or any wholly owned subsidiary of the Company; (v) except
in the ordinary course of business, consistent with past practice, pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise); (vi) enter into or modify any
material lease, contract, agreement or commitment (including, without
limitation, any such contract, lease, agreement or commitment of a nature that
would be required to be filed as an exhibit to Form 10-K under the Exchange
Act), other than contracts for sale, lease or rent of the Company's or the
Company Subsidiaries' products in the ordinary course of business consistent
with past practice; (vii) terminate, amend, modify, assign, waive, release or
relinquish any contract rights or any other material rights or claims, including
without limitation any contract rights or other rights or claims arising under
insurance contracts or policies; (viii) settle or compromise any claim, action,
suit or proceeding pending or threatened against the Company, or, if the Company
may be liable or obligated to provide indemnification against the Company's
directors or officers, before any court, governmental agency or arbitrator,
except in the ordinary course of business; PROVIDED, HOWEVER, that nothing shall
require any action that might impair or otherwise affect the obligation of any
insurance carrier under any insurance policy maintained by the Company; (ix)
sell, assign or transfer any patents, trademarks, trade names, domain names,
copyrights, trade secrets or other intangible assets; (x) make any change in
officer or executive compensation other than in the ordinary course of business;
(xi) change its accounting
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principles, practices or methods; or (xii) agree, in writing or otherwise, to
take any of the actions listed in (i) through (xi) above;
(d) neither the Company nor any Company Subsidiary shall take any
action that would make any representation or warranty of the Company hereunder
untrue or inaccurate in any respect at, or as of any time prior to, the
Effective Time, or omit to take any action necessary to prevent any such
representation or warranty from being untrue or inaccurate in any such time; and
(e) each of the Company and the Company Subsidiaries shall use its best
efforts, to the extent not prohibited by the foregoing provisions of this
Section 7.2, to maintain its relationships with its customers, licensors,
licensees, distributors and others having business dealings with them, and if
requested by Parent, the Company shall schedule, and the management of the
Company shall participate in, meetings of representatives of Parent with
employees of the Company or any Company Subsidiary.
ARTICLE VIII
ADDITIONAL AGREEMENTS OF THE PARTIES.
Section 8.1 ACCESS TO INFORMATION.
(a) The Company and the Company Subsidiaries shall and shall cause its
and their officers, directors, employees, representatives and agents to, afford
to Parent and Subsidiary and each of their accountants, counsel, financial
advisors, employees, agents, officers and directors and other representatives
(the "PARENT REPRESENTATIVES") reasonable access during normal business hours
with reasonable notice throughout the period from the date hereof through the
Effective Time to all of the Company's properties, books, contracts, commitments
and records (including, but not limited to, Tax Returns and records) and, during
such period, shall furnish promptly to Parent or the Parent Representatives (i)
a copy of each report, schedule and other document filed by the Company pursuant
to the requirements of federal or state securities laws or filed by the Company
with the SEC in connection with the transactions contemplated by this Agreement,
and (ii) such other information concerning the Company's business, properties
and personnel as Parent shall reasonably request. Except as required by law,
Parent and its subsidiaries shall hold and shall use their reasonable best
efforts to cause the Parent Representatives to hold in strict confidence all
nonpublic documents and confidential information furnished to Parent, Subsidiary
and any Parent Representative in connection with the transactions contemplated
by this Agreement in accordance with the confidentiality agreement dated as of
September 26, 2000 between the Company and Parent (the "CONFIDENTIALITY
AGREEMENT").
(b) No investigation pursuant to this Section 8.1 shall affect, add to
or subtract from any representations or warranties of the parties hereto or the
conditions to the obligations of the parties hereto to effect the Merger.
Section 8.2 ACQUISITION PROPOSALS
(a) Without limiting any of its other obligations under this Agreement,
the Company agrees that neither it nor any of the Company Subsidiaries nor any
of the officers or directors of it or the Company Subsidiaries shall, and that
it shall direct and use its reasonable best efforts to cause the Company and the
Company Subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of the Company
Subsidiaries) not to, directly or indirectly, (i) initiate, solicit, encourage
or facilitate (including by way of furnishing information) any inquiries or the
making of any proposal or offer (including without limitation an offer to
stockholders of the Company) for, or a transaction to effect, a merger,
reorganization, share exchange,
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consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving it or any of the Company Subsidiaries (or a
material portion of the stock or assets of any of them) or any purchase or sale
of any material assets (including without limitation stock of the Company
Subsidiaries) of the Company and the Company Subsidiaries, taken as a whole, or
any purchase or sale of, or tender or exchange offer for, the equity securities
of the Company (or of the surviving parent entity in such transaction) or any of
the Company Subsidiaries (any such proposal, offer or transaction, other than a
proposal or offer made by Parent or an affiliate thereof, being hereinafter
referred to as an "ACQUISITION PROPOSAL"); (ii) have any discussion with or
provide any confidential information or data to any person relating to an
Acquisition Proposal, or knowingly facilitate any effort or attempt to make or
implement an Acquisition Proposal; (iii) approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal; or (iv) approve or
recommend, or propose to approve or recommend, or execute or enter into, any
letter of intent, agreement in principle, merger agreement, acquisition
agreement, option agreement or other similar agreement related to any
Acquisition Proposal or propose or agree to do any of the foregoing.
(b) Notwithstanding anything in this Agreement to the contrary, the
Company or its Board of Directors shall be permitted at any time prior to the
time of the Stockholders' Meeting (i) to the extent applicable, to comply with
Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal; (ii) to withdraw or change the recommendation of the
Company's Board of Directors in respect of the Offer, the Merger or this
Agreement or to approve or recommend or to propose publicly to approve or
recommend any Acquisition Proposal; (iii) to engage in any discussions or
negotiations with, or provide any information to, any person in response to an
unsolicited BONA FIDE written Acquisition Proposal by any such person; or (iv)
to enter into an agreement in principle or a definitive agreement with respect
to a Superior Proposal (as defined below), if and only to the extent that, in
any such case referred to in clause (ii), (iii) or (iv), (A)(x) in the case of
clause (ii) above, it has received an unsolicited BONA FIDE written Acquisition
Proposal from a third party and the Company's Board of Directors concludes in
good faith that such Acquisition Proposal constitutes a Superior Proposal (after
taking into account any concessions that may be offered by Parent pursuant to
clause (C) below) and (y) in the case of clause (iii) above, the Company's Board
of Directors concludes in good faith that such Acquisition Proposal reasonably
could be expected (without any change in the amount or type of consideration
offered) to constitute a Superior Proposal, (B) in the case of clauses (ii),
(iii) and (iv) above, the Board of Directors, following receipt of advice of
outside counsel, determines in good faith that the failure to take such action
would result in a breach of its fiduciary duties under applicable law, (C) prior
to the Company's Board of Directors taking or authorizing any action described
in clause (ii) or clause (iv) above, Parent shall have been notified at least
five business days in advance of the Company's Board of Directors' intention to
take or authorize such action and of the material terms and conditions of the
relevant Acquisition Proposal and shall have been provided at that time with a
copy of the relevant transaction document and any other relevant documents (and
subsequently notified of and provided with any changes to such terms, conditions
or documents) and shall have been afforded the right for at least five business
days to amend the terms of the Offer in response to such Acquisition Proposal,
(D) prior to providing any information or data to any person, the Company's
Board of Directors receives from such person an executed confidentiality
agreement having provisions that are customary in such agreements, as advised by
counsel, and no less restrictive of such person than the Confidentiality
Agreement, and (E) prior to providing any information or data to any person or
entering into discussions or negotiations with any person, the Company notifies
Parent promptly of such inquiries, proposals or offers received by, any such
information requested from, or any such discussions or negotiations sought to be
initiated or continued with, any of its representatives indicating, in
connection with such notice, the name of such person and the material terms and
conditions of any inquiries, proposals or offers.
(c) The Company agrees that it will, and will cause its officers,
directors and representatives to, immediately cease and cause to be terminated
any activities, discussions or negotiations existing as of
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the date of this Agreement with any parties conducted heretofore with respect to
any Acquisition Proposal. The Company shall promptly request each person that
has executed a confidentiality agreement in connection with its consideration of
a possible Acquisition Proposal to return (or, if required under the provisions
of the confidentiality agreement, destroy) all confidential information
previously furnished to such Person. The Company will promptly inform its
directors, officers, key employees, agents and representatives of the
obligations undertaken in this Section 8.2.
(d) Nothing in this Section 8.2 shall (i) permit the Company to
terminate this Agreement (except as specifically provided in Article VIII
hereof) or (ii) affect any other obligation of the Company. The Company shall
not submit to the vote of its stockholders any Acquisition Proposal other than
the Merger.
(e) As used in this Agreement, "SUPERIOR PROPOSAL" means a BONA FIDE
written proposal made by a person other than Parent or an affiliate of Parent
which the Company's Board of Directors concludes in good faith (following
receipt of the advice of its financial advisors and after consultation with
outside legal counsel), taking into account, among other things, all legal,
financial, regulatory and other aspects of the proposal and the person making
the proposal, (i) would, if consummated, result in a transaction that is more
favorable to the Company's stockholders (in their capacities as stockholders),
from a financial point of view, than the transactions contemplated by this
Agreement, (ii) is fully financed or reasonably capable of being fully financed
and (iii) is probable of completion.
(f) The Company shall (i) notify Parent promptly (and in any event
within 24 hours) after receipt of any Acquisition Proposal (or any indication
that any person is considering marking an Acquisition Proposal) or any request
for non-public information relating to the Company or any of its Subsidiaries or
for access to the properties, books or records of the Company or any of its
subsidiaries by any person that may be considering making, or has made, an
Acquisition Proposal, (ii) notify Parent promptly of any material change to any
such Acquisition Proposal, indication or request and (iii) upon reasonable
request by Parent, provide Parent with all material information about any such
Acquisition Proposal, indication or request.
(g) Any disclosure pursuant to Section 8.2(b)(i) shall be deemed to be
a withdrawal or adverse modification of the Company's Board of Directors for
purposes of Section 7.1(d)(i) unless the Company's Board of Directors expressly
reaffirms its recommendation of the Offer and the Merger.
Section 8.3 EXPENSES AND FEES. 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 expenses, except that the expenses incurred in connection with the filing,
printing and mailing of the Proxy Statement and the Offer Documents shall be
borne equally by Parent and the Company.
Section 8.4 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) Parent and Subsidiary agree that all rights to indemnification now
existing in favor of any current or former director or officer of the Company as
provided in the Company's Certificate of Incorporation or Bylaws or in a written
agreement between any such person and the Company in effect on the date hereof
shall survive the Merger and shall continue in full force and effect until the
expiration of all applicable statutes of limitation. Parent also agrees to (or
to cause the Surviving Corporation to) indemnify all current and former
directors and officers of the Company to the fullest extent the Company would be
permitted by Delaware Law to indemnify them with respect to all acts and
omissions arising out of such individuals' service as officers or directors of
the Company or any of its subsidiaries or as trustees, fiduciaries or
administrators of any plan for the benefit of employees occurring prior to the
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Effective Time. Without limitation of the foregoing, in the event any such
person is or becomes involved in any capacity in any action, proceeding or
investigation in connection with any matter, including, without limitation, the
transactions contemplated by this Agreement, occurring prior to, and including,
the Effective Time, Parent will (or will cause the Surviving Corporation to) pay
such person's reasonable legal and other expenses of counsel selected by such
person and reasonably acceptable to Parent (including the cost of any
investigation, preparation and settlement) incurred in connection therewith
promptly after statements therefor are received by Parent; PROVIDED, HOWEVER,
that neither Parent nor the Surviving Corporation shall, in connection with any
one such action or proceeding or separate but substantially similar actions or
proceedings arising out of the same general allegations, be liable for
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all indemnified persons. Parent
shall be entitled to participate in the defense of any such action or
proceeding, and counsel selected by the indemnified person shall, to the extent
consistent with their professional responsibilities, cooperate with Parent and
any counsel designated by Parent. Parent shall pay all reasonable fees and
expenses, including attorneys' fees, that may be incurred by any indemnified
person in enforcing the indemnity and other obligations provided for in this
Section.
(b) Parent agrees that the Company and, from and after the Effective
Time, the Surviving Corporation shall cause to be maintained in effect for not
less than six years from the Effective Time the current policies of directors'
and officers' liability insurance maintained by the Company by purchasing a
policy providing "tail" coverage for a period of not less than six years from
the Effective Time; PROVIDED, however, that the Surviving Corporation shall not
be required to pay an amount in excess of $400,000 for such policy providing
such "tail" coverage; and if the Surviving Corporation is unable to obtain the
insurance required by this Section, it shall obtain as much comparable insurance
as possible for an annual premium equal to such maximum amount.
Section 8.5 EMPLOYEE BENEFITS. For not less than 90 days from the
Effective Time, Parent shall provide, and cause the Surviving Corporation to
provide, employee benefits under employee benefit plans to the employees and
former employees of the Company and its subsidiaries that are in the aggregate
no less favorable than those provided to such persons pursuant to Company Plans
on the date of this Agreement (excluding equity and equity-based compensation);
provided, however, that the provisions of this Section 8.5 will not prohibit
Parent or the Surviving Corporation from requiring normal and customary employee
contributions with respect to medical and other similar employee benefit plans.
Nothing herein shall prohibit any changes to any Company Plan that are (i)
required by law (including, without limitation, any applicable qualification
requirements of Section 401(a) of the Code); (ii) necessary as a technical
matter to reflect the transactions contemplated hereby; or (iii) required for
the Surviving Corporation to provide for or permit investment in its securities
or Parent's securities. Furthermore, nothing herein shall require Parent to
continue any particular Company Plan or prevent the amendment or termination
thereof (subject to the maintenance, in the aggregate, of the benefits as
provided in this Section 8.5 and to the obligation to provide benefits as
provided above).
Section 8.6 LITIGATION. The Company shall give Parent the
opportunity to participate in the defense or settlement of any shareholder
litigation against the Company and its directors relating to the Offer, the
Merger and the other transactions contemplated by this Agreement until the
consummation of the Offer, and thereafter, Parent shall direct the defense of
such litigation and shall give the Company and its directors an opportunity to
participate in such litigation; PROVIDED, HOWEVER, that no settlement shall be
agreed to prior to the consummation of the Offer without Parent's consent, which
consent shall not be unreasonably withheld or delayed; and provided further that
no settlement requiring a payment or an admission of any wrongdoing by a current
or former director shall be agreed to without such person's consent.
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Section 8.7 ADDITIONAL SECURITIES REGULATORY MATTERS. The Company
shall, before the Effective Time, take all actions necessary to obtain an
exemption from the Quebec Securities Commission and any other applicable
securities regulatory authority for the issue and exercise of options and the
sale or resale of securities to or by the officers, directors and employees of
the Company or of any Company Subsidiary residing in the Province of Quebec,
Canada, pursuant to the Company Stock Plans.
Section 8.8 2000 FORM 10-K. The Company shall, on or prior to March
15, 2001, file its Annual Report on Form 10-K for the year ended December 31,
2000, which shall include audited consolidated financial statements for the
Company and the Company Subsidiaries for the fiscal year ended December 31, 2000
that have been prepared in accordance with GAAP.
ARTICLE IX
CONDITIONS
Section 9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, at or prior to the Effective Time, of
each of the following conditions:
(a) if required by the DGCL, this Agreement shall have been duly
adopted by the requisite affirmative vote of the stockholders of the Company in
accordance with applicable law the Certificate of Incorporation and Bylaws of
the Company;
(b) no statute, rule, regulation, executive order, decree, ruling,
judgment, decision, order or injunction shall have been enacted, entered,
promulgated, issued or enforced by any court or other Governmental Authority
which is in effect and has the effect of prohibiting restraining or enjoining
the consummation of the Merger; and
(c) Subsidiary shall have accepted for payment and paid for all shares
of Company Common Stock duly tendered and not subsequently withdrawn pursuant to
the Offer.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time before the Effective Time, whether before or
after approval of this Agreement and the Merger by the stockholders of the
Company (if required by applicable law):
(a) by mutual written consent, duly authorized by the Boards of
Directors of Parent and, subject to Section 1.4(c) the Company;
(b) by either the Company or Parent if (i) any statute, rule,
regulation, executive order, decree, ruling, judgment, decision, order or
injunction of or by any court or other Governmental Authority of competent
jurisdiction which makes the consummation of the Merger illegal shall be in
effect and shall have become final and nonappealable; (ii) the Offer (as
extended and re-extended in accordance with Section 1.1) shall have expired
without the acceptance for payment of shares of Company Common Stock thereunder;
or (iii) the purchase of the shares of Company Common Stock pursuant to the
Offer (as extended and re-extended in accordance with Section 1.1) shall not
have occurred on or prior to the close of business on May 23, 2001 the ("OUTSIDE
DATE"); unless, in the case of any of clause (i), (ii) or (iii) above, such
event has been caused by a breach of this Agreement by the party seeking such
termination;
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(c) by Parent, if before the purchase of shares of Company Common Stock
pursuant to the Offer, the Board of Directors of the Company or any committee
thereof shall (i) have recommended an Acquisition Proposal or failed to publicly
announce its recommendation against an Acquisition Proposal within five business
days after the first public announcement of the Acquisition Proposal or in any
announcement or filing made with respect to an Acquisition Proposal pursuant to
Rule 14d-9 or Rule 14e-2 under the Exchange Act; (ii) have withdrawn, modified
or amended its approval or recommendation of the Offer, this Agreement or the
Merger or failed to reaffirm its approval or recommendation of the Offer or the
Merger or the adoption of the Agreement promptly upon Parent's reasonable
request; (iii) have executed an agreement in principle or definitive agreement
relating to an Acquisition Proposal or similar business combination with a third
party; or (iv) have resolved to do any of the foregoing;
(d) by Parent, if before the purchase of shares of Company Common Stock
pursuant to the Offer, (i) any of the Company's representations and warranties
contained in this Agreement shall be inaccurate as of the date of this
Agreement, or shall have become inaccurate as of a date subsequent to the date
of this Agreement (as if made on such subsequent date) such that the condition
set forth in clause (c)(i) of ANNEX A would not be satisfied or (ii) any of the
Company's covenants contained in this Agreement shall have been breached such
that the condition set forth in clause (c)(ii) of ANNEX A would not be
satisfied, if in either case the Company shall have failed to cure such breach
within ten business days after written notice of the breach; provided, however,
that if an inaccuracy in the Company's representations and warranties or a
breach of a covenant by the Company is not curable by the Company prior to the
Outside Date no such notice or opportunity to cure shall be required;
(e) by the Company prior to the acceptance for purchase of shares
pursuant to the Offer if (i) there shall have been a breach in any material
respect of any representation or warranty in this Agreement of Parent or
Subsidiary or (ii) Parent or Subsidiary shall have materially breached any
covenant or agreement contained in this Agreement, which breach, in the case of
both clause (i) and clause (ii) above, shall not have been cured prior to ten
business days following notice of such breach to Parent and Subsidiary by the
Company;
(f) by the Company, if before the purchase of shares of Company Common
Stock pursuant to the Offer, the Board of Directors of the Company or any
committee thereof shall, after complying with Section 8.2(b) hereof, (i) have
recommended a Superior Proposal; or (ii) have authorized or permitted the
execution of an agreement in principle or definitive agreement relating to a
Superior Proposal or similar business combination with a third party.
Section 10.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either Parent or
the Company pursuant to the provisions of Section 10.1, this Agreement shall
forthwith become void and there shall be no liability or further obligation on
the part of the Company, Parent, Subsidiary or their respective officers or
directors (except for obligations in this Section 10.2(a), in the second
sentence of Section 8.1(a) and in Sections 8.3 and this Section 10.2, all of
which shall survive the termination). Nothing in this Section 10.2 shall relieve
any party hereto from liability for any willful and intentional breach of any
covenant or other agreement of such party contained in this Agreement.
(b) Parent and the Company agree that (i) if Parent shall terminate
this Agreement (x) pursuant to Section 10.1(c) or (y) pursuant to Section
10.1(d)(ii) by reason of a breach of Section 7.1(d)(i) or Section 8.2, (ii) if
the Company shall terminate this Agreement pursuant to Section 10.1(f) or (iii)
this Agreement is terminated for any other reason (other than the breach of this
Agreement by Parent or Subsidiary and other than pursuant to Section 10.1(a))
and, in the case of this clause (iii) only, (x) at the time of such termination
there was pending an Acquisition Proposal from one or more third parties and
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(y) within one year after such termination either (A) a transaction is
consummated with any such third party or any affiliate of such third party that
results in the stockholders of the Company immediately prior to the consummation
of such transaction owning less than 80% of the total voting power of the
Company immediately prior to the consummation of the transaction or in the sale
of assets representing 50% or more of the consolidated assets or revenues of the
Company and the Company Subsidiaries or (B) the Company enters into a definitive
agreement for such transaction, then the Company shall pay to Parent an amount
equal to $4,000,000. In addition, if Parent shall terminate this Agreement
pursuant to Section 10.1(b)(iii), Section 10.1(c) or Section 10.1(d) or if the
Company shall terminate this Agreement pursuant to Section 10.1(f), the Company
shall pay to Parent an amount (not to exceed $1,000,000 in the aggregate) equal
to all out-of-pocket expenses and fees payable by Parent, Subsidiary or any of
their affiliates to (i) all banks, investment banking firms and other financial
institutions for providing financial advice with respect to, or arranging or
committing to provide or providing any financing for, the acquisition of all
outstanding shares of Company Common Stock in the Offer and the Merger, and (ii)
to all lawyers, accountants and other professionals in respect of services
performed in connection with the transactions contemplated by this Agreement.
(c) If the Company shall terminate this Agreement pursuant to Section
10.1(e), Parent shall pay to Company an amount (not to exceed $1,000,000 in the
aggregate) equal to all out-of-pocket expenses and fees payable by the Company
to the Company Financial Advisor and to all lawyers, accountants and other
professionals in respect of services performed in connection with the
transactions contemplated by this Agreement.
(d) Any payment required to be made pursuant to this Section 10.2 shall
be made not later than three business days after the termination of this
Agreement or in the case of any payment required to be made by the Company under
Section 10.2(b)(ii), three business days after the execution of the definitive
agreement referred to therein, as applicable. All payments under this Section
10.2 shall be made by wire transfer of immediately available funds to an account
designated by the party entitled to receive payment.
(e) The Company and Parent agree that any payment required to be made
pursuant to Section 10.2(b) shall represent liquidated damages and not a
penalty. The provisions of Sections 10.1 and 10.2 shall be the exclusive remedy
for any party for breach of any representation, warranty, covenant or agreement
contained in this Agreement.
Section 10.3 AMENDMENT. This Agreement may not be amended except by
action taken by the parties' respective Boards of Directors or duly authorized
committees thereof and then only by an instrument in writing signed on behalf of
each of the parties hereto and in compliance with applicable law and Section
1.4(c). Subject to Section 1.4(c) and applicable law, such amendment may take
place at any time prior to the Closing Date and whether before or after the
Company Stockholders' Approval is obtained; PROVIDED, HOWEVER, that after the
Company Stockholders' Approval is obtained, no amendment may be made which would
reduce the amount or change the kind of consideration to be received by the
holders of Company Common Stock upon consummation of the Merger or alter or
change any of the terms and conditions of this Agreement if such alteration or
change would adversely effect the holders of any class or series of securities
of the Company.
Section 10.4 EXTENSION; WAIVER. At any time prior to the Effective
Time, subject to Section 1.4(c), any party hereto may (a) extend the time for
the performance of any of the obligations or other acts of the other party, (b)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document, certificate or writing delivered pursuant
hereto, or (c) waive compliance by the party with any of the agreements or
conditions contained herein. Any agreement on the part of any party hereto to
any such extension or waiver shall be valid only if set forth in an
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instrument in writing signed on behalf of such party. The failure of any party
hereto to assert any of its rights hereunder shall not constitute a waiver of
such rights.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of
the representations, warranties, covenants or agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, and after the Effective Time, none of the Company, Parent, Subsidiary or
their respective officers or directors shall have any further obligation with
respect thereto except for the representations, warranties or agreements that by
their terms apply or are to be performed in whole in part after the Effective
Time.
Section 11.2 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail, postage prepaid return receipt requested) or sent
via facsimile to the parties at the following addresses:
If to Parent or Subsidiary, to:
Inveresk Research Group Limited
Elphinstone Research Centre
Tranet, Xxxx Xxxxxxx
XX00 0XX
Xxxxxxxx, Xxxxxx Xxxxxxx
Facsimile: x00 0000 000 000
Attention: Xxxxxxx X. Xxxxxx
with a copy to:
Xxxxxxxx Chance Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
If to the Company, to:
ClinTrials Research Inc.
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxx, Xxxxx Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxxx
with a copy to:
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Telecopier: (000) 000-0000
Attention: Xxxx Manner, Esq.
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or at such other address as any party hereto shall have designated by notice in
writing to the other parties hereto. Notices shall be deemed duly received (a)
on the date of delivery if delivered personally, or by telecopy or facsimile,
upon confirmation of receipt, or (b) on the tenth business day following the
date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid.
Section 11.3 GOVERNING LAW; VENUE. This Agreement shall be governed
in all respects including validity, interpretation and effect, by the laws of
the State of Delaware applicable to contracts executed and to be performed
wholly within such state. The exclusive venue for any proceeding brought by any
party to this Agreement against another party in respect of the subject matter
of this Agreement shall be the Delaware Chancery Court or, in the alternative,
any Federal or State Court having proper jurisdiction and sitting in the Borough
of Manhattan, New York, and each party hereby consents to such venue and waives
all rights to object to such venue, whether on the grounds of forum non
conveniens or otherwise.
Section 11.4 THIRD PARTY BENEFICIARIES. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and except as
set forth in this Agreement; nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement; provided that the provisions of
Section 8.4 hereof are for the benefit of, and shall be enforceable by, each of
the current and former directors and officers of the Company.
Section 11.5 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
Section 11.6 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties hereto
without the prior written consent of the other parties. Any assignment in
violation of the preceding sentence shall be null and void. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
Section 11.7 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. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
Section 11.8 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 11.9 ENTIRE AGREEMENT. This Agreement (including Annex A and
the documents and instruments referred to herein) constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof,
and supersede all prior agreements and understandings, both oral and written,
among the parties with respect to the subject matter of this Agreement. No
representations, warranty, promise, inducement or statement of intention has
been made by any party that is not embodied in this Agreement or such other
documents, and none of the parties shall be bound by, or be liable for, any
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alleged representation, warranty, promise, inducement or statement of intention
not embodied herein or therein.
[Signature Page Follows]
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IN WITNESS WHEREOF, Parent, Subsidiary and the Company have caused this
Agreement and Plan of Merger to be signed by their respective officers as of the
date first written above.
INVERESK RESEARCH GROUP LIMITED
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive
INDIGO ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
CLINTRIALS RESEARCH INC.
By: /s/ Xxxx Xxxxxxxxx
------------------------------
Name: Xxxx Xxxxxxxxx
Title: President
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ANNEX A
TO
AGREEMENT AND PLAN OF MERGER
CONDITIONS TO THE OFFER. Notwithstanding any other provision of the
Offer or the Agreement, in addition to (and not in limitation of) Subsidiary's
rights pursuant to the Agreement to extend and amend the Offer in accordance
with the Agreement, and subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c)) under the Exchange Act relating to Subsidiary's
obligation to pay for or return tendered shares of Company Common Stock after
termination of the Offer, Subsidiary shall not be required to accept for payment
or, pay for and may delay the acceptance for payment of or, subject to Rule
14e-1(c) of the Exchange Act, the payment for, any tendered shares of Company
Common Stock not theretofore accepted for payment or paid for, and Subsidiary
may amend the Offer (subject to Section 1.1 of the Agreement) if (i) a number of
shares of Company Common Stock representing at least a majority of the sum of
(x) the total number of outstanding shares of Company Common Stock plus (y) the
total number of shares of Company Common Stock issuable upon exercise of
outstanding options, warrants, conversion privileges and other similar rights
shall not have been validly tendered prior to the expiration of the Offer and
not withdrawn or otherwise acquired by Parent or any of its affiliates prior to
the expiration of the Offer ("MINIMUM CONDITION"); (ii) any applicable waiting
period under the HSR Act or the Investment Canada Act or Competition Act
(Canada) shall not have expired or been terminated; or (iii) at any time on or
after the date of the Agreement and prior to the time of acceptance of such
shares of Company Common Stock for payment pursuant to the Offer or the payment
therefor, any of the following conditions has occurred and continues to exist
through the time of acceptance for payment or payment:
(a) there shall be pending any suit, action, or proceeding (i)
challenging the acquisition by Parent or Subsidiary of the shares of Company
Common Stock, seeking to make illegal, materially delay, make materially more
costly or otherwise directly or indirectly restrain or prohibit the making or
consummation of the Offer and the Merger or the performance of any of the other
transactions contemplated by this Agreement or seeking to obtain from the
Company, Parent or Subsidiary any damages or penalties that are material in
relation to the Company and its subsidiaries taken as whole; (ii) seeking to
prohibit or materially limit the ownership or operation by the Company, Parent
or any of their respective subsidiaries or affiliates of any of the businesses
or assets of the Company, Parent or any of their respective subsidiaries or
affiliates, or to compel the Company, Parent or any of their respective
subsidiaries or affiliates to dispose of or hold separate all or any material
portion of the businesses or assets of the Company or Parent, as a result of the
Offer, the Merger or any of the other transactions contemplated by this
Agreement; (iii) seeking to impose material limitations on the ability of Parent
or Subsidiary to acquire or hold, or exercise full rights of ownership of, any
shares of Company Common Stock accepted for payment pursuant to the Offer
including, without limitation, the right to vote the shares of Company Common
Stock accepted for payment by it on all matters properly presented to the
stockholders of the Company; (iv) seeking to prohibit Parent or any of its
subsidiaries or affiliates from effectively controlling in any material respect
the business or operations of the Company or its subsidiaries; (v) requiring
divestiture by Subsidiary or any of its affiliates of any shares of Company
Common Stock; or (vi) which otherwise would, if adversely determined, have a
Company Material Adverse Effect.
(b) there shall be any statute, rule, regulation, executive order,
decree, ruling, judgment, decision, order or injunction (including with respect
to competition or antitrust matters) enacted, entered, enforced, promulgated,
issued or enforced, or any statute, rule, regulation, executive order, decree,
ruling, judgment, decision, order or injunction which has been proposed by the
relevant legislative, judicial or regulatory body with respect to or deemed
applicable to, or any material consent or approval withheld or
48
any other action taken with respect to (i) Parent, the Company or any of their
respective subsidiaries or affiliates or (ii) the Offer or the Merger or any of
the other transactions contemplated by this Agreement, by any court or other
Governmental Authority, other than applicable waiting periods under the HSR Act
as specified in the introductory paragraph above, in any case, that in the
reasonable judgment of Parent, has resulted or is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses (i)
though (vi) of paragraph (a) above;
(c) (i) the representations and warranties of the Company contained in
the Agreement shall not be true and correct in all material respects at the date
hereof and as of the consummation of the Offer with the same effect as if made
at and as of the consummation of the Offer (except to the extent such
representations and warranties specifically relate to an earlier date, in which
case such representations and warranties shall be true and correct in all
material respects as of such earlier date); provided, however, that this
condition shall not be satisfied if the representation set forth in Section
5.5(d) of the Agreement is not true and correct at the date hereof or at
consummation of the Offer; (ii) the Company shall have failed to perform or
comply in all material respects with its covenants and obligations contained in
the Agreement, which failure to perform has not been cured within ten business
days after the giving of written notice to the Company; provided, however, that
this condition shall not be satisfied if the Company fails to perform or comply
with the covenant set forth in Section 8.8 of the Agreement; or (iii) there
shall have occurred since the date of the Agreement any events or changes which,
individually or in the aggregate, constitute or may reasonably be expected to
have a Company Material Adverse Effect.
(d) the Board of Directors of the Company or any committee thereof
shall (i) have recommended an Acquisition Proposal or failed to publicly
announce its recommendation against an Acquisition Proposal within five business
days after the first public announcement of the Acquisition Proposal; (ii) have
withdrawn, modified in a manner adverse to Parent or Subsidiary (including by
amendment of the Schedule 14D-9), or amended in a manner adverse to Parent or
Subsidiary its approval or recommendation of the Offer, this Agreement or the
Merger, or failed to reaffirm its approval or recommendation of the Offer or the
Merger or the adoption of the Agreement upon Parent's reasonable request, or
recommended an Alternative Proposal; (iii) have executed an agreement in
principle or a definitive agreement relating to an Acquisition Proposal or
similar business combination with an entity other than Parent, Subsidiary or
their affiliates, or (iv) have resolved to do any of the foregoing;
(e) the Agreement shall have been terminated in accordance with its
terms, or any event shall have occurred which gives Parent or Subsidiary the
right to terminate the Agreement or not consummate the Merger;
(f) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation in prices for securities on any national
securities exchange or in the over-the-counter market (other than as a result of
market circuit-breakers or other similar procedures); (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, the United Kingdom or Canada (whether or not mandatory); (iii)
any limitation (whether or not mandatory), by a United States, United Kingdom or
Canadian governmental authority or agency on the extension of credit by banks or
other financial institutions which in the reasonable judgment of Parent or
Subsidiary, in any such case, makes it inadvisable to proceed with the Offer or
with such acceptance for payment or payments; (iv) a commencement of war or
armed hostilities or other national or international calamity directly or
indirectly involving the United States, the United Kingdom or Canada, which has
a significant adverse effect on the functioning of financial markets in the
United States, the United Kingdom or Canada; or (v) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
2
49
(g) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be obtained or made by the
Company, Parent or Subsidiary with or from any Governmental Authority or third
party in connection with the execution, delivery and performance of the
Agreement, the Offer and the consummation of the transactions contemplated by
this Agreement shall not have been made or obtained and such failure could
reasonably be expected to have a Company Material Adverse Effect; or
(h) it shall have been publicly disclosed that any Person, entity or
"group" (as defined in Section 13(d)(3) of the Exchange Act) shall have acquired
beneficial ownership (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of more than 20% of the then-outstanding shares of Company Common
Stock, through the acquisition of stock, the formation of a group or otherwise.
Subject to the provisions of Section 1.1 of the Agreement, the foregoing
conditions are solely for the benefit of Parent and Subsidiary and may be waived
by either Parent or Subsidiary, in whole or in part at any time and from time to
time, in the sole discretion of Parent and Subsidiary. The failure by Parent and
Subsidiary at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
3
