EXHIBIT 2.1
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXX MEDICAL SYSTEMS, INC.,
HORNET ACQUISITION CORP.
AND
HORIZON MEDICAL PRODUCTS, INC.
DATED AS MAY 12, 2004
TABLE OF CONTENTS
PAGE
SECTION 1. THE MERGER 3
1.1 MERGER OF MERGER SUB INTO THE COMPANY.......................................................... 3
1.2 EFFECT OF THE MERGER........................................................................... 3
1.3 CLOSING; EFFECTIVE TIME........................................................................ 3
1.4 ARTICLES OF INCORPORATION AND BYLAWS........................................................... 3
1.5 CONVERSION OF SHARES IN THE MERGER............................................................. 4
1.6 CLOSING OF THE COMPANY'S TRANSFER BOOKS........................................................ 5
1.7 EXCHANGE OF CERTIFICATES....................................................................... 5
1.8 FURTHER ACTION................................................................................. 6
1.9 TAX CONSEQUENCES............................................................................... 6
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
2.1 DUE ORGANIZATION; SUBSIDIARIES................................................................. 7
2.2 AUTHORITY; BINDING NATURE OF AGREEMENT......................................................... 7
2.3 CAPITALIZATION, ETC............................................................................ 8
2.4 SEC FILINGS; FINANCIAL STATEMENTS.............................................................. 9
2.5 ABSENCE OF CHANGES............................................................................. 10
2.6 PROPRIETARY ASSETS............................................................................. 12
2.7 CONTRACTS...................................................................................... 13
2.8 LIABILITIES.................................................................................... 15
2.9 COMPLIANCE WITH LEGAL REQUIREMENTS; FDA MATTERS................................................ 15
2.10 GOVERNMENTAL AUTHORIZATIONS.................................................................... 19
2.11 TAX MATTERS.................................................................................... 19
2.12 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS...................................................... 21
2.13 ENVIRONMENTAL MATTERS.......................................................................... 25
2.14 LEGAL PROCEEDINGS; ORDERS...................................................................... 26
2.15 VOTE REQUIRED.................................................................................. 26
2.16 NON-CONTRAVENTION; CONSENTS.................................................................... 26
2.17 OPINION OF FINANCIAL ADVISOR................................................................... 27
2.18 FINANCIAL ADVISOR.............................................................................. 27
2.19 TAKEOVER STATUTES.............................................................................. 27
2.20 INFORMATION TO BE SUPPLIED..................................................................... 28
2.21 FOREIGN CORRUPT PRACTICES ACT.................................................................. 28
2.22 REAL PROPERTY.................................................................................. 29
2.23 INSURANCE POLICIES............................................................................. 29
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB 29
3.1 DUE ORGANIZATION; SUBSIDIARIES................................................................. 30
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT......................................................... 30
3.3 CAPITALIZATION, ETC............................................................................ 31
3.4 SEC FILINGS; FINANCIAL STATEMENTS.............................................................. 32
3.5 ABSENCE OF CHANGES............................................................................. 33
3.6 PROPRIETARY ASSETS............................................................................. 35
3.7 CONTRACTS...................................................................................... 36
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3.8 LIABILITIES.................................................................................... 38
3.9 COMPLIANCE WITH LEGAL REQUIREMENTS; FDA MATTERS................................................ 38
3.10 GOVERNMENTAL AUTHORIZATIONS.................................................................... 41
3.11 TAX MATTERS.................................................................................... 41
3.12 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS...................................................... 44
3.13 ENVIRONMENTAL MATTERS.......................................................................... 48
3.14 LEGAL PROCEEDINGS; ORDERS...................................................................... 49
3.15 VOTE REQUIRED.................................................................................. 49
3.16 NON-CONTRAVENTION; CONSENTS.................................................................... 49
3.17 OPINION OF FINANCIAL ADVISOR................................................................... 50
3.18 FINANCIAL ADVISOR.............................................................................. 50
3.19 TAKEOVER STATUTES.............................................................................. 50
3.20 INFORMATION TO BE SUPPLIED..................................................................... 51
3.21 FOREIGN CORRUPT PRACTICES ACT.................................................................. 51
3.22 REAL PROPERTY.................................................................................. 51
3.23 INSURANCE POLICIES............................................................................. 52
SECTION 4. CERTAIN COVENANTS OF THE COMPANY AND PARENT 52
4.1 ACCESS AND INVESTIGATION....................................................................... 52
4.2 OPERATION OF BUSINESS.......................................................................... 53
4.3 NO SOLICITATION BY THE COMPANY................................................................. 59
4.4 NO SOLICITATION BY PARENT...................................................................... 61
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES 64
5.1 REGISTRATION STATEMENT AND PROXY STATEMENT FOR STOCKHOLDER APPROVAL............................ 64
5.2 COMPANY SHAREHOLDERS' MEETING AND PARENT STOCKHOLDERS' MEETING................................. 65
5.3 REGULATORY APPROVALS........................................................................... 67
5.4 COMPANY STOCK OPTIONS AND WARRANTS............................................................. 67
5.5 EMPLOYEE BENEFITS.............................................................................. 68
5.6 INDEMNIFICATION OF OFFICERS AND DIRECTORS...................................................... 70
5.7 ADDITIONAL AGREEMENTS.......................................................................... 71
5.8 PUBLIC DISCLOSURE.............................................................................. 71
5.9 TAX MATTERS.................................................................................... 71
5.10 RESIGNATION OF DIRECTORS....................................................................... 72
5.11 LISTING........................................................................................ 72
5.12 TAKEOVER LAWS.................................................................................. 72
5.13 FORM S-8; SECTION 16........................................................................... 72
5.14 AFFILIATES..................................................................................... 73
5.15 LITIGATION..................................................................................... 73
5.16 ADVICE OF CHANGES.............................................................................. 73
5.17 DIRECTORS AND OFFICERS OF PARENT............................................................... 73
5.18 EMPLOYMENT AGREEMENTS.......................................................................... 74
SECTION 6. CONDITIONS TO THE MERGER 74
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION.......................................................... 74
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6.2 ADDITIONAL CONDITIONS TO PARENT'S AND MERGER SUB'S OBLIGATIONS................................. 75
6.3 ADDITIONAL CONDITIONS TO THE COMPANY'S OBLIGATIONS............................................. 76
SECTION 7. TERMINATION 77
7.1 TERMINATION.................................................................................... 77
7.2 EFFECT OF TERMINATION.......................................................................... 78
7.3 EXPENSES; TERMINATION FEES..................................................................... 79
SECTION 8. MISCELLANEOUS PROVISIONS 81
8.1 AMENDMENT...................................................................................... 81
8.2 WAIVER......................................................................................... 81
8.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES.................................................. 81
8.4 ENTIRE AGREEMENT; COUNTERPARTS................................................................. 81
8.5 APPLICABLE LAW; JURISDICTION................................................................... 82
8.6 ATTORNEYS' FEES................................................................................ 82
8.7 ASSIGNABILITY; THIRD PARTY BENEFICIARIES....................................................... 82
8.8 NOTICES........................................................................................ 83
8.9 SEVERABILITY................................................................................... 84
8.10 SPECIFIC PERFORMANCE........................................................................... 84
8.11 CONSTRUCTION................................................................................... 84
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and
entered into on May 12, 2004, by and among XXXX MEDICAL SYSTEMS, INC., a
Delaware corporation ("PARENT"), HORNET ACQUISITION CORP., a Delaware
corporation and a wholly-owned subsidiary of Parent ("MERGER SUB"), and HORIZON
MEDICAL PRODUCTS, INC., a Georgia corporation (the "COMPANY"). Certain
capitalized terms used in this Agreement are defined in EXHIBIT A.
RECITALS
WHEREAS, Parent, Merger Sub and the Company intend to effect a
merger (the "MERGER") of Merger Sub into the Company in accordance with this
Agreement, the General Corporation Law of the State of Delaware (the "DGCL") and
the Georgia Business Corporation Code ("GBCC"). Upon consummation of the Merger,
Merger Sub will cease to exist, and the Company will become a wholly-owned
subsidiary of Parent;
WHEREAS, it is intended that the Merger shall qualify as a
"REORGANIZATION" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "CODE");
WHEREAS, the Board of Directors of the Company (i) has determined
that the Merger is in the best interests of the Company and its shareholders,
(ii) has approved and adopted this Agreement, (iii) has approved the Merger and
the other transactions contemplated by this Agreement and (iv) has determined to
recommend that the shareholders of the Company approve this Agreement (the
recommendation referred to in this clause (iv) is referred to in this Agreement
as the "COMPANY RECOMMENDATION");
WHEREAS, the Board of Directors of Parent (i) has determined that
the Merger is in the best interests of Parent and its stockholders, (ii) has
approved and adopted this Agreement, the Merger and the other transactions
contemplated by this Agreement, (iii) has taken all corporate action necessary
to render the rights issuable under the Parent Stockholder Rights Agreement
inapplicable to this Agreement, the Merger and the other transactions
contemplated by this Agreement, and (iv) has determined to recommend that the
stockholders of Parent approve the issuance of Parent Common Stock pursuant to
the Merger as contemplated by this Agreement (the recommendation referred in
this clause (iv) is referred to in this Agreement as the "PARENT
RECOMMENDATION");
WHEREAS, (i) the Board of Directors of Merger Sub has (a) determined
that the Merger is in the best interests of Merger Sub and Parent, as its sole
stockholder, (b) approved, adopted and declared advisable this Agreement, (c)
approved the Merger and the other transactions contemplated by this Agreement,
and (d) has determined to recommend that Parent approve this Agreement and (ii)
Parent, as the sole stockholder of Merger Sub, will, immediately after the
execution and delivery hereof, approve, adopt and declare advisable this
Agreement, the Merger and the other transactions contemplated by this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Parent and Merger Sub to enter
into this Agreement, Parent, the
Company and certain shareholders of the Company listed on EXHIBIT B-1
(collectively, the "COMPANY SHAREHOLDERS") are entering into Voting Agreements
in the form of EXHIBIT B-2 (the "COMPANY VOTING AGREEMENTS") pursuant to which
the Company Shareholders have agreed, inter alia, to vote all of their shares of
Company Common Stock in favor of the approval of this Agreement and to take
certain other actions in connection with the transactions contemplated hereby in
accordance with the terms thereof;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the Company to enter into this
Agreement, the Company, Parent and the stockholders of Parent listed in EXHIBIT
B-3 (the "PARENT STOCKHOLDERS") are entering into Voting Agreements in the form
of EXHIBIT B-4 (the "PARENT VOTING AGREEMENTS") pursuant to which such Parent
Stockholders have agreed, inter alia, to vote all of their shares of Parent
Common Stock in favor of the issuance of Parent Common Stock pursuant to the
Merger and to take certain other actions in connection with the transactions
contemplated hereby in accordance with the terms thereof;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the parties hereto to enter into
this Agreement, Parent, the shareholders of the Company and the stockholder of
Parent listed on EXHIBIT C-1 are entering into Lock-Up Agreements in the form of
EXHIBIT C-2, in the case of such Company shareholders, and in the form of
EXHIBIT C-3, in the case of such Parent stockholder (collectively, the "LOCK-UP
AGREEMENTS") pursuant to which such Parent Stockholders have agreed to certain
restrictions on their ability to dispose of shares of Parent Common Stock
following the Closing and to certain other restrictions regarding the sale of
Parent Common Stock in connection with the transactions contemplated hereby; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Parent and Merger Sub to enter
into this Agreement (i) the Company and each of Medtronic, Inc., ComVest Venture
Partners, L.P. and such other individuals and entities as constitute "Requisite
Noteholders", as defined in the Company Note Agreement, have executed an
Amendment No. 4 to the Company Note Agreement in the form of EXHIBIT D (the
"COMPANY NOTE AGREEMENT AMENDMENT") and (ii) the Requisite Noteholders have
approved the transactions contemplated by this Agreement in accordance with the
provisions of the Company Note Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the parties hereto to enter into
this Agreement, certain officers and employees of the Company have agreed to
amend certain agreements concerning their employment with the Company, to be
effective upon the Closing; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the parties hereto to enter into
this Agreement, certain officers and employees of Parent have agreed to amend
certain agreements concerning their employment with Parent, to be effective upon
the Closing.
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AGREEMENT
The parties to this Agreement, intending to be legally bound, agree
as follows:
SECTION 1. THE MERGER
1.1 MERGER OF MERGER SUB INTO THE COMPANY.
Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time (as defined in Section 1.3), Merger Sub shall
be merged with and into the Company, and the separate corporate existence of
Merger Sub shall cease. The Company will continue as the surviving corporation
in the Merger (the "SURVIVING CORPORATION") and will be a wholly-owned
subsidiary of Parent.
1.2 EFFECT OF THE MERGER.
The Merger shall have the effects set forth in this Agreement and
the applicable provisions of the DGCL and the GBCC.
1.3 CLOSING; EFFECTIVE TIME.
The consummation of the Merger (the "CLOSING") shall take place at
the offices of Xxxxxx Xxxxxx White & XxXxxxxxx LLP, 000 Xxxxxxxxxxx Xxxx, Xxxxx
Xxxx, Xxxxxxxxxx at 10:00 a.m. on a date to be mutually agreed upon by Parent
and the Company (the "CLOSING DATE"), which date shall be no later than the
third (3rd) business day after the conditions set forth in Section 6 shall have
been satisfied or waived (other than those conditions that by their nature are
to be satisfied at the Closing, but subject to the satisfaction or waiver of
such conditions), or such other time as Parent and the Company shall mutually
agree. Subject to the provisions of this Agreement, the certificate of merger in
the form attached hereto as EXHIBIT E (the "DELAWARE CERTIFICATE OF MERGER") and
the certificate of merger in the form attached hereto as EXHIBIT F (the "GEORGIA
CERTIFICATE OF MERGER"), together with such other documents as may be required
by the relevant provision of the DGCL and the GBCC, shall be duly executed on
behalf of the Company and simultaneously with the Closing delivered to the
Secretary of State of the State of Delaware and the Secretary of State of the
State of Georgia, respectively, for filing. The Merger shall become effective as
of the date and time set forth in the Delaware Certificate of Merger and the
Georgia Certificate of Merger (the "EFFECTIVE TIME").
1.4 ARTICLES OF INCORPORATION AND BYLAWS.
(a) The articles of incorporation of the Surviving Corporation shall
be amended and restated in the Merger in the form attached hereto as EXHIBIT G
as set forth in the Georgia Certificate of Merger and the Delaware Certificate
of Merger.
(b) The bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time in the form attached hereto as EXHIBIT H.
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(c) The directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the respective individuals who are
the directors and officers of Merger Sub immediately prior to the Effective
Time.
1.5 CONVERSION OF SHARES IN THE MERGER.
(a) At the Effective Time, by virtue of the Merger and without any
further action on the part of Parent, Merger Sub, the Company or any shareholder
of the Company, subject to Section 1.5(b) and Section 1.5(c), each share of
Company Common Stock then issued and outstanding, other than Excluded Shares, if
any, shall be converted into the right to receive 0.4212 of a share (the
"EXCHANGE RATIO") of Parent Common Stock (together with any cash in lieu of
fractional shares of Parent Common Stock as set forth in Section 1.5(c), the
"MERGER CONSIDERATION").
(b) If, between the date of this Agreement and the Effective Time,
the outstanding shares of Company Common Stock or Parent Common Stock are
changed into a different number or class of shares by reason of any stock split,
stock dividend, reverse stock split, reclassification, recapitalization or other
similar transaction, including any such transaction with a record date between
the date of this Agreement and the Effective Time, then the Exchange Ratio shall
be appropriately adjusted to the extent the record date for any such event is
between the date of this Agreement and the Effective Time, so as to provide the
holders of Company Common Stock and Parent the same economic effect as
contemplated prior to such stock split, stock dividend, reverse stock split,
reclassification, recapitalization or other similar transaction.
(c) No fractional shares of Parent Common Stock shall be issued in
connection with the Merger, and no certificates or scrip for any such fractional
shares shall be issued. Any holder of Company Common Stock who would otherwise
be entitled to receive a fraction of a share of Parent Common Stock pursuant to
the Merger (after aggregating all fractional shares of Parent Common Stock
issuable to such holder) shall, in lieu of such fraction of a share and upon
surrender of such holder's Company Stock Certificate(s) (as defined in Section
1.6), be paid in cash the dollar amount (rounded to the nearest whole cent),
without interest, equal to the product obtained by multiplying (A) that fraction
of a share of Parent Common Stock to which such shareholder would otherwise be
entitled (after aggregating all fractional shares of Parent Common Stock
otherwise issuable to such holder) by (B) the closing sales price of one (1)
share of Parent Common Stock as reported on the Nasdaq (as reported in The Wall
Street Journal or, if not reported therein, any other authoritative source) on
the trading day immediately preceding the Effective Time.
(d) At the Effective Time, by virtue of the Merger and without any
further action on the part of Parent, Merger Sub, the Company or any stockholder
of Merger Sub, each share of Common Stock, par value $.001 per share, of Merger
Sub then issued and outstanding shall be converted into one validly issued,
fully paid and nonassessable share of common stock, par value $.001 per share,
of the Surviving Corporation and shall constitute the only outstanding shares of
capital stock of the Surviving Corporation.
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1.6 CLOSING OF THE COMPANY'S TRANSFER BOOKS.
At the Effective Time: (a) all shares of Company Common Stock
("SHARES") outstanding immediately prior to the Effective Time shall
automatically be canceled and shall cease to exist, each share of Company Common
Stock shall represent only the right to receive the Merger Consideration and all
holders of certificates representing Shares that were outstanding immediately
prior to the Effective Time shall cease to have any rights as shareholders of
the Company; and (b) the stock transfer books of the Company shall be closed
with respect to all Shares outstanding immediately prior to the Effective Time.
No further transfer of any such Shares shall be made on such stock transfer
books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any Shares (a "COMPANY STOCK CERTIFICATE")
is presented to the Exchange Agent (as defined in Section 1.7) or to the
Surviving Corporation or Parent, such Company Stock Certificate shall be
canceled and shall be exchanged as provided in this Section 1.
1.7 EXCHANGE OF CERTIFICATES.
(a) Prior to the Closing Date, Parent shall select a reputable bank
or trust company reasonably acceptable to the Company to act as exchange agent
in the Merger (the "EXCHANGE AGENT"). Within two (2) business days after the
Effective Time, Parent shall deposit with the Exchange Agent, for the benefit of
the holders of Shares, (i) certificates representing the shares of Parent Common
Stock issuable pursuant to this Section 1, and (ii) cash sufficient to make
payments in lieu of fractional shares in accordance with Section 1.5(c) (such
cash and shares of Parent Common Stock, together with any dividends or
distributions with respect thereto, being referred to as the "EXCHANGE FUND").
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent will mail to the record holders of Company Stock Certificates (i)
a letter of transmittal in customary form and containing such provisions as
Parent and the Company may reasonably specify (including a provision confirming
that delivery of Company Stock Certificates shall be effected, and risk of loss
and title to Company Stock Certificates shall pass, only upon delivery of such
Company Stock Certificates to the Exchange Agent), and (ii) instructions for use
in effecting the surrender of Company Stock Certificates in exchange for the
Merger Consideration. Upon surrender of a Company Stock Certificate to the
Exchange Agent for exchange, together with a duly executed letter of transmittal
and such other documents as may be reasonably required by the Exchange Agent or
Parent, (A) the holder of such Company Stock Certificate shall be entitled to
receive in exchange therefor the Merger Consideration, and (B) the Company Stock
Certificate so surrendered shall be immediately canceled. Until surrendered as
contemplated by this Section 1.7, each Company Stock Certificate shall be
deemed, from and after the Effective Time, to represent only the right to
receive the Merger Consideration and any distribution or dividend the record
date for which is after the Effective Time. If any Company Stock Certificate
shall have been lost, stolen or destroyed, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Company Stock Certificates the
Merger Consideration; provided, however, that Parent may, in its discretion and
as a condition precedent to the issuance of any certificate representing Parent
Common Stock, require the owner of such lost, stolen or destroyed Company Stock
Certificate to provide an appropriate affidavit and to deliver a bond (in such
reasonable sum as Parent may reasonably direct) as indemnity against
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any claim that may be made against the Exchange Agent, Parent or the Surviving
Corporation with respect to such Company Stock Certificate.
(c) No dividends or other distributions declared or made with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock that such holder has the right to
receive pursuant to the Merger until such holder surrenders such Company Stock
Certificate in accordance with this Section 1.7.
(d) Any portion of the Exchange Fund that remains undistributed to
holders of Company Stock Certificates as of the date one (1) year after the
Effective Time shall be delivered to Parent upon demand, and any holders of
Company Stock Certificates who have not theretofore surrendered their Company
Stock Certificates to the Exchange Agent in accordance with this Section 1.7
shall thereafter look only to Parent for satisfaction of their claims for the
Merger Consideration to which such holder is entitled pursuant hereto.
(e) Each of the Exchange Agent, Parent and the Surviving Corporation
shall be entitled to deduct and withhold from any consideration payable or
otherwise deliverable pursuant to this Agreement to any holder or former holder
of Company Common Stock such amounts as may be required to be deducted or
withheld therefrom under the Code or any provision of state, local or foreign
tax law or under any other applicable Legal Requirement. To the extent such
amounts are so deducted or withheld, such amounts shall be treated for all
purposes under this Agreement as having been paid to the Person to whom such
amounts would otherwise have been paid.
(f) Neither Parent nor the Surviving Corporation shall be liable to
any holder or former holder of Company Common Stock or to any other Person with
respect to any shares of Parent Common Stock (or dividends or distributions with
respect thereto), or for any cash amounts, properly delivered to any public
official in compliance with any applicable abandoned property law, escheat law
or similar Legal Requirement.
1.8 FURTHER ACTION.
If, at any time after the Effective Time, any further action is
determined by Parent to be necessary or desirable to carry out the purposes of
this Agreement or to vest the Surviving Corporation with full right, title and
possession of and to all rights and property of Merger Sub and the Company, the
officers and directors of the Surviving Corporation and Parent shall be fully
authorized (in the name of Merger Sub, in the name of the Company and otherwise)
to take such action. Parent, Merger Sub and Surviving Corporation also shall
take such further actions as may be necessary or desirable to ensure that the
Exchange Agent sends out the letters of transmittal to the shareholders of the
Company and issues certificates representing Parent Common Stock to such
shareholders in accordance with Section 1.7.
1.9 TAX CONSEQUENCES.
For federal income tax purposes, the Merger is intended to
constitute a reorganization within the meaning of Section 368 of the Code. The
parties to this Agreement
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hereby adopt this Agreement as a "PLAN OF REORGANIZATION" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in Company SEC Documents or the Disclosure
Letter delivered by the Company to Parent and Merger Sub prior to the execution
and delivery of this Agreement (the "COMPANY DISCLOSURE LETTER") and referred to
in the section of the Company Disclosure Letter corresponding to the section(s)
of this Section 2 to which such disclosure applies (unless it is reasonably
apparent that the disclosure or statement in one section of the Company
Disclosure Letter should apply to one or more sections thereof), the Company
hereby represents and warrants to Parent and Merger Sub as follows:
2.1 DUE ORGANIZATION; SUBSIDIARIES.
The Company is a corporation duly organized, validly existing and in
good standing under the Legal Requirements of the jurisdiction of its
incorporation, and each of the other Acquired Corporations which is a
"SIGNIFICANT SUBSIDIARY" (as defined in Regulation S-X) of the Company is a
corporation duly organized, validly existing and in good standing under the
Legal Requirements of the jurisdiction of its incorporation or formation. Each
of the Acquired Corporations has all necessary power and authority: (a) to
conduct its business in the manner in which its business is currently being
conducted; (b) to own and use its assets in the manner in which its assets are
currently owned and used; and (c) to perform its material obligations under all
Company Material Contracts. Each of the Acquired Corporations is qualified to do
business as a foreign corporation, and is in good standing, under the Legal
Requirements of all jurisdictions where the failure to be so qualified would
have a Material Adverse Effect on the Acquired Corporations. The Company has
delivered or made available to Parent accurate and complete copies of the
articles of incorporation, bylaws and other charter or organizational documents
of each of the Acquired Corporations, including all amendments thereto
(collectively, the "COMPANY ORGANIZATION DOCUMENTS"). The Company has no
Subsidiaries, except for the corporations identified in Schedule 2.1 of the
Company Disclosure Letter. The Company and each of its Subsidiaries identified
in Schedule 2.1 of the Company Disclosure Letter are collectively referred to
herein as the "ACQUIRED CORPORATIONS". None of the Acquired Corporations has any
equity interest or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any Entity,
other than the Acquired Corporations' interests in their Subsidiaries identified
in Schedule 2.1 of the Company Disclosure Letter.
2.2 AUTHORITY; BINDING NATURE OF AGREEMENT.
Subject to the receipt of the shareholder approval contemplated by
Section 5.2, the Company has all requisite corporate power and authority to
enter into and to perform its obligations under this Agreement. This Agreement
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to (a) Legal
Requirements of general application relating to bankruptcy, insolvency and the
relief of debtors, (b) rules of law governing specific performance, injunctive
relief and other equitable remedies and (c) the approval of shareholders of the
Company. The Company hereby
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represents that its Board of Directors, at a meeting duly called and held on or
prior to the date hereof, has by unanimous vote (with one abstention) (i)
determined that the Merger is in the best interests of the Company and its
shareholders, (ii) approved and adopted this Agreement, (iii) approved the
Merger and the other transactions contemplated by this Agreement, and (iv)
determined to make the Company Recommendation to the shareholders of the
Company.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock and 5,000,000 shares of Company
Preferred Stock. The Company has not authorized any other class of capital stock
other than the Company Common Stock and the Company Preferred Stock. As of May
11, 2004, 44,264,101 shares of Company Common Stock have been issued or are
outstanding and no shares of the Company Preferred Stock have been issued or are
outstanding. No shares of Company Common Stock are held in the Company's
treasury or held by any of the Company's Subsidiaries. All of the outstanding
shares of Company Common Stock have been duly authorized and validly issued, and
are fully paid and nonassessable. None of the outstanding shares of Company
Common Stock is entitled or subject to any preemptive right, right of
participation, right of maintenance or any similar right or subject to any right
of first refusal in favor of the Company. Except as set forth in Schedule 2.3(a)
of the Company Disclosure Letter, there is no Contract to which the Company is a
party and, to the Company's knowledge, there is no Contract between other
Persons, relating to the voting or registration of, or restricting any Person
from purchasing, selling, pledging or otherwise disposing of, any shares of
Company Common Stock other than the Company Voting Agreements and the Lock-Up
Agreements. None of the Acquired Corporations is under any obligation, or is
bound by any Contract pursuant to which it may become obligated, to repurchase,
redeem or otherwise acquire any outstanding shares of Company Common Stock.
(b) As of May 11, 2004, 6,000,000 shares of Company Common Stock are
reserved for issuance pursuant to stock options under the Company's 1998 Stock
Incentive Plan (as amended and together with all stock option agreements
evidencing grants thereunder, the "COMPANY STOCK OPTION PLAN"), of which options
to acquire 9,230,917 shares of Company Common Stock are outstanding. Stock
options granted by the Company pursuant to the Company Stock Option Plan, as
well as any stock options granted by the Company outside of the Company Stock
Option Plan, are referred to collectively herein as "COMPANY OPTIONS." Schedule
2.3(b) of the Company Disclosure Letter sets forth the following information
with respect to each Company Option outstanding as of May 11, 2004: (i) the
particular plan pursuant to which such Company Option was granted; (ii) the name
of the optionee; (iii) the number of shares of Company Common Stock subject to
such Company Option and the number of such shares that have been exercised; (iv)
the current exercise price of such Company Option; (v) the date on which such
Company Option was granted; (vi) the extent to which such Company Option is
vested and exercisable as of the date of this Agreement; (vii) the vesting
schedule of such Company Option including the anticipated acceleration of
vesting of Company Options as described in Section 2.3(b) and Schedule 2.3(b) of
the Company Disclosure Letter; (viii) the expiration date of the Company Option;
and (ix) the period of time following termination of employment during which the
Company Option may be exercised if not expired. The Company has delivered or
made available to Parent accurate and complete copies of all stock option plans
pursuant to which the Company has granted Company Options, and the forms of all
stock option
8
agreements evidencing such options. There have been no repricings of any Company
Options through amendments, cancellation and reissuance or other means during
the current or prior two (2) calendar years. Effective as of the Effective Time,
all Company Options outstanding as of the date hereof and as of immediately
prior to the Effective Time shall become exercisable and vested with respect to
100% of the shares underlying such Company Options, as described in Schedule
2.3(b) of the Company Disclosure Letter. Except as set forth in Schedule 2.3(b)
of the Company Disclosure Letter, none of the Company Options have been granted
in contemplation of the Merger or the transactions contemplated in this
Agreement.
(c) Schedule 2.3(c) of the Company Disclosure Letter sets forth the
following information with respect to each warrant of the Company outstanding as
of May 11, 2004 (each, a "COMPANY WARRANT"): (i) the aggregate number of
warrants outstanding; (ii) the expiration date; and (iii) the exercise price.
The terms of each Company Warrant do not prohibit the assumption of the Company
Warrants as provided in Section 5.4(d).
(d) Except as set forth in Section 2.3(a), Section 2.3(b) or Section
2.3(c) above or on Schedule 2.3(d) of the Company Disclosure Letter, there is
no: (i) outstanding subscription, option, call, warrant or right (whether or not
currently exercisable) to acquire any shares of the capital stock or other
securities of any of the Acquired Corporations; (ii) outstanding security,
instrument or obligation that is or may become convertible into or exchangeable
for any shares of the capital stock or other securities of any of the Acquired
Corporations; (iii) rights agreement, shareholder rights plan or similar plan
commonly referred to as a "POISON PILL"; or (iv) Contract under which any of the
Acquired Corporations are or may become obligated to sell or otherwise issue any
shares of its capital stock or any other securities ("COMPANY RIGHTS
AGREEMENTS") (items (i) through (iv) above, collectively, "COMPANY STOCK
RIGHTS").
(e) All outstanding shares of Company Common Stock, all outstanding
Company Options and all outstanding shares of capital stock of each Subsidiary
of the Company have been issued and granted in compliance in all material
respects with (i) all applicable securities laws and other applicable Legal
Requirements, and (ii) all requirements set forth in Contracts applicable to the
issuance of Company Common Stock, granting of Company Options and/or the
issuance of shares of capital stock of any Company Subsidiary. All of the
outstanding shares of capital stock of each of the Company's Subsidiaries have
been duly authorized and are validly issued, are fully paid and nonassessable
and, except as required by Legal Requirements applicable to each of the Acquired
Corporations which is formed or incorporated under the laws of a foreign
jurisdiction, are owned beneficially and of record by the Company, free and
clear of any Encumbrances. Schedule 2.3(e) of the Company Disclosure Letter sets
forth all entities (other than Subsidiaries) in which any of the Acquired
Corporations has any ownership interest and the amount of such interest.
2.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) All statements, reports, schedules, forms, exhibits and other
documents required to have been filed by the Company with the SEC since January
1, 1999 (the "COMPANY SEC DOCUMENTS") have been so filed. As of their respective
dates (or, if amended, supplemented or superseded by a filing prior to the date
of this Agreement, then on the date of such amendment, supplement or superseding
filing): (i) each of the Company SEC Documents
9
complied in all material respects with the applicable requirements of the
Securities Act or the Exchange Act (as the case may be); and (ii) none of the
Company SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The Company SEC Documents include all certifications and
statements required of it, if any, by (i) Rule 13a-14 or 15d-14 under the
Exchange Act, and (ii) 18 U.S.C. Section 1350 (Section 906 of the Xxxxxxxx-Xxxxx
Act of 2002), and each of such certifications and statements contain no
qualifications or exceptions to the matters certified therein other than a
knowledge qualification, permitted under such provision, and have not been
modified or withdrawn and neither the Company nor any of its officers has
received any notice from the SEC or any other Governmental Body questioning or
challenging the accuracy, completeness, form or manner of filing or submission
of such certifications or statements.
(c) The Company is in compliance in all material respects with all
of the provisions of the Xxxxxxxx-Xxxxx Act of 2002, and the provisions of the
Exchange Act and the Securities Act relating thereto, which under the terms of
such provisions (including the dates by which such compliance is required) have
become applicable to the Company.
(d) Except as amended in subsequent filings set forth on Schedule
2.4(d) of the Company Disclosure Letter, the financial statements (including
related notes, if any) contained in the Company SEC Documents (the "COMPANY
FINANCIAL STATEMENTS"): (i) complied as to form in all material respects with
the published rules and regulations of the SEC applicable thereto; (ii) were
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods covered
(except as may be indicated in the notes to such financial statements or, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC, and except
that the unaudited financial statements may not have contained footnotes and
were subject to normal and recurring year-end adjustments which were not, or are
not reasonably expected to be, individually or in the aggregate, material); and
(iii) fairly presented in all material respects the consolidated financial
position of the Company and its consolidated subsidiaries as of the respective
dates thereof and the consolidated results of operations and cash flows of the
Company and its consolidated subsidiaries for the periods covered thereby. For
purposes of this Agreement, "COMPANY BALANCE SHEET" means that consolidated
balance sheet of the Company and its consolidated subsidiaries as of December
31, 2003 set forth in the Company's Annual Report on Form 10-K filed with the
SEC on March 30, 2004, as amended by the Form 10-K/A filed by the Company with
the SEC on April 29, 2004 (the "COMPANY 10-K") and the "COMPANY BALANCE SHEET
DATE" means December 31, 2003.
2.5 ABSENCE OF CHANGES.
(a) Since the Company Balance Sheet Date,
(i) none of the Acquired Corporations has made any material
changes in its pricing polices or payment or credit practices or failed to pay
any creditor any material amount owed to such creditor when due or granted any
extensions or credit other than in the ordinary course of business consistent
with prior practice;
10
(ii) none of the Acquired Corporations has terminated or
closed any material facility, business or operation;
(iii) none of the Acquired Corporations has written up or
written down any of its material assets; and
(iv) there has been no material loss, destruction or damage to
any item of property of the Acquired Corporations, whether or not insured.
(b) Except as set forth in Schedule 2.5(b) of the Company Disclosure
Letter, since the Company Balance Sheet Date and through the date of this
Agreement:
(i) there has not been any event that has had a Material
Adverse Effect on the Acquired Corporations, and no fact, event, circumstance or
condition exists or has occurred that could reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations;
(ii) each of the Acquired Corporations has operated its
respective business in the ordinary course consistent with prior practice;
(iii) none of the Acquired Corporations has (A) declared,
accrued, set aside or paid any dividend or made any other distribution in
respect of any shares of capital stock; (B) repurchased, redeemed or otherwise
reacquired any shares of capital stock or other securities; (C) made any capital
expenditure which, when added to all other capital expenditures made on behalf
of the Acquired Corporations since the Company Balance Sheet Date, exceeds
$350,000, in the aggregate; (D) made any material Tax election; (E) settled any
Legal Proceedings involving amounts in excess of $25,000; or (F) entered into or
consummated any transactions with any affiliate;
(iv) none of the Acquired Corporations has (A) sold or
otherwise disposed of, or acquired, leased, licensed, waived or relinquished any
material right or other material asset to, from or for the benefit of, any other
Person except for rights or other assets sold, disposed of, acquired, leased,
licensed, waived or relinquished in the ordinary course of business consistent
with prior practice; (B) mortgaged, pledged or subjected to any Encumbrance any
of their respective property, business or assets; (C) entered into or amended
any lease of real property (whether as lessor or lessee); or (D) canceled or
compromised any debt or claim other than accounts receivable in the ordinary
course of business consistent with prior practice;
(v) except for the anticipated acceleration of vesting of
outstanding Company Options as described in Section 2.3(b) and Schedule 2.3(b)
of the Company Disclosure Letter, none of the Acquired Corporations has (A)
amended or waived any of its material rights under, or permitted the
acceleration of vesting under any provision of any agreement or Company Stock
Option Plan evidencing any outstanding Company Option; (B) caused or permitted
any Company Employee Plan to be amended in any material respect; or (C) paid any
bonus or made any profit-sharing or similar payment to, or materially increased
the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
consultants;
11
(vi) there has been no material labor dispute (including any
work slowdown, stoppage or strike) involving the Acquired Corporations;
(vii) none of the Acquired Corporations has made any change in
its methods of accounting or accounting practices;
(viii) none of the Acquired Corporations has made any loan,
advance or capital contributions to, or any other investment in, any Person;
(ix) none of the Acquired Corporations has terminated or
amended, or suffered a termination of, any Company Material Contract;
(x) none of the Acquired Corporations has entered into any
contractual obligation to do any of the things referred to elsewhere in this
Section 2.5; and
(xi) there has been no material development in any Legal
Proceeding described in a Company SEC Document that has not been disclosed under
the caption "Legal Proceedings" in the Company 10-K.
2.6 PROPRIETARY ASSETS.
(a) Schedule 2.6(a) of the Company Disclosure Letter sets forth as
of the date of this Agreement (i) all U.S. and foreign patents, patent
applications, registered trademarks, unregistered trademarks, trademark
applications, copyright registrations and copyright applications, Internet
domain names, computer software (other than third party software generally
available for sale to the public) and fictitious name and assumed name
registrations owned by any of the Acquired Corporations, (ii) all patent
applications and other Proprietary Assets that are currently in the name of
inventors or other Persons and for which an Acquired Corporation has the right
to receive an assignment and (iii) all material third party licenses for
Proprietary Assets to which an Acquired Corporation is the licensee party and
which are not set forth on Schedule 2.7(a)(iii) of the Company Disclosure
Letter. Each Acquired Corporation has good, valid and marketable title to, or
has a valid right to use, license or otherwise exploit, all of the material
Acquired Corporation Proprietary Assets necessary for the conduct of such
Acquired Corporation's business as presently conducted, free and clear of all
Encumbrances. None of the Acquired Corporations has developed jointly with any
other Person any material Acquired Corporation Proprietary Asset with respect to
which such other Person has any rights. Other than Contracts entered into in the
ordinary course of business consistent with prior practice that are not, with
respect to any individual Contract, material to the Acquired Corporations, there
is no Acquired Corporation Contract pursuant to which any Person has any right
(whether or not currently exercisable) to use, license or otherwise exploit any
Acquired Corporation Proprietary Asset owned or exclusively licensed by any of
the Acquired Corporations.
(b) (i) To the Company's knowledge, all Acquired Corporation
Proprietary Assets owned by any of the Acquired Corporations are valid,
enforceable, subsisting and in effect; (ii) to the Company's knowledge none of
the Acquired Corporation Proprietary Assets and no Proprietary Asset that is
currently being developed or reduced to practice or which is the subject of a
current invention disclosure by any of the Acquired Corporations (either by
itself or with any other Person) infringes, misappropriates or conflicts with
any Proprietary Asset owned or
12
used by any other Person; (iii) to the Company's knowledge, none of the products
or services that is or has been designed, created, developed, assembled,
performed, manufactured, sold, marketed or licensed by any of the Acquired
Corporations is infringing, misappropriating or making any unlawful or
unauthorized use of any Proprietary Asset owned or used by any other Person,
and, to the Company's knowledge, none of such products or services has at any
time infringed, misappropriated or made any unlawful or unauthorized use of, and
none of the Acquired Corporations has received any written notice of any actual,
alleged, possible or potential infringement, misappropriation or unlawful or
unauthorized use of, any Proprietary Asset owned or used by any other Person;
(iv) to the Company's knowledge, the operation of the business of each Acquired
Corporation as it currently is conducted does not and will not when conducted by
the Surviving Corporation in substantially the same manner following the
Closing, infringe or misappropriate or make any unlawful or unauthorized use of
any Proprietary Asset of any other Person; and (v) to the Company's knowledge,
no other Person is infringing, misappropriating or making any unlawful or
unauthorized use of, and no Proprietary Asset owned or used by any other Person
infringes or conflicts with, any material Acquired Corporation Proprietary
Asset. The Acquired Corporation Proprietary Assets constitute all the material
Proprietary Assets necessary to enable each of the Acquired Corporations to
conduct its business in the manner in which such business is being conducted.
Upon the consummation of the Merger, the Surviving Corporation shall have good,
valid, and enforceable title, or license (if the applicable Acquired
Corporations Proprietary Asset is licensed to an Acquired Corporation) to all
material Acquired Corporation Proprietary Assets, free and clear of all
Encumbrances and on, and subject to, the same terms and conditions as in effect
immediately prior to the Closing. None of the Acquired Corporations has entered
into any covenant not to compete or any Contract limiting its ability to exploit
fully any Acquired Corporation Proprietary Assets owned or licensed by such
Acquired Corporation or to transact business in any market or geographical area
or with any Person.
(c) Each Acquired Corporation has taken all reasonable steps that
are required to protect such Acquired Corporation's rights in confidential
information and trade secrets of the Acquired Corporation or provided by any
other Person to the Acquired Corporation. Set forth on Schedule 2.6(c) of the
Company Disclosure Letter is a list of each employee, consultant and contractor
of the Acquired Corporations that has executed a proprietary information and
confidentiality agreement substantially in the form previously made available to
Parent and described on Schedule 2.6(c) of the Company Disclosure Letter.
2.7 CONTRACTS.
(a) For purposes of this Agreement, each of the following shall be
deemed to constitute a "COMPANY MATERIAL CONTRACT", which Company Material
Contracts and all amendments thereto, in each case as of the date of this
Agreement are listed on Schedule 2.7 of the Company Disclosure Letter and copies
of which have been made been made available to Parent:
(i) any Acquired Corporation Contract that is required by the
rules and regulations of the SEC to be filed as an exhibit to the Company SEC
Documents;
13
(ii) any Acquired Corporation Contract relating to (A) the
employment of any employee or the services of any independent contractor or
consultant and pursuant to which any of the Acquired Corporations is or may
become obligated to make any severance or termination payment in excess of
$50,000 or (B) any bonus, relocation or other payment in excess of a material
amount to any current or former employee, independent contractor, consultant,
officer or director (other than payments, in the case of (A) and (B) above, in
respect of salary or pursuant to standard severance policies, existing bonus
plans or standard relocation policies of the Company which are listed on
Schedule 2.7(a) or Schedule 2.12(a) of the Company Disclosure Letter);
(iii) any Acquired Corporation Contract relating to the
acquisition, transfer, development, sharing or license of any material
Proprietary Asset (except for any Acquired Corporation Contract pursuant to
which (A) any material Proprietary Asset is licensed to the Acquired
Corporations under any third party software license generally available for sale
to the public, or (B) any material Proprietary Asset is licensed by any of the
Acquired Corporations to any customer in connection with the sale of any product
in the ordinary course of business consistent with prior practice);
(iv) any Acquired Corporation Contract with any officer,
director or affiliate of the Company;
(v) any Acquired Corporation Contract creating or relating to
any partnership or joint venture or any sharing of revenues, profits, losses,
costs or liabilities, under which an Acquired Corporation has continuing
material obligations;
(vi) any Acquired Corporation Contract that involves the
payment or expenditure by an Acquired Corporation in excess of $50,000 that may
not be terminated by such Acquired Corporation (without penalty) within sixty
(60) days after the delivery of a termination notice by the applicable Acquired
Corporation;
(vii) any Acquired Corporation Contract contemplating or
involving the payment or delivery of cash or other consideration to an Acquired
Corporation in excess of $50,000;
(viii) any Acquired Corporation Contract imposing any
restriction on the right or ability of any Acquired Corporation to (A) compete
with any other Person, (B) acquire any material product or other material asset
or any services from any other Person, sell any material product or other
material asset to or perform any services for any other Person or transact
business or deal in any other manner with any other Person, or (C) develop or
distribute any material technology; and
(ix) any other Acquired Corporation Contract, if a breach of
such Acquired Corporation Contract could reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations.
(b) Each Company Material Contract is valid and in full force and
effect, and is enforceable in accordance with its terms subject to (A) Legal
Requirements of general application relating to bankruptcy, insolvency and the
relief of debtors, and (B) rules of law
14
governing specific performance, injunctive relief and other equitable remedies,
except to the extent they have expired in accordance with their terms and except
where the failure to be in full force and effect, individually or in the
aggregate, would not reasonably be expected to be material to the Acquired
Corporations. The Company has delivered to or made available to Parent true and
complete copies of each Company Material Contract, except in the case of a
Company Material Contract which is derived from a standard form agreement of the
Acquired Corporations, the Company has delivered to or made available to Parent
a form or forms of such agreement. In each case where a Company Material
Contract is derived from a standard form agreement, all of the terms, conditions
and provisions of such Company Material Contract are substantially similar with
respect to material terms to the form agreement from which such agreement
derived.
(c) None of the Acquired Corporations has materially violated or
breached, or committed any material default under, any Company Material
Contract. To the Company's knowledge, no other Person has materially violated or
breached, or committed any material default under, any Company Material
Contract.
(d) To the Company's knowledge, no event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time)
could reasonably be expected to (i) result in a material violation or breach of
any provision of any Company Material Contract by any of the Acquired
Corporations; (ii) give any Person the right to declare a material default or
exercise any remedy under any Company Material Contract; (iii) give any Person
the right to accelerate the maturity or performance of any Company Material
Contract; or (iv) give any Person the right to cancel or terminate, or modify in
any material respect, any Company Material Contract
2.8 LIABILITIES.
Except as disclosed in Company SEC Documents, since the Company
Balance Sheet Date, none of the Acquired Corporations has any accrued,
contingent or other liabilities of any nature, either matured or unmatured
(whether due or to become due) required to be reflected in financial statements
prepared in accordance with GAAP, except for: (a) liabilities that are reflected
in the "LIABILITIES" column of the Company Balance Sheet and the notes thereto,
(b) normal and recurring liabilities that have been incurred by the Acquired
Corporations since the Company Balance Sheet Date in the ordinary course of
business consistent with prior practice, and (c) liabilities incurred in
connection with the transactions contemplated by this Agreement.
2.9 COMPLIANCE WITH LEGAL REQUIREMENTS; FDA MATTERS.
(a) Each of the Acquired Corporations is in compliance in all
material respects with all applicable Legal Requirements. Except as disclosed in
the Company 10-K, within the past three (3) years none of the Acquired
Corporations has received any written notice or, to the Company's knowledge,
other communication from any Governmental Body regarding any actual or possible
material violation of, or failure to comply in any material respect with, any
Legal Requirement.
15
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Acquired Corporations, each of the Acquired
Corporations is in possession of all franchises, grants, authorizations,
licenses, establishment registrations, product listings, permits, easements,
variances, exceptions, consents, certificates, approvals and orders of any
Government Body, including the United States Food and Drug Administration (the
"FDA") and similar authorities in the U.S. and non-U.S. jurisdictions necessary
for each Acquired Corporation to own, lease and operate its properties or to
develop, produce, store, distribute, promote and sell its products or otherwise
to carry on its business as it is now being conducted (the "COMPANY PERMITS"),
and, as of the date of this Agreement, no suspension or cancellation of any of
the Company Permits is pending or, to the knowledge of the Company, threatened,
except where the failure to have, or the suspension or cancellation of, any of
the Company Permits would not, individually or in the aggregate, have a Material
Adverse Effect on the Acquired Corporations. Except for conflicts, defaults or
violations which, individually or in the aggregate, would not have a Material
Adverse Effect on the Acquired Corporations, no Acquired Corporation is in
conflict with, or in violation or default of, (i) any law applicable to such
Acquired Corporation or by which any property, asset, operation, or product of
an Acquired Corporation is bound or affected, including the Federal Food, Drug
and Cosmetic Act (the "FDCA"), the Comprehensive Drug Abuse Prevention and
Control Act of 1970 (the "CDAPCA"), the Controlled Substance Act (the "CSA") and
Medicare, Medicaid, and Anti-Kickback Statutes, HIPAA, the Federal False Claims
Act, or any other similar act or law or (ii) any Company Permit.
(c) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on the Acquired Corporations:
(i) all manufacturing operations of the Acquired Corporations
are being conducted in substantial compliance with applicable good manufacturing
practices;
(ii) all necessary clearances or approvals from governmental
agencies for all device products which are manufactured or sold by the Acquired
Corporations have been obtained, and each Acquired Corporation is in substantial
compliance with the most current form of each applicable clearance, approval, or
regulatory standards applicable to devices for which no clearance or approval is
required, with respect to the development, production, storage, distribution,
promotion and sale by the such Acquired Corporation of such products;
(iii) all of the clinical studies which have been, or are
being conducted by or for the Acquired Corporations, are being conducted in
substantial compliance with generally accepted good clinical practices and all
applicable government regulatory, statutory and other requirements;
(iv) to the knowledge of the Company, none of its respective
officers, employees or agents (during the term of such person's employment by
any Acquired Corporation or while acting as an agent of an Acquired Corporation)
has made any untrue statement of a material fact or fraudulent statement to the
FDA or any governmental agency (including non-U.S. regulatory agencies), failed
to disclose a material fact required to be disclosed to the FDA or similar
governmental agency (including non-U.S. regulatory agencies), or to the
knowledge of the Company, committed an act, made a statement or failed to make a
statement that could reasonably be expected to provide a basis for the FDA or
similar governmental agency
16
(including non-U.S. regulatory agencies) to invoke its Application Integrity
Policy or similar governmental policy or regulation (including non-U.S. policies
or regulations);
(v) to the knowledge of the Company, except as disclosed in
the Company 10-K, no Acquired Corporation has received any written notice within
the past three (3) years that the FDA or any similar governmental agency
(including non-U.S. regulatory agencies) has commenced, or threatened to
initiate, any action to withdraw its clearance or approval, or to request the
recall of, any product of an Acquired Corporation, or commenced, or overtly
threatened to initiate, any action to enjoin production at any facility of an
Acquired Corporation;
(vi) to the knowledge of the Company, as to each medical
device, drug, biologic or other article manufactured and/or distributed by an
Acquired Corporation, such article is not adulterated or misbranded within the
meaning of the FDCA or any similar governmental act or law of any jurisdiction
(including non-U.S. jurisdictions); and
(vii) to the knowledge of the Company, none of the officers or
employees of the Acquired Corporations (during the term of such person's
employment by an Acquired Corporation or while acting as an agent of an Acquired
Corporation), subsidiaries or affiliates was subject to an FDA debarment order,
nor have any such persons been convicted of any crime or engaged in any conduct
for which debarment or similar punishment is mandated or permitted by any
applicable law.
(d) As to each product subject to the jurisdiction of the FDA under
the FDCA which is developed, manufactured, tested, distributed, held and/or
marketed by the Acquired Corporations, to the knowledge of the Company such
product is being developed, manufactured, held and distributed in substantial
compliance with all applicable requirements under the FDCA, if applicable,
including such requirements relating to investigational use, pre-market
clearance, registration and listing, good manufacturing practices, labeling,
advertising, record keeping, filing of reports and security, except for such
non-compliance which, individually or in the aggregate, would not have a
Material Adverse Effect on the Acquired Corporations.
(e) To the knowledge of the Company, each Acquired Corporation has,
prior to the execution of this Agreement, provided to Parent copies of or made
available for Parent's review any and all documents in its possession material
to assessing the Acquired Corporation's compliance with the FDCA and
implementing regulations for the prior three (3) years, including copies in its
possession of (i) all FDA Inspection Reports (Form 483) and all correspondence
between the Acquired Corporations and the FDA relating to each such Form 483,
Warning Letters and company responses issued during the last three (3) years;
(ii) all audit reports performed during the last three (3) years, whether
performed by the Acquired Corporations or an outside consultant; (iii) any
material document (prepared by the Acquired Corporations) concerning any
material oral or written communication received from the FDA or any other
governmental department or agency during the last three (3) years; (iv) any
administrative or judicial order, ruling, consent decree or agreement issued or
entered into during the last three (3) years in which an Acquired Corporation or
its respective predecessor companies were a named party; or (v) any recall
notice or order and all company responses relating to any product of the
Acquired Corporations.
17
(f) Schedule 2.9(f) of the Company Disclosure Letter sets forth a
complete and accurate list of (i) medical devices, drugs, biologics, or other
articles manufactured or distributed by the Acquired Corporations and listed or
registered with the FDA or similar U.S. or non-governmental agency, (ii) each
clinical trial protocol submitted by the Acquired Corporations to the FDA or
similar U.S. or non-U.S. governmental agency, (iii) each Pre-Market Approval
application (PMA) or Pre-Market Notification (510(k)) and any amendments or
supplements thereto filed by the Acquired Corporations pursuant to the FDCA, or
any non-US. equivalents, (iv) each New Drug Application (NDA) or Biologic
License Application (BLA) filed by the Acquired Corporations pursuant to the
FDCA or the Public Health Service Act, as amended, or any non-U.S. equivalents.
(g) (i) Each of the Acquired Corporations is in compliance, to the
extent applicable, with any HIPAA Privacy Rule obligations, and the transactions
contemplated by this Agreement are in accordance with, and will not violate or
result in the violation of, HIPAA by the Acquired Corporations; (ii) no Acquired
Corporation has received any communication or inquiry (whether written or oral)
from the Department of Health and Human Services, the Federal Trade Commission,
or any other Governmental Body regarding its failure to comply, in any material
respect with one or more of HIPAA's provisions (other than an industry-wide
communication not specifically targeted to any Acquired Corporation); (iii) no
certification organization has concluded or stated that any Acquired Corporation
has failed or may fail to comply with HIPAA or any requirement or element
thereof, including one or more of the HIPAA electronic transaction standards;
and (iv) no Acquired Corporation has received any communication (whether written
or oral) from any individual, customer, or trading partner regarding its failure
to comply in any material respect with one or more of HIPAA's provisions.
(h) No Acquired Corporation is engaged in any activity, whether
alone or in concert with one or more of its customers, which would constitute a
violation of any Legal Requirement (including (i) federal fraud and abuse or
similar laws pertaining to Medicare, Medicaid or any other federal health or
insurance program; (ii) state laws pertaining to Medicaid or any other state
health or insurance programs; (iii) state or federal laws pertaining to xxxxxxxx
to insurance companies, health maintenance organizations, and other managed care
plans or insurance fraud; and (iv) federal and state laws relating to collection
agencies (in the performance of collection services) prohibiting fraudulent,
abusive or unlawful practices connected in any way with the provisions of health
care services, the billing for such services provided to a beneficiary of any
state, federal or private health or insurance program or credit collection
services, except for violations that could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Acquired Corporations. Without limiting the generality of the foregoing, no
Acquired Corporation has directly or indirectly, knowingly and willfully paid,
offered to pay or agreed to pay, or solicited or received, any fee, commission,
sum of money, property or other remuneration to or from any person which is or
may be illegal under 42 U.S.C. Section 1320a-7b(b) or any similar state law.
(i) No Acquired Corporation nor, to the knowledge of the Company,
any of the Acquired Corporations' respective officers, directors, employees or
agents (as those terms are defined under 42 C.F.R. 1001.1001): (i) has had a
civil monetary penalty assessed against him, her or it, as the case may be,
under Section 1128A of the Social Security Act or any regulations promulgated
thereunder; (ii) has been debarred, excluded or suspended from participation
under
18
the Medicare program, Medicaid program or any other federal or state health
program or any regulations promulgated thereunder; or (iii) has been charged
with convicted of any criminal offense relating to the delivery of any item or
service under Medicare, Medicaid, or other federal or state health program.
2.10 GOVERNMENTAL AUTHORIZATIONS.
Each of the Acquired Corporations holds all Governmental
Authorizations necessary to enable such Acquired Corporation to conduct its
business in the manner in which such business is currently being conducted
except where the failure to hold such Governmental Authorizations would not be
reasonably likely to have a Material Adverse Effect on the Acquired
Corporations. All such Governmental Authorizations are valid and in full force
and effect. Each Acquired Corporation is in compliance in all material respects
with the terms and requirements of such Governmental Authorizations. None of the
Acquired Corporations has received any notice or other communication from any
Governmental Body regarding (a) any actual or possible violation of or failure
to comply in any material respect with any term or requirement of any
Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization.
2.11 TAX MATTERS.
(a) The Acquired Corporations have paid or properly reserved for all
Taxes, due and payable by any of them for or with respect to all periods up to
and including the date hereof (without regard to whether or not such Taxes are
or were disputed), whether or not shown on any Tax Return.
(b) Each of the Acquired Corporations has filed on a timely basis
(taking into account any extensions of time an Acquired Corporation was granted)
all material Tax Returns that it was required to file. None of the Acquired
Corporations is currently the beneficiary of any extension of time within which
to file any Tax Return. No claim that has not been resolved has ever been made
to an Acquired Corporation by an authority in a jurisdiction where the Acquired
Corporations do not file Tax Returns that any one of them is or may be subject
to taxation by that jurisdiction. None of the Acquired Corporations has given
any currently effective waiver of any statute of limitations in respect of Taxes
or agreed to any currently effective extension of time with respect to a Tax
assessment or deficiency. There are no security interests on any of the assets
of any of the Acquired Corporations that arose in connection with any failure
(or alleged failure) to pay any Tax (other than liens for Taxes not yet due and
payable).
(c) The Acquired Corporations have withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, shareholder or other third
party.
(d) None of the Acquired Corporations, including any director,
officer or employee responsible for tax matters of the Acquired Corporations is
aware of any facts or circumstances which would give rise to a likelihood that
any relevant taxing authority may assess any additional Taxes for any period for
which Tax Returns have been filed. There is no dispute or claim concerning any
liability for Taxes of the Acquired Corporations either (i) claimed or
19
raised by any authority in writing or (ii) as to which such Acquired Corporation
has knowledge based upon personal contact with any agent of such authority.
Schedule 2.11(d) to the Company Disclosure Letter sets forth as of the date of
this Agreement a complete and accurate list of current open audits of Tax
Returns filed by or on behalf of the Acquired Corporations with any Governmental
Body.
(e) The unpaid Taxes of the Acquired Corporations (i) did not, as of
the date of the most recent Company Financial Statements, exceed the reserve for
Tax Liability (as opposed to any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth in the Company
Balance Sheet and (ii) will not exceed that reserve as adjusted for the passage
of time through the Closing Date in accordance with the past custom and practice
of the Acquired Corporations in filing their Tax Returns.
(f) None of the Acquired Corporations is a party to any Tax
allocation or sharing agreement. None of the Acquired Corporations has made any
distribution of any "CONTROLLED CORPORATION" as that term is defined in Section
355(a)(1) of the Code. None of the Acquired Corporations (i) has been a member
of an "AFFILIATED GROUP," as defined in Section 1504(a) of the Code, filing a
consolidated federal income Tax Return other than an affiliated group the common
parent of which is the Company or (ii) has any Liability for the Taxes of any
Person (other than any of the Acquired Corporations) under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract or otherwise.
(g) None of the Acquired Corporations has filed a consent under
Section 341(f) of the Code concerning collapsible corporations. None of the
Acquired Corporations will be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period or
portion thereof ending after the Closing Date as a result of any (i) change in
method of accounting for a taxable period ending on or prior to the Closing Date
under Section 481 of the Code, (ii) closing agreement as described in Section
7121 of the Code executed on or prior to the Closing Date, (iii) deferred
intercompany gain or any excess loss account described in regulations under
Section 1502 of the Code or (iv) installment sale or open transaction
disposition made on or prior to the Closing Date.
(h) The Company is not a U.S. real property holding corporation
within the meaning of Code Section 897(c)(2).
(i) The Company has made available to Parent or its legal or
accounting representative copies of (i) all foreign, federal and state income
tax Returns for the Company and each of its subsidiaries filed for all periods
including and after the period ended December 31, 2001, and (ii) the sales and
use tax return for the Company for the State of Georgia for the period ending
December 31, 2003.
(j) Neither the Company nor any affiliate of the Company has taken
or agreed to take any action or knows of any fact or circumstance that is
reasonably likely to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
20
2.12 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Schedule 2.12(a) of the Company Disclosure Letter lists as of
the date of this Agreement (i) all employee pension benefit plans (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), (ii) all employee welfare benefit plans (as defined in Section 3(1)
of ERISA), (iii) all other pension, bonus, commission, stock option, stock
purchase, incentive, deferred compensation, supplemental retirement, severance,
fringe benefits and other similar benefit plans (including any fringe benefit
under Section 132 of the Code and any foreign plans), programs, Contracts,
arrangements or policies (including a specific identification of those which
contain change of control provisions or pending change of control provisions),
and (iv) any employment, executive compensation or severance agreements
(including a specific identification of those which contain change of control
provisions or pending change of control provisions), whether written or
otherwise, as amended, modified or supplemented, of any Acquired Corporation or
any other Entity (whether or not incorporated) which is a member of a controlled
group which includes any of the Acquired Corporations or which is under common
control with any of the Acquired Corporations within the meaning of Sections
414(b), (c), (m) or (o) of the Code or Section 4001(a) (14) or (b) of ERISA
(each a "COMPANY ERISA AFFILIATE") for the benefit of, or relating to, any
former or current employee, independent contractor, officer or director (or any
of their beneficiaries) of any Acquired Corporation or any other Company ERISA
Affiliate (all such plans, programs, Contracts, agreements, arrangements or
policies as described in this Section 2.12(a) shall be collectively referred to
as the "COMPANY EMPLOYEE PLANS"). The Company has made available to Parent, in a
reasonable time, place and manner, true and complete copies of (i) each such
written Company Employee Plan (or a written description of any Company Employee
Plan which is not written) and all related trust agreements, insurance and other
contracts (including policies), summary plan descriptions, summaries of material
modifications, registration statements (including all attachments), prospectuses
and communications distributed to plan participants, (ii) the three most recent
annual reports on Form 5500 series, with accompanying schedules and attachments
(including accountants' opinions, if applicable), filed with respect to each
Company Employee Plan required to make such a filing, (iii) the most recent
actuarial valuation for each Company Employee Plan subject to Title IV of ERISA,
(iv) the most recent favorable determination letters issued for each Company
Employee Plan and related trust which is intended to be qualified under Section
401(a) of the Code (and, if an application for such determination is pending, a
copy of the application for such determination), and (v) financial and other
information regarding current and projected liabilities, if any, with respect to
each Company Employee Plan for which the filings described in (ii) or (iii)
above are not required under ERISA.
(b) (i) None of the Company Employee Plans promises or provides
post-termination or retiree medical or other post-termination or retiree welfare
benefits to any person (other than continuation coverage to the extent required
by law, whether pursuant to the Consolidated Omnibus Budget Reconciliation Act
of 1985 or otherwise); (ii) none of the Company Employee Plans is a "MULTIPLE
EMPLOYER WELFARE ARRANGEMENT" (as defined in Section 3(40) of ERISA), a
"MULTIPLE EMPLOYER PLAN" (as defined in Section 413(c) of the Code), or a
"MULTIEMPLOYER PLAN" (as defined in Section 3(37) of ERISA), and neither the
Acquired Corporations nor any Company ERISA Affiliate has ever contributed to,
been required to contribute to, or otherwise had any obligation or liability in
connection with a Multiple
21
Employer Plan or a Multiemployer Plan; (iii) no party in interest or
disqualified person (as defined in Section 3(14) of ERISA and Section 4975 of
the Code, respectively) has at any time engaged in a transaction with respect to
any Company Employee Plan which could subject any of the Acquired Corporations,
directly or indirectly, to any material tax, material penalty or other material
liability for prohibited transactions under ERISA or Section 4975 of the Code;
(iv) no fiduciary of any Company Employee Plan has breached any of the
responsibilities or obligations imposed upon fiduciaries under Title I of ERISA
which shall subject any of the Acquired Corporations, directly or indirectly, to
any material penalty or liability for breach of fiduciary duty; (v) all Company
Employee Plans have been established, maintained and operated in accordance with
their terms and have been established, maintained and operated in substantial
compliance with all applicable Legal Requirements; (vi) all Company Employee
Plans may by their terms be amended and/or terminated at any time without the
consent of any other Person subject to applicable Legal Requirements and the
terms of each Company Employee Plan; (vii) each of the Acquired Corporations has
performed all obligations required to be performed by them under, and are not in
any respect in default under or in violation of, the terms and conditions of any
Company Employee Plan; (viii) none of the Acquired Corporations has any
knowledge of any default or violation by any other Person with respect to any of
the Company Employee Plans; (ix) each Company Employee Plan which is intended to
be qualified under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code is the subject of a favorable determination
letter from the Internal Revenue Service as to its qualified status under
Section 401(a) of the Code (or comparable letter, such as an opinion or
notification letter as to the form of plan adopted by one or more Acquired
Corporations), or has time remaining under applicable Treasury guidance to seek
such a determination, and to the Company's knowledge nothing has occurred prior
to or since the issuance of such letter (or could reasonably be expected to
occur) which might impair such favorable determination or otherwise impair the
qualified status of such plan; (x) no Acquired Corporation is currently subject
to any penalty or tax with respect to any Company Employee Plan under Section
502(i) of ERISA or 4975 through 4980F of the Code or has any outstanding
liability for any penalty or tax which is not otherwise reserved for or
reflected in the Company Financial Statements; (xi) all material contributions
required to be made or reserved, and all material premiums required to be paid
by the Acquired Corporations, as appropriate, with respect to any Company
Employee Plan pursuant to the terms of the Company Employee Plan, any Legal
Requirements or any collective bargaining agreement, have been made, paid or
reserved on or before their due dates (including any extensions thereof); (xii)
all Company Employee Plans are either fully insured or funded by a related
trust, and for each Company Employee Plan that is funded by a related trust, the
fair market value of the assets of the related trust are at least equal to the
liabilities of such Company Employee Plan; (xiii) there are no audits, inquiries
or proceedings pending or threatened by the Internal Revenue Service or the
Department of Labor with respect to any Company Employee Plan; and (xiv) no
Company Employee Plan other than a Company Employee Plan intended to qualify
under Section 401(a) of the Code provides for post-employment or retiree
benefits.
(c) None of the Acquired Corporations or any other Company ERISA
Affiliate currently maintains, sponsors or participates in, or within the last
five years has maintained, sponsored or participated in, or has any liability,
contingent or otherwise, to, any "EMPLOYEE BENEFIT PLAN" (as defined in Section
3(3) of ERISA) that is subject to Section 412 of the Code or Title IV of ERISA.
22
(d) Except for the anticipated acceleration of vesting of Company
Options as described in Section 2.3(b) and Schedule 2.3(b) of the Company
Disclosure Letter and as otherwise provided in this Agreement, the consummation
of the transactions contemplated by this Agreement will not (either solely as a
result thereof or as a result of such transactions in conjunction with another
event) cause or result in an increase in the amount of compensation or benefits
or timing of payment of any benefits or compensation payable in respect of any
former or current employee, independent contractor or consultant (or any of
their beneficiaries) of any of the Acquired Corporations.
(e) There are no Legal Proceedings pending or, to the knowledge of
the Company, threatened in respect of or relating to any Company Employee Plan.
To the Company's knowledge, there are no facts or circumstances which could
reasonably be expected to give rise to any such Legal Proceeding (other than
routine benefit claims) in respect of or relating to any Company Employee Plan.
(f) None of the Acquired Corporations has ever maintained an
employee stock ownership plan (within the meaning of Section 4975(e)(7) of the
Code) or any other Company Employee Plan that invests in Company capital stock.
Since December 31, 2003, none of the Acquired Corporations has proposed or
agreed to any increase in benefits under any Company Employee Plan (or the
creation of new benefits) or change in employee coverage which would increase
the expense of maintaining any Company Employee Plan. No person will be entitled
to any severance benefits, acceleration of vesting of any the Company Options or
the extension of any period during which any Company Options may be exercised,
under the terms of any Company Employee Plan as a result of the consummation of
the transactions contemplated by this Agreement (either solely as a result
thereof or as a result of such transactions in conjunction with another event).
(g) To the extent that any Company Employee Plan is required by any
applicable Legal Requirement to be covered by any bond (e.g., fidelity or
otherwise) in any particular amount, each such Company Employee Plan required to
be covered by such bond has at all times been covered by such bond in accordance
and in material compliance with all applicable Legal Requirements.
(h) (i) There are no controversies pending or, to the knowledge of
the Company, threatened, between any of the Acquired Corporations and any of
their respective foreign or domestic former or current employees, officers,
directors, independent contractors or consultants (or any of their
beneficiaries), (ii) there is no labor strike, dispute, slowdown, work stoppage
or lockout actually pending or, to the knowledge of the Company, threatened
against or affecting any Acquired Corporation, (iii) none of the Acquired
Corporations is a party to or bound by any collective bargaining or similar
agreement with any labor organization, or work rules or practices agreed to with
any labor organization or employee association applicable to employees of the
Acquired Corporations, (iv) none of the employees of the Acquired Corporations
are represented by a labor organization or group that was either certified or
voluntarily recognized by any labor relations board and no union organizing
campaign or other attempt to organize or establish a labor union, employee
organization or labor organization involving employees of the Acquired
Corporations has occurred, is in progress or, to the knowledge of the Company,
is threatened, (v) the Acquired Corporations have each at all times been in
compliance in all material respects with
23
all applicable Legal Requirements governing or concerning labor relations,
conditions of employment, employment discrimination or harassment, wages, hours,
or occupational safety and health, and with any collective bargaining agreements
(both foreign and domestic), (vi) there is no unfair labor practice charge or
complaint against any of the Acquired Corporations pending or, to the knowledge
of the Company, threatened before the National Labor Relations Board or any
similar state or foreign agency, (vii) there is no grievance or arbitration
demand or proceeding arising out of any collective bargaining agreement or other
grievance procedure relating to the Acquired Corporations pending, or to the
knowledge of the Company, threatened, against any Acquired Corporation, (viii)
none of the Acquired Corporations is a federal or state contractor, (ix) to the
Company's knowledge, neither the Occupational Safety and Health Administration
nor any corresponding state or foreign agency is threatening to file any
citation or complaint, and there are no pending citations or complaints,
relating to the Acquired Corporations, and (x) there are no complaints, charges
or claims against any Acquired Corporation pending or, to the knowledge of the
Company, threatened, which could be brought or filed with any Governmental Body,
court or arbitrator based on, arising out of, in connection with, or otherwise
relating to the employment of, termination of employment of, or failure of any
Acquired Corporation to employ any individual. There are no pending, threatened
or reasonably anticipated claims against any of the Acquired Corporations under
any workers' compensation disability policy or long-term policy.
(i) No Company Employee Plan is a Voluntary Employees' Beneficiary
Association within the meaning of Section 501(c)(9) of the Code.
(j) All Company Employee Plans that are "GROUP HEALTH PLANS" as
defined under the respective provision comply with and have been administered in
compliance with the health care continuation-coverage requirements under Section
4980B(f) of the Code, Sections 601 through 607 of ERISA, all final Treasury
regulations under Section 4890B of the Code explaining those requirements, and
all other applicable Legal Requirements regarding continuation and/or conversion
coverage and with Code Section 4980D and ERISA Sections 701 through 734, the
requirements of the Family Medical Leave Act, the requirements of HIPAA, the
requirements of the Women's Health and Cancer Rights Act of 1998, the
requirements of the Newborns' and Mothers' Health Protection Act of 1996, and
any amendment to each such act or any similar provisions of state law applicable
to employees of the Acquired Corporations.
(k) No amount required to be paid or payable to or with respect to
current or former employee of any of the Acquired Corporations in connection
with the transactions contemplated hereby (either solely as a result thereof or
as a result of such transactions in conjunction with any other event) will be an
"EXCESS PARACHUTE PAYMENT" within the meaning of Section 280G of the Code or
will not be deductible under Sections 162(a)(1) or 404 of the Code.
(l) Set forth on Schedule 2.12(l) of the Company Disclosure Letter
is a list of all employees of each Acquired Corporation as of the date of this
Agreement together with respect to each such employee (i) the employee's base
salary and (ii) any severance that would be due upon termination with or without
cause of such employee (other than pursuant to (A) severance or bonus policies
or employment or change of control agreements in each case as in effect on the
date of this Agreement and listed on Schedule 2.7(a) or Schedule 2.12(a) of the
Company
24
Disclosure Letter, or (B) Legal Requirements applicable to each of the Acquired
Corporations which is formed or incorporated under the laws of a foreign
jurisdiction). Schedule 2.12(l) of the Company Disclosure Letter also sets forth
with respect to each Company employee accrued paid time off payable to each such
employee as of May 11, 2004.
(m) None of the Acquired Corporations has taken any action that
would constitute a "MASS LAYOFF," "MASS TERMINATION" or "PLANT CLOSING" within
the meaning of the United States Worker Adjustment and Retraining Notification
Act ("WARN ACT") or otherwise trigger notice requirements or liability under any
federal, local, state, or foreign plant closing notice or collective dismissal
law.
(n) Each of the Acquired Corporations is in compliance with all
immigration and naturalization Legal Requirements relating to employment and
employees, each of the Acquired Corporations has properly completed and
maintained in all material respects all applicable forms (including I-9 forms),
there are no citations, investigations, enforcement proceedings or formal
complaints concerning immigration or naturalization Legal Requirements pending
or, to the knowledge of the Company, threatened before the United States
Citizenship and Immigration Services or any related federal, state, foreign or
administrative agency or court, involving or against the Acquired Corporations,
and none of the Acquired Corporations has received notice of any violation of
any immigration and naturalization Legal Requirement.
(o) The classification by the Acquired Corporations or a Company
ERISA Affiliate of individuals as employees or independent contractors has been
made in compliance with all applicable Legal Requirements.
2.13 ENVIRONMENTAL MATTERS.
Each of the Acquired Corporations is in compliance with, and has
conducted its activities in compliance with, all applicable Environmental Laws,
which compliance includes the possession by each of the Acquired Corporations of
all material permits and other Governmental Authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof, except where the failure to so comply would not result in a material
liability or clean up obligation on the Acquired Corporations. The consummation
of the transactions contemplated by this Agreement will not affect the validity
of such material permits and Governmental Authorizations held by the Company or
any of the Acquired Corporations, and will not require any filing, notice, or
remediation under any Environmental law. To the knowledge of the Company, there
are no past or present events, conditions, activities, or practices which would
reasonably be expected to prevent the Company's or any of the Acquired
Corporations' compliance in all material respects with any Environmental Law, or
which would reasonably be expected to give rise to any material liability of the
Company or any of the Acquired Corporations under any Environmental Law. Within
the past seven (7) years, none of the Acquired Corporations has received any
written notice, or to its knowledge, other communication (in writing or
otherwise) that alleges that any of the Acquired Corporations is not in material
compliance with any Environmental Law, and the Company has no knowledge of any
circumstances that would reasonably be expected to result in such claims or
communications. To the Company's knowledge, no current or prior owner of any
property owned, leased or controlled by any of the Acquired Corporations has
received any written notice or other
25
communication (in writing or otherwise) that alleges that such current or prior
owner or any of the Acquired Corporations is not in compliance with any
Environmental Law in such a manner as would be reasonably likely to result in a
material liability or clean up obligation on any Acquired Corporation. Neither
the Company nor any of the Acquired Corporations has assumed by contract,
agreement or otherwise any liabilities or obligations arising under any
Environmental Law, or is currently performing any required investigation,
response or other corrective action under any Environmental Law. There are no
underground storage tanks or related piping on any property owned, leased,
controlled by or used by any of the Acquired Corporations, and any former such
tanks and piping have been removed or closed in accordance with applicable
Environmental Laws. To the Company's knowledge, all property that is owned by,
leased to, controlled by or used by any of the Acquired Corporations is free of
any friable asbestos or asbestos-containing material.
2.14 LEGAL PROCEEDINGS; ORDERS.
Except as set forth in the Company SEC Documents or in Schedule 2.14
of the Company Disclosure Letter, there is no pending Legal Proceeding and, to
the Company's knowledge, within the past twenty-four (24) months no Person has
threatened to commence any Legal Proceeding, that involves any of the Acquired
Corporations or any of the assets owned or used by any of the Acquired
Corporations, in each case which would be reasonably likely to be material to
the Acquired Corporations; and there is no Order to which any of the Acquired
Corporations, or any of the material assets owned or used by any of the Acquired
Corporations, is subject.
2.15 VOTE REQUIRED.
The affirmative vote of the holders of a majority of the shares of
Company Common Stock outstanding on the record date for the Company
Shareholders' Meeting is the only vote of the holders of any class or series of
the Company's capital stock necessary to approve this Agreement and otherwise
approve and consummate the Merger as set forth herein.
2.16 NON-CONTRAVENTION; CONSENTS.
Neither the execution, delivery or performance of this Agreement nor
the consummation of the Merger, or any of the other transactions contemplated by
this Agreement, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of any of the
provisions of the Company Organization Documents or any resolution adopted by
the shareholders, the Board of Directors or any committee of the Board of
Directors of any of the Acquired Corporations;
(b) subject to such filings, if any, as may be required pursuant to
the Xxxx-Xxxxx Xxxxxx Antitrust Improvements Act of 1976, as amended ("HSR") and
any Governmental Body action related thereto, contravene, conflict with or
result in a violation of, or give any Governmental Body the right to challenge
the Merger or any of the other transactions contemplated by this Agreement or to
exercise any remedy or obtain any relief under, any Legal Requirement or any
Order to which any of the Acquired Corporations, or any of the material assets
owned or used by any of the Acquired Corporations, is subject;
26
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any material Governmental
Authorization that is held by any of the Acquired Corporations or that is
otherwise material to the business of any of the Acquired Corporations or to any
of the assets owned or used by any of the Acquired Corporations; or
(d) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any Company Material Contract
(except for any such violation or breach which by its terms can be cured and is
so cured within the applicable cure period or where the non-breaching party has
no right to accelerate or terminate as a result of such violation or breach), or
give any Person the right to (i) declare a default or exercise any remedy under
any Company Material Contract, (ii) accelerate the maturity or performance of
any Company Material Contract, or (iii) cancel, terminate or modify any term of
any Company Material Contract.
Except as may be required by the Exchange Act, the GBCC and the
rules and regulations of the American Stock Exchange (as such rules and
regulations relate to the Registration Statement and the Proxy Statement) and
such filings as may be required pursuant to the HSR and except for any Consent
required under any Company Material Contract, none of the Acquired Corporations
was, is or will be required to make any filing with or give any notice to, or
obtain any Consent from, any Person in connection with (x) the execution,
delivery or performance of this Agreement, or (y) the consummation of the Merger
or any of the other transactions contemplated by this Agreement, except in the
case of subsections (x) and (y), where the failure to make such filing, give
such notice or obtain any such consent would not have a Material Adverse Effect
on the Acquired Corporations.
2.17 OPINION OF FINANCIAL ADVISOR.
The Company's Board of Directors has received the opinion of
Brookwood Associates, LLC ("BROOKWOOD"), financial advisor to the Company, that
as of the date of this Agreement, and subject to the assumptions, qualifications
and limitations set forth therein, the Exchange Ratio is fair to the
shareholders of the Company from a financial point of view. The Company will
furnish an accurate and complete copy of said opinion to Parent.
2.18 FINANCIAL ADVISOR.
Except with respect to Brookwood and Commonwealth Associates
("COMMONWEALTH"), no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
any of the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of any of the Acquired Corporations. The
Company has furnished to Parent accurate and complete copies of its agreements
with Brookwood and Commonwealth.
2.19 TAKEOVER STATUTES
The approval of the Agreement, the Company Voting Agreement and the
transactions contemplated hereby and the thereby, including the Merger, by the
Board of Directors of the Company referred to in Section 2.2 constitutes the
approval of this Agreement,
27
the Company Voting Agreements and the transactions contemplated hereby and
thereby, including the Merger, for purposes of the GBCC and represents the only
action necessary to ensure that any applicable "moratorium," "control share,"
"fair price," "business combination" or other applicable provision of the GBCC
does not and will not apply to the execution, delivery or performance of this
Agreement, the Company Voting Agreements, the Lock-Up Agreements or the
consummation of the Merger and the other transactions contemplated hereby and
thereby. The provisions of Section 1302 et. seq. of the GBCC providing for
dissenters' rights do not apply to the Merger. To the Company's knowledge, no
other Takeover Laws are applicable to the Merger, this Agreement, the Company
Voting Agreements or any of the transactions contemplated hereby and thereby.
2.20 INFORMATION TO BE SUPPLIED.
None of the information supplied or to be supplied by or on behalf
of the Company for inclusion or incorporation by reference in the Registration
Statement will, at the time the Registration Statement is filed with the SEC or
becomes effective under the Securities Act, 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 the light of the
circumstances under which they are made, not misleading. None of the information
supplied or to be supplied by or on behalf of the Company for inclusion or
incorporation by reference in the Company Proxy Statement or Parent Proxy
Statement will, at the time the Company Proxy Statement or the Parent Proxy
Statement is mailed to the shareholders of the Company or to the stockholders of
Parent, as the case may be, or at the time of the Company Shareholders' Meeting
or the Parent Stockholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Company Proxy
Statement will comply as to form in all material respects with the applicable
provisions of the Exchange Act and the rules and regulations promulgated by the
SEC thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by or to be
supplied by Parent or Merger Sub that is included or incorporated by reference
in the foregoing documents.
2.21 FOREIGN CORRUPT PRACTICES ACT.
Neither the Company, any other Acquired Corporation, any of the
Acquired Corporation's officers, directors, nor, to the Company's knowledge, any
employees or agents (or shareholders), distributors, representatives or other
persons acting on the express, implied or apparent authority of any Acquired
Corporation, have paid, given or received or have offered or promised to pay,
give or receive, any bribe or other unlawful payment of money or other thing of
value, any unlawful discount, or any other unlawful inducement, to or from any
person or Governmental Body in the United States or elsewhere in connection with
or in furtherance of the business of any of the Acquired Corporations (including
any unlawful offer, payment or promise to pay money or other thing of value (a)
to any foreign official, political party (or official thereof) or candidate for
political office for the purposes of influencing any act, decision or omission
in order to assist any Acquired Corporation in obtaining business for or with,
or directing business to, any person, or (b) to any person, while knowing that
all or a portion of such money or other thing of value will be offered, given or
promised unlawfully to any such
28
official or party for such purposes). Neither the business of the Company nor of
any other Acquired Corporation is in any manner dependent upon the making or
receipt of such unlawful payments, discounts or other inducements. Neither the
Company nor any other Acquired Corporation has otherwise taken any action that
could cause the Company or any other Acquired Corporation to be in violation of
the Foreign Corrupt Practices Act of 1977, as amended, the regulations
thereunder, or any applicable Legal Requirements of similar effect.
2.22 REAL PROPERTY.
Except as set forth in Schedule 2.22 of the Company Disclosure
Letter, the Company has good and marketable title to, or a valid leasehold
interest in, all of its real properties, in each case free and clear of all
Encumbrances. Schedule 2.22 of the Company Disclosure Letter sets forth a true,
correct and complete list of all real property owned by the Acquired
Corporations at any time during the past five (5) years and a true and correct
list of all real property currently leased by each of the Acquired Corporations
identifying, with respect to each lease of such real property, the date of, the
parties to, and any amendments, modifications, extensions or other supplements
to such lease. No Acquired Corporation has sent or received any written notice
of any default under any of the leases of real property to which it is party. No
Acquired Corporation is in breach of, or in default under, any covenant,
agreement, term or condition of or contained in any lease of real property to
which it is a party and there has not occurred any event that with the lapse of
time or the giving of notice or both could constitute such a default or breach.
2.23 INSURANCE POLICIES.
The Company has delivered to Parent prior to the date hereof a
complete and accurate list of all insurance policies in force naming the
Company, any of the other Acquired Corporations or any director, officer or
employee thereof as an insured or beneficiary or as a loss payable payee or for
which the Company or any other Acquired Corporation has paid or is obligated to
pay all or part of the premiums. Neither the Company nor any other Acquired
Corporation has received notice of any pending or threatened cancellation or
premium increase (retroactive or otherwise) with respect thereto, and each of
the Acquired Corporations is in compliance in all material respects with all
conditions contained therein. There are no material pending claims against such
insurance policies by the Company or any other Acquired Corporation as to which
insurers are defending under reservation of rights or have denied liability, and
there exists no material claim under such insurance policies that has not been
properly filed by the Company or any other Acquired Corporation. Except for the
self-insurance retentions or deductibles set forth in the policies contained in
the aforementioned list, the policies are adequate in scope and amount to cover
all prudent and reasonably foreseeable risks which may arise in the conduct of
the business of the Acquired Corporations that would reasonably be expected to
have a Material Adverse Effect on the Acquired Corporations.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in Parent SEC Documents or the Disclosure Letter
delivered by Parent and Merger Sub to the Company prior to the execution and
delivery of this Agreement
29
(the "PARENT DISCLOSURE LETTER") and referred to in the section of the Parent
Disclosure Letter corresponding to the section(s) of this Section 3 to which
such disclosure applies (unless it is reasonably apparent that the disclosure or
statement in one section of the Parent Disclosure Letter should apply to one or
more sections thereof), Parent and Merger Sub represent and warrant to the
Company as follows:
3.1 DUE ORGANIZATION; SUBSIDIARIES.
Parent is a corporation duly organized, validly existing and in good
standing under the Legal Requirements of the jurisdiction of its incorporation,
and each of the other XXXX Corporations which is a "SIGNIFICANT SUBSIDIARY" (as
defined in Regulation S-X) of Parent is a corporation duly organized, validly
existing and in good standing under the Legal Requirements of the jurisdiction
of its incorporation or formation. Each of the XXXX Corporations has all
necessary power and authority: (a) to conduct its business in the manner in
which its business is currently being conducted; (b) to own and use its assets
in the manner in which its assets are currently owned and used; and (c) to
perform its material obligations under all Parent Material Contracts. Each of
the XXXX Corporations is qualified to do business as a foreign corporation, and
is in good standing, under the Legal Requirements of all jurisdictions where the
failure to be so qualified would have a Material Adverse Effect on the XXXX
Corporations. Parent has delivered or made available to the Company accurate and
complete copies of the certificate of incorporation, bylaws and other charter or
organizational documents of each of the XXXX Corporations, including all
amendments thereto (collectively, the "PARENT ORGANIZATION DOCUMENTS"). Parent
has no Subsidiaries, except for the corporations identified in Schedule 3.1 of
the Parent Disclosure Letter. Parent and each of its Subsidiaries identified in
Schedule 3.1 of the Parent Disclosure Letter are collectively referred to herein
as the "XXXX CORPORATIONS". None of the XXXX Corporations has any equity
interest or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any Entity,
other than the XXXX Corporations' interests in their Subsidiaries identified in
Schedule 3.1 of the Parent Disclosure Letter.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT.
Subject to the receipt of the stockholder approval contemplated by
Section 5.2, each of Parent and Merger Sub has all requisite corporate power and
authority to enter into and to perform its obligations under this Agreement.
This Agreement constitutes the legal, valid and binding obligation of Parent and
Merger Sub, enforceable against Parent and Merger Sub in accordance with its
terms, subject to (a) Legal Requirements of general application relating to
bankruptcy, insolvency and the relief of debtors, (b) rules of law governing
specific performance, injunctive relief and other equitable remedies and (c) the
approval of the stockholders of Parent. Parent hereby represents that its Board
of Directors, at a meeting duly called and held on or prior to the date hereof,
has by unanimous vote (i) determined that the Merger is in the best interests of
Parent and its stockholders, (ii) approved and adopted this Agreement, the
Merger and the other transactions contemplated by this Agreement, and (iii)
determined to make the Parent Recommendation to the stockholders of Parent.
Merger Sub hereby represents that its Board of Directors, by unanimous written
consent, approved and adopted this Agreement, declared it advisable and approved
the Merger and the other transactions contemplated by this Agreement, and
recommended that the Parent adopt this Agreement. Parent hereby represents that
it, as the
30
sole stockholder of Merger Sub, will approve and adopt this Agreement, the
Merger and the other transactions contemplated by this Agreement immediately
after the execution and delivery of this Agreement by the parties hereto.
3.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of Parent consists of: (i)
100,000,000 shares of Parent Common Stock and (ii) 2,000,000 shares of Parent
Preferred Stock, of which 100,000 shares have been designated as Series A
Participating Preferred Stock pursuant to the Parent Stockholder Rights
Agreement. Parent has not authorized any other class of capital stock other than
the Parent Common Stock and Parent Preferred Stock. As of May 11, 2004,
18,017,765 shares of Parent Common Stock have been issued or are outstanding and
no shares of Preferred Stock have been issued or are outstanding. No shares of
Parent Common Stock are held in Parent's treasury or are held by any of Parent's
Subsidiaries. All of the outstanding shares of Parent Common Stock have been
duly authorized and validly issued, and are fully paid and nonassessable. None
of the outstanding shares of Parent Common Stock is entitled or subject to any
preemptive right, right of participation, right of maintenance or any similar
right or subject to any right of first refusal in favor of Parent. There is no
Contract to which Parent is a party and, to Parent's knowledge, there is no
Contract between other Persons, relating to the voting or registration of, or
restricting any Person from purchasing, selling, pledging or otherwise disposing
of, any shares of Parent Common Stock other than the Parent Voting Agreements
and the Lock-Up Agreements. None of the XXXX Corporations is under any
obligation, or is bound by any Contract pursuant to which it may become
obligated, to repurchase, redeem or otherwise acquire any outstanding shares of
Parent Common Stock.
(b) As of May 11, 2004: (i) 4,764,080 shares of Parent Common Stock
are reserved for issuance pursuant to stock options under the 1994 Incentive
Stock Plan, of which options to acquire 109,228 shares of Parent Common Stock
are outstanding; (ii) 3,500,000 shares of Parent Common Stock are reserved for
issuance under the 2000 Stock Plan, of which 2,523,504 shares of Parent Common
Stock are outstanding; (iii) 500,000 shares of Parent Common Stock are reserved
for issuance pursuant to stock options under the 2000 Directors' Stock Option
Plan, of which options to acquire 131,000 shares of Parent Common Stock are
outstanding; and (iv) 341,647 shares of Parent Common Stock are available for
purchase under the 2000 Employee Stock Purchase Plan (the "PARENT ESPP"). Stock
options granted by Parent pursuant to the Parent Stock Option Plans, as well as
any stock options granted by Parent outside of the Parent Stock Option Plans
(but excluding the Parent ESPP), are referred to collectively herein as "PARENT
OPTIONS." Schedule 3.3(b) of the Parent Disclosure Letter sets forth the
following information with respect to each Parent Option outstanding as of May
11, 2004: (i) the particular plan pursuant to which such Parent Option was
granted; (ii) the name of the optionee; (iii) the number of shares of Parent
Common Stock subject to such Parent Option and the number of such shares that
have been exercised; (iv) the current exercise price of such Parent Option; (v)
the date on which such Parent Option was granted; (vi) the extent to which such
Parent Option is vested and exercisable as of the date of this Agreement; (vii)
the vesting schedule of such Parent Option including any acceleration of vesting
upon a change in control of Parent; (viii) the expiration date of the Parent
Option; and (ix) the period of time following termination of employment during
which the Parent Option may be exercised if not expired. Parent has delivered or
made available to Company accurate and complete copies of the Parent ESPP, all
31
stock option plans pursuant to which Parent has granted Parent Options, and the
forms of all stock option agreements evidencing such options. There have been no
repricings of any Parent Options through amendments, cancellation and reissuance
or other means during the current or prior two (2) calendar years. None of the
Company Options have been granted in contemplation of the Merger or the
transactions contemplated in this Agreement.
(c) Except as set forth in Section 3.3(a) or Section 3.3(b) above,
and other than the Parent Stockholder Rights Agreement and the rights
thereunder, there is no: (i) outstanding subscription, option, call, warrant or
right (whether or not currently exercisable) to acquire any shares of the
capital stock or other securities of any of the XXXX Corporations; (ii)
outstanding security, instrument or obligation that is or may become convertible
into or exchangeable for any shares of the capital stock or other securities of
any of the XXXX Corporations; (iii) rights agreement, stockholder rights plan or
similar plan commonly referred to as a "POISON PILL"; or (iv) Contract under
which any of the XXXX Corporations are or may become obligated to sell or
otherwise issue any shares of its capital stock or any other securities ("PARENT
RIGHTS AGREEMENTS") (items (i) through (iv) above, collectively, "PARENT STOCK
RIGHTS").
(d) All outstanding shares of Parent Common Stock, all outstanding
Parent Options and all outstanding shares of capital stock of each Subsidiary of
Parent have been issued and granted in compliance with (i) all applicable
securities laws and other applicable Legal Requirements, and (ii) all
requirements set forth in Contracts applicable to the issuance of Parent Common
Stock, granting Parent Options and/or the issuance of shares of capital stock of
any Parent Subsidiary. All of the outstanding shares of capital stock of each of
the Parent's Subsidiaries have been duly authorized and are validly issued, are
fully paid and nonassessable and, except as required by Legal Requirements
applicable to each of the XXXX Corporations which is formed or incorporated
under the laws of a foreign jurisdiction, are owned beneficially and of record
by Parent, free and clear of any Encumbrances. Schedule 3.3(d) of the Parent
Disclosure Letter sets forth all entities (other than Subsidiaries) in which any
of the XXXX Corporations has any ownership interest and the amount of such
interest.
(e) Parent directly owns all of the outstanding stock of Merger Sub.
3.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) All statements, reports, schedules, forms, exhibits and other
documents required to have been filed by Parent with the SEC since January 1,
1999 (the "PARENT SEC DOCUMENTS") have been so filed. As of their respective
dates (or, if amended, supplemented or superseded by a filing prior to the date
of this Agreement, then on the date of such amendment, supplement or superseding
filing): (i) each of the Parent SEC Documents complied in all material respects
with the applicable requirements of the Securities Act or the Exchange Act (as
the case may be); and (ii) none of the Parent SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) The Parent SEC Documents include all certifications and
statements required of it, if any, by (i) Rule 13a-14 or 15d-14 under the
Exchange Act, and (ii) 18 U.S.C. Section
32
1350 (Section 906 of the Xxxxxxxx-Xxxxx Act of 2002), and each of such
certifications and statements contain no qualifications or exceptions to the
matters certified therein other than a knowledge qualification, permitted under
such provision, and have not been modified or withdrawn and neither Parent nor
any of its officers has received any notice from the SEC or any other
Governmental Body questioning or challenging the accuracy, completeness, form or
manner of filing or submission of such certifications or statements.
(c) Parent is in compliance in all material respects with all of the
provisions of the Xxxxxxxx-Xxxxx Act of 2002, and the provisions of the Exchange
Act and the Securities Act relating thereto which under the terms of such
provisions (including the dates by which such compliance is required) have
become applicable to Parent.
(d) The financial statements (including related notes, if any)
contained in the Parent SEC Documents (the "PARENT FINANCIAL STATEMENTS"): (i)
complied as to form in all material respects with the published rules and
regulations of the SEC applicable thereto; (ii) were prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered (except as may
be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC, and except that the
unaudited financial statements may not have contained footnotes and were subject
to normal and recurring year-end adjustments which were not, or are not
reasonably expected to be, individually or in the aggregate, material), and
(iii) fairly presented in all material respects the consolidated financial
position of Parent and its consolidated subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows of Parent and
its consolidated subsidiaries for the periods covered thereby. For purposes of
this Agreement, "PARENT BALANCE SHEET" means that consolidated balance sheet of
Parent and its consolidated subsidiaries as of December 31, 2003 set forth in
the Parent's Annual Report on Form 10-K filed with the SEC on March 15, 2004, as
amended by the Form 10-K/A filed by Parent with the SEC on April 29, 2004 (the
"PARENT 10-K") and the "PARENT BALANCE SHEET DATE" means December 31, 2003.
3.5 ABSENCE OF CHANGES.
(a) Since the Parent Balance Sheet Date,
(i) none of the XXXX Corporations has made any material
changes in its pricing polices or payment or credit practices or failed to pay
any creditor any material amount owed to such creditor when due or granted any
extensions or credit other than in the ordinary course of business consistent
with prior practice;
(ii) none of the XXXX Corporations has terminated or closed
any material facility, business or operation;
(iii) none of the XXXX Corporations has written up or written
down any of its material assets; and
(iv) there has been no material loss, destruction or damage to
any item of property of the XXXX Corporations, whether or not insured.
33
(b) Except as set forth in Schedule 3.5(b) of the Parent Disclosure
Letter, since the Parent Balance Sheet Date and through the date of this
Agreement:
(i) there has not been any event that has had a Material
Adverse Effect on the XXXX Corporations, and no fact, event, circumstance or
condition exists or has occurred that could reasonably be expected to have a
Material Adverse Effect on the XXXX Corporations;
(ii) each of the XXXX Corporations has operated its respective
business in the ordinary course consistent with prior practice;
(iii) none of the XXXX Corporations has (A) declared, accrued,
set aside or paid any dividend or made any other distribution in respect of any
shares of capital stock; (B) repurchased, redeemed or otherwise reacquired any
shares of capital stock or other securities; (C) made any capital expenditure
which, when added to all other capital expenditures made on behalf of the XXXX
Corporations since the Parent Balance Sheet Date, exceeds $350,000, in the
aggregate; (D) made any material Tax election; (E) settled any Legal Proceedings
involving amounts in excess of $25,000; or (F) entered into or consummated any
transactions with any affiliate;
(iv) none of the XXXX Corporations has (A) sold or otherwise
disposed of, or acquired, leased, licensed, waived or relinquished any material
right or other material asset to, from or for the benefit of, any other Person
except for rights or other assets sold, disposed of, acquired, leased, licensed,
waived or relinquished in the ordinary course of business consistent with prior
practice; (B) mortgaged, pledged or subjected to any Encumbrance any of their
respective property, business or assets; (C) entered into or amended any lease
of real property (whether as lessor or lessee); or (D) canceled or compromised
any debt or claim other than accounts receivable in the ordinary course of
business consistent with prior practice;
(v) none of the XXXX Corporations has (A) amended or waived
any of its material rights under, or permitted the acceleration of vesting
under, any provision of any of the Parent Employee Plans or any provision of any
agreement or Parent Stock Option Plan evidencing any outstanding Parent Option;
(B) caused or permitted any Parent Employee Plan to be amended in any material
respect; or (C) paid any bonus or made any profit-sharing or similar payment to,
or materially increased the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its directors,
officers or consultants;
(vi) there has been no material labor dispute (including any
work slowdown, stoppage or strike) involving the XXXX Corporations;
(vii) none of the XXXX Corporations has made any change in its
methods of accounting or accounting practices;
(viii) none of the XXXX Corporations has made any loan,
advance or capital contributions to, or any other investment in, any Person;
(ix) none of the XXXX Corporations has terminated or amended,
or suffered a termination of, any Parent Material Contract;
34
(x) none of the XXXX Corporations has entered into any
contractual obligation to do any of the things referred to elsewhere in this
Section 3.5; and
(xi) there has been no material development in any Legal
Proceeding described in a Parent SEC Document that has not been disclosed under
the caption "Legal Proceedings" in the Parent 10-K.
3.6 PROPRIETARY ASSETS.
(a) Schedule 3.6(a) of the Parent Disclosure Letter sets forth as of
the date of this Agreement (i) all U.S. and foreign patents, patent
applications, registered trademarks, unregistered trademarks, trademark
applications, copyright registrations and copyright applications, Internet
domain names, computer software (other than third party software generally
available for sale to the public) and fictitious name and assumed name
registrations owned by any of the XXXX Corporations, (ii) all patent
applications and other Proprietary Assets that are currently in the name of
inventors or other Persons and for which a XXXX Corporation has the right to
receive an assignment and (iii) all material third party licenses for
Proprietary Assets to which a XXXX Corporation is the licensee party and which
are not set forth on Schedule 3.7(a)(iii) of the Parent Disclosure Letter. Each
XXXX Corporation has good, valid and marketable title to, or has a valid right
to use, license or otherwise exploit, all of the material XXXX Corporation
Proprietary Assets necessary for the conduct of such XXXX Corporation's business
as presently conducted, free and clear of all Encumbrances. None of the XXXX
Corporations has developed jointly with any other Person any material XXXX
Corporation Proprietary Asset with respect to which such other Person has any
rights. Other than Contracts entered into in the ordinary course of business
consistent with prior practice that are not, with respect to any individual
Contract, material to the XXXX Corporations, there is no XXXX Corporation
Contract pursuant to which any Person has any right (whether or not currently
exercisable) to use, license or otherwise exploit any XXXX Corporation
Proprietary Asset owned or exclusively licensed by any of the XXXX Corporations.
(b) (i) To Parent's knowledge, all XXXX Corporation Proprietary
Assets owned by any of the XXXX Corporations are valid, enforceable, subsisting
and in effect; (ii) to the Parent's knowledge none of the XXXX Corporation
Proprietary Assets and no Proprietary Asset that is currently being developed or
reduced to practice or which is the subject of a current invention disclosure by
any of the XXXX Corporations (either by itself or with any other Person)
infringes, misappropriates or conflicts with any Proprietary Asset owned or used
by any other Person; (iii) to Parent's knowledge, none of the products or
services that is or has been designed, created, developed, assembled, performed,
manufactured, sold, marketed or licensed by any of the XXXX Corporations is
infringing, misappropriating or making any unlawful or unauthorized use of any
Proprietary Asset owned or used by any other Person, and, to Parent's knowledge,
none of such products or services has at any time infringed, misappropriated or
made any unlawful or unauthorized use of, and none of the XXXX Corporations has
received any written notice or of any actual, alleged, possible or potential
infringement, misappropriation or unlawful or unauthorized use of, any
Proprietary Asset owned or used by any other Person; (iv) to Parent's knowledge,
the operation of the business of each XXXX Corporation as it currently is
conducted does not, and will not when conducted following the Closing, infringe
or misappropriate or make any unlawful or unauthorized use of any Proprietary
Asset of any other Person; and (v) to
35
Parent's knowledge, no other Person is infringing, misappropriating or making
any unlawful or unauthorized use of, and no Proprietary Asset owned or used by
any other Person infringes or conflicts with, any material XXXX Corporation
Proprietary Asset. The XXXX Corporation Proprietary Assets constitute all the
material Proprietary Assets necessary to enable each of the XXXX Corporations to
conduct its business in the manner in which such business is being conducted.
None of the XXXX Corporations has entered into any covenant not to compete or
any Contract limiting its ability to exploit fully any XXXX Corporation
Proprietary Assets owned or licensed by such XXXX Corporation or to transact
business in any market or geographical area or with any Person.
(c) Each XXXX Corporation has taken all reasonable steps that are
required to protect such XXXX Corporation's rights in confidential information
and trade secrets of the XXXX Corporation or provided by any other Person to the
XXXX Corporation. Without limiting the foregoing, each XXXX Corporation has, and
enforces, a policy requiring each employee, consultant and contractor to execute
a proprietary information and confidentiality agreement, substantially in the
forms previously made available to the Company and listed on Schedule 3.6(c) of
the Parent Disclosure Letter, and all current and former employees, consultants
and contractors of such XXXX Corporation have executed such an agreement.
3.7 CONTRACTS.
(a) For purposes of this Agreement, each of the following shall be
deemed to constitute a "PARENT MATERIAL CONTRACT", which Parent Material
Contracts and all amendments thereto, in each case as of the date of this
Agreement are listed on Schedule 3.7 of the Parent Disclosure Letter and copies
of which have been made been made available to the Company:
(i) any XXXX Corporation Contract that is required by the
rules and regulations of the SEC to be filed as an exhibit to the Parent SEC
Documents;
(ii) any XXXX Corporation Contract relating to (A) the
employment of any employee or the services of any independent contractor or
consultant and pursuant to which any of the XXXX Corporations is or may become
obligated to make any severance or termination payment in excess of $50,000 or
(B) any bonus, relocation or other payment in excess of a material amount to any
current or former employee, independent contractor, consultant, officer or
director (other than payments, in the case of (A) and (B) above, in respect of
salary or pursuant to standard severance policies, existing bonus plans or
standard relocation policies of Parent which are listed on Schedule 3.7(a) or
Schedule 3.12(a) of the Parent Disclosure Letter);
(iii) any XXXX Corporation Contract relating to the
acquisition, transfer, development, sharing or license of any material
Proprietary Asset (except for any XXXX Corporation Contract pursuant to which
(A) any material Proprietary Asset is licensed to the XXXX Corporations under
any third party software license generally available for sale to the public, or
(B) any material Proprietary Asset is licensed by any of the XXXX Corporations
to any customer in connection with the sale of any product in the ordinary
course of business consistent with prior practice);
36
(iv) any XXXX Corporation Contract with any officer, director
or affiliate of Parent;
(v) any XXXX Corporation Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits, losses, costs
or liabilities, under which a XXXX Corporation has continuing material
obligations;
(vi) any XXXX Corporation Contract that involves the payment
or expenditure by a XXXX Corporation in excess of $50,000 that may not be
terminated by such XXXX Corporation (without penalty) within sixty (60) days
after the delivery of a termination notice by the applicable XXXX Corporation;
(vii) any XXXX Corporation Contract contemplating or involving
the payment or delivery of cash or other consideration to a XXXX Corporation in
excess of $50,000;
(viii) any XXXX Corporation Contract imposing any restriction
on the right or ability of any XXXX Corporation to (A) compete with any other
Person, (B) acquire any material product or other material asset or any services
from any other Person, sell any material product or other material asset to or
perform any services for any other Person or transact business or deal in any
other manner with any other Person, or (C) develop or distribute any material
technology; and
(ix) any other XXXX Corporation Contract, if a breach of such
XXXX Corporation Contract could reasonably be expected to have a Material
Adverse Effect on the XXXX Corporations.
(b) Each Parent Material Contract is valid and in full force and
effect, and is enforceable in accordance with its terms subject to (A) Legal
Requirements of general application relating to bankruptcy, insolvency and the
relief of debtors, and (B) rules of law governing specific performance,
injunctive relief and other equitable remedies, except to the extent they have
expired in accordance with their terms and except where the failure to be in
full force and effect, individually or in the aggregate, would not reasonably be
expected to be material to the XXXX Corporations. Parent has delivered to or
made available to the Company true and complete copies of each Parent Material
Contract, except in the case of a Parent Material Contract which is derived from
a standard form agreement of the XXXX Corporations, Parent has delivered to or
made available to the Company a form or forms of such agreement. In each case
where a Parent Material Contract is derived from a standard form agreement, all
of the terms, conditions and provisions of such Parent Material Contract are
substantially similar with respect to material terms to the form agreement from
which such agreement derived.
(c) None of the XXXX Corporations has materially violated or
breached, or committed any material default under, any Parent Material Contract.
To Parent's knowledge, no other Person has materially violated or breached, or
committed any material default under, any Parent Material Contract.
(d) To Parent's knowledge, no event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time)
could reasonably be expected to (i) result in a material violation or breach of
any provision of any Parent Material Contract by any
37
of the XXXX Corporations; (ii) give any Person the right to declare a material
default or exercise any remedy under any Parent Material Contract; (iii) give
any Person the right to accelerate the maturity or performance of any Parent
Material Contract; or (iv) give any Person the right to cancel or terminate, or
modify in any material respect, any Parent Material Contract
3.8 LIABILITIES.
Except as disclosed in Parent SEC Documents, since the Parent
Balance Sheet Date, none of the XXXX Corporations has any accrued, contingent or
other liabilities of any nature, either matured or unmatured (whether due or to
become due) required to be reflected in financial statements prepared in
accordance with GAAP, except for: (a) liabilities that are reflected in the
"LIABILITIES" column of the Parent Balance Sheet and the notes thereto, (b)
normal and recurring liabilities that have been incurred by the XXXX
Corporations since the Parent Balance Sheet Date in the ordinary course of
business consistent with prior practice, and (c) liabilities incurred in
connection with the transactions contemplated by this Agreement.
3.9 COMPLIANCE WITH LEGAL REQUIREMENTS; FDA MATTERS.
(a) Each of the XXXX Corporations is in compliance in all material
respects with all applicable Legal Requirements. Within the past three (3)
years, none of the XXXX Corporations has received any written notice or, to
Parent's knowledge, other communication from any Governmental Body regarding any
actual or possible material violation of, or failure to comply in all material
respects with, any Legal Requirement.
(b) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on the XXXX Corporations, each of the XXXX Corporations
is in possession of all franchises, grants, authorizations, licenses,
establishment registrations, product listings, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any Government Body,
including the FDA and similar authorities in the U.S. and non-U.S. jurisdictions
necessary for each XXXX Corporation to own, lease and operate its properties or
to develop, produce, store, distribute, promote and sell its products or
otherwise to carry on its business as it is now being conducted (the "PARENT
PERMITS"), and, as of the date of this Agreement, no suspension or cancellation
of any of Parent Permits is pending or, to the knowledge of Parent, threatened,
except where the failure to have, or the suspension or cancellation of, any of
Parent Permits would not, individually or in the aggregate, have a Material
Adverse Effect on the XXXX Corporations. Except for conflicts, defaults or
violations which, individually or in the aggregate, would not have a Material
Adverse Effect on the XXXX Corporations, no XXXX Corporation is in conflict
with, or in violation or default of, (i) any law applicable to such XXXX
Corporation or by which any property, asset, operation, or product of a XXXX
Corporation is bound or affected, including the FDCA, the CDAPCA, the CSA,
Medicare, Medicaid, Anti-Kickback Statutes, HIPAA, the Federal False Claims Act,
or any other similar act or law or (ii) any Parent Permit.
(c) Except as would not, individually or in the aggregate, have a
Material Adverse Effect on the XXXX Corporations:
(i) all manufacturing operations of the XXXX Corporations are
being conducted in substantial compliance with applicable good manufacturing
practices;
38
(ii) all necessary clearances or approvals from governmental
agencies for all device products which are manufactured or sold by the XXXX
Corporations have been obtained, and each XXXX Corporation is in substantial
compliance with the most current form of each applicable clearance, approval, or
regulatory standards applicable to devices for which no clearance or approval is
required, with respect to the development, production, storage, distribution,
promotion and sale by the such XXXX Corporation of such products;
(iii) all of the clinical studies which have been, or are
being conducted by or for the XXXX Corporations, are being conducted in
substantial compliance with generally accepted good clinical practices and all
applicable government regulatory, statutory and other requirements;
(iv) to the knowledge of Parent, none of its respective
officers, employees or agents (during the term of such person's employment by
any XXXX Corporation or while acting as an agent of a XXXX Corporation) has made
any untrue statement of a material fact or fraudulent statement to the FDA or
any governmental agency (including non-U.S. regulatory agencies), failed to
disclose a material fact required to be disclosed to the FDA or similar
governmental agency (including non-U.S. regulatory agencies), or to the
knowledge of Parent, committed an act, made a statement or failed to make a
statement that could reasonably be expected to provide a basis for the FDA or
similar governmental agency (including non-U.S. regulatory agencies) to invoke
its Application Integrity Policy or similar governmental policy or regulation
(including non-U.S. policies or regulations);
(v) to the knowledge of Parent, no XXXX Corporation has
received any written notice within the past three (3) years that the FDA or any
similar governmental agency (including non-U.S. regulatory agencies) has
commenced, or threatened to initiate, any action to withdraw its clearance or
approval, or to request the recall, of any product of a XXXX Corporation, or
commenced, or overtly threatened to initiate, any action to enjoin production at
any facility of a XXXX Corporation;
(vi) to the knowledge of Parent, as to each medical device,
drug, biologic or other article manufactured and/or distributed by a XXXX
Corporation, such article is not adulterated or misbranded within the meaning of
the FDCA or any similar governmental act or law of any jurisdiction (including
non-U.S. jurisdictions); and
(vii) to the knowledge of Parent, none of the officers or
employees of the XXXX Corporations (during the term of such person's employment
by a XXXX Corporation or while acting as an agent of a XXXX Corporation),
subsidiaries or affiliates was subject to an FDA debarment order, nor have any
such persons been convicted of any crime or engaged in any conduct for which
debarment or similar punishment is mandated or permitted by any applicable law.
(d) As to each product subject to the jurisdiction of the FDA under
the FDCA which is developed, manufactured, tested, distributed, held and/or
marketed by the XXXX Corporations, to the knowledge of Parent such product is
being developed, manufactured, held and distributed in substantial compliance
with all applicable requirements under the FDCA, if applicable, including such
requirements relating to investigational use, pre-market clearance,
39
registration and listing, good manufacturing practices, labeling, advertising,
record keeping, filing of reports and security, except for such non-compliance
which, individually or in the aggregate, would not have a Material Adverse
Effect on the XXXX Corporations.
(e) To the knowledge of Parent, each XXXX Corporation has, prior to
the execution of this Agreement, provided to Parent copies of or made available
for Parent's review any and all documents in its possession material to
assessing the XXXX Corporation's compliance with the FDCA and implementing
regulations for the prior three (3) years, including copies in its possession of
(i) all FDA Inspection Reports (Form 483) and all correspondence between the
Acquired Corporation and the FDA relating to each such Form 483, Warning Letters
and company responses issued during the last three (3) years; (ii) all audit
reports performed during the last three (3) years, whether performed by the XXXX
Corporations or an outside consultant; (iii) any material document (prepared by
the XXXX Corporations) concerning any material oral or written communication
received from the FDA, or any other governmental department or agency during the
last three (3) years; (iv) any administrative or judicial order, ruling, consent
decree or agreement issued or entered into during the last three (3) years in
which a XXXX Corporation or its respective predecessor companies were a named
party; or (v) any recall notice or order and all company responses relating to
any product of the XXXX Corporations.
(f) Schedule 3.9(f) of Parent Disclosure Letter sets forth a
complete and accurate list of (i) medical devices, drugs, biologics, or other
article manufactured or distributed by the XXXX Corporations and listed or
registered with the FDA or similar U.S. or non-U.S. governmental agency, (ii)
each clinical trial protocol submitted by the XXXX Corporations to the FDA or
similar U.S. or non-U.S. governmental agency, (iii) each Pre-Market Approval
application (PMA) or Premarket Notification (510(k)) and any amendments or
supplements thereto filed by the XXXX Corporations pursuant to the FDCA, or any
non-US. equivalents, (iv) each New Drug Application (NDA) or Biologic License
Application (BLA) filed by XXXX Corporations pursuant to the FDCA or the Public
Health Service Act, as amended, or any non-U.S. equivalents.
(g) (i) Each of the XXXX Corporations is in compliance, to the
extent applicable, with any HIPAA Privacy Rule obligations, and the transactions
contemplated by this Agreement are in accordance with, and will not violate or
result in the violation of, HIPAA by the XXXX Corporations; (ii) no XXXX
Corporation has received any communication or inquiry (whether written or oral)
from the Department of Health and Human Services, the Federal Trade Commission,
or any other Governmental Body regarding its failure to comply, in any material
respect with one or more of HIPAA's provisions (other than an industry-wide
communication not specifically targeted to any XXXX Corporation); (iii) no
certification organization has concluded or stated that any XXXX Corporation has
failed or may fail to comply with HIPAA or any requirement or element thereof,
including one or more of the HIPAA electronic transaction standards; and (iv) no
XXXX Corporation has received any communication (whether written or oral) from
any individual, customer, or trading partner regarding its failure to comply in
any material respect with one or more of HIPAA's provisions.
(h) No XXXX Corporation is engaged in any activity, whether alone or
in concert with one or more of its customers, which would constitute a violation
of any Legal Requirement (including (i) federal fraud and abuse or similar laws
pertaining to Medicare, Medicaid or any
40
other federal health or insurance program; (ii) state laws pertaining to
Medicaid or any other state health or insurance programs; (iii) state or federal
laws pertaining to xxxxxxxx to insurance companies, health maintenance
organizations, and other managed care plans or insurance fraud; and (iv) federal
and state laws relating to collection agencies in the performance of collection
services) prohibiting fraudulent, abusive or unlawful practices connected in any
way with the provisions of health care services, the billing for such services
provided to a beneficiary of any state, federal or private health or insurance
program or credit collection services, except for violations that could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the XXXX Corporations. Without limiting the generality of the
foregoing, no XXXX Corporation has directly or indirectly, knowingly and
willfully paid, offered to pay or agreed to pay, or solicited or received, any
fee, commission, sum of money, property or other remuneration to or from any
person which is or may be illegal under 42 U.S.C. Section 1320a-7b(b) or any
similar state law.
(i) No XXXX Corporation nor, to the knowledge of the Parent, any of
the XXXX Corporations' respective officers, directors, employees or agents (as
those terms are defined under 42 C.F.R. 1001.1001): (i) has had a civil monetary
penalty assessed against him, her or it, as the case may be, under Section 1128A
of the Social Security Act or any regulations promulgated thereunder; (ii) has
been debarred, excluded or suspended from participation under the Medicare
program, Medicaid program or any other federal or state health program or any
regulations promulgated thereunder; or (iii) has been charged with convicted of
any criminal offense relating to the delivery of any item or service under
Medicare, Medicaid, or other federal or state health program.
3.10 GOVERNMENTAL AUTHORIZATIONS.
Each of the XXXX Corporations holds all Governmental Authorizations
necessary to enable such XXXX Corporation to conduct its business in the manner
in which such business is currently being conducted except where the failure to
hold such Governmental Authorizations would not be reasonably likely to have a
Material Adverse Effect on the XXXX Corporations. All such Governmental
Authorizations are valid and in full force and effect. Each XXXX Corporation is
in compliance in all material respects with the terms and requirements of such
Governmental Authorizations. None of the XXXX Corporations has received any
notice or other communication from any Governmental Body regarding (a) any
actual or possible violation of or failure to comply in any material respect
with any term or requirement of any Governmental Authorization, or (b) any
actual or possible revocation, withdrawal, suspension, cancellation, termination
or modification of any Governmental Authorization.
3.11 TAX MATTERS.
(a) The XXXX Corporations have paid or properly reserved for all
Taxes, due and payable by any of them for or with respect to all periods up to
and including the date hereof (without regard to whether or not such Taxes are
or were disputed), whether or not shown on any Tax Return.
(b) Each of the XXXX Corporations has filed on a timely basis
(taking into account any extensions of time a XXXX Corporation was granted) all
material Tax Returns that it
41
was required to file. None of the XXXX Corporations is currently the beneficiary
of any extension of time within which to file any Tax Return. No claim that has
not been resolved has ever been made to a XXXX Corporation by an authority in a
jurisdiction where the XXXX Corporations do not file Tax Returns that any one of
them is or may be subject to taxation by that jurisdiction. None of the XXXX
Corporations has given any currently effective waiver of any statute of
limitations in respect of Taxes or agreed to any currently effective extension
of time with respect to a Tax assessment or deficiency. There are no security
interests on any of the assets of any of the XXXX Corporations that arose in
connection with any failure (or alleged failure) to pay any Tax (other than
liens for Taxes not yet due and payable).
(c) The XXXX Corporations have withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party.
(d) None of the XXXX Corporations, including any director, officer
or employee responsible for tax matters of the XXXX Corporations is aware of any
facts or circumstances which would give rise to a likelihood that any relevant
taxing authority may assess any additional Taxes for any period for which Tax
Returns have been filed. There is no dispute or claim concerning any liability
for Taxes of the XXXX Corporations either (i) claimed or raised by any authority
in writing or (ii) as to which such XXXX Corporation has knowledge based upon
personal contact with any agent of such authority. Schedule 3.11(d) to the
Parent Disclosure Letter sets forth as of the date of this Agreement a complete
and accurate list of current open audits of Tax Returns filed by or on behalf of
the XXXX Corporations with any Governmental Body.
(e) The unpaid Taxes of the XXXX Corporations (i) did not, as of the
date of the most recent Parent Financial Statements, exceed the reserve for Tax
Liability (as opposed to any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth in the Parent Balance
Sheet and (ii) will not exceed that reserve as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of the
XXXX Corporations in filing their Tax Returns.
(f) None of the XXXX Corporations is a party to any Tax allocation
or sharing agreement. None of the XXXX Corporations (i) has been a member of an
"AFFILIATED GROUP," as defined in Section 1504(a) of the Code, filing a
consolidated federal income Tax Return other than an affiliated group the common
parent of which is Parent or (ii) has any Liability for the Taxes of any Person
(other than any of the XXXX Corporations) under Treas. Reg. Section 1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor, by contract or otherwise.
(g) None of the XXXX Corporations will be required to include any
item of income in, or exclude any item of deduction from, taxable income for any
taxable period or portion thereof ending after the Closing Date as a result of
any (i) change in method of accounting for a taxable period ending on or prior
to the Closing Date under Section 481 of the Code, (ii) closing agreement as
described in Section 7121 of the Code executed on or prior to the Closing Date,
(iii) deferred intercompany gain or any excess loss account described in
42
regulations under Section 1502 of the Code or (iv) installment sale or open
transaction disposition made on or prior to the Closing Date.
(h) Parent is not a U.S. real property holding corporation within
the meaning of Code Section 897(c)(2).
(i) Parent has made available to the Company or its legal or
accounting representative copies of all foreign, federal and state income tax
and all state sales and use tax Returns for Parent and each of its subsidiaries
filed for all periods including and after the tax period ended December 31,
1998.
(j) (i) Parent does not have any plan or intention to reacquire, nor
does any Person "related" to Parent (within the meaning of Treasury Regulation
Section 1.368-1(e)(3)) have a plan or intention to acquire, any Parent stock
that will be issued in the Merger; except for (i) possible share repurchases
pursuant to Parent's preexisting stock repurchase program made on the open
market, through a broker at the then prevailing market price, in which the
identity of the shareholder is not known to Parent or (ii) repurchases made in
connection with the termination of employees in the ordinary course of business.
(ii) Parent has no plan or intention to liquidate the Company
or to cause the Company to merge into another corporation following the Merger.
(iii) Parent has no plan or intention to cause the Company to
sell, transfer or otherwise to dispose of any of its assets following the
Merger, except for dispositions made in the ordinary course of business and
transfers described in Section 368(a)(2)(C) of the Code and the Treasury
Regulations issued thereunder.
(iv) Parent has no plan or intention to sell or otherwise to
dispose of any stock of the Company that will be acquired by Parent in the
Merger, except for transfers described in Section 368(a)(2)(C) of the Code and
the Treasury Regulations issued thereunder.
(v) Following the Merger, Parent or one or more members of
Parent's "qualified group" intends to continue the Company's "historic business"
or to use a significant portion of its "historic business assets" in a business
(within the meaning of Section 1.368-1(d) of the Treasury Regulations), assuming
that the assets of, and the business conducted by, the Company on the Closing
Date constitute the Company's historic business assets and historic business,
respectively.
(vi) Parent has no plan or intention following the Merger to
cause the Company to issue additional shares of its stock that will result in
Parent losing "control" of the Company (within the meaning of Section 368(c) of
the Code).
(vii) Parent will own directly 100% of the capital stock of
Merger Sub at the time of the Merger.
43
3.12 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS
(a) Schedule 3.12(a) of the Parent Disclosure Letter lists as of the
date of this Agreement (i) all employee pension benefit plans (as defined in
Section 3(2) of ERISA), (ii) all employee welfare benefit plans (as defined in
Section 3(1) of ERISA), (iii) all other pension, bonus, commission, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance, fringe benefits and other similar benefit plans
(including any fringe benefit under Section 132 of the Code and any foreign
plans), programs, Contracts, arrangements or policies (including a specific
identification of those which contain change of control provisions or pending
change of control provisions), and (iv) any employment, executive compensation
or severance agreements (including a specific identification of those which
contain change of control provisions or pending change of control provisions),
whether written or otherwise, as amended, modified or supplemented, of any XXXX
Corporation or any other Entity (whether or not incorporated) which is a member
of a controlled group which includes any of the XXXX Corporations or which is
under common control with any of the XXXX Corporations within the meaning of
Sections 414(b), (c), (m) or (o) of the Code or Section 4001(a) (14) or (b) of
ERISA (each, a "PARENT ERISA AFFILIATE") for the benefit of, or relating to, any
former or current employee, independent contractor, officer or director (or any
of their beneficiaries) of any XXXX Corporation or any other Parent ERISA
Affiliate (all such plans, programs, Contracts, agreements, arrangements or
policies as described in this Section 3.12(a) shall be collectively referred to
as the "PARENT EMPLOYEE PLANS"). Parent has made available to the Company, in a
reasonable time, place and manner, true and complete copies of (i) each such
written Parent Employee Plan (or a written description of any Parent Employee
Plan which is not written) and all related trust agreements, insurance and other
contracts (including policies), summary plan descriptions, summaries of material
modifications, registration statements (including all attachments), prospectuses
and communications distributed to plan participants, (ii) the three most recent
annual reports on Form 5500 series, with accompanying schedules and attachments
(including accountants' opinions, if applicable), filed with respect to each
Parent Employee Plan required to make such a filing, (iii) the most recent
actuarial valuation for each Parent Employee Plan subject to Title IV of ERISA,
(iv) the most recent favorable determination letters issued for each Parent
Employee Plan and related trust which is intended to be qualified under Section
401(a) of the Code (and, if an application for such determination is pending, a
copy of the application for such determination), and (v) financial and other
information regarding current and projected liabilities, if any, with respect to
each Parent Employee Plan for which the filings described in (ii) or (iii) above
are not required under ERISA.
(b) (i) None of the Parent Employee Plans promises or provides
post-termination or retiree medical or other post-termination or retiree welfare
benefits to any person (other than continuation coverage to the extent required
by law, whether pursuant to the Consolidated Omnibus Budget Reconciliation Act
of 1985 or otherwise); (ii) none of the Parent Employee Plans is a Multiple
Employer Welfare Arrangement, a Multiple Employer Plan or a Multiemployer Plan,
and neither the XXXX Corporations nor any Parent ERISA Affiliate has ever
contributed to, been required to contribute to, or otherwise had any obligation
or liability in connection with a Multiple Employer Plan or a Multiemployer
Plan; (iii) no party in interest or disqualified person (as defined in Section
3(14) of ERISA and Section 4975 of the Code, respectively) has at any time
engaged in a transaction with respect to any Parent Employee Plan which could
subject any of the XXXX Corporations, directly or indirectly, to any material
tax,
44
material penalty or other material liability for prohibited transactions under
ERISA or Section 4975 of the Code; (iv) no fiduciary of any Parent Employee Plan
has breached any of the responsibilities or obligations imposed upon fiduciaries
under Title I of ERISA which shall subject any of the XXXX Corporations,
directly or indirectly, to any material penalty or liability for breach of
fiduciary duty; (v) all Parent Employee Plans have been established, maintained
and operated in accordance with their terms and have been established,
maintained and operated in substantial compliance with all applicable Legal
Requirements; (vi) all XXXX Employee Plans may by their terms be amended and/or
terminated at any time without the consent of any other Person subject to
applicable Legal Requirements and the terms of each Parent Employee Plan; (vii)
each of the XXXX Corporations has performed all obligations required to be
performed by them under, and are not in any respect in default under or in
violation of, the terms and conditions of any Parent Employee Plan; (viii) none
of the XXXX Corporations has any knowledge of any default or violation by any
other Person with respect to any of the Parent Employee Plans; (ix) each Parent
Employee Plan which is intended to be qualified under Section 401(a) of the Code
and each trust intended to qualify under Section 501(a) of the Code is the
subject of a favorable determination letter from the Internal Revenue Service as
to its qualified status under Section 401(a) of the Code (or comparable letter,
such as an opinion or notification letter as to the form of plan adopted by one
or more XXXX Corporations), or has time remaining under applicable Treasury
guidance to seek such a determination, and to Parent's knowledge nothing has
occurred prior to or since the issuance of such letter (or could reasonably be
expected to occur) which might impair such favorable determination or otherwise
impair the qualified status of such plan; (x) no XXXX Corporation is currently
subject to any penalty or tax with respect to any Parent Employee Plan under
Section 502(i) of ERISA or 4975 through 4980F of the Code or has any outstanding
liability for any penalty or tax which is not otherwise reserved for or
reflected in the Parent Financial Statements; (xi) all material contributions
required to be made or reserved, and all material premiums required to be paid
by the XXXX Corporations, as appropriate, with respect to any Parent Employee
Plan pursuant to the terms of the Parent Employee Plan, any Legal Requirements
or any collective bargaining agreement, have been made, paid or reserved on or
before their due dates (including any extensions thereof); and (xii) all Parent
Employee Plans are either fully insured or funded by a related trust, and for
each Parent Employee Plan that is funded by a related trust, the fair market
value of the assets of the related trust are at least equal to the liabilities
of such Parent Employee Plan; (xiii) there are no audits, inquiries or
proceedings pending or threatened by the Internal Revenue Service or the
Department of Labor with respect to any Parent Employee Plan; and (xiv) no
Parent Employee Plan other than a Parent Employee Plan intended to qualify under
Section 401(a) of the Code provides for post-employment or retiree benefits.
(c) None of the XXXX Corporations or any other Parent ERISA
Affiliate currently maintains, sponsors or participates in, or within the last
five years has maintained, sponsored or participated in, or has any liability,
contingent or otherwise, to, any "EMPLOYEE BENEFIT PLAN" (as defined in Section
3(3) of ERISA) that is subject to Section 412 of the Code or Title IV of ERISA.
(d) The consummation of the transactions contemplated by this
Agreement will not (either solely as a result thereof or as a result of such
transactions in conjunction with another event) cause or result in an increase
in the amount of compensation or benefits or accelerate the vesting or timing of
payment of any benefits or compensation payable in respect of any former or
45
current employee, independent contractor or consultant (or any of their
beneficiaries) of any of the XXXX Corporations.
(e) There are no Legal Proceedings pending or, to the knowledge of
Parent, threatened in respect of or relating to any Parent Employee Plan. To
Parent's knowledge, there are no facts or circumstances which could reasonably
be expected to give rise to any such Legal Proceeding (other than routine
benefit claims) in respect of or relating to any Parent Employee Plan.
(f) None of the XXXX Corporations has ever maintained an employee
stock ownership plan (within the meaning of Section 4975(e)(7) of the Code) or
any other Parent Employee Plan that invests in Parent capital stock. Since June
30, 2003, none of the XXXX Corporations has proposed or agreed to any increase
in benefits under any Parent Employee Plan (or the creation of new benefits) or
change in employee coverage which would increase the expense of maintaining any
Parent Employee Plan. No person will be entitled to any severance benefits,
acceleration of vesting of any the Parent Options or the extension of any period
during which any Parent Options may be exercised, under the terms of any Parent
Employee Plan as a result of the consummation of the transactions contemplated
by this Agreement (either solely as a result thereof or as a result of such
transactions in conjunction with another event).
(g) To the extent that any Parent Employee Plan is required by any
applicable Legal Requirement to be covered by any bond (e.g., fidelity or
otherwise) in any particular amount, each such Parent Employee Plan required to
be covered by such bond has at all times been covered by such bond in accordance
and in material compliance with all applicable Legal Requirements.
(h) (i) There are no controversies pending or, to the knowledge of
Parent, threatened, between any of the XXXX Corporations and any of their
respective foreign or domestic former or current employees, officers, directors,
independent contractors or consultants (or any of their beneficiaries), (ii)
there is no labor strike, dispute, slowdown, work stoppage or lockout actually
pending or, to the knowledge of Parent, threatened against or affecting any XXXX
Corporation, (iii) none of the XXXX Corporations is a party to or bound by any
collective bargaining or similar agreement with any labor organization, or work
rules or practices agreed to with any labor organization or employee association
applicable to employees of the XXXX Corporations, (iv) none of the employees of
the XXXX Corporations are represented by a labor organization or group that was
either certified or voluntarily recognized by any labor relations board and no
union organizing campaign or other attempt to organize or establish a labor
union, employee organization or labor organization involving employees of the
XXXX Corporations has occurred, is in progress or, to the knowledge of Parent,
is threatened, (v) the XXXX Corporations have each at all times been in
compliance in all material respects with all applicable Legal Requirements
governing or concerning labor relations, conditions of employment, employment
discrimination or harassment, wages, hours, or occupational safety and health,
and with any collective bargaining agreements (both foreign and domestic), (vi)
there is no unfair labor practice charge or complaint against any of the XXXX
Corporations
46
pending or, to the knowledge of Parent, threatened before the National Labor
Relations Board or any similar state or foreign agency, (vii) there is no
grievance or arbitration demand or proceeding arising out of any collective
bargaining agreement or other grievance procedure relating to the XXXX
Corporations pending, or to the knowledge of Parent, threatened, against any
XXXX Corporation, (viii) none of the XXXX Corporations is a federal or state
contractor, (ix) to Parent's knowledge, neither the Occupational Safety and
Health Administration nor any corresponding state or foreign agency is
threatening to file any citation or complaint, and there are no pending
citations or complaints, relating to the XXXX Corporations, and (x) there are no
complaints, charges or claims against any XXXX Corporation pending or, to the
knowledge of Parent, threatened, which could be brought or filed with any
Governmental Body, court or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment of, termination of employment of,
or failure of any XXXX Corporation to employ any individual. There are no
pending, threatened or reasonably anticipated claims against any of the XXXX
Corporations under any workers' compensation disability policy or long-term
policy.
(i) No Parent Employee Plan is a Voluntary Employees' Beneficiary
Association within the meaning of Section 501(c)(9) of the Code.
(j) All Parent Employee Plans that are "GROUP HEALTH PLANS" as
defined under the respective provision comply with and have been administered in
compliance with the health care continuation-coverage requirements under Section
4980B(f) of the Code, Sections 601 through 607 of ERISA, all final Treasury
regulations under Section 4890B of the Code explaining those requirements, and
all other applicable Legal Requirements regarding continuation and/or conversion
coverage and with Code Section 4980D and ERISA Sections 701 through 734, the
requirements of the Family Medical Leave Act, the requirements of HIPAA, the
requirements of the Women's Health and Cancer Rights Act of 1998, the
requirements of the Newborns' and Mothers' Health Protection Act of 1996, and
any amendment to each such act or any similar provisions of state law applicable
to employees of the XXXX Corporations.
(k) No amount required to be paid or payable to or with respect to
current or former employee of any of the XXXX Corporations in connection with
the transactions contemplated hereby (either solely as a result thereof or as a
result of such transactions in conjunction with any other event) will be an
"EXCESS PARACHUTE PAYMENT" within the meaning of Section 280G of the Code or
will not be deductible under Sections 162(a)(1) or 404 of the Code.
(l) Set forth on Schedule 3.12(l) of the Parent Disclosure Letter is
a list of all employees of each XXXX Corporation as of the date of this
Agreement together with respect to each such employee (i) the employee's base
salary and (ii) any severance that would be due upon termination with or without
cause of such employee (other than pursuant to (A) severance or bonus policies
or employment or change of control agreements in each case as in effect on the
date of this Agreement and listed on Schedule 3.7(a) or Schedule 3.12(a) of the
Parent Disclosure Letter, or (B) Legal Requirements applicable to each of the
XXXX Corporations which is formed or incorporated under the laws of a foreign
jurisdiction). Schedule 3.12(l) of the Parent Disclosure Letter also sets forth
with respect to each Parent employee accrued paid time off payable to each such
employee as of May 11, 2004.
(m) None of the XXXX Corporations has taken any action that would
constitute a "MASS LAYOFF," "MASS TERMINATION" or "PLANT CLOSING" within the
meaning of the WARN Act or
47
otherwise trigger notice requirements or liability under any federal, local,
state, or foreign plant closing notice or collective dismissal law.
(n) Each of the XXXX Corporations is in compliance with all
immigration and naturalization Legal Requirements relating to employment and
employees, each of the XXXX Corporations has properly completed and maintained
in all material respects all applicable forms (including I-9 forms), there are
no citations, investigations, enforcement proceedings or formal complaints
concerning immigration or naturalization Legal Requirements pending or, to the
knowledge of Parent, threatened before the United States Citizenship and
Immigration Services or any related federal, state, foreign or administrative
agency or court, involving or against the XXXX Corporations, and none of the
XXXX Corporations has received notice of any violation of any immigration and
naturalization Legal Requirement.
(o) The classification by the XXXX Corporations or a Parent ERISA
Affiliate of individuals as employees or independent contractors has been made
in compliance with all applicable Legal Requirements.
3.13 ENVIRONMENTAL MATTERS.
Each of the XXXX Corporations is in compliance with, and has
conducted its activities in compliance with, all applicable Environmental Laws,
which compliance includes the possession by each of the XXXX Corporations of all
material permits and other Governmental Authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof, except
where the failure to so comply would not result in a material liability or clean
up obligation on the XXXX Corporations. The consummation of the transactions
contemplated by this Agreement will not affect the validity of such material
permits and Governmental Authorizations held by Parent or any of the XXXX
Corporations, and will not require any filing, notice, or remediation under any
Environmental law. To the knowledge of Parent, there are no past or present
events, conditions, activities, or practices which would reasonably be expected
to prevent Parent's or any of the XXXX Corporations' compliance in any material
respect with any Environmental Law, or which would reasonably be expected to
give rise to any material liability of Parent or any of the XXXX Corporations
under any Environmental Law. Within the past seven (7) years, none of the XXXX
Corporations has received any written notice, or to its knowledge, other
communication (in writing or otherwise) that alleges that any of the XXXX
Corporations is not in material compliance with any Environmental Law, and
Parent has no knowledge of any circumstances that would reasonably be expected
to result in such claims or communications. To Parent's knowledge, no current or
prior owner of any property owned, leased or controlled by any of the XXXX
Corporations has received any written notice or other communication (in writing
or otherwise) that alleges that such current or prior owner or any of the XXXX
Corporations is not in compliance with any Environmental Law in such a manner as
would be reasonably likely to would not result in a material liability or clean
up obligation on any XXXX Corporation. Neither Parent nor any of the XXXX
Corporations has assumed by contract, agreement or otherwise any liabilities or
obligations arising under any Environmental Law, or is currently performing any
required investigation, response or other corrective action under any
Environmental Law. There are no underground storage tanks or related piping on
any property owned, leased, controlled by or used by any of the XXXX
Corporations, and any former such tanks and piping have been removed or closed
in accordance
48
with applicable Environmental Laws. To Parent's knowledge, all property that is
owned by, leased to, controlled by or used by any of the XXXX Corporations is
free of any friable asbestos or asbestos-containing material.
3.14 LEGAL PROCEEDINGS; ORDERS.
Except as set forth in the Parent SEC Documents, there is no pending
Legal Proceeding and, to Parent's knowledge, within the past twenty-four (24)
months no Person has threatened to commence any Legal Proceeding, that involves
any of the XXXX Corporations or any of the assets owned or used by any of the
XXXX Corporations, in each case which would be reasonably likely to be material
to the XXXX Corporations; and there is no Order to which any of the XXXX
Corporations, or any of the material assets owned or used by any of the XXXX
Corporations, is subject.
3.15 VOTE REQUIRED.
(a) The affirmative vote of a majority of the votes cast on the
proposal to approve the issuance of Parent Common Stock pursuant to the Merger
(provided that the total votes cast on the proposal represent over 50% in
interest of all securities entitled to vote on the proposal) is the only vote of
the holders of any class or series of Parent's capital stock necessary to
approve the issuance of Parent Common Stock pursuant to the Merger.
(b) The affirmative vote of Parent is the only vote of the holders
of any class or series of Merger Sub's capital stock necessary to approve this
Agreement and otherwise approve and consummate the Merger as set forth herein.
3.16 NON-CONTRAVENTION; CONSENTS.
Neither the execution, delivery or performance of this Agreement nor
the consummation of the Merger, or any of the other transactions contemplated by
this Agreement, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of any of the
provisions of the Parent Organization Documents or any resolution adopted by the
stockholders, the Board of Directors or any committee of the Board of Directors
of any of the XXXX Corporations;
(b) subject to such filings, if any, as may be required pursuant to
the HSR and any Governmental Body action related thereto, contravene, conflict
with or result in a violation of, or give any Governmental Body the right to
challenge the Merger or any of the other transactions contemplated by this
Agreement or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which any of the XXXX Corporations, or any of the
material assets owned or used by any of the XXXX Corporations, is subject;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any material Governmental
Authorization that is held by any of the XXXX Corporations or that is otherwise
material to the business of any of the XXXX Corporations or to any of the assets
owned or used by any of the XXXX Corporations; or
49
(d) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any Parent Material Contract
(except for any such violation or breach which by its terms can be cured and is
so cured within the applicable cure period or where the non-breaching party has
no right to accelerate or terminate as a result of such violation or breach), or
give any Person the right to (i) declare a default or exercise any remedy under
any Parent Material Contract, (ii) accelerate the maturity or performance of any
Parent Material Contract, or (iii) cancel, terminate or modify any term of any
Parent Material Contract.
Except as may be required by the Exchange Act, the DGCL and the
rules and regulations of the Nasdaq (as such rules and regulations relate to the
Registration Statement and the Proxy Statement) and such filings as may be
required pursuant to the HSR and except for any Consent required under any
Parent Material Contract, none of the XXXX Corporations was, is or will be
required to make any filing with or give any notice to, or obtain any Consent
from, any Person in connection with (x) the execution, delivery or performance
of this Agreement, or (y) the consummation of the Merger or any of the other
transactions contemplated by this Agreement, except in the case of subsections
(x) and (y), where the failure to make such filing, give such notice or obtain
any such consent would not have a Material Adverse Effect on the XXXX
Corporations.
3.17 OPINION OF FINANCIAL ADVISOR.
The Parent's Board of Directors has received the opinion of Xxxxx
Fargo Securities, LLC ("XXXXX FARGO"), financial advisor to Parent, that as of
the date of this Agreement and subject to the assumptions, qualifications and
limitations set forth therein, the Exchange Ratio is fair to Parent from a
financial point of view. Parent will furnish an accurate and complete copy of
said opinion to the Company.
3.18 FINANCIAL ADVISOR.
Except with respect to Xxxxx Fargo, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger or any of the other transactions contemplated by this
Agreement based upon arrangements made by or on behalf of any of the XXXX
Corporations. Parent has furnished to the Company an accurate and complete copy
of its agreement with Xxxxx Fargo.
3.19 TAKEOVER STATUTES.
To Parent's knowledge, no Takeover Laws (other than Section 203 of
the DGCL) are applicable to the Merger, this Agreement, the Parent Voting
Agreements or any of the transactions contemplated hereby and thereby. The
action of the Board of Directors of Parent in approving this Agreement and the
Parent Voting Agreements (and the transactions provided for herein and therein)
is sufficient to render inapplicable to this Agreement and the Parent Voting
Agreements (and the transactions provided for herein and therein) the
restrictions on "business combinations" (as defined in Section 203 of the DGCL)
as set forth in Section 203 of the DGCL. The provisions of Section 262 of the
DGCL providing for appraisal rights do not apply to the Merger.
50
3.20 INFORMATION TO BE SUPPLIED.
None of the information supplied or to be supplied by or on behalf
of Parent for inclusion or incorporation by reference in the Registration
Statement will, at the time the Registration Statement is filed with the SEC or
becomes effective under the Securities Act, 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 the light of the
circumstances under which they are made, not misleading. None of the information
supplied or to be supplied by or on behalf of Parent for inclusion or
incorporation by reference in the Parent Proxy Statement or the Company Proxy
Statement will, at the time the Parent Proxy Statement or the Company Proxy
Statement is mailed to the stockholders of Parent or the shareholders of the
Company, as the case may be, or at the time of the Parent Stockholders' Meeting
or the Company's Shareholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Parent Proxy
Statement will comply as to form in all material respects with the applicable
provisions of the Exchange Act and the rules and regulations promulgated by the
SEC thereunder. Notwithstanding the foregoing, Parent makes no representation or
warranty with respect to any information supplied by or to be supplied by the
Company that is included or incorporated by reference in the foregoing
documents.
3.21 FOREIGN CORRUPT PRACTICES ACT.
Neither Parent, any other XXXX Corporation, any of the XXXX
Corporation's officers, directors, nor, to Parent's knowledge, any employees or
agents (or stockholders), distributors, representatives or other persons acting
on the express, implied or apparent authority of any XXXX Corporation, have
paid, given or received or have offered or promised to pay, give or receive, any
bribe or other unlawful payment of money or other thing of value, any unlawful
discount, or any other unlawful inducement, to or from any person or
Governmental Body in the United States or elsewhere in connection with or in
furtherance of the business of any of the XXXX Corporations (including any
unlawful offer, payment or promise to pay money or other thing of value (a) to
any foreign official, political party (or official thereof) or candidate for
political office for the purposes of influencing any act, decision or omission
in order to assist any XXXX Corporation in obtaining business for or with, or
directing business to, any person, or (b) to any person, while knowing that all
or a portion of such money or other thing of value will be offered, given or
promised unlawfully to any such official or party for such purposes). Neither
the business of Parent nor of any other XXXX Corporation is in any manner
dependent upon the making or receipt of such unlawful payments, discounts or
other inducements. Neither Parent nor any other XXXX Corporation has otherwise
taken any action that could cause Parent or any other XXXX Corporation to be in
violation of the Foreign Corrupt Practices Act of 1977, as amended, the
regulations thereunder, or any applicable Legal Requirements of similar effect.
3.22 REAL PROPERTY.
Parent has good and marketable title to, or a valid leasehold
interest in, all of its real properties, in each case free and clear of all
Encumbrances. The XXXX Corporations have not owned any real property at any time
during the past five (5) years. Schedule 3.22 of the
51
Parent Disclosure Letter sets forth a true and correct list of all real property
currently leased by each of the XXXX Corporations identifying, with respect to
each lease of such real property, the date of, the parties to, and any
amendments, modifications, extensions or other supplements to such lease. No
XXXX Corporation has sent or received any written notice of any default under
any of the leases of real property to which it is party. No XXXX Corporation is
in breach of, or in default under, any covenant, agreement, term or condition of
or contained in any lease of real property to which it is a party and there has
not occurred any event that with the lapse of time or the giving of notice or
both could constitute such a default or breach.
3.23 INSURANCE POLICIES.
Parent has delivered to the Company prior to the date hereof a
complete and accurate list of all insurance policies in force naming Parent, any
of the other XXXX Corporations or any director, officer or employee thereof as
an insured or beneficiary or as a loss payable payee or for which Parent or any
other XXXX Corporation has paid or is obligated to pay all or part of the
premiums. Neither Parent nor any other XXXX Corporation has received notice of
any pending or threatened cancellation or premium increase (retroactive or
otherwise) with respect thereto, and each of the XXXX Corporations is in
compliance in all material respects with all conditions contained therein. There
are no material pending claims against such insurance policies by Parent or any
other XXXX Corporation as to which insurers are defending under reservation of
rights or have denied liability, and there exists no material claim under such
insurance policies that has not been properly filed by Parent or any other XXXX
Corporation. Except for the self-insurance retentions or deductibles set forth
in the policies contained in the aforementioned list, the policies are adequate
in scope and amount to cover all prudent and reasonably foreseeable risks which
may arise in the conduct of the business of the XXXX Corporations that would
reasonably be expected to have a Material Adverse Effect on the XXXX
Corporations.
SECTION 4. CERTAIN COVENANTS OF THE COMPANY AND PARENT
4.1 ACCESS AND INVESTIGATION.
During the period from the date of this Agreement until the earlier
of the Effective Time or the date this Agreement shall be terminated in
accordance with Section 7 (the "PRE-CLOSING PERIOD"), each of the Company and
Parent shall use its reasonable best efforts to cause the Acquired Corporations,
in the case of the Company, and the XXXX Corporations in the case of Parent, to
provide the other party's Representatives with reasonable access during normal
business hours to the personnel and assets of, and to all existing books,
records, Tax Returns, work papers and other documents and information relating
to, the Acquired Corporations and the XXXX Corporations and with such additional
financial, operating and other data and information regarding the Acquired
Corporations, as Parent may reasonably request, and the XXXX Corporations, as
the Company may reasonably request, as the case may be; provided, however, that
the parties shall endeavor to coordinate such access through the following
contacts: Xxxxxx Xxxxxx for the Company and Xxxx XxXxxxx for Parent. Each party
acknowledges that the Company and Parent have previously entered into (a) a
Non-Disclosure Agreement, dated July 8, 2003, between the Company and Parent,
(b) a Confidentiality Agreement, undated, between Parent and the Company, and
(c) a Non-Disclosure Agreement dated January 27, 2004 among
52
the Company, Parent, and Wells-Fargo Securities, LLC (collectively, the
"CONFIDENTIALITY AGREEMENTS"), which will continue in full force and effect in
accordance with their terms.
4.2 OPERATION OF BUSINESS.
(a) During the Pre-Closing Period the Company (which for purposes of
this Section 4.2 shall include the Acquired Corporations) and Parent (which for
purposes of this Section 4.2 shall include the XXXX Corporations) shall, (i)
except in the case of the Company, as provided in Schedule 4.2 of the Company
Disclosure Letter, (ii) except in the case of Parent, as provided in Schedule
4.2 of the Parent Disclosure Letter, (iii) except as contemplated by this
Agreement, and (iv) except with the prior written consent of the other party
(the granting or withholding of such consent not to be unreasonably delayed,
withheld or conditioned): (A) conduct, in the case of the Company, the business
and operations of the Acquired Corporations taken as a whole, and in the case of
Parent, the business and operations of the XXXX Corporations taken as a whole,
(1) in the ordinary course consistent with prior practice, and (2) in material
compliance with all applicable Legal Requirements and the requirements of all
Company Material Contracts in the case of the Acquired Corporations and of all
Parent Material Contracts in the case of the XXXX Corporations; (B) use
commercially reasonable efforts to preserve intact, in the case of the Company,
the current business organization of the Acquired Corporations taken as a whole,
and in the case of Parent, the current business organization of the XXXX
Corporations taken as a whole, keep available the services of their current
officers and employees and maintain their relations and goodwill at least as
favorable as at the date of this Agreement with all suppliers, customers,
distributors, landlords, creditors, licensors, licensees and other Persons
having business relationships with them; (C) provide all notices, assurances and
support required by any Contract relating to any Acquired Corporation
Proprietary Asset or XXXX Corporation Proprietary Asset, as the case may be, in
order to ensure that no condition under such Contract occurs which could result
in, or could increase the likelihood of any transfer or disclosure by any
Acquired Corporation or XXXX Corporation, as the case may be, of any source code
materials or other Acquired Corporation Proprietary Asset or XXXX Corporation
Proprietary Asset, as the case may be; and (iv) keep in full force and effect
(with the same scope and limits of coverage) all insurance policies in effect as
of the date of this Agreement covering all material assets of the Acquired
Corporations or the XXXX Corporations, as the case may be (including using
commercially reasonable efforts to renew such policies which may expire or
terminate during the Pre-Closing Period; provided, however, that either the
Company or Parent may choose not to renew any such policy without the other
party's prior written consent, subject to reasonable prior consultation with the
other party).
(b) Except as contemplated by this Agreement or as set forth on
Schedule 4.2(b) of the Company Disclosure Letter, during the Pre-Closing Period,
the Company shall not and shall not permit any of the other Acquired
Corporations, without the prior written consent of Parent (the granting or
withholding of such consent not to be unreasonably delayed, withheld or
conditioned) to:
(i) declare, accrue, set aside or pay any dividend or make any
other distribution in respect of any shares of capital stock or repurchase,
redeem or otherwise reacquire any shares of capital stock or other securities;
53
(ii) sell, issue, grant or authorize the issuance or grant of
(A) any capital stock, other security (including the sale, transfer or grant of
any treasury shares) or any obligation convertible or exchangeable for capital
stock or any other security of any of the Acquired Corporations or (B) any
Company Stock Right, other than prior to the Effective Time, except (1) the
Company may issue Company Common Stock upon the valid exercise of Company Stock
Rights outstanding as of the date of this Agreement and (2) the Company may
grant options to purchase shares of Company Common Stock at fair market value in
the ordinary course of business consistent with prior practice and in accordance
with the Company Stock Option Plan to employees of the Company (and the exercise
of those options) in an amount not to exceed the number of options set forth on
Schedule 4.2(b)(ii) of the Company Disclosure Letter;
(iii) hire any employee of the Company or any other Acquired
Corporation, other than employees hired in the ordinary course business
consistent with prior practice;
(iv) except (i) as required by applicable Legal Requirements,
(ii) for the anticipated acceleration of vesting of Company Options as described
in Section 2.3(b) and Schedule 2.3(b) of the Company Disclosure Letter, (iii)
pursuant to the terms of a Company Employee Plan or agreement, as the case may,
or (iv) as disclosed on Schedule 2.3(a) or Schedule 2.12(a) of the Company
Disclosure Letter, amend or waive any of its rights under any provision of any
of the Company Stock Option Plan, any provision of any agreement evidencing any
outstanding stock option or any restricted stock purchase agreement, or
otherwise modify any of the terms of any outstanding option, warrant, or other
security or any related Contract;
(v) form any Subsidiary;
(vi) amend or permit the adoption of any amendment to the
Company Organization Documents, or effect a recapitalization, reclassification
of shares, stock split, reverse stock split or similar transaction;
(vii) make any capital expenditure in excess of the amount
budgeted therefor on the capital expenditure budget of the Company and the other
Acquired Corporations previously delivered to Parent;
(viii) enter into or become bound by, or permit any of the
Proprietary Assets owned by it to become bound by, any Company Material Contract
under which the Company grants an exclusive license to or other exclusive rights
in any such Proprietary Asset;
(ix) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets of, by
licensing or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets of any other Person, except for the
purchase of assets from suppliers or vendors in the ordinary course of business
consistent with prior practice;
(x) sell, lease, exchange, mortgage, pledge, transfer or
otherwise subject to any Encumbrance or dispose of any of its material assets,
except for sales, dispositions
54
or transfers in the ordinary course of business consistent with prior practice
and except for the disposition and leaseback of the Company's Atlanta office
building located at Seven North Parkway Square, 0000 Xxxxxxxxx Xxxxxxx, X.X.,
Xxxxxxx, Xxxxxxx;
(xi) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another Person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities, guarantee
any debt securities of another Person, enter into any "KEEP WELL" or other
agreement to maintain any financial statement condition of another Person or
enter into any agreement having the economic effect of any of the foregoing,
except for borrowings incurred under the Company's existing credit facility or
in the ordinary course of business, (B) make any loans or advances to any other
Person other than in the ordinary course of business consistent with prior
practice or (C) make any capital contributions to, or investments in, any other
Person;
(xii) (A) pay, discharge, settle or satisfy any claims,
liabilities or obligations (whether absolute or contingent, matured or
unmatured, known or unknown), other than the payments, discharges or
satisfactions in the ordinary course of business consistent with prior practice
or (B) subject to Section 4.3(d), (1) waive any material benefits of, or agree
to modify in any material respect, any standstill or similar agreement to which
any Acquired Corporation is a party or (2) waive any benefits of, or agree to
modify, any confidentiality agreement or similar agreement to which any Acquired
Corporation is a party (other than confidentiality agreements entered into in
the ordinary course of business consistent with prior practice where such
modification or waiver would not have a Material Advance Effect on the Acquired
Corporations);
(xiii) except as set forth in Schedule 2.7(a) and Schedule
2.12(a) of the Company Disclosure Letter, (A) except as required by Legal
Requirements applicable to each of the Acquired Corporations which is formed or
incorporated under the laws of a foreign jurisdiction (1) increase in any
material manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee; (2) grant any severance or termination pay to, or
enter into any severance agreement with, any director, officer or employee, or
enter into any employment agreement with any director, officer or employee; (3)
pay any benefit not provided for under any Company Employee Plan or other
arrangement; (4) grant any awards under any bonus, incentive, performance or
other compensation plan or arrangement or Company Employee Plan or other
arrangement (including the grant of stock options, stock appreciation rights,
stock-based or stock-related awards, performance units or restricted stock, or
the removal of existing restrictions in any Company Employee Plan or other
arrangement or agreement or awards made thereunder), other than options issued
in accordance with Section 4.2(b)(ii) above; or (5) take any action to fund
prior to when due or in any other way secure the payment of compensation or
benefits under any agreement or (B) except as may be required to comply with
applicable Legal Requirements, establish, adopt, enter into or amend any Company
Employee Plan or other arrangement;
(xiv) change any of its methods of accounting or accounting
practices in any respect, except as required by GAAP;
55
(xv) make or rescind any express or deemed material election
relating to Taxes, settle or compromise any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, or change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns;
(xvi) commence or settle any material Legal Proceeding other
than in the ordinary course consistent with prior practice;
(xvii) take, agree to take, or omit to take any action which
would cause any of the conditions set forth in Section 6 not to be able to be
satisfied prior to the Termination Date;
(xviii) enter into or become bound by, or permit any of the
assets owned or used by it to become bound by, any Company Material Contract, or
waive, release, or assign any rights or claims, or modify or terminate any
Company Material Contract;
(xix) allow any of the Acquired Corporation Proprietary Assets
to lapse, expire (except by operation of law) or become abandoned; or
(xx) agree or commit to take any of the actions described in
clauses (i) through (xix) of this Section 4.2(b).
(c) Except as contemplated by this Agreement or as set forth on
Schedule 4.2(c) of the Parent Disclosure Letter, during the Pre-Closing Period,
neither Parent nor Merger Sub shall, nor shall they permit any of the XXXX
Corporations, without the prior written consent of the Company (the granting or
withholding of such consent not to be unreasonably delayed, withheld or
conditioned) to:
(i) declare, accrue, set aside or pay any dividend or make any
other distribution in respect of any shares of capital stock or repurchase,
redeem or otherwise reacquire any shares of capital stock or other securities;
(ii) sell, issue, grant or authorize the issuance or grant of
(A) any capital stock, other security (including the sale, transfer or grant of
any treasury shares) or any obligation convertible or exchangeable for capital
stock or any other security of any of the XXXX Corporations or (B) any Parent
Stock Right, other than prior to the Effective Time, (1) except Parent may issue
Parent Common Stock (and corresponding rights under the Parent Stockholder
Rights Agreement) upon the valid exercise of Parent Stock Rights outstanding as
of the date of this Agreement, (2) Parent may grant options to purchase shares
of Parent Common Stock at fair market value in the ordinary course of business
consistent with prior practice and in accordance with existing Parent Stock
Option Plans to employees of Parent (and the exercise of those options) in an
amount not to exceed the number of options set forth on Schedule 4.2(c)(ii) of
the Parent Disclosure Letter, and (3) shares of Parent Common Stock (and
corresponding rights under the Parent Stockholder Rights Agreement) issuable to
participants in the Parent ESPP consistent with the terms thereof in an amount
not to exceed the number of shares set forth on Schedule 4.2(c)(ii) of the
Parent Disclosure Letter;
56
(iii) except as required by applicable Legal Requirements or
pursuant to the terms of a Parent Employee Plan or agreement, as the case may,
or disclosed on Schedule 3.7 or Schedule 3.12(a) of the Parent Disclosure
Letter, amend or waive any of its rights under, or accelerate the vesting under,
any provision of any of the Parent Stock Option Plans, any provision of any
agreement evidencing any outstanding stock option or any restricted stock
purchase agreement, or otherwise modify any of the terms of any outstanding
option, warrant, or other security or any related Contract;
(iv) hire any employee of Parent or any other XXXX
Corporation, other than employees hired in the ordinary course business
consistent with prior practice;
(v) amend or permit the adoption of any amendment to the
Parent Organization Documents, or effect a recapitalization, reclassification of
shares, stock split, reverse stock split or similar transaction provided,
however, Parent may include in the Parent Proxy Statement a proposal to amend,
or amend and restate, Parent's Amended and Certificate of Incorporation to
increase the number of shares of Parent Common Stock that Parent is authorized
to issue;
(vi) form any Subsidiary;
(vii) make any capital expenditure in excess of the amount
budgeted therefor on the capital expenditure budget of Parent and the other XXXX
Corporations previously delivered to the Company;
(viii) enter into or become bound by, or permit any of the
Proprietary Assets owned by it to become bound by, any Parent Material Contract
under which Parent grants an exclusive license to or other exclusive rights in
such Proprietary Asset;
(ix) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or agree
to acquire any assets of any other Person, except for the purchase of assets
from suppliers or vendors in the ordinary course of business consistent with
prior practice;
(x) sell, lease, exchange, mortgage, pledge, transfer or
otherwise subject to any Encumbrance or dispose of any of its material assets,
except for sales, dispositions or transfers in the ordinary course of business
consistent with prior practice;
(xi) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another Person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities, guarantee
any debt securities of another Person, enter into any "KEEP WELL" or other
agreement to maintain any financial statement condition of another Person or
enter into any agreement having the economic effect of any of the foregoing,
except for borrowings incurred in the ordinary course of business, (B) make any
loans or advances to any other Person other than in the ordinary course of
business consistent with prior practice or (C) make any capital contributions
to, or investments in, any other Person;
57
(xii) (A) pay, discharge, settle or satisfy any claims,
liabilities or obligations (whether absolute or contingent, matured or
unmatured, known or unknown), other than the payments, discharges or
satisfactions in the ordinary course of business consistent with prior practice
or (B) subject to Section 4.4(d), (1) waive any material benefits of, or agree
to modify in any material respect, any standstill or similar agreement to which
any XXXX Corporation is a party or (2) waive any benefits of, or agree to
modify, any confidentiality agreement or similar agreement to which any XXXX
Corporation is a party (other than confidentiality agreements entered into in
the ordinary course of business consistent with prior practice where such
modification or waiver would not have a Material Advance Effect on the XXXX
Corporations);
(xiii) except as set forth in Schedule 3.7(a) or Schedule
3.12(a) of the Parent Disclosure Letter, (A) except as required by Legal
Requirements applicable to each of the XXXX Corporations which is formed or
incorporated under the laws of a foreign jurisdiction (1) increase in any
material manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee; (2) grant any severance or termination pay to, or
enter into any severance agreement with, any director, officer or employee, or
enter into any employment agreement with any director, officer or employee; (3)
pay any benefit not provided for under any Parent Employee Plan or other
arrangement; (4) grant any awards under any bonus, incentive, performance or
other compensation plan or arrangement or Parent Employee Plan or other
arrangement (including the grant of stock options, stock appreciation rights,
stock-based or stock-related awards, performance units or restricted stock, or
the removal of existing restrictions in any Parent Employee Plan or other
arrangement or agreement or awards made thereunder) other than options or shares
issued in accordance with Section 4.2(c)(ii) above; or (5) take any action to
fund prior to when due or in any other way secure the payment of compensation or
benefits under any agreement or (B) except as may be required to comply with
applicable Legal Requirements, establish, adopt, enter into or amend any Parent
Employee Plan or other arrangement;
(xiv) change any of its methods of accounting or accounting
practices in any respect, except as required by GAAP;
(xv) make or rescind any express or deemed material election
relating to Taxes, settle or compromise any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, or change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns;
(xvi) take, agree to take, or omit to take any action which
would cause the conditions set forth in Section 6 not to be able to be satisfied
prior to the Termination Date;
(xvii) commence or settle any material Legal Proceeding other
than in the ordinary course consistent with prior practice;
(xviii) enter into or become bound by, or permit any of the
assets owned or used by it to become bound by, any Parent Material Contract, or
waive, release, or assign any rights or claims, or modify or terminate any
Parent Material Contract;
58
(xix) allow any of the XXXX Corporation Proprietary Assets to
lapse, expire (except by operation of law) or become abandoned; or
(xx) agree or commit to take any of the actions described in
clauses (i) through (xix) of this Section 4.2(c).
4.3 NO SOLICITATION BY THE COMPANY.
(a) During the Pre-Closing Period, the Company shall not, directly
or indirectly, and shall not, directly or indirectly, authorize or permit any of
the other Acquired Corporations or any Representative of any of the Acquired
Corporations to, (i) solicit, encourage, initiate or seek the making, submission
or announcement of any Company Acquisition Proposal, (ii) furnish any
information regarding any of the Acquired Corporations to any Person (other than
Parent or Merger Sub) in connection with or in response to a Company Acquisition
Proposal or an inquiry that could reasonably be expected to lead to a Company
Acquisition Proposal, (iii) engage or participate in any discussions or
negotiations with any Person with respect to any Company Acquisition Proposal or
any inquiry that could reasonably be expected to lead to any Company Acquisition
Proposal, (iv) approve, endorse or recommend any Company Acquisition Proposal,
or (v) enter into any letter of intent or similar document or any Contract
contemplating or otherwise relating to any Company Acquisition Transaction;
provided, however, that this Section 4.3 shall not prohibit (A) the Company, or
the Board of Directors of the Company, prior to the approval of this Agreement
by the Company's shareholders, from furnishing nonpublic information regarding
the Acquired Corporations to, or entering into or participating in discussions
or negotiations with, any Person in response to an unsolicited, bona fide
written Company Acquisition Proposal that the Board of Directors of the Company
concludes in good faith would reasonably be expected to result in a Company
Superior Offer that is submitted to the Company by such Person (and not
withdrawn) if (1) none of the Acquired Corporations or any Representative of any
of the Acquired Corporations shall have violated any of the restrictions set
forth in this Section 4.3 in connection with the receipt of such Company
Acquisition Proposal, (2) the Board of Directors of the Company concludes in
good faith, after consultation with its outside legal counsel, that such action
with respect to such Company Acquisition Proposal is required to comply with the
fiduciary duties of the Board of Directors of the Company to the Company
shareholders under applicable Georgia law, (3) the Company gives to Parent the
notice required by Section 4.3(b), (4) the Company gives Parent prompt prior
written notice of the Company's intention to furnish nonpublic information to,
or enter into or participate in discussions or negotiations with, such Person,
and the Company receives from such Person an executed confidentiality agreement
with provisions no less favorable to the Company than those contained in the
Confidentiality Agreements; and (5) the Company furnishes such information to
such Person and to Parent at substantially the same time (to the extent such
information has not been previously furnished by the Company to Parent); or (B)
subject to the obligation of the Company and the Company's Board of Directors
not to withhold, withdraw or modify its recommendation except as expressly set
forth in Section 4.3(e), the Company from complying with Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to any Company Acquisition
Proposal. Without limiting the foregoing, it is understood that any violation of
the restrictions set forth in the preceding sentence by any director, officer,
employee or agent of the Company or any of its subsidiaries or any investment
banker, financial advisor, attorney,
59
accountant or other representative of the Company or any of its subsidiaries
shall be deemed to be a breach of this Section by the Company.
(b) The Company shall promptly, and in no event later than
twenty-four (24) hours after its receipt of any Company Acquisition Proposal or
inquiry that could reasonably be expected to lead to any Company Acquisition
Proposal, or any request for nonpublic information relating to any of the
Acquired Corporations in connection with a Company Acquisition Proposal or
inquiry that could reasonably be expected to lead to any Company Acquisition
Proposal, advise Parent orally and in writing of such Company Acquisition
Proposal, inquiry or request (including providing the identity of the Person
making or submitting such Company Acquisition Proposal, inquiry or request, and
a summary of the material terms thereof, if the Company Acquisition Proposal is
not in writing, or a copy of the Company Acquisition Proposal and any related
draft agreements if it is in writing) that is made or submitted by any Person
during the Pre-Closing Period. The Company shall keep Parent informed in all
material respects on a prompt basis with respect to the status of any such
Company Acquisition Proposal, inquiry or request and any material modification
or proposed material modification thereto (and in no event later than
twenty-four (24) hours of any request, material modification or proposed
material modification thereto).
(c) Upon the execution of this Agreement, the Company shall
immediately cease and cause to be terminated any discussions existing as of the
date of this Agreement with any Person (other than Parent) that relate to any
Company Acquisition Proposal.
(d) Notwithstanding anything in Section 4.2(b)(xii)(B), the Company
agrees not to release any Person (other than Parent) from or waive any provision
of any confidentiality, "standstill" or similar agreement to which the Company
is a party and which relates to a Company Acquisition Proposal, and will use its
commercially reasonable efforts to enforce each such agreement at the request of
Parent.
(e) Notwithstanding anything in this Agreement to the contrary, the
Board of Directors of the Company may at any time prior to receipt of the
approval of the Company's shareholders of this Agreement, withhold, withdraw or
modify the Company Recommendation in a manner adverse to Parent in respect of,
or enter into an agreement with respect to, a Company Acquisition Transaction
if: (i) an unsolicited, bona fide written offer is made to the Company by a
third party for a Company Acquisition Transaction, and such offer is not
withdrawn; (ii) the Company's Board of Directors determines in good faith, after
consultation with its financial advisor, that such offer constitutes a Company
Superior Offer; (iii) following consultation with outside legal counsel, the
Company's Board of Directors determines that the withholding, withdrawal or
modification of the Company Recommendation is required to comply with the
fiduciary duties of the Board of Directors of Company to the shareholders of the
Company under applicable Georgia law; (iv) the Company Recommendation is not
withheld, withdrawn or modified in a manner adverse to Parent at any time prior
to three (3) business days after Parent receives written notice from the Company
confirming that the Company's Board of Directors has determined that such offer
is a Company Superior Offer; and (v) at the end of such three (3) business day
period, after taking into account any adjustment or modification of the terms of
this Agreement proposed by Parent (and any adjustment or modification of the
terms of such Company Acquisition Proposal), the Board of Directors of the
Company again makes the
60
determination in good faith that such offer is a Superior Offer and that the
withholding, withdrawal or modification of the Company Recommendation is
required to comply with the fiduciary duties of the Board of Directors of the
Company to the shareholders of the Company under applicable Georgia law.
Notwithstanding anything in this Agreement to the contrary, the Board of
Directors of the Company may at any time prior to receipt of the approval of the
Company's shareholders of this Agreement, withhold, withdraw or modify the
Company Recommendation in a manner adverse to Parent other than in respect of a
Company Acquisition transaction if: (i) following consultation with outside
legal counsel, the Company's Board of Directors determines that the withdrawal
or modification of such Company Recommendation is required to comply with the
fiduciary duties of the Board of Directors of Company to the shareholders of the
Company under applicable Legal Requirements; (ii) the Company Recommendation is
not withdrawn or modified in a manner adverse to Parent at any time prior to
three (3) business days after Parent receives written notice from the Company
confirming that the Company's Board of Directors has determined to withdraw or
modify the Company Recommendation and specifying the reasons therefor, and (iii)
at the end of such three (3) business day period, after taking into account any
adjustment or modification of the terms of this Agreement proposed by Parent,
the Board of Directors of the Company again makes the determination in good
faith that the withdrawal or modification of such Company Recommendation is
required to comply with the fiduciary duties of the Board of Directors of the
Company to the shareholders of the Company under applicable Legal Requirements.
(f) The Company may terminate this Agreement and enter into an
acquisition agreement or other similar agreement (each, an "ACQUISITION
AGREEMENT") with respect to such Company Superior Offer at any time three (3)
business days following delivery of the notice referenced in Section 4.3(e);
provided, that (i) neither the Company nor its Representatives is in material
breach of this Section 4.3, (ii) during the three (3) business day period
following the Company's delivery to Parent of the written notice described in
Section 4.3(e), Parent shall have the right to propose adjustments in the terms
and conditions of this Agreement and the Company shall have caused its financial
and legal advisors to negotiate with Parent in good faith such proposed
adjustments in the terms and conditions of this Agreement, and (iii) upon the
expiration of the three (3) business day period following the Company's delivery
to Parent of the written notice described in Section 4.3(e), the Company
delivers to Parent (x) a written notice of termination of this Agreement
pursuant to Section 7.1(h), and (y) pays the Termination Fee (as defined in
Section 7.3(b)) as set forth in Section 7.3(b).
4.4 NO SOLICITATION BY PARENT.
(a) During the Pre-Closing Period, Parent shall, not directly or
indirectly, and shall not, directly or indirectly, authorize or permit any of
the other XXXX Corporations or any Representative of any of the XXXX
Corporations to, (i) solicit, encourage, initiate or seek the making, submission
or announcement of any Parent Acquisition Proposal, (ii) furnish any information
regarding any of the XXXX Corporations to any Person (other than to the Company)
in connection with or in response to a Parent Acquisition Proposal or an inquiry
that could reasonably be expected to lead to a Parent Acquisition Proposal,
(iii) engage or participate in any discussions or negotiations with any Person
with respect to any Parent Acquisition Proposal or any inquiry that could
reasonably be expected to lead to any Parent Acquisition Proposal, (iv) approve,
endorse or recommend any Parent Acquisition Proposal, or (v) enter into any
letter
61
of intent or similar document or any Contract contemplating or otherwise
relating to any Parent Acquisition Transaction; provided, however, that this
Section 4.4 shall not prohibit (A) Parent, or the Board of Directors of Parent,
prior to receipt of the approval of Parent's stockholders of the issuance of
Parent Common Stock pursuant to the Merger, from furnishing nonpublic
information regarding the XXXX Corporations to, or entering into or
participating in discussions or negotiations with, any Person in response to an
unsolicited, bona fide written Parent Acquisition Proposal that the Board of
Directors of Parent concludes in good faith would reasonably be expected to
result in a Parent Superior Offer that is submitted to Parent by such Person
(and not withdrawn) if (1) none of the XXXX Corporations or any Representative
of any of the XXXX Corporations shall have violated any of the restrictions set
forth in this Section 4.4 in connection with the receipt of such Parent
Acquisition Proposal, (2) the Board of Directors of Parent concludes in good
faith, after consultation with its outside legal counsel, that such action with
respect to such Parent Acquisition Proposal is required to comply with the
fiduciary duties of the Board of Directors of Parent to Parent stockholders
under applicable Delaware law, (3) Parent gives to the Company the notice
required by Section 4.4(b), (4) Parent gives the Company prompt prior written
notice of Parent's intention to furnish information to, or enter into or
participate in discussions or negotiations with, such Person, and Parent
receives from such Person an executed confidentiality agreement with provisions
no less favorable to Parent than those contained in the Confidentiality
Agreements; and (5) Parent furnishes such information to such Person and to the
Company at substantially the same time (to the extent such information has not
been previously furnished by Parent to the Company); or (B) subject to the
obligation of Parent and Parent's Board of Directors not to withhold, withdraw
or modify its recommendation except as expressly set forth in Section 4.4(e),
Parent from complying with Rules 14d-9 and 14e-2 promulgated under the Exchange
Act with regard to any Parent Acquisition Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
the preceding sentence by any director, officer, employee or agent of Parent or
any of its subsidiaries or any investment banker, financial advisor, attorney,
accountant or other representative of Parent or any of its subsidiaries shall be
deemed to be a breach of this Section by Parent.
(b) Parent shall promptly, and in no event later than twenty four
(24) hours after its receipt of any Parent Acquisition Proposal or inquiry that
could reasonably be expected to lead to any Parent Acquisition Proposal, or any
request for nonpublic information relating to any of the Acquired Corporations
in connection with a Parent Acquisition Proposal or inquiry that could
reasonably be expected to lead to any Parent Acquisition Proposal, advise the
Company orally and in writing of such Parent Acquisition Proposal, inquiry or
request (including providing the identity of the Person making or submitting
such Parent Acquisition Proposal, inquiry or request, and a summary of the
material terms thereof, if Parent Acquisition Proposal is not in writing, or a
copy of Parent Acquisition Proposal and any related draft agreements if it is in
writing) that is made or submitted by any Person during the Pre-Closing Period.
Parent shall keep the Company informed in all material respects on a prompt
basis with respect to the status of any such Parent Acquisition Proposal,
inquiry or request and any material modification or proposed material
modification thereto (and in no event later than twenty-four (24) hours of any
request, material modification or proposed material modification thereto).
(c) Upon the execution of this Agreement, Parent shall immediately
cease and cause to be terminated any discussions existing as of the date of this
Agreement with any Person (other than Parent) that relate to any Parent
Acquisition Proposal.
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(d) Notwithstanding anything in Section 4.2(c)(xii)(B), Parent
agrees not to release any Person (other than the Company) from or waive any
provision of any confidentiality, "standstill" or similar agreement to which
Parent is a party and which relates to a Parent Acquisition Proposal, and will
use its commercially reasonable efforts to enforce each such agreement at the
request of the Company.
(e) Notwithstanding anything in this Agreement to the contrary, the
Board of Directors of Parent may at any time prior to receipt of the approval of
Parent's stockholders of the issuance of Parent Common Stock pursuant to the
Merger, withhold, withdraw or modify the Parent Recommendation in a manner
adverse to the Company in respect of, or enter into an agreement with respect
to, a Parent Acquisition Transaction if: (i) an unsolicited, bona fide written
offer is made to Parent by a third party for a Parent Acquisition Transaction,
and such offer is not withdrawn; (ii) Parent's Board of Directors determines in
good faith, after consultation with its financial advisor, that such offer
constitutes a Parent Superior Offer; (iii) following consultation with outside
legal counsel, Parent's Board of Directors determines that the withholding,
withdrawal or modification of the Parent Recommendation is required to comply
with the fiduciary duties of the Board of Directors of Parent to the
stockholders of Parent under applicable Delaware law; (iv) the Parent
Recommendation is not withheld, withdrawn or modified in a manner adverse to the
Company at any time prior to three (3) business days after the Company receives
written notice from Parent confirming that Parent's Board of Directors has
determined that such offer is a Parent Superior Offer; and (v) at the end of
such three (3) business day period, after taking into account any adjustment or
modification of the terms of this Agreement proposed by the Company (and any
adjustment or modification of the terms of such Parent Acquisition Proposal),
the Board of Directors of Parent again makes the determination in good faith
that such offer is a Superior Offer and that the withholding, withdrawal or
modification of the Parent Recommendation is required to comply with the
fiduciary duties of the Board of Directors of Parent to the stockholders of
Parent under applicable Delaware law. Notwithstanding anything in this Agreement
to the contrary, the Board of Directors of Parent may at any time prior to
receipt of the approval of Parent's stockholders of the issuance of Parent
Common Stock pursuant to the Merger, withhold, withdraw or modify the Parent
Recommendation in a manner adverse to the Company other than in respect of a
Parent Acquisition Transaction if: (i) following consultation with outside legal
counsel, Parent's Board of Directors determines that the withdrawal or
modification of such Parent Recommendation is required to comply with the
fiduciary duties of the Board of Directors of Parent to the stockholders of
Parent under applicable Legal Requirements; (ii) the Parent Recommendation is
not withdrawn or modified in a manner adverse to the Company at any time prior
to three (3) business days after the Company receives written notice from Parent
confirming that Parent's Board of Directors has determined to withdraw or modify
the Parent Recommendation and specifying the reasons therefor, and (iii) at the
end of such three (3) business day period, after taking into account any
adjustment or modification of the terms of this Agreement proposed by the
Company, the Board of Directors of Parent again makes the determination in good
faith that the withdrawal or modification of such Parent Recommendation is
required to comply with the fiduciary duties of the Board of Directors of Parent
to the stockholders of Parent under applicable Legal Requirements.
(f) Parent may terminate this Agreement and enter into an
Acquisition Agreement with respect to such Parent Superior Offer at any time
three (3) business days following delivery
63
of the notice referenced in Section 4.4(e); provided, that (i) neither Parent
nor its Representatives is in material breach of this Section 4.4, (ii) during
the three (3) business day period following Parent's delivery to the Company of
the written notice described in Section 4.4(e), the Company shall have the right
to propose adjustments in the terms and conditions of this Agreement and Parent
shall have caused its financial and legal advisors to negotiate with the Company
in good faith such proposed adjustments in the terms and conditions of this
Agreement, and (iii) upon the expiration of the three (3) business day period
following Parent's delivery to the Company of the written notice described in
Section 4.4(e), Parent delivers to the Company (x) a written notice of
termination of this Agreement pursuant to Section 7.1(i), and (y) pays the
Termination Fee as set forth in Section 7.3(b).
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 REGISTRATION STATEMENT AND PROXY STATEMENT FOR STOCKHOLDER APPROVAL.
(a) As soon as practicable following the execution of this
Agreement, Parent and the Company shall jointly prepare, and Parent shall file
with the SEC, a joint registration and proxy statement consisting of a proxy
statement of the Company in connection with the Merger complying with applicable
Legal Requirements (the "COMPANY PROXY STATEMENT"), a proxy statement of Parent
in connection with the Merger and issuance of Parent Common Stock in the Merger
and complying with applicable Legal Requirements (the "PARENT PROXY STATEMENT")
and a registration statement on Form S-4 (such registration statement, together
with the amendments and supplements thereto being the "REGISTRATION STATEMENT")
for the offer and sale of Parent Common Stock pursuant to the Merger included in
which shall be the Company Proxy Statement and the Parent Proxy Statement which
shall constitute a prospectus. Each of the Company and Parent shall use
commercially reasonable efforts to have the Registration Statement declared
effective under the Securities Act as promptly as practicable after its filing.
The Company and Parent will use commercially reasonable efforts to cause the
Company Proxy Statement to be mailed to the Company's shareholders and the
Parent Proxy Statement to be mailed to Parent's stockholders, as the case may
be, as promptly as practicable after the Registration Statement is declared
effective under the Securities Act. Parent shall also take any action (other
than qualifying to do business in any jurisdiction in which it is not now so
qualified or filing a general consent to service of process) required to be
taken under any applicable state securities laws and other applicable Legal
Requirements in connection with the issuance of Parent Common Stock pursuant to
the Merger, and each party shall furnish all information concerning the Company,
Parent and the holders of capital stock of the Company and Parent, as
applicable, as may be reasonably requested by the other party in connection with
any such action and the preparation, filing and distribution of the Company
Proxy Statement. No filing of, or amendment or supplement to, or correspondence
to the SEC or its staff with respect to, the Registration Statement or Parent
Proxy Statement will be made by Parent, or with respect to the Company Proxy
Statement will be made by the Company, without providing the other party a
reasonable opportunity to review and comment thereon. Parent will advise the
Company, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, the issuance of any stop order, the suspension of the qualification
of the Parent Common Stock issuable in connection with the Merger for offering
or sale in any jurisdiction, or any request by the SEC for amendment of the
64
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information. The Company will advise Parent, promptly
after it receives notice thereof, of any request by the SEC for the amendment of
the Company Proxy Statement or comments thereon and responses thereto or
requests by the SEC for additional information. Parent will advise the Company,
promptly after it receives notice thereof, of any request by the SEC for the
amendment of the Registration Statement, the Parent Proxy Statement or the
Company Proxy Statement or comments thereon and responses thereto or requests by
the SEC for additional information relating thereto. If at any time prior to the
Effective Time any information relating to the Company or Parent, or any of
their respective affiliates, officers or directors, is discovered by the Company
or Parent which should be set forth in an amendment or supplement to either the
Registration Statement, the Company Proxy Statement or the Parent Proxy
Statement, so that any of such documents would not include any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly notify
the other parties hereto and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC, after the other party or
parties have had a reasonable opportunity to review and comment thereon, and, to
the extent required by applicable Legal Requirements, disseminated to the
shareholders of the Company or the stockholders of Parent, as the case may be.
(b) Parent agrees to use its commercially reasonable efforts to: (i)
file a post-effective amendment to the Registration Statement on Form S-3
registering the resale by the Company Shareholders set forth on Schedule 5.1(b)
of the Company Disclosure Letter within ten (10) days subsequent to the
Effective Time; (ii) cause such Form S-3 to be declared effective under the
Securities Act as promptly as practicable after its filing; (iii) maintain the
effectiveness of the Registration Statement, as amended, for a period of time
ending on the earlier of (A) the date on which all shares of Parent Common Stock
issued in connection with the Merger to all Company Shareholders whose shares
shall be registered for resale thereunder have been sold and (B) the date on
which all shares of Parent Common Stock held by all Company Shareholders whose
shares shall be registered for resale thereunder, in the opinion of counsel for
Parent, are eligible for sale pursuant to Rule 144 under the Securities Act and
could be sold in any three-month period in accordance with the volume
limitations contained in Rule 144(e)(1) under the Securities Act.
5.2 COMPANY SHAREHOLDERS' MEETING AND PARENT STOCKHOLDERS' MEETING.
(a) The Company shall take all action necessary under all applicable
Legal Requirements to call, give notice of and hold a meeting of the holders of
Company Common Stock to vote on a proposal to approve this Agreement and the
Merger (the "COMPANY SHAREHOLDERS' MEETING"). The Company Shareholders' Meeting
shall be held as soon as reasonably practicable after the Registration Statement
is declared effective under the Securities Act. The Company will consult with
Parent to use its commercially reasonable efforts to hold the Company
Shareholders' Meeting on the same day as the Parent's Stockholder Meeting.
Subject to Section 4.3(e), the Company shall use commercially reasonable efforts
to take all actions necessary or advisable to solicit proxies in favor of this
Agreement and shall ensure that all proxies solicited in connection with the
Company Shareholders' Meeting are solicited in
65
compliance with all applicable Legal Requirements. Once the Company
Shareholders' Meeting has been called and noticed, the Company shall not
postpone or adjourn the Company Shareholders' Meeting (other than for the
absence of a quorum) without the consent of Parent.
(b) Subject to Section 4.3(e), the Company Proxy Statement shall
include the Company Recommendation, and the Company Recommendation shall not be
withdrawn or modified in a manner adverse to Parent, and no resolution by the
Board of Directors of the Company or any committee thereof to withdraw or modify
the Company Recommendation in a manner adverse to Parent shall be adopted or
proposed.
(c) Notwithstanding anything herein to the contrary, the Company
shall have no obligation to call, give notice of or hold the Company
Shareholders' Meeting in the event of a withdrawal or modification of the
Company Recommendation in accordance with the requirements of this Agreement.
(d) The Company and Parent shall cooperate with one another (i) in
connection with the preparation of the Company Proxy Statement, the Parent Proxy
Statement and the Registration Statement, (ii) in determining whether any action
by or in respect of, or filing with, any Governmental Body is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (iii) in seeking any such
actions, consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith or with the Company Proxy
Statement, the Parent Proxy Statement and the Registration Statement and seeking
timely to complete or obtain any such actions, consents, approvals or waivers.
(e) Parent shall take all action necessary under all applicable
Legal Requirements to call, give notice of and hold a meeting of the holders of
Parent Common Stock to vote on the issuance of Parent Common Stock pursuant to
the Merger (the "PARENT STOCKHOLDERS' MEETING"). The Parent Stockholders'
Meeting shall be held as soon as reasonably practicable after the Registration
Statement is declared effective under the Securities Act. Parent will consult
with the Company to use its commercially reasonable efforts to hold the Parent's
Stockholders Meeting on the same day as the Company's Shareholder Meeting.
Subject to Section 4.4(e), Parent shall use commercially reasonable efforts to
take all actions necessary or advisable to solicit proxies in favor of the
issuance of Parent Common Stock and shall ensure that all proxies solicited in
connection with the Parent Stockholders' Meeting are solicited in compliance
with all applicable Legal Requirements. Once the Parent Stockholders' Meeting
has been called and noticed, Parent shall not postpone or adjourn the Parent
Stockholders' Meeting (other than for the absence of a quorum) without the
consent of the Company.
(f) Subject to Section 4.4(e), the Parent Proxy Statement shall
include the Parent Recommendation, and the Parent Recommendation shall not be
withdrawn or modified in a manner adverse to the Company, and no resolution by
the Board of Directors of Parent or any committee thereof to withdraw or modify
the Parent Recommendation in a manner adverse to the Company shall be adopted or
proposed.
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(g) Notwithstanding anything herein to the contrary, Parent shall
have no obligation to call, give notice of or hold the Parent Stockholders'
Meeting in the event of a withdrawal or modification of Parent Recommendation in
accordance with the requirements of this Agreement.
5.3 REGULATORY APPROVALS
(a) As soon as may be reasonably practicable, the Company and Parent
each shall file with the United States Federal Trade Commission (the "FTC") and
the Antitrust Division of the United States Department of Justice ("DOJ")
Notification and Report Forms relating to the transactions contemplated herein
to the extent any such filing is required by the HSR Act. The Company and Parent
each shall each use commercially reasonable efforts to obtain early termination
of any waiting period under HSR and Company and Parent shall each promptly (a)
supply the other with any information which may be required in order to
effectuate such filings and (b) supply any additional information which
reasonably may be required by the FTC or the DOJ.
(b) Each of the Company and Parent shall use its commercially
reasonable efforts to file, as soon as practicable after the date of this
Agreement, all other notices, reports and other documents required to be filed
with any Governmental Body with respect to the Merger and the other transactions
contemplated by this Agreement (including pre-merger notification forms required
by the merger notification or control laws and regulations of any applicable
foreign jurisdiction, as agreed to by the parties). Each of Parent and the
Company shall promptly (a) supply the other with any information which may be
required in order to effectuate such filings and (b) supply any additional
information which reasonably may be required by a Governmental Body of any
jurisdiction and which the parties may reasonably deem appropriate.
(c) Each of the Company and Parent shall (i) give the other party
prompt notice of the commencement or threat of commencement of any Legal
Proceeding by or before any Governmental Body with respect to the Merger or any
of the other transactions contemplated by this Agreement, (ii) keep the other
party informed as to the status of any such Legal Proceeding or threat, and
(iii) promptly inform the other party of any communication to or from any
Governmental Body regarding the Merger.
5.4 COMPANY STOCK OPTIONS AND WARRANTS
(a) Effective as of the Effective Time, the Company Stock Option
Plan and each Company Option that is outstanding immediately prior to the
Effective Time, whether or not then exercisable or vested, shall be assumed by
Parent. As of the Effective Time, each Company Option shall cease to represent a
right to acquire shares of Company Common Stock and shall be converted
automatically into an option to purchase shares of Parent Common Stock in an
amount, at an exercise price and subject to such terms and conditions determined
as provided below. Subject to the accelerated vesting of Company Options as
described in Section 2.3(b) and Schedule 2.3(b) of the Company Disclosure
Letter, each Company Option so assumed by Parent shall be subject to, and
exercisable and vested upon, the same terms and conditions as under the
applicable Company Stock Option Plan and the applicable option and other related
agreements issued thereunder, including the maximum term of the Company Option
and the provisions
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regarding termination of the Company Option following a termination of
employment, except that (A) each assumed Company Option shall be exercisable
for, and represent the right to acquire, that number of shares of Parent Common
Stock (rounded down to the nearest whole share) equal to (i) the number of
shares of Company Common Stock subject to such Company Option immediately prior
to the Effective Time multiplied by (ii) the Exchange Ratio; (B) the exercise
price per share of Parent Common Stock subject to each assumed Company Option
shall be an amount equal to (i) the exercise price per share of Company Common
Stock subject to such Company Option in effect immediately prior to the
Effective Time divided by (ii) the Exchange Ratio (rounded up to the nearest
whole cent); and (C) references under the Company Option to a termination of
employment shall mean, on and after the Effective Time, a termination of
employment with the Surviving Corporation or any XXXX Corporation.
(b) The Company's Board of Directors, or its duly appointed
committee to administer the Company Stock Option Plan, shall adopt resolutions
and take such other actions as may be necessary, effective contingent upon the
consummation of the transactions contemplated hereby, immediately prior to the
Closing Date, to provide for the application of Section 5.4(a) to the Company
Stock Option Plan and the Company Options outstanding as of immediately prior to
the Effective Time.
(c) The conversion of Company Options provided for in Section 5.4(a)
shall, with respect to any options which qualified as "INCENTIVE STOCK OPTIONS"
(as defined in Section 422 of the Code immediately prior to the Merger), be
effected in a manner consistent with Section 424(a) of the Code.
(d) As of the Effective Time, Parent shall, to the full extent
permitted by applicable law, assume all of the Company Warrants identified on
Schedule 2.3(c) of the Company Disclosure Letter and outstanding immediately
prior to the Effective Time. Each Company Warrant shall, to the full extent
permitted by applicable law, be assumed by Parent in such a manner that it shall
be exercisable upon the same terms and conditions as under the Company Warrant
pursuant to which it was issued; provided that (A) each Company Warrant so
assumed shall be exercisable for, and represent the right to acquire, that
number of shares of Parent Common Stock (rounded down to the nearest whole
share) equal to (i) the number of shares of Company Common Stock subject to such
Company Warrant immediately prior to the Effective Time multiplied by (ii) the
Exchange Ratio; (B) the exercise price per share of Parent Common Stock subject
to each assumed Company Warrant shall be an amount equal to (i) the exercise
price per share of Company Common Stock subject to such Company Warrant in
effect immediately prior to the Effective Time divided by (ii) the Exchange
Ratio (rounded up to the nearest whole cent). Prior to the Effective Time, the
Company shall make all adjustments provided for in the Company Warrants with
respect to the Company Warrants to facilitate the implementation of the
provisions of this Section 5.4(d) and take such other action as may be necessary
to effect this Section 5.4(d).
5.5 EMPLOYEE BENEFITS
(a) Welfare Plans. The Surviving Corporation will continue following
the Effective Time to maintain each Company Welfare Plan for the benefit of the
employees of the Acquired Corporations for a transition period to provide
benefits that are comparable in the
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aggregate to the benefits provided under the Company Welfare Plans immediately
prior to the Effective Time, and the transition period may be different for each
such plan and will be set by Parent and/or the Surviving Corporation based on
the time deemed necessary to effect a reasonable transition for such employees
from participating in each Company Welfare Plan to participating in a comparable
Parent and/or Surviving Corporation benefit arrangement maintained for similarly
situated Parent employees, provided (i) no transition period for any Company
Welfare Plan shall end before March 1, 2005 following the Effective Time, (ii)
Parent and/or the Surviving Corporation shall adopt transition rules to prevent
any loss of credit for participant contributions, payments, co-payments and the
like if a transition period for a Company Welfare Plan ends before the end of
the plan year for such plan and (iii) the Surviving Corporation will, subject to
the obligations set forth in this Section 5.5(a), continue to maintain such each
Company Welfare Plan subject to the same rights the Company had immediately
before the Effective Time to administer, amend and terminate such plan.
(b) 401(k) Plan. Before the Effective Time, the Company will take
all actions required to terminate the Company 401(k) Plan immediately before the
Effective Time. Parent shall use its commercially reasonable efforts to cause
the Parent 401(k) Plan to be amended to permit the employees who were eligible
to participate in the Company 401(k) Plan immediately before the Effective Time
to be eligible to participate in the Parent 401(k) Plan as of immediately
following the Effective Time so that there will be no interruption in the rights
of such employees to make pre-tax contributions under a Code Section 401(k)
plan.
(c) Stock-Based Plans. Following the Effective Time, employees of
the Acquired Corporations will be eligible to receive stock options and other
stock-based awards under the stock-based plans maintained by the Parent and/or
the Surviving Corporation on the same basis as similarly situated Parent
employees.
(d) Employment Policies and Practices. The Surviving Corporation
will continue following the Effective Time to maintain the generally applicable
employment related policies and practices of the Acquired Corporations,
including those related to vacation time, sick leave, personal time off and the
like for a transition period, which transition period may be different for each
such policy or practice and which period shall be set by Parent and/or Surviving
Corporation based on the time deemed necessary to effect a reasonable transition
for such employees from being subject to any such policy or practice to being
subject to a comparable Parent and/or Surviving Corporation policy or practice,
if any, for similarly situated employees of Parent.
(e) Service and Vesting Credit. Parent and/or Surviving Corporation
will treat an individual's employment as an employee by the Acquired
Corporations the same as employment as an employee by Parent and/or Surviving
Corporation for purposes of satisfying any service requirement to participate in
any Parent and/or Surviving Corporation benefit arrangement and to determine the
extent to which a benefit earned under such a plan is non-forfeitable if such
individual is employed as an employee by the Acquired Corporations at the
Effective Time.
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5.6 INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(a) From and after the Effective Time, Parent and the Surviving
Corporation, jointly and severally, shall honor all rights to indemnification
existing as of the date of this Agreement in favor of (i) current and former
directors, officers and employees of the Company (the "INDEMNIFIED PERSONS") and
(ii) those Persons who have indemnification agreements with the Company as of
the date of this Agreement, for acts and omissions occurring prior to or at the
Effective Time, as provided in the Company Organizational Documents and under
each indemnification agreement with the Indemnified Persons to which the Company
is a party (as each is in effect as of the date of this Agreement), for a period
of six (6) years from the Effective Time. The articles of incorporation and
Bylaws of the Surviving Corporation will contain provisions with respect to
exculpation and indemnification that are at least as favorable to those
contained in the Company Organizational Documents, which provisions will not be
amended, repealed or otherwise modified for a period of six (6) years from the
Effective Time in any manner that would adversely affect the rights thereunder
of Indemnified Persons, unless such modification is required by applicable Legal
Requirements.
(b) For a period of six (6) years from the Effective Time, Parent
and the Surviving Corporation shall, jointly and severally, provide for
officers' and directors' liability insurance for the benefit of each Person
(other than the Company) named as an insured party in any officers' and
directors' liability insurance policy held by the Company as of the date of this
Agreement (the "INSURED PARTIES"), on terms with respect to such coverage no
less favorable than those of such policy in effect on the date of this
Agreement, covering only those acts or omissions occurring prior to or at the
Effective Time; provided that neither Parent nor the Surviving Corporation shall
be required to maintain such policies to the extent the cost of maintaining the
same shall increase by more than 175% from the cost most recently incurred by
the Company for maintaining the same (the "CURRENT D&O INSURANCE COST"), in
which case Parent or the Surviving Corporation shall maintain as much comparable
insurance as can be obtained for such amount. Prior to the Effective Time, the
Company shall take all reasonable actions requested by Parent to maintain such
directors and officers liability insurance. The Company represents to Parent and
Merger Sub that the Current D&O Insurance Cost is $342,133.
(c) The terms of this Section 5.6 are intended to be for the benefit
of and shall be enforceable by the Indemnified Parties and the Insured Parties
and their heirs and personal representatives and shall be binding on Parent and
the Surviving Corporation and their successors and assigns. In the event Parent
or the Surviving Corporation (or any of their successors and assigns) (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
Person, then, and in each case, proper provision shall be made so that the
successor or assign of Parent or the Surviving Corporation, as the case may be,
honors the obligation set forth with respect to Parent or the Surviving
Corporation, as the case may be, in this Section 5.6.
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5.7 ADDITIONAL AGREEMENTS.
Each of Parent and the Company shall use its reasonable best efforts
to take, or cause to be taken, all actions necessary to carry out the intent and
purposes of this Agreement and to consummate the Merger and make effective the
other transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, each party to this Agreement (i) shall cooperate
fully with the other party, shall execute and deliver such further documents,
certificates, agreements and instruments and shall take such other actions as
may be reasonably requested by the other party to evidence or reflect the
transactions contemplated by this Agreement (including the execution and
delivery of all documents, certificates, agreements and instruments reasonably
necessary for all filings hereunder), (ii) give all notices (if any) required to
be made and given by such party in connection with the Merger and the other
transactions contemplated by this Agreement; (iii) shall use its reasonable best
efforts to obtain each Consent (if any) required to be obtained (pursuant to any
applicable Legal Requirement or Contract, or otherwise) by such party in
connection with the Merger or any of the other transactions contemplated by this
Agreement; and (iv) shall use its reasonable best efforts to lift any restraint,
injunction or other legal bar to the Merger. Each of the Company and Parent
shall promptly deliver to the other party a copy of each such filing made, each
such notice given and each such Consent obtained by it during the Pre-Closing
Period.
5.8 PUBLIC DISCLOSURE.
The initial press release relating to this Agreement shall be a
joint press release and thereafter Parent and the Company shall consult with
each other and shall agree upon the text of any press release or public
statement before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated hereunder and shall not
issue any such press release or make any such public statement prior to such
consultation and agreement, except as may be required by Legal Requirements or
any listing agreement with, or the rules of, AMEX or Nasdaq, in which case
commercially reasonable efforts to consult with the other party shall be made
prior to such release or public statement; provided, however, that no such
consultation shall be required if, prior to the date of such release or public
statement, either party shall have withheld, withdrawn, amended or modified the
Company Recommendation or the Parent Recommendation, as the case may be.
5.9 TAX MATTERS.
At or prior to the filing of the Registration Statement, the Company
and Parent shall execute and deliver to Xxxxxx Xxxxxx White and XxXxxxxxx LLP,
and to King & Spalding LLP, tax representation letters in customary form
satisfactory to such counsel in connection with such counsel's rendering of the
opinions of counsel referred to in Section 6.1(f). Parent, Merger Sub and the
Company shall each confirm to Xxxxxx Xxxxxx White and XxXxxxxxx LLP, and to King
& Spalding LLP, on such dates as shall be reasonably requested by Xxxxxx Xxxxxx
White and XxXxxxxxx LLP, and by King & Spalding LLP, the accuracy and
completeness of the tax representation letters delivered pursuant to the
immediately preceding sentence. Upon the request of counsel, the Company and
Parent shall execute and deliver updated tax representation letters in customary
form satisfactory to such counsel on or before the Closing Date in connection
with the opinions of counsel referred to in Section 6.1(f). Following delivery
of the
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tax representations letters pursuant to the first sentence of this Section 5.9,
each of Parent and the Company shall use its commercially reasonable efforts to
cause Xxxxxx Xxxxxx White and XxXxxxxxx LLP, and to cause King & Spalding LLP,
respectively, to deliver to it a tax opinion satisfying the requirements of Item
601 of Regulation S-K promulgated under the Securities Act. In rendering such
opinions, each of such counsel shall be entitled to rely on the tax
representation letters referred to in this Section 5.9.
5.10 RESIGNATION OF DIRECTORS.
The Company shall deliver to Parent upon the execution and delivery
of this Agreement the resignations of the directors of the Acquired Corporations
from the boards of directors of the Acquired Corporations, effective as of the
Effective Time.
5.11 LISTING.
Parent shall use its commercially reasonable efforts to cause the
shares of Parent Common Stock being issued pursuant to the Merger or upon the
exercise of Company Options or Company Warrants to be approved for listing
(subject to official notice of issuance) on the Nasdaq as of the Effective Time.
5.12 TAKEOVER LAWS.
If any Takeover Law may become, or may purport to be, applicable to
the transactions contemplated in this Agreement, each of Parent and the Company
and the members of their respective Boards of Directors, to the extent
permissible under applicable Legal Requirements, will grant such approvals and
take such actions as are necessary so that the transactions contemplated by this
Agreement may be consummated as promptly as practicable, and in any event prior
to the Termination Date, on the terms and conditions contemplated hereby and
otherwise, to the extent permissible under applicable Legal Requirements, act to
eliminate the effect of any Takeover Law on any of the transactions contemplated
by this Agreement.
5.13 FORM S-8; SECTION 16.
(a) Parent agrees to file one or more registration statements on
Form S-8 or other form to the extent Form S-8 is unavailable for the shares of
Parent Common Stock issuable with respect to assumed Company Options within ten
(10) days subsequent to the Effective Time and keep any such registration
statements effective until all shares registered thereunder have been issued;
provided, however that it shall not be considered a breach of this Section 5.13
by Parent if Parent cannot file such registration statement within ten (10) days
due to the fact that Parent does not receive an independent auditors consent
required by the form of registration statement within ten (10) days after using
commercially reasonable efforts to obtain such consent; and provided, further
that Parent continues to use commercially reasonable efforts to obtain such
consent and file such registration statement promptly after such consent is
obtained.
(b) Parent shall, prior to the Effective Time, cause Parent's Board
of Directors to approve the issuance of Parent equity securities (including
derivative securities) in connection with the Merger with respect to any
employees of the Company who as of the Effective Time are subject or will become
subject to the reporting requirements of Section 16 of the Exchange Act
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to the extent necessary for such issuance to be an exempt acquisition pursuant
to SEC Rule 16b-3; provided, however, that Parent shall not be deemed to have
violated this covenant if the Company does not provide to the Board of Directors
of Parent at least ten (10) business days prior to the Effective Time, all
information reasonably requested by Parent for the purpose of effecting such
exemption. Prior to the Effective Time, the Board of Directors of the Company
shall approve the disposition of Company equity securities (including derivative
securities) in connection with the Merger by those directors and officers of the
Company subject to the reporting requirements of Section 16 of the Exchange Act
to the extent necessary for such disposition to be an exempt disposition
pursuant to SEC Rule 16b-3. Such actions shall be consistent with all current
applicable interpretation and guidance of the SEC, including the No-Action
Letter, dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate,
Xxxxxxx & Xxxx.
5.14 AFFILIATES.
Attached as Schedule 5.14 of the Company Disclosure Letter is a list
of all Persons who are, to the Company's knowledge, affiliates of the Company
for purposes of Rule 145 under the Securities Act as of the date of this
Agreement. Prior to the effectiveness of the Registration Statement, the Company
shall use commercially reasonable efforts to deliver or cause to be delivered an
executed Rule 145 affiliate agreement in the form attached hereto as EXHIBIT I
from each of the persons listed on Schedule 5.14 of the Company Disclosure
Letter.
5.15 LITIGATION.
The Company shall give Parent the opportunity to participate in the
defense of any shareholder litigation against the Company and/or its directors
relating to the transactions contemplated by this Agreement and the Company
Voting Agreements and Parent Voting Agreements. Parent shall give the Company
the opportunity to participate in the defense of any shareholder litigation
against Parent and/or its directors relating to the transactions contemplated by
this Agreement and the Company Voting Agreements and Parent Voting Agreements.
5.16 ADVICE OF CHANGES.
Each of the Company and Parent will give prompt written notice to
the other (and will subsequently keep the other informed on a current basis of
any developments related to such notice) upon its becoming aware of the
occurrence or existence of any fact, event or circumstance that (i) is
reasonably likely to result in any of the conditions set forth in Section 6 not
being able to be satisfied prior to the Termination Date or (ii) any resignation
of an employee of the Company at the director or Vice President level or above
or that any such employee has given written notice of such employee's intent to
resign or voluntarily terminate his employment with any Acquired Corporation.
5.17 DIRECTORS AND OFFICERS OF PARENT.
(a) Parent will take all actions necessary to cause the Board of
Directors of Parent to fix the size of the Board of Directors of Parent as of
immediately after the Effective Time at nine (9) directors, consisting of (i)
five (5) directors designated by Parent prior to the date on which the
Registration Statement is declared effective by the SEC, (ii) three (3)
directors
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designated by the Company prior to the date on which the Registration Statement
is declared effective by the SEC and (iii) the Chief Executive Officer of
Parent. The parties acknowledge and agree that the Company intends to designate
as directors of Parent the three (3) individuals set forth on Schedule 5.17(a)
of the Parent Disclosure Letter to serve in the classes set forth on such
Schedule. In the event that any such individual is unwilling or unable to serve
as a director of Parent, the Company shall designate another individual
reasonably acceptable to the Board of Directors of Parent to serve as a director
of Parent. In the event that (i) any other individual designated to serve on the
Board of Directors of Parent immediately after the Effective Time is unwilling
or unable to serve on the Board or Directors of Parent at such time or (ii)
Parent or the Company fails to designate one or more directors in accordance
with this Section 5.17, the Board of Directors of Parent shall fill any
resulting vacancy on the Board of Directors in accordance with the Bylaws of
Parent as soon as reasonably practicable following the Effective Time. Each such
director shall serve until his respective successor is duly elected or appointed
and qualified.
(b) Parent shall take all actions necessary to cause the officers of
Parent immediately following the Effective Time to include Xxxxxxx Xxxxx as
Chairman of the Board of Directors, Xxxxxx XxXxxx as President and Chief
Executive Officer, Xxxxxx X. Xxxxxx as Chief Operating Officer, Xxxxxx Xxxxxxx
as Chief Financial Officer and Xxxxxx Xxxxxx as Chief Technology Officer. Each
such officer shall serve until his respective successor is duly elected or
appointed and qualified.
5.18 EMPLOYMENT AGREEMENTS.
Except for the acceleration of Company Options as described in
Section 2.3(b) and Schedule 2.3(b) of the Company Disclosure Letter, during the
Pre-Closing Period, neither the Parent nor the Company will enter into any new
agreement or arrangement or amend any existing agreement or arrangement (except
as provided in this Agreement) with any individual that would entitle the
individual to severance pay or any other payment or increase the amount of
benefits or compensation due any such individual as a result of the consummation
of the transactions contemplated by this Agreement.
SECTION 6. CONDITIONS TO THE MERGER
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION.
The respective obligations of the Company, Parent and Merger Sub to
consummate the Merger are subject to the satisfaction or, to the extent
permitted by Legal Requirements, the waiver by each party on or prior to the
Effective Time of each of the following conditions:
(a) This Agreement shall have been approved by the requisite vote of
the shareholders of the Company. The issuance of shares of Parent Common Stock
pursuant to the Merger shall have been approved by the requisite vote of the
stockholders of Parent;
(b) No provision of any applicable Legal Requirements and no Order
shall be in effect that prohibits the consummation of the Merger or the other
transactions contemplated by this Agreement, provided, however, that each of
Parent, Merger Sub and the Company shall have used its reasonable efforts to (i)
prevent the application of any Legal Requirement and (ii)
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prevent the entry of any Order that prohibits the consummation of the Merger or
the other transactions contemplated by this Agreement;
(c) The Registration Statement shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order;
(d) The shares of Parent Common Stock to be issued pursuant to the
Merger shall have been authorized for listing on the Nasdaq (subject to official
notice of issuance);
(e) Any waiting period (and any extension thereof) applicable to the
Merger under HSR shall have been terminated or shall have expired; and
(f) (i) Parent shall have received, and Xxxxxx Xxxxxx White &
XxXxxxxxx LLP shall not have subsequently rescinded, an opinion of Xxxxxx Xxxxxx
White & XxXxxxxxx LLP, in form and substance reasonably satisfactory to Parent
and to the Company, on the basis of customary facts, representations and
assumptions set forth, or incorporated by reference, in such opinion, to the
effect that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and (ii) the
Company shall have received, and King & Spalding LLP shall not have subsequently
rescinded, an opinion of King & Spalding LLP in form and substance reasonably
satisfactory to Parent and to the Company, on the basis of customary facts,
representations and assumptions set forth, or incorporated by reference, in such
opinion, to the effect that the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code.
In connection with the opinions referred to in this Section 6.1(f), Xxxxxx
Xxxxxx White & XxXxxxxxx LLP and King & Spalding LLP shall be entitled to rely
upon the tax representation letters of Parent and the Company referred to in
Section 5.9.
6.2 ADDITIONAL CONDITIONS TO PARENT'S AND MERGER SUB'S OBLIGATIONS.
The respective obligations of Parent and Merger Sub to consummate
the Merger are subject to the satisfaction or, to the extent permitted by Legal
Requirements, the waiver by Parent and Merger Sub on or prior to the Effective
Time of each of the following conditions:
(a) there shall not be pending or threatened any Legal Proceeding in
which a Governmental Body is: (i) seeking to prohibit or limit in any material
respect Merger Sub's or Parent's ability to vote, receive dividends with respect
to or otherwise exercise ownership rights with respect to the stock of the
Surviving Corporation; (ii) seeking to materially and adversely affect the right
of Parent, the Surviving Corporation or any Subsidiary of Parent to own the
assets or operate the business of the Acquired Corporations; or (iii) seeking to
compel Parent or the Company, or any subsidiary of Parent or the Company, to
dispose of or hold separate any material assets, as a result of the Merger or
any of the other transactions contemplated by this Agreement;
(b) the Company shall have performed or complied in all material
respects with all of its covenants, obligations or agreements required to be
performed or complied with under the Agreement prior to the Effective Time;
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(c) the representations and warranties of the Company contained in
this Agreement not qualified by Material Adverse Effect shall be accurate,
except where the failure to be accurate would not, in the aggregate, reasonably
be expected to have a Material Adverse Effect and the representations and
warranties of the Company contained in this Agreement which are qualified by
Material Adverse Effect shall be accurate, in the case of each, as of the date
of this Agreement, and on and as of the Effective Time, except for those
representations and warranties which address matters only as of a particular
date (which (i) if not qualified by Material Adverse Effect shall remain true
and correct on and as of such particular date, except where the failure to be
accurate would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect and (ii) if qualified by Material Adverse Effect shall remain
true and correct on and as of such particular date), with the same force and
effect as if made on and as of the Effective Time;
(d) there shall not have been a Material Adverse Effect on the
Acquired Corporations;
(e) Parent shall have received from the Company evidence that the
Company 401(k) Plan has been terminated pursuant to resolutions of the Company's
Board of Directors (the form and substance of which shall have been subject to
review and approval of Parent), effective as of the Effective Time;
(f) the Company shall have obtained each consent or waiver, and
shall have taken such other actions identified in Schedule 6.2(f) to the Company
Disclosure Letter;
(g) the Requisite Noteholders (as defined in the Company Note
Agreement) shall have executed and delivered to the Company an estoppel
certificate in the form attached hereto as EXHIBIT J.
(h) Parent shall have received a certificate from an executive
officer of the Company certifying as to the matters set forth in paragraphs (a),
(b), (c), (d), (e) and (f) of this Section 6.2.
The foregoing conditions are for the sole benefit of Parent and
Merger Sub and may, subject to the terms of the Agreement, be waived by Parent
and Merger Sub, in whole or in part at any time and from time to time, in the
sole discretion of Parent and Merger Sub. The failure by Parent and Merger Sub
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 prior to the Effective Time.
6.3 ADDITIONAL CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The obligations of the Company to consummate the Merger are subject
to the satisfaction or, to the extent permitted by Legal Requirements, the
waiver by the Company on or prior to the Effective Time of each of the following
conditions:
(a) there shall not be pending or threatened any Legal Proceeding in
which a Governmental Body is: (i) seeking to prohibit or limit in any material
respect Merger Sub's or Parent's ability to vote, receive dividends with respect
to or otherwise exercise ownership rights
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with respect to the stock of the Surviving Corporation; (ii) seeking to
materially and adversely affect the right of Parent, the Surviving Corporation
or any Subsidiary of Parent to own the assets or operate the business of the
Acquired Corporations; or (iii) seeking to compel Parent or the Company, or any
subsidiary of Parent or the Company, to dispose of or hold separate any material
assets, as a result of the Merger or any of the other transactions contemplated
by this Agreement;
(b) Parent or Merger Sub shall have performed or complied in all
material respects with all of their respective covenants, obligations or
agreements required to be performed or complied with under the Agreement prior
to the Effective Time;
(c) the representations and warranties of Parent contained in this
Agreement not qualified by Material Adverse Effect shall be accurate, except
where the failure to be accurate would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect and the representations and
warranties of Parent contained in this Agreement which are qualified by Material
Adverse Effect shall be accurate, in the case of each, as of the date of this
Agreement, and on and as of the Effective Time, except for those representations
and warranties which address matters only as of a particular date (which (i) if
not qualified by Material Adverse Effect shall remain true and correct on and as
of such particular date, except where the failure to be accurate would not, in
the aggregate, reasonably be expected to have a Material Adverse Effect and (ii)
if qualified by Material Adverse Effect shall remain true and correct on and as
of such particular date), with the same force and effect as if made on and as of
the Effective Time;
(d) there shall not have been a Material Adverse Effect on the XXXX
Corporations; and
(e) Parent shall have obtained each consent or waiver, and shall
have taken such other actions identified in Schedule 6.3(e) to the Parent
Disclosure Letter;
(f) the Company shall have received a certificate from an executive
officer of Parent certifying as to the matters set forth in paragraphs (a), (b),
(c), (d) and (e) of this Section 6.3.
The foregoing conditions are for the sole benefit of the Company and
may, subject to the terms of the Agreement, be waived by the Company, in whole
or in part at any time and from time to time, in the sole discretion of the
Company. The failure by the Company 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 prior to the Effective Time.
SECTION 7. TERMINATION
7.1 TERMINATION.
This Agreement may be terminated prior to the Effective Time,
whether before or after approval of this Agreement by the Company's
shareholders:
(a) by mutual written consent of Parent and the Company;
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(b) by either Parent or the Company if (i) the Merger shall not have
been consummated on or prior to November 9, 2004 provided that such date shall
be automatically extended to December 9, 2004 in the event that any Governmental
Authorization is pending (the "TERMINATION DATE"); provided, however that the
right to terminate this Agreement under this Section 7.1(b)(i) shall not be
available to any party whose action or failure to act has been the cause of the
failure of the Merger to occur on or before such date and such action or failure
to act constitutes a breach of this Agreement; or (ii) a Company Shareholders'
Meeting is held and the holders of Company Common Stock do not approve this
Agreement; or (iii) a Parent Stockholders' Meeting is held and the holders of
Parent Common Stock do not approve the issuance of Parent Common Stock pursuant
to the Merger;
(c) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Body shall have issued a final and
nonappealable Order, or shall have taken any other action, having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger;
(d) by Parent, at any time prior to the Effective Time, if a Company
Triggering Event shall have occurred;
(e) by Company, at any time prior to the Effective Time, if a Parent
Triggering Event shall have occurred;
(f) by Parent, at any time prior to the Effective Time, if any of
the Company's covenants, representations or warranties contained in this
Agreement shall have been breached or, any of the Company's representations and
warranties shall have become untrue, such that any of the conditions set forth
in Section 6.2(b), Section 6.2(c) or Section 6.2(d) would not be satisfied as of
the time of such breach or at the time such representation or warranty shall
have become untrue, and such breach shall not have been cured within thirty (30)
days of receipt by the Company of written notice of such breach describing the
details of such breach;
(g) by the Company, at any time prior to the Effective Time, if any
of Parent's or Merger Sub's covenants, representations or warranties contained
in this Agreement shall have been breached or, any of Parent's and Merger Sub's
representations and warranties shall have become untrue, such that any of the
conditions set forth in Section 6.3(b), Section 6.3(c) or Section 6.3(d) would
not be satisfied as of the time of such breach or at the time such
representation or warranty shall have become untrue, and such breach shall not
have been cured within thirty (30) days of receipt by Parent written notice of
such breach describing the details of such breach;
(h) by the Company pursuant to Section 4.3(f); and
(i) by Parent pursuant to Section 4.4(f).
7.2 EFFECT OF TERMINATION.
In the event of the termination of this Agreement as provided in
Section 7.1, this Agreement shall be of no further force or effect; provided,
however, that (i) this Section 7.2, Section 7.3 and Section 8 shall survive the
termination of this Agreement and shall remain in full
78
force and effect, and (ii) the termination of this Agreement shall not relieve
any party from any liability or damages for any breach of any provision
contained in this Agreement.
7.3 EXPENSES; TERMINATION FEES.
(a) Expenses. Except as set forth in this Section 7.3, fees and
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement ("TRANSACTION EXPENSES") shall be paid by the
party incurring such expenses, whether or not the Merger is consummated;
provided, that the Company and Parent shall share equally all filing and
printing fees incurred in connection with SEC and HSR filings hereunder (whether
or not the Merger is consummated).
(b) Termination Fee.
(i) If (A) this Agreement is terminated by Parent or the
Company pursuant to Section 7.1(b)(i) or (ii) or by Parent pursuant to Section
7.1(f) and (1) after the date of this Agreement and prior to or at the time of
such termination a Company Acquisition Proposal shall have been submitted to the
Company or shall have been publicly announced; and (2) within twelve (12) months
of such termination pursuant to Section 7.1(b)(i) or (ii) or Section 7.1(f) the
Company either enters into a definitive agreement for or consummates a Company
Acquisition Transaction with any Person or (B) this Agreement is terminated by
Parent pursuant to Section 7.1(d) or by the Company pursuant to Section 7.1(h),
then the Company shall pay to Parent, in immediately available funds, a
nonrefundable fee in the amount of $3,500,000 (the "TERMINATION FEE") less any
amount of Parent's Transaction Expenses previously paid by the Company pursuant
to Section 7.3(b)(iii). Any Termination Fee payable by the Company to Parent
pursuant to Section 7.3(b)(i)(A) shall be paid to Parent by the Company at or
prior to the earlier of the execution of the agreement providing for the
applicable Company Acquisition Transaction or consummation of the applicable
Company Acquisition Transaction, as the case may be. Any Termination Fee payable
by the Company to Parent pursuant to Section 7.3(b)(i)(B) shall be paid to
Parent by the Company within three (3) business days after such termination by
Parent or the Company. For purposes of this Section 7.3(b)(i) all references to
"15%" in the definition of a Company Acquisition Transaction shall be deemed to
be "30%."
(ii) If (A) this Agreement is terminated by Parent or the
Company pursuant to Section 7.1(b)(i) or (iii) or by the Company pursuant to
Section 7.1(g) and (1) after the date of this Agreement and prior to or at the
time of such termination a Parent Acquisition Proposal shall have been submitted
to Parent or shall have been publicly announced; and (2) within twelve (12)
months of such termination pursuant to Section 7.1(b)(i) or (iii) or Section
7.1(g) Parent either enters into a definitive agreement for or consummates a
Parent Acquisition Transaction with any Person or (B) this Agreement is
terminated by the Company pursuant to Section 7.1(e) or by Parent pursuant to
Section 7.1(i), then Parent shall pay to the Company, in immediately available
funds, the Termination Fee less any amount of the Company's Transaction Expenses
previously paid by Parent pursuant to Section 7.3(b)(iii). Any Termination Fee
or Transaction Expenses payable by Parent to the Company pursuant to Section
7.3(b)(ii)(A) shall be paid by Parent to the Company at or prior to the earlier
of the execution of the agreement providing for the applicable Parent
Acquisition Transaction or consummation of the applicable Parent Acquisition
Transaction, as the case may be. Any Termination Fee or
79
Transaction Expenses payable by Parent to the Company pursuant to Section
7.3(b)(ii)(B) shall be paid by Parent to the Company within three (3) business
days after such termination by the Company or Parent. For purposes of this
Section 7.3(b)(ii), all references to "15%" in the definition of a Parent
Acquisition Transaction shall be deemed to be "30%."
(iii) (A) If this Agreement is terminated by Parent pursuant
to Section 7.1(f) and the Termination Fee is not payable to Parent by the
Company at the time of such termination pursuant to Section 7.3(b)(i), then the
Company shall pay to Parent, in immediately available funds, Parent's
Transaction Expenses in an amount not to exceed $1,000,000 within three (3)
business days after such termination. (B) If this Agreement is terminated by the
Company pursuant to Section 7.1(g) and the Termination Fee is not payable to the
Company by Parent at the time of such termination pursuant to Section
7.3(b)(ii), then Parent shall pay to the Company, in immediately available
funds, the Company's documented, out-of-pocket Transaction Expenses in an amount
not to exceed $1,000,000 within three (3) business days after such termination.
(C) If this Agreement is terminated by Parent pursuant to Section 7.1(b)(ii) and
the Termination Fee is not payable to Parent by the Company at the time of such
termination pursuant to Section 7.3(b)(i), then the Company shall pay to Parent,
in immediately available funds, Parent's documented, out-of-pocket Transaction
Expenses in an amount not to exceed $1,500,000 within three (3) business days
after such termination and, within one year after such termination, the
difference between $1,500,000 and the amount of such Transaction Expenses so
paid (such difference being the "COMPANY DISAPPROVAL FEE"). (D) If this
Agreement is terminated by the Company pursuant to Section 7.1(b)(iii) and the
Termination Fee is not payable to the Company by Parent at the time of such
termination pursuant to Section 7.3(b)(ii), then Parent shall pay to the
Company, in immediately available funds, the Company's Transaction Expenses in
an amount not to exceed $1,500,000 within three (3) business days after such
termination and, within one year after such termination, the difference between
$1,5000,000 and the amount of such Transaction Expenses so paid (such difference
being the "PARENT DISAPPROVAL FEE"). The Company may elect to pay the Company
Disapproval Fee, and Parent may elect to pay the Parent Disapproval Fee,
pursuant to a promissory note in the form attached hereto as EXHIBIT K, which
note shall be executed and delivered within three (3) business days after the
date of the termination of this Agreement under circumstances requiring the
payment of such Company Disapproval Fee or Parent Disapproval Fee, as the case
may be.
(c) Company and Parent Acknowledgement.
Each of Parent and the Company acknowledges that the agreements
contained in this Section 7.3 are an integral part of the transaction
contemplated by this Agreement, and that, without these agreements, it would not
enter into this Agreement. Accordingly, if either party fails to pay the
Termination Fee or other amounts due under Section 7.3 in a timely manner and if
a party makes a claim against the other party in order to obtain payment of such
amounts and the claim results in a judgment against such for the amounts due
under this Section 7.3, the non-prevailing party shall pay to the prevailing
party its actual, documented, reasonable out-of-pocket costs and expenses
incurred by the prevailing party (including attorneys' fees and expenses) in
connection with such suit, together with interest on the amounts due from and
including the date on which such payment was to be made in accordance with
Section 7.3 but excluding the date of payment thereof, at the prime rate
published by The Wall Street Journal, as that rate may vary from time to time,
or if no longer published, a comparable rate. Payment of the fees and
80
expenses described in this Section 7.3 shall not be in lieu of damages incurred
in the event of a breach of this Agreement.
SECTION 8. MISCELLANEOUS PROVISIONS
8.1 AMENDMENT.
This Agreement may be amended with the approval of the respective
Boards of Directors of the Company, Merger Sub and Parent at any time (whether
before or after any required approvals by the stockholders of the Company or
Parent); provided, however, that after any such required stockholder approval
has been obtained, no amendment shall be made which by law or the rules of AMEX
or the Nasdaq requires further approval of the stockholders of either the
Company or Parent without the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
8.2 WAIVER.
(a) No failure on the part of any party to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
party in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No party shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this Agreement,
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
party; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
8.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations, warranties or agreements contained in
this Agreement or in any certificate delivered pursuant to this Agreement shall
survive the Effective Time, except for agreements which by their terms survive
the Effective Time.
8.4 ENTIRE AGREEMENT; COUNTERPARTS.
This Agreement (and the exhibits and schedules hereto) constitutes
the entire agreement among the parties hereto and all other prior agreements and
understandings, both written and oral, among or between any of the parties with
respect to the subject matter hereof and thereof, it being understood that the
Confidentiality Agreements shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement. This Agreement may
be executed in several counterparts, each of which shall be deemed an original
and all of which shall constitute one and the same instrument.
81
8.5 APPLICABLE LAW; JURISDICTION.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to principles of conflict of
laws. The parties hereto hereby declare that it is their intention that this
Agreement shall be regarded as made under the laws of the State of Delaware and
that the laws of said State shall be applied in interpreting its provisions in
all cases where legal interpretation shall be required. Each of the parties
hereto agrees (a) that this Agreement involves at least $100,000.00, and (b)
that this Agreement has been entered into by the parties hereto in express
reliance upon 6 Del. C. Section 2708. Each of the parties hereto agrees that any
action, suit or proceeding arising out of the transactions contemplated by this
Agreement (a "PROCEEDING") shall be commenced and conducted exclusively in the
federal or state courts of the State of Delaware, and each of the parties hereby
irrevocably and unconditionally: (i) consents to submit to the exclusive
jurisdiction of the federal and state courts in the State of Delaware for any
Proceeding (and each party agrees not to commence any Proceeding, except in such
courts); (ii) waives any objection to the laying of venue of any Proceeding in
the federal or state courts of the State of Delaware; (iii) waives, and agrees
not to plead or to make, any claim that any Proceeding brought in any federal or
state court of the State of Delaware has been brought in an improper or
otherwise inconvenient forum; and (iv) waives, and agrees not to plead or to
make, any claim that any Proceeding shall be transferred or removed to any other
forum. Each of the parties hereto hereby irrevocably and unconditionally agrees:
(1) to the extent such party is not otherwise subject to service of process in
the State of Delaware, to appoint and maintain an agent in the State of Delaware
as such party's agent for acceptance of legal process, and (2) that service of
process may also be made on such party by prepaid certified mail with a proof of
mailing receipt validated by the United States Postal Service constituting
evidence of valid service, and that service made pursuant to clause (1) or (2)
above shall have the same legal force and effect as if served upon such party
personally within the State of Delaware. For purposes of implementing the
parties' agreement to appoint and maintain an agent for service of process in
the State of Delaware, the Company does hereby appoint as such agent The
Corporation Trust Company, 1209 Orange Street, County of Newcastle, Xxxxxxxxxx,
Xxxxxxxx 00000.
8.6 ATTORNEYS' FEES.
In any action at law or suit in equity to enforce this Agreement or
the rights of any of the parties hereunder, the prevailing party in such action
or suit shall be entitled to reasonable attorneys' fees and all other reasonable
costs and expenses incurred in such action or suit.
8.7 ASSIGNABILITY; THIRD PARTY BENEFICIARIES.
This Agreement shall be binding upon, and shall be enforceable by
and inure solely to the benefit of, the parties hereto and their respective
successors and permitted assigns; provided, however, that neither this Agreement
nor any of the Company's or Parent's rights hereunder may be assigned by the
Company or by Parent without the prior written consent of Parent or the Company,
as the case may be, and any attempted assignment of this Agreement or any of
such rights by the Company or by Parent without such consent shall be void and
of no effect; provided, further, however, that, except for assignments by Merger
Sub to a wholly-owned Subsidiary of Parent, neither this Agreement nor any of
Parent's or Merger Sub's rights
82
hereunder may be assigned by Parent or Merger Sub without the prior written
consent of the Company, and any attempted assignment of this Agreement or any of
such rights by Parent or Merger Sub without such consent shall be void and of no
effect. Nothing in this Agreement, express or implied, is intended to or shall
confer upon any Person (other than the parties hereto) any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement except for
rights, benefits and remedies granted to the Indemnified Persons under Section
5.6.
8.8 NOTICES.
Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received (i) on the date of delivery if
delivered personally, (ii) on the date of confirmation of receipt (or the first
business day following such receipt if the date is not a business day) of
transmission by telecopy or facsimile, or (iii) on the date of confirmation of
receipt (or the first business day following such receipt if the date is not a
business day) if delivered by a nationally recognized overnight courier service.
All notices hereunder shall be delivered to the address or facsimile telephone
number set forth beneath the name of such party below (or to such other address
or facsimile telephone number as such party shall have specified in a written
notice given to the other parties hereto):
If to Parent or Merger Sub:
XXXX Medical Systems, Inc.
000 Xxxxx Xxxxxxxxx Xxxx.
Xxxxxxxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx XxXxxx, President and Chief Executive Officer
with a copy to (which copy shall not constitute notice hereunder):
Xxxxxx Xxxxxx White & XxXxxxxxx LLP
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile No. (000) 000-0000
Attention: Xxxx Xxxxx, Esq.
If to the Company:
Horizon Medical Products, Inc.
Xxx Xxxxxxx Xxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxxx, President
with a copy to (which copy shall not constitute notice hereunder):
King & Spalding LLP
000 Xxxxxxxxx Xxxxxx
00
Xxxxxxx, Xxxxxxx 00000
Facsimile No. (000) 000-0000
Attention: Xxx X. Xxxxxx, Xx.
8.9 SEVERABILITY.
If any provision of this Agreement or any part of any such provision
is held under any circumstances to be invalid or unenforceable in any
jurisdiction, then (a) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to confirm to
applicable Legal Requirements so as to be valid and enforceable to the fullest
possible extent, (b) the invalidity or unenforceability of such provision or
part thereof under such circumstances and in such jurisdiction shall not affect
the validity or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Agreement. Each provision of this
Agreement is separable from every other provision of this Agreement, and each
part of each provision of this Agreement is separable from every other part of
such provision.
8.10 SPECIFIC PERFORMANCE.
The parties agree that irreparable damage would occur in the event
that any provision of this Agreement is not performed in accordance with its
specific terms or is otherwise breached. The parties agree that, in the event of
any breach by the other party of any covenant or obligation contained in this
Agreement, the other party shall be entitled (in addition to any other remedy
that may be available to it, including monetary damages) to seek (a) a decree or
order of specific performance to enforce the observance and performance of such
covenant or obligation, and (b) an injunction restraining such breach. The
parties further agree that no party to this Agreement shall be required to
obtain, furnish or post any bond or similar instrument in connection with or as
a condition to obtaining any remedy referred to in this Section 8.10, and each
party waives any objection to the imposition of such relief or any right it may
have to require the obtaining, furnishing or posting of any such bond or similar
instrument.
8.11 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "INCLUDE" and "INCLUDING,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "WITHOUT LIMITATION."
84
(d) Except as otherwise indicated, all references in this Agreement
to "SECTIONS" and "EXHIBITS" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
[Signatures on following page]
85
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
XXXX MEDICAL SYSTEMS, INC.
By: /s/ Xxxxxx XxXxxx
--------------------------------
Name: Xxxxxx XxXxxx
Title: President and CEO
HORNET ACQUISITION CORP.
By: /s/ Xxxxxx XxXxxx
--------------------------------
Name: Xxxxxx XxXxxx
Title: President and CEO
HORIZON MEDICAL PRODUCTS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Interim CEO
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
"ACQUIRED CORPORATION CONTRACT" shall mean any Contract: (a)
currently in force to which any of the Acquired Corporations is a party or (b)
by which any of the Acquired Corporations or any asset of any of the Acquired
Corporations is bound or has any continuing obligations or rights.
"ACQUIRED CORPORATION PROPRIETARY ASSET" shall mean any Proprietary
Asset owned by or licensed to any of the Acquired Corporations or otherwise used
by any of the Acquired Corporations.
"ACQUIRED CORPORATIONS" is defined in Section 2.1 to this Agreement.
"ACQUISITION AGREEMENT" is defined in Section 4.3(f) to this
Agreement.
"AGREEMENT" is defined in the Preamble to this Agreement.
"AMENDED NOTE AGREEMENT" is defined in the Recitals to this
Agreement.
"AMEX" shall mean the American Stock Exchange.
"CDAPCA" is defined in Section 2.9(b) of this Agreement.
"CLAIM" shall mean any and all claims, demands, actions, causes of
action, suits, proceedings and administrative proceedings.
"CLOSING" is defined in Section 1.3 to this Agreement.
"CLOSING DATE" is defined in Section 1.3 to this Agreement.
"CODE" is defined in the Recitals to this Agreement.
"COMPANY" is defined in the Preamble to this Agreement.
"COMPANY ACQUISITION PROPOSAL" shall mean any bona fide offer,
inquiry, proposal or indication of interest received from a third party (other
than an offer, inquiry, proposal or indication of interest by Parent) relating
to any Company Acquisition Transaction.
"COMPANY ACQUISITION TRANSACTION" shall mean any transaction or
series of transactions involving:
(a) any merger, consolidation, share exchange, business combination
or similar transaction involving any of the Acquired Corporations;
(b) any issuance of securities, direct or indirect acquisition of
securities, tender offer, exchange offer or other similar transaction in which
(i) a Person or "GROUP" (as
1
defined in the Exchange Act and the rules promulgated thereunder) of Persons
(other than any Acquired Corporation) directly or indirectly acquires beneficial
or record ownership of securities representing more than 15% of the outstanding
securities of any class of voting securities of any of the Acquired Corporation,
or (ii) any of the Acquired Corporations issues securities representing more
than 15% of the outstanding securities of any class of voting securities of any
of the Acquired Corporations (to any Person other than an Acquired Corporation);
(c) any direct or indirect sale, lease, exchange, transfer, license,
acquisition or disposition of any business or businesses or of assets or rights
that constitute or account for 10% or more of the consolidated net revenues, net
income or assets of the Acquired Corporations; or
(d) any liquidation or dissolution of any of the Acquired
Corporations.
"COMPANY BALANCE SHEET" is defined in Section 2.4(d) of this
Agreement.
"COMPANY BALANCE SHEET DATE" is defined in Section 2.4(d) of this
Agreement.
"COMPANY COMMON STOCK" shall mean the Common Stock, $.001 par value,
of the Company.
"COMPANY DISAPPROVAL FEE" is defined in Section 7.3(b) of this
Agreement.
"COMPANY DISCLOSURE LETTER" is defined in Section 2 of this
Agreement.
"COMPANY EMPLOYEE PLANS" is defined in Section 2.12(a) of this
Agreement.
"COMPANY ERISA AFFILIATE" is defined in Section 2.12(a) of this
Agreement.
"COMPANY FINANCIAL STATEMENTS" is defined in Section 2.4(d) of this
Agreement.
"COMPANY MATERIAL CONTRACT" is defined in Section 2.7(a) of this
Agreement.
"COMPANY NOTE AGREEMENT" shall mean that certain Note Purchase
Agreement, dated as of March 1, 2002, by and among the Company, ComVest Venture
Partners, L.P. and the additional note purchasers identified therein, as amended
by Amendment No. 1 thereto dated as of June 10, 2002, Amendment No. 2 thereto
dated as of July 29, 2002 and Amendment No. 1 thereto dated as of October 21,
2003.
"COMPANY NOTE AGREEMENT AMENDMENT" is defined in the Recitals to
this Agreement.
"COMPANY OPTIONS" is defined in Section 2.3(b) of this Agreement.
"COMPANY ORGANIZATION DOCUMENTS" is defined in Section 2.1 of this
Agreement.
"COMPANY PERMITS" is defined in Section 2.9(b) of this Agreement.
2
"COMPANY PREFERRED STOCK" shall mean the Preferred Stock, $.001 par
value, of the Company.
"COMPANY PROXY STATEMENT" is defined in Section 5.1 of this
Agreement.
"COMPANY RECOMMENDATION" is defined in the Recitals of this
Agreement.
"COMPANY RIGHTS AGREEMENTS" is defined in Section 2.3(d) of this
Agreement.
"COMPANY SEC DOCUMENTS" is defined in Section 2.4(a) of this
Agreement.
"COMPANY SHAREHOLDERS" is defined in the Recitals of this Agreement.
"COMPANY SHAREHOLDERS' MEETING" is defined in Section 5.2(a) of this
Agreement.
"COMPANY STOCK CERTIFICATE" is defined in Section 1.6 of this
Agreement.
"COMPANY STOCK OPTION PLAN" is defined in Section 2.3(b) of this
Agreement.
"COMPANY STOCK RIGHTS" is defined in Section 2.3(d) of this
Agreement.
"COMPANY SUPERIOR OFFER" shall mean a Company Acquisition Proposal
on terms that the Board of Directors of the Company determines, in good faith,
after consultation with its outside legal counsel and its financial advisor,
that if consummated, is more favorable to the Company's shareholders from a
financial point of view than the Merger and the transactions contemplated by
this Agreement and is reasonably likely to be consummated, taking into account
all legal, financial and regulatory aspects of the offer and the Person making
the offer and would, if consummated, be in the best interests of the
shareholders of the Company; provided, however, that any such "COMPANY
ACQUISITION PROPOSAL" shall not be deemed to be a "COMPANY SUPERIOR OFFER" if
any financing required to consummate the transaction contemplated by such offer
is not committed.
"COMPANY TAX RETURNS" is defined in Section 2.11(d) of this
Agreement.
A "COMPANY TRIGGERING EVENT" shall be deemed to have occurred if:
(i) the Board of Directors of the Company shall have failed to make the Company
Recommendation or shall have withdrawn or modified in a manner adverse to Parent
or Merger Sub the Company Recommendation, including by issuing a public
announcement or other public release that makes it readily apparent that the
Board of Directors of the Company desires to withdraw or modify the Company
Recommendation in a manner adverse to Parent (other than any filing with the SEC
or dissemination of information that the Company has been advised by its counsel
is required to comply with Section 5.1 of this Agreement so long as such filing
or dissemination includes a reaffirmation of the Company Recommendation); (ii)
the Company shall have failed to include the Company Recommendation in the
Registration Statement or the Company Proxy Statement; (iii) the Board of
Directors of the Company shall have approved, endorsed or recommended any
Company Acquisition Proposal or shall have resolved or announced an intention to
do so; (iv) a tender or exchange offer relating to securities of the Company
shall have been commenced and
3
(A) the Company shall have recommended such tender offer, or (B) the Company
shall not have sent to its securityholders, within ten (10) business days after
the commencement of such tender or exchange offer, a statement disclosing that
the Company recommends rejection of such tender or exchange offer (it being
understood that taking no position or indicating its inability to take a
position does not constitute recommending a rejection of such tender or exchange
offer), or (C) the Board of Directors of the Company fails to reaffirm in
writing the Company Recommendation within ten (10) business days after Parent
requests in writing that such Company Recommendation be reaffirmed, (v) a
Company Acquisition Proposal is publicly announced, and the Company (A) fails to
issue a press release announcing its opposition to such Company Acquisition
Proposal within ten (10) business days after such Company Acquisition Proposal
is publicly announced, or (B) the Board of Directors of the Company fails to
reaffirm in writing the Company Recommendation within ten (10) business days
after Parent requests in writing that such Company Recommendation be reaffirmed,
or (vi) the Company willfully breaches its obligations under Section 4.3 of this
Agreement; provided, however, that the sending of notice by the Company to
Parent pursuant to Section 7.1(g) shall not in any case be deemed to be a
Company Triggering Event.
"COMPANY VOTING AGREEMENTS" is defined in the Recitals of this
Agreement.
"COMPANY WARRANT" is defined in Section 2.3(c) of this Agreement.
"COMPANY WELFARE PLANS" shall mean all employee welfare benefit
plans (as defined in Section 3(1) of ERISA) of any Acquired Corporation or any
other Company ERISA Affiliate for the benefit of, or relating to, any former or
current employee, independent contractor, officer or director (or any of their
beneficiaries) of any Acquired Corporation or any other Company ERISA Affiliate.
"COMPANY 401(k) PLAN" shall mean the Horizon Medical Products, Inc.
401(k) Plan.
"CONFIDENTIALITY AGREEMENTS" is defined in Section 4.1 of this
Agreement.
"CONSENT" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
"CONTRACT" shall mean any legally binding written or oral agreement,
contract, subcontract, lease, understanding, instrument, note, option, warranty,
purchase order, license, sublicense, insurance policy, benefit plan or
commitment or undertaking of any nature.
"CSA" is defined in Section 2.9(b) of this Agreement.
"CURRENT D&O INSURANCE COST" is defined in Section 5.6 of this
Agreement.
"DELAWARE CERTIFICATE OF MERGER" is defined in Section 1.3 to this
Agreement.
"DGCL" is defined in the Recitals of this Agreement.
"EFFECTIVE TIME" is defined in Section 1.3 of this Agreement.
4
"ENCUMBRANCE" shall mean any lien, pledge, hypothecation, charge,
mortgage, security interest, encumbrance, claim, infringement, interference,
option, right of first refusal, preemptive right or community property interest
(including any restriction on the voting of any security, any restriction on the
transfer of any security or other asset, any restriction on the receipt of any
income derived from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any asset); provided that the term Encumbrance shall not be deemed
to include (a) liens for current Taxes or income Taxes not yet due and payable
or that are being contested in good faith, in each case, and for which adequate
reserves have been recorded, (b) liens for assessments or other governmental
charges or liens of landlords, carriers, warehousemen, mechanics or materialmen
securing obligations incurred in the ordinary course of business consistent with
prior practice that are not yet due and payable or due but not delinquent or
being contested in good faith, (c) liens incurred in the ordinary course of
business consistent with prior practice in connection with workers'
compensation, unemployment insurance and other types of social security or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return of money bonds
and similar obligations, (d) purchase money or similar security interests
granted in connection with the purchase of equipment or supplies in the ordinary
course of business consistent with prior practice in an amount not to exceed
$150,000 in the aggregate, (e) liens, security interests, encumbrances or
restrictions which secure indebtedness which are properly reflected in the
Company 10-K or the Parent 10-K, as the case may be, (f) liens arising as a
matter of law in the ordinary course of business with respect to obligations
incurred after December 31, 2003, provided that the obligations secured by such
liens are not delinquent, and (g) such title defects and liens, if any, as
individually or in the aggregate are not reasonably likely to have a Material
Adverse Effect on the Acquired Corporations or the XXXX Corporations, as the
case may be.
"ENTITY" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
"ENVIRONMENTAL LAW" shall mean any foreign, federal, state or local
statute, law, rule, regulation, ordinance, treaty, code, policy or rule of
common law now or from time to time in effect and in each case as amended, and
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
natural resources, health, safety or Hazardous Materials, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended; the Resource Conservation and Recovery Act, as amended; the Hazardous
Materials Transportation Act, as amended; the Clean Water Act, as amended; the
Toxic Substances Control Act, as amended; the Clean Air Act, as amended; the
Safe Drinking Water Act, as amended; the Atomic Energy Act, as amended; the
Federal Insecticide, Fungicide and Rodenticide Act, as amended; and the
Occupational Safety and Health Act, as amended; and
"ERISA" is defined in Section 2.12(a) of this Agreement.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
5
"EXCHANGE AGENT" is defined in Section 1.7(a) of this Agreement.
"EXCHANGE FUND" is defined in Section 1.7(a) of this Agreement.
"EXCHANGE RATIO" is defined in Section 1.5(a) of this Agreement.
"EXCLUDED SHARES" shall mean any shares of Company Common Stock held
as of the Effective Time (a) by Parent, Merger Sub or any Subsidiary of Parent
or Merger Sub, (b) by any Subsidiary or (c) by the Company as treasury shares.
"FDA" is defined in Section 2.9(b) of this Agreement.
"FDCA" is defined in Section 2.9(b) of this Agreement.
"GAAP" is defined in Section 2.4(d) of this Agreement.
"GBCC" is defined in the Recitals of this Agreement.
"GEORGIA CERTIFICATE OF MERGER" is defined in Section 1.3 of this
Agreement.
"GOVERNMENTAL AUTHORIZATION" shall mean any: (a) permit, license,
certificate, franchise, permission, variance, clearance, registration,
qualification or authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement; or (b) right under any Contract with any Governmental Body.
"GOVERNMENTAL BODY" shall mean any: (a) nation, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of any
nature; (b) federal, state, local, municipal, foreign or other government; (c)
governmental or quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, instrumentality,
official, organization, unit or body and any court or other tribunal); (d) the
National Association of Securities Dealers, Inc. (including the rules and
regulations of the Nasdaq) or (e) the American Stock Exchange.
"GOVERNMENT CONTRACT" shall mean any prime contract, subcontract,
letter contract, purchase order or delivery order, task order, or other
agreement of any kind executed or submitted to or on behalf of any Governmental
Body or any prime contractor or higher-tier subcontractor, or under which any
Governmental Body or any such prime contractor otherwise has or may acquire any
right or interest.
"HAZARDOUS MATERIALS" shall mean (A) petroleum or petroleum products
(including crude oil or any fraction thereof, natural gas, natural gas liquids,
liquefied natural gas, or synthetic gas useable for fuel, or any mixture
thereof), polychlorinated biphenyls (PCBs), asbestos or asbestos containing
materials, urea formaldehyde foam insulation, and radon gas; (B) any substance
defined as or included in the definition of "HAZARDOUS SUBSTANCE," "HAZARDOUS
WASTE," "HAZARDOUS MATERIAL," "EXTREMELY HAZARDOUS WASTE," "RESTRICTED HAZARDOUS
WASTE," "WASTE," "SPECIAL WASTE," "TOXIC SUBSTANCE," "TOXIC POLLUTANT,"
"CONTAMINANT" OR "POLLUTANT," or words of similar import, under any applicable
Environmental Law (as defined
6
below); (C) infectious materials and other regulated medical wastes; (D) any
substance which is toxic, explosive, corrosive, flammable, radioactive,
carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by
any governmental agency; and (E) any other substance, material or waste the
presence of which requires investigation or remediation under any Environmental
Law.
"HIPAA" means the Health Insurance Portability and Accountability
Act of 1996, Pub. L. No. 104-191, as amended, and any rules or regulations
promulgated thereunder.
"HSR" is defined in Section 2.16 of this Agreement.
"INDEMNIFIED PERSONS" is defined in Section 5.6(a) of this
Agreement.
"INSURED PARTY" is defined in Section 5.6(b) of this Agreement.
"KNOWLEDGE" with respect to any party hereto shall mean the actual
knowledge of such party's executive officers.
"LEGAL PROCEEDING" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), hearing, inquiry, audit, examination or
investigation commenced, brought, conducted or heard by or before, or otherwise
involving, any court or other Governmental Body or any arbitrator or arbitration
panel.
"LEGAL REQUIREMENT" shall mean any federal, state, local, municipal,
foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Body (or under the
authority of AMEX, NASD or Nasdaq), including any Environmental Law.
"LIABILITY" shall mean any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"LOCK-UP AGREEMENTS" is defined in the Recitals to this Agreement.
An event, violation, inaccuracy, circumstance or other matter will
be deemed to have a "MATERIAL ADVERSE EFFECT" on, or shall be deemed to be
"MATERIAL" to, the Acquired Corporations, taken as a whole, if such event,
violation, inaccuracy, circumstance or other matter had or could reasonably be
expected to have a material adverse effect on (i) the business, condition,
assets, operations or financial performance of the Acquired Corporations taken
as a whole, or (ii) the ability of the Company to consummate the Merger or any
of the other transactions contemplated by this Agreement or to perform any of
its obligations under this Agreement prior to the Termination Date; provided,
however, that no one or more of the following shall be deemed to constitute, in
and of itself, or be taken into account in determining, the occurrence of a
Material Adverse Effect: (A) any effect arising from or relating to general
economic conditions, (B) any effect relating to, affecting, or with respect to,
conditions affecting the industries as a whole in which the Acquired
Corporations have material operations, (C) any
7
effect arising from the transactions contemplated by this Agreement or the
public announcement thereof (including any cancellation of or delays in customer
agreements, any reduction in sales, any disruption in supplier, distributor,
partner or similar relationships or any loss of employees), (D) any decline in
trading prices in financial markets generally or in the trading price of shares
of Company Common Stock arising from the transactions contemplated by this
Agreement or the public announcement thereof, or (E) the failure of the Company
to meet earnings expectations published in analysts reports (provided that
clauses (D) and (E) shall not exclude any underlying effect which may have
caused such change in trading price or failure to meet published earnings
projections). An event, violation, inaccuracy, circumstance or other matter will
be deemed to have a "MATERIAL ADVERSE EFFECT" on, or shall be deemed to be
"MATERIAL" to, the XXXX Corporations, taken as a whole, if such event,
violation, inaccuracy, circumstance or other matter had or could reasonably be
expected to have a material adverse effect on (i) the business, condition,
assets, operations or financial performance of the XXXX Corporations taken as a
whole, or (ii) the ability of Parent to consummate the Merger or any of the
other transactions contemplated by this Agreement or to perform any of its
obligations under this Agreement prior to the Termination Date; provided,
however, that no one or more of the following shall be deemed to constitute, in
and of itself, or be taken into account in determining, the occurrence of a
Material Adverse Effect: (A) any effect arising from or relating to general
economic conditions, (B) any effect relating to, affecting, or with respect to,
conditions affecting the industries as a whole in which the XXXX Corporations
have material operations, (C) any effect arising from the transactions
contemplated by this Agreement or the public announcement thereof (including any
cancellation of or delays in customer agreements, any reduction in sales, any
disruption in supplier, distributor, partner or similar relationships or any
loss of employees), (D) any decline in trading prices in financial markets
generally or in the trading price of shares of Parent Common Stock arising from
the transactions contemplated by this Agreement or the public announcement
thereof, or (E) the failure of Parent to meet earnings expectations published in
analysts reports (provided that clauses (D) and (E) shall not exclude any
underlying effect which may have caused such change in trading price or failure
to meet published earnings projections).
"MERGER" is defined in the Recitals of this Agreement.
"MERGER CONSIDERATION" is defined in Section 1.5(a) of this
Agreement.
"MERGER SUB" is defined in the Preamble of this Agreement.
"MULTIEMPLOYER PLAN" is defined in Section 2.12(b) of this
Agreement.
"MULTIPLE EMPLOYER PLAN" is defined in Section 2.12(b) of this
Agreement.
"MULTIPLE EMPLOYER WELFARE ARRANGEMENT" is defined in Section
2.12(b) of this Agreement.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"NASDAQ" shall mean the National Market System of the National
Association of Securities Dealers automated quotation system.
8
"ORDER" shall mean any: (a) order, judgment, injunction, edict,
decree, ruling, pronouncement, determination, decision, opinion, verdict,
sentence, subpoena, writ or award issued, made, entered, rendered or otherwise
put into effect by or under the authority of any court, administrative agency or
other Governmental Body or any arbitrator or arbitration panel; or (b) Contract
with any Governmental Body entered into in connection with any Legal Proceeding.
"PARENT" is defined in the Preamble of this Agreement.
"PARENT ACQUISITION PROPOSAL" shall mean any bona fide offer,
inquiry, proposal or indication of interest received from a third party (other
than an offer, inquiry, proposal or indication of interest by the Company)
relating to any Parent Acquisition Transaction.
"PARENT ACQUISITION TRANSACTION" shall mean any transaction or
series of transactions involving:
(a) any merger, consolidation, share exchange, business combination
or similar transaction involving any of the XXXX Corporations;
(b) any issuance of securities, direct or indirect acquisition of
securities, tender offer, exchange offer or other similar transaction in which
(i) a Person or "GROUP" (as defined in the Exchange Act and the rules
promulgated thereunder) of Persons (other than any XXXX Corporation) directly or
indirectly acquires beneficial or record ownership of securities representing
more than 15% of the outstanding securities of any class of voting securities of
any of the XXXX Corporations, or (ii) any of the XXXX Corporations issues
securities representing more than 15% of the outstanding securities of any class
of voting securities of any of the XXXX Corporations (to any Person other than a
XXXX Corporation);
(c) any direct or indirect sale, lease, exchange, transfer, license,
acquisition or disposition of any business or businesses or of assets or rights
that constitute or account for 10% or more of the consolidated net revenues, net
income or assets of the XXXX Corporations; or
(d) any liquidation or dissolution of any of the Acquired
Corporations.
"PARENT BALANCE SHEET" is defined in Section 3.4(d) of this
Agreement.
"PARENT BALANCE SHEET DATE" is defined in Section 3.4(d) of this
Agreement.
"PARENT COMMON STOCK" shall mean the Common Stock, $0.001 par value
per share, of Parent.
"PARENT DISAPPROVAL FEE" is defined in Section 7.3(b) of this
Agreement.
"PARENT DISCLOSURE LETTER" is defined in Section 3 of this
Agreement.
"PARENT EMPLOYEE PLANS" is defined in Section 3.12(a) of this
Agreement.
"PARENT ERISA AFFILIATE" is defined in Section 3.12(a) of this
Agreement.
9
"PARENT ESPP" is defined in Section 3.3(b) of this Agreement.
"PARENT FINANCIAL STATEMENTS" is defined in Section 3.4(d) of this
Agreement.
"PARENT MATERIAL CONTRACT" is defined in Section 3.7(a) of this
Agreement.
"PARENT OPTIONS" is defined in Section 3.3(b) of this Agreement.
"PARENT ORGANIZATION DOCUMENTS" is defined in Section 3.1 of this
Agreement.
"PARENT PERMITS" is defined in Section 3.9(b) of this Agreement.
"PARENT PREFERRED STOCK" shall mean the Preferred Stock, $.001 par
value, of Parent.
"PARENT PROXY STATEMENT" is defined in Section 5.1 of this
Agreement.
"PARENT RECOMMENDATION" is defined in the Recitals of this
Agreement.
"PARENT RIGHTS AGREEMENTS" is defined in Section 3.3(c) of this
Agreement.
"PARENT SEC DOCUMENTS" is defined in Section 3.4(a) of this
Agreement.
"PARENT STOCKHOLDERS" is defined in the Recitals of this Agreement.
"PARENT STOCKHOLDER RIGHTS AGREEMENT" shall mean that certain
Preferred Shares Rights Agreement, dated as of July 31, 2001, by and between
Parent and U.S. Stock Transfer Corporation.
"PARENT STOCKHOLDERS' MEETING" is defined in Section 5.2(e) of this
Agreement.
"PARENT STOCK OPTION PLANS" shall mean the stock option plans of
Parent listed in Section 3.3(b), any other plans or arrangements under which
Parent Options are issued and all stock option agreements evidencing stock
option grants under the foregoing.
"PARENT STOCK RIGHTS" is defined in Section 3.3(c) of this
Agreement.
"PARENT SUPERIOR OFFER" shall mean a Parent Acquisition Proposal on
terms that the Board of Directors of Parent determines, in good faith, after
consultation with its outside legal counsel and its financial advisor, that if
consummated, is more favorable to Parent's stockholders from a financial point
of view than the Merger and the transactions contemplated by this Agreement and
is reasonably likely to be consummated, taking into account all legal, financial
and regulatory aspects of the offer and the Person making the offer and would,
if consummated, be in the best interests of the stockholders of Parent;
provided, however, that any such "PARENT ACQUISITION PROPOSAL" shall not be
deemed to be a "PARENT SUPERIOR OFFER" if any financing required to consummate
the transaction contemplated by such offer is not committed..
"PARENT TAX RETURN" is defined in Section 3.11(d) of this Agreement.
10
A "PARENT TRIGGERING EVENT" shall be deemed to have occurred if: (i)
the Board of Directors of Parent shall have failed to make the Parent
Recommendation or shall have withdrawn or modified in a manner adverse to the
Company the Parent Recommendation, including by issuing a public announcement or
other public release that makes it readily apparent that the Board of Directors
of Parent desires to withdraw or modify the Parent Recommendation (other than
any filing with the SEC or dissemination of information that Parent has been
advised by its counsel is required to comply with Section 5.1 of this Agreement
so long as such filing or dissemination includes a reaffirmation of the Parent
Recommendation); (ii) Parent shall have failed to include the Parent
Recommendation in the Registration Statement or the Parent Proxy Statement;
(iii) the Board of Directors of Parent shall have approved, endorsed or
recommended any Parent Acquisition Proposal or shall have resolved or announced
an intention to do so; (iv) a tender or exchange offer relating to securities of
Parent shall have been commenced and (A) Parent shall have recommended such
tender offer, or (B) Parent shall not have sent to its security holders, within
ten (10) business days after the commencement of such tender or exchange offer,
a statement disclosing that Parent recommends rejection of such tender or
exchange offer (it being understood that taking no position or indicating its
inability to take a position does not constitute recommending a rejection of
such tender or exchange offer), or (C) the Board of Directors of Parent fails to
reaffirm in writing the Parent Recommendation within ten (10) business days
after the Company requests in writing that such Parent Recommendation be
reaffirmed, (v) a Parent Acquisition Proposal is publicly announced, and Parent
(A) fails to issue a press release announcing its opposition to such Parent
Acquisition Proposal within ten (10) business days after such Parent Acquisition
Proposal is publicly announced, or (B) the Board of Directors of Parent fails to
reaffirm in writing the Parent Recommendation within ten (10) business days
after the Company requests in writing that such Parent Recommendation be
reaffirmed, or (vi) Parent willfully breaches its obligations under Section 4.4
of this Agreement; provided, however, that the sending of notice by Parent to
the Company pursuant to Section 7.1(f) shall not in any case be deemed to be a
Parent Triggering Event.
"PARENT VOTING AGREEMENTS" is defined in the Recitals of this
Agreement.
"PARENT 401(k) PLAN" shall mean the XXXX Medical Systems, Inc.
401(k) Plan.
"PERSON" shall mean any individual, Entity or Governmental Body.
"PRE-CLOSING PERIOD" is defined in Section 4.1 of this Agreement.
"PROCEEDING" is defined is Section 8.5 of this Agreement.
"PROPRIETARY ASSET" shall mean any: (a) patent, patent application,
trademark (whether registered or unregistered), trademark application, trade
name, fictitious business name, service xxxx (whether registered or
unregistered), service xxxx application, copyright (whether registered or
unregistered), database rights, design rights, moral rights, domain name,
assumed and fictitious name registrations, copyright application, copyright
registration, mask work right, mask work right application, trade secret, or any
other intellectual or industrial or intangible property right, know-how,
customer lists, computer software, source code, algorithm, invention,
engineering drawing, and technology; and (b) right to use or exploit any of the
foregoing.
11
"XXXX CORPORATION CONTRACT" shall mean any Contract: (a) to which
any of the XXXX Corporations is a party; (b) by which any of the XXXX
Corporations or any asset of any of the XXXX Corporations is or may become bound
or under which any of the XXXX Corporations has, or may become subject to, any
obligation; or (c) under which any of the Acquired Corporations has or may
acquire any right or interest.
"XXXX CORPORATION PROPRIETARY ASSET" shall mean any Proprietary
Asset owned by or licensed to any of the XXXX Corporations or otherwise used by
any of the XXXX Corporations.
"XXXX CORPORATIONS" is defined in Section 3.1 of this Agreement.
"REGISTRATION STATEMENT" is defined in Section 5.1 of this
Agreement.
"REPRESENTATIVES" shall mean officers, directors, employees, agents,
attorneys, accountants, advisors, consultants and representatives of the Person
and its Subsidiaries.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended
and the regulations promulgated thereunder.
"SHARES" is defined in Section 1.6 of this Agreement.
An entity shall be deemed to be a "SUBSIDIARY" of another Person if
such Person directly or indirectly owns, beneficially or of record, (a) an
amount of voting securities of other interests in such Entity that is sufficient
to enable such Person to elect at least a majority of the members of such
Entity's Board of Directors or other governing body, or (b) at least 50% of the
outstanding equity or financial interests of such Entity.
"SURVIVING CORPORATION" is defined in Section 1.1 of this Agreement.
"TAKEOVER LAWS" shall mean any "MORATORIUM," "CONTROL SHARE
ACQUISITION," "FAIR PRICE," "SUPERMAJORITY," "AFFILIATE TRANSACTIONS," or
"BUSINESS COMBINATION STATUTE OR REGULATION" or other similar state antitakeover
laws and regulations.
"TAX" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
"TAX RETURN" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment
12
of any Tax or in connection with the administration, implementation or
enforcement of or compliance with any Legal Requirement relating to any Tax.
"TERMINATION DATE" is defined in Section 7.1(b) of this Agreement.
"TERMINATION FEE" is defined in Section 7.3(b)(i) of this Agreement.
"TRANSACTION EXPENSES" is defined in Section 7.3(a) of this
Agreement.
"WARN ACT" is defined Section 2.12(m) of this Agreement.
"XXXXX FARGO" is defined in Section 3.17 of this Agreement.
13
EXHIBIT B-1
COMPANY VOTING AGREEMENT SIGNATORIES
Xxxxxx Blue
Xxxxx X. Brands
Xxxxx X. Ku
Xxxxxxxx X. Xxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
L. Xxxxx Xxxxx
Xxxxxx X. Xxxxxxx
ComVest Venture Partners, L.P.
Medtronic, Inc.
EXHIBIT B-2
FORM OF COMPANY VOTING AGREEMENT
EXHIBIT B-3
PARENT VOTING AGREEMENT SIGNATORIES
Xxxxxxx Xxxxx
Xxxxxx XxXxxx
Xxxx Xxxxxxx
Xxxxx Xxxxxxx
Xxxxxx X. Xxxxxxx, Xx.
Xxxxx Xxxxxxxx
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxx
Xxxx Xxxxxxxxx
Xxxxxxx Xxxxxxx
Xxxx Xxxx
Xxxxxx Xxxxxxx Venture Partners
EXHIBIT B-4
FORM PARENT VOTING AGREEMENT
EXHIBIT C-1
LOCK-UP AGREEMENT SIGNATORIES
ComVest Venture Partners, L.P.
Medtronic, Inc.
Xxxxxxxx X. Xxxx
Xxxxxx Xxxxxxx Venture Partners
EXHIBIT C-2
FORM OF COMPANY LOCK-UP AGREEMENT
EXHIBIT C-3
FORM OF PARENT LOCK-UP AGREEMENT
EXHIBIT D
AMENDMENT TO NOTE PURCHASE AGREEMENT
EXHIBIT E
DELAWARE CERTIFICATE OF MERGER
EXHIBIT F
GEORGIA CERTIFICATE OF MERGER
EXHIBIT G
FORM OF SURVIVING CORPORATION AMENDED AND RESTATED ARTICLES OF INCORPORATION
EXHIBIT H
FORM OF SURVIVING CORPORATION BYLAWS
EXHIBIT I
FORM OF AFFILIATE AGREEMENT
EXHIBIT J
FORM OF ESTOPPEL CERTIFICATE
EXHIBIT K
FORM OF PROMISSORY NOTE
