Exhibit 10.1
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AGREEMENT AND PLAN OF MERGER
AMONG
EURAMAX INTERNATIONAL, INC.
AMERIMAX PENNSYLVANIA, INC.
AND
XXXXXX HOLDINGS, LTD.
Dated as of October 10, 2003
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Table of Contents
Page
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ARTICLE I THE OFFER............................................................................. 2
Section 1.1. The Offer.......................................................................... 2
Section 1.2. Company Actions.................................................................... 4
Section 1.3. Stockholder Lists.................................................................. 5
Section 1.4. Directors; Section 14(f)........................................................... 5
ARTICLE II THE MERGER............................................................................ 7
Section 2.1. The Merger......................................................................... 7
Section 2.2. Effective Time..................................................................... 8
Section 2.3. Effects of the Merger.............................................................. 8
Section 2.4. Articles of Incorporation; Bylaws.................................................. 8
Section 2.5. Directors and Officers............................................................. 8
Section 2.6. Conversion of Securities........................................................... 8
Section 2.7. Dissenting Shares.................................................................. 9
Section 2.8. Surrender of Shares................................................................ 9
Section 2.9. No Further Transfer or Ownership Rights........................................... 11
Section 2.10. Treatment of Options.............................................................. 11
Section 2.11. Closing........................................................................... 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................ 12
Section 3.1. Organization and Qualification.................................................... 12
Section 3.2. Capitalization.................................................................... 13
Section 3.3. Authority Relative to this Agreement.............................................. 14
Section 3.4. Absence of Certain Changes........................................................ 15
Section 3.5. Reports........................................................................... 16
Section 3.6. Proxy Statement................................................................... 16
Section 3.7. Consents and Approvals; No Violation.............................................. 17
Section 3.8. Brokerage Fees and Commissions.................................................... 18
Section 3.9. Schedule 14D-9; Offer Documents................................................... 18
Section 3.10. Litigation........................................................................ 19
Section 3.11. Absence of Changes in Benefit Plans............................................... 19
Section 3.12. ERISA Compliance.................................................................. 19
Section 3.13. Taxes............................................................................. 23
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Section 3.14. No Excess Parachute Payments; Termination Payments; Section 162(m) of the Code.... 24
Section 3.15. Compliance with Applicable Laws; Environmental.................................... 25
Section 3.16. State Takeover Statutes........................................................... 26
Section 3.17. Contracts......................................................................... 27
Section 3.18. Labor Matters..................................................................... 28
Section 3.19. Title to Properties............................................................... 29
Section 3.20. Undisclosed Liabilities; Indebtedness............................................. 30
Section 3.21. Opinion of Company Financial Advisor.............................................. 31
Section 3.22. Intellectual Property............................................................. 31
Section 3.23. Insurance......................................................................... 33
Section 3.24. Affiliate Transactions............................................................ 33
Section 3.25. Indemnification Claims............................................................ 33
Section 3.26. Absence of Questionable Payments.................................................. 33
Section 3.27. Products Liability................................................................ 34
Section 3.28. Relationship with Customers and Suppliers......................................... 34
Section 3.29. Company Rights Agreement.......................................................... 34
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER............................... 35
Section 4.1. Organization and Qualification.................................................... 35
Section 4.2. Authority Relative to this Agreement.............................................. 35
Section 4.3. Proxy Statement................................................................... 35
Section 4.4. Consents and Approvals; No Violation.............................................. 36
Section 4.5. Schedule TO; Offer Documents...................................................... 36
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER............................................... 37
Section 5.1. Conduct of Business of the Company Pending the Merger............................. 37
Section 5.2. Prohibited Actions by the Company................................................. 37
ARTICLE VI COVENANTS............................................................................ 40
Section 6.1. No Solicitation................................................................... 40
Section 6.2. Access to Information............................................................. 42
Section 6.3. Confidentiality Agreement......................................................... 43
Section 6.4. Commercially Reasonable Best Efforts.............................................. 43
Section 6.5. Indemnification of Directors and Officers......................................... 44
Section 6.6. Event Notices and Other Actions................................................... 45
Section 6.7. Third Party Standstill Agreements................................................. 46
Section 6.8. Employee Stock Options; Employee Plans and Benefits and Employment Contracts...... 46
Section 6.9. Purchase of Shares................................................................ 48
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Section 6.10. Meeting of the Company's Shareholders............................................. 48
Section 6.11. Proxy Statement................................................................... 48
Section 6.12. Public Announcements.............................................................. 49
Section 6.13. Shareholder Litigation............................................................ 49
Section 6.14. FIRPTA............................................................................ 49
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER............................................. 49
Section 7.1. Conditions to Each Party's Obligation to Effect the Merger........................ 49
Section 7.2. Conditions to Obligations of Parent and Purchaser to Effect the Merger............ 50
ARTICLE VIII TERMINATION; AMENDMENT; WAIVER....................................................... 50
Section 8.1. Termination....................................................................... 50
Section 8.2. Effect of Termination............................................................. 53
Section 8.3. Expenses; Termination Fee......................................................... 53
Section 8.4. Amendment......................................................................... 55
Section 8.5. Extension; Waiver................................................................. 55
ARTICLE IX MISCELLANEOUS........................................................................ 55
Section 9.1. Non-Survival of Representations and Warranties.................................... 55
Section 9.2. Entire Agreement; Assignment...................................................... 56
Section 9.3. Enforcement of the Agreement...................................................... 56
Section 9.4. Severability...................................................................... 56
Section 9.5. Notices........................................................................... 56
Section 9.6. Failure or Indulgence Not Waiver; Remedies Cumulative............................. 57
Section 9.7. Governing Law; Consent to Jurisdiction............................................ 58
Section 9.8. Descriptive Headings.............................................................. 58
Section 9.9. Parties in Interest............................................................... 58
Section 9.10. Counterparts...................................................................... 58
Section 9.11. Certain Definitions............................................................... 58
Section 9.12. Interpretation.................................................................... 60
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CERTAIN DEFINITIONS
Acquisition Agreement........................................................ 41
Acquisition Proposal......................................................... 42
affiliate.................................................................... 59
Agreement.................................................................... 1
Articles of Merger........................................................... 8
B&S.......................................................................... 4
beneficial owner............................................................. 59
Benefit Plans................................................................ 20
Bidders...................................................................... 42
business day................................................................. 59
Cash Payment................................................................. 12
Certain Shareholders......................................................... 1
Certificates................................................................. 10
Closing...................................................................... 12
Code......................................................................... 20
Common Stock Price........................................................... 1
Company...................................................................... 1
Company Common Stock......................................................... 1
Company Disclosure Schedule.................................................. 59
Company Form 10-K............................................................ 20
Company Preferred Stock...................................................... 13
Company Rights Agreement..................................................... 2
Company SEC Documents........................................................ 16
Company Shareholder Approval................................................. 15
Company Stock Option Plan.................................................... 12
Confidentiality Agreement.................................................... 43
Continuing Employee.......................................................... 48
Contract..................................................................... 27
control...................................................................... 59
D&O Insurance................................................................ 45
Department of State.......................................................... 8
Dissenting Shareholder....................................................... 9
Dissenting Shares............................................................ 9
XXXXX........................................................................ 16
Effective Time............................................................... 8
Environmental Claim.......................................................... 27
Environmental Laws........................................................... 25
Environmental Liabilities.................................................... 27
ERISA........................................................................ 20
ERISA Affiliate.............................................................. 20
Exchange Act................................................................. 2
Expenses..................................................................... 55
Fairness Opinion............................................................. 4
Filed Company SEC Documents.................................................. 15
Fully Diluted Shares......................................................... 59
Governmental Entity.......................................................... 18
group........................................................................ 60
Hazardous Materials.......................................................... 26
Independent Directors........................................................ 7
Intellectual Property........................................................ 32
IRS.......................................................................... 20
Licenses..................................................................... 18
Liens........................................................................ 13
Material Adverse Effect...................................................... 60
Material Business............................................................ 42
Merger....................................................................... 1
Merger Consideration......................................................... 9
Minimum Condition............................................................ 1
Notice Filing................................................................ 27
Offer........................................................................ 1
Offer Documents.............................................................. 3
Offer to Purchase............................................................ 3
Option....................................................................... 11
Other Action................................................................. 7
Owned Real Property.......................................................... 29
Parent....................................................................... 1
Paying Agent................................................................. 10
PBCL......................................................................... 1
Pension Plan................................................................. 21
Permits...................................................................... 25
person....................................................................... 60
Proxy Statement.............................................................. 17
Purchaser.................................................................... 1
Real Property Leases......................................................... 30
Releases..................................................................... 26
Rights....................................................................... 2
SARs......................................................................... 14
Schedule 14D-9............................................................... 5
Schedule TO.................................................................. 3
SEC.......................................................................... 3
Securities Act............................................................... 14
Share Acquisition Date....................................................... 6
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Shareholder Meeting.......................................................... 8
subsidiary................................................................... 60
Superior Proposal............................................................ 42
Surviving Corporation........................................................ 7
Tax Returns.................................................................. 24
Taxes........................................................................ 24
Tender and Option Agreement.................................................. 1
Termination Fee.............................................................. 55
Transactions................................................................. 4
Voting Company Debt.......................................................... 14
WARN Act..................................................................... 23
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Execution Copy
AGREEMENT AND PLAN OF MERGER
THIS IS AN AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as
of October 10, 2003, among Euramax International, Inc., a Delaware corporation
("Parent"), Amerimax Pennsylvania, Inc., a Pennsylvania corporation and an
indirect wholly owned subsidiary of Parent ("Purchaser"), and Xxxxxx Holdings,
Ltd., a Pennsylvania corporation (the "Company").
Background
WHEREAS, the Board of Directors of the Company has determined that it
is fair to, advisable and in the best interests of the Company and the
shareholders of the Company to enter into and consummate this Agreement with
Parent and Purchaser, providing for the merger (the "Merger") of Purchaser with
and into the Company, with the Company as the Surviving Corporation, in
accordance with the Pennsylvania Business Corporation Law of 1988, as amended
(the "PBCL"), and the other transactions contemplated hereby, upon the terms and
subject to the conditions set forth herein;
WHEREAS, the Board of Directors of Purchaser has approved the Merger
of Purchaser with and into the Company and such other transactions in accordance
with the PBCL upon the terms and subject to the conditions set forth herein;
WHEREAS, the Company and Purchaser have agreed that, upon the terms
and subject to the conditions contained herein, Purchaser shall commence an
offer (as amended or supplemented in accordance with this Agreement, the
"Offer") to purchase for cash all of the issued and outstanding shares of common
stock, par value $.01 per share (the "Company Common Stock"), of the Company, at
a price per share of $3.90, net to the seller in cash (the "Common Stock
Price");
WHEREAS, the Board of Directors of the Company has determined that the
consideration to be paid for each share of Company Common Stock in the Offer and
the Merger is fair to the holders of shares of Company Common Stock and has
resolved to recommend that the holders of such shares of Company Common Stock
tender their shares pursuant to the Offer and approve and adopt this Agreement
and the Merger upon the terms and subject to the conditions set forth herein;
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger;
WHEREAS, simultaneously with the execution and delivery of this
Agreement and in order to induce Parent and Purchaser to enter into this
Agreement, certain shareholders of the Company (the "Certain Shareholders") have
executed and delivered to Parent and Purchaser an agreement (the "Tender and
Option Agreement") pursuant to which the Certain Shareholders have agreed to
take specified actions in furtherance of the transactions contemplated by this
Agreement, including tendering their shares of Company Common Stock into the
Offer and
granting Parent and Purchaser the Purchase Option (as such term is defined in
the Tender and Option Agreement) with respect to such shares of Company Common
Stock and to make the Incentive Payments (as such term is defined in the Tender
and Option Agreement); and
WHEREAS, simultaneously with the execution and delivery of this
Agreement and in order to induce Parent and Purchaser to enter into this
Agreement, the Company has granted the Purchaser an option to purchase shares of
Company Common Stock pursuant to an agreement among Parent, Purchaser and the
Company (the "Top-up Option Agreement").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and
intending to be legally bound hereby, Parent, Purchaser and the Company hereby
agree as follows:
ARTICLE I
THE OFFER
Section 1.1. The Offer.
(a) Subject to the provisions of this Agreement, and provided
that this Agreement shall not have been terminated in accordance with Section
8.1 and so long as none of the events or circumstances set forth in clauses
(a)-(i) of Annex A hereto shall have occurred and be continuing, not later than
the fifth business day from the date of public announcement of the execution of
this Agreement, Parent shall cause Purchaser to commence (within the meaning of
Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), the Offer at a price equal to the Common Stock Price for the Company
Common Stock (including the associated preferred stock purchase rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of August 21, 1998,
by and between the Company and Oxford Transfer & Registrar, as Rights Agent (the
"Company Rights Agreement"")). The obligation of Purchaser to consummate the
Offer, to accept for payment and to pay for any shares of Company Common Stock
tendered pursuant to the Offer shall be subject to those conditions set forth in
Annex A. It is agreed that the conditions to the Offer set forth on Annex A are
for the benefit of Purchaser and may be asserted by Purchaser regardless of the
circumstances giving rise to any such condition (other than any action or
inaction by Purchaser in violation of this Agreement) and Purchaser expressly
reserves the right, in its sole discretion, to waive any such condition;
provided that, without the consent of the Company, Parent or Purchaser shall not
waive the Minimum Condition (except for waivers reducing the Minimum Condition
not below a majority of the outstanding shares of Company Common Stock on a
fully diluted basis) or the condition set forth in paragraph (g) of Annex A. The
initial expiration date of the Offer shall be the 20th business day following
the commencement of the Offer in accordance with Rule 14e-1(a) promulgated under
the Exchange Act, unless this Agreement is terminated in accordance with Article
VIII, in which case the Offer (whether or not previously extended in accordance
with the terms hereof) shall expire on such date of termination (in either case,
the "Expiration Date").
(b) Purchaser expressly reserves the right, in its sole
discretion, to modify and make changes to the terms and conditions of the Offer,
provided that without the prior consent of the Company, no modification or
change may be made which (i) decreases the
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consideration payable in the Offer (except as permitted by this Agreement), (ii)
changes the form of consideration payable in the Offer (other than by adding
consideration), (iii) increases the Minimum Condition, or reduces the Minimum
Condition below a majority of the outstanding shares of Company Common Stock on
a fully diluted basis, (iv) decreases the maximum number of shares of Company
Common Stock sought pursuant to the Offer, (v) changes any other terms or
conditions to the Offer in a manner materially adverse to the Company or its
shareholders or option holders, or (vi) imposes additional conditions to the
Offer (other than solely in respect of any consideration which is payable in
addition to the Common Stock Price). Notwithstanding the foregoing, Purchaser
may (but shall not be required under this Agreement or otherwise to), without
the consent of the Company, (i) extend the Offer on one or more occasions for
such period as may be determined by Purchaser in its sole discretion (each such
extension period not to exceed 10 business days at a time), if at the then
scheduled expiration date of the Offer any of the conditions to Purchaser's
obligations to accept for payment and pay for shares of Company Common Stock
shall not be satisfied or waived and (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the
Offer. Without limiting the right of Purchaser to extend the Offer, provided
that this Agreement shall not have been terminated in accordance with Section
8.1 hereof, if the conditions set forth in Annex A are not satisfied or, to the
extent permitted hereby, waived by Purchaser as of the date the Offer would
otherwise have expired, then, except to the extent that such conditions in the
reasonable judgment of Purchaser are incapable of being satisfied, at the
request of the Company, Purchaser shall extend the Offer from time to time until
the earlier of (i) December 31, 2003, (ii) the consummation of the Offer or
(iii) termination of this Agreement. On the terms and subject to the conditions
of the Offer and this Agreement, promptly after expiration of the Offer,
Purchaser shall accept for payment and pay for, and Parent shall cause Purchaser
to accept for payment and pay for, all shares of Company Common Stock (including
the associated Rights) validly tendered and not withdrawn pursuant to the Offer
that Purchaser becomes obligated to purchase pursuant to the Offer.
Notwithstanding the foregoing, Purchaser may in its sole discretion elect to
provide for a subsequent offering period pursuant to, and on the terms required
by, Rule 14d-11 under the Exchange Act.
(c) on the date of commencement of the Offer, Parent and
Purchaser shall file with the SEC with respect to the Offer a Tender Offer
Statement on Schedule TO (together with all amendments and supplements thereto
and including the exhibits thereto, the "Schedule TO") with respect to the Offer
which will comply in all material respects with the provisions of applicable
federal securities laws, and will contain the offer to purchase relating to the
Offer (the "Offer to Purchase") and forms of related letters of transmittal and
summary advertisement (which documents, together with any supplements or
amendments thereto and including the exhibits thereto, are referred to herein
collectively as the "Offer Documents"). Parent shall deliver copies of the
proposed forms of the Schedule TO and the Offer Documents to the Company within
a reasonable time prior to the commencement of the Offer for review and comment
by the Company and its counsel. The Company and its counsel shall be given a
reasonable opportunity to promptly review any amendments and supplements to the
Schedule TO and the exhibits thereto prior to their filing with the SEC or
dissemination to shareholders of the Company. Parent agrees to provide the
Company and its counsel in writing any comments that Purchaser, Parent or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt thereof. Each of the Company, Parent and
Purchaser
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shall promptly correct any information provided by it for use in the Schedule TO
or the Offer Documents that shall be or shall have become false or misleading in
any material respect and Parent and Purchaser further agree to take all steps
necessary to cause such Schedule TO or Offer Documents as so corrected to be
filed with the SEC and disseminated to the shareholders of the Company, as and
to the extent required by applicable federal securities laws.
(d) The parties understand and agree that the Common Stock Price
has been calculated based upon the accuracy of the representation and warranty
set forth in Section 3.2(a) and that, in the event the number of outstanding
shares of Company Common Stock or the number of shares of Company Common Stock
issuable upon the exercise or conversion of, or subject to, options, warrants,
securities or other agreements exceeds the amounts specifically set forth in
Section 3.2(a) (including without limitation as a result of any stock split,
stock dividend, including any dividend or distribution of securities convertible
into shares of the Company Common Stock, recapitalization, or other like change
occurring after the date of this Agreement) or the number of Options and
exercise prices therefor set forth in Section 3.2(a) of the Company Disclosure
Schedule are inaccurately stated in any manner adverse to Parent or Purchaser,
the Common Stock Price shall be appropriately adjusted downward. The provisions
of this paragraph (d) shall not, however, affect the representation set forth in
Section 3.2(a). Notwithstanding the foregoing, there shall be no adjustment
pursuant to this paragraph (d) with respect to the issuance of shares of Company
Common Stock upon the exercise of Options disclosed on Section 3.2(a) of the
Company Disclosure Schedule.
Section 1.2. Company Actions
(a) The Company hereby consents to the Offer and represents and
warrants that (i) its Board of Directors, at a meeting duly called and held on
October 10, 2003, has duly and by unanimous vote adopted resolutions approving
the Offer, the Merger, this Agreement, the Tender and Option Agreement, the
Top-up Option Agreement and the other transactions contemplated hereby and
thereby (collectively, the "Transactions"), determining that the terms of the
Offer and the Merger are fair to, advisable and in the best interests of, the
Company's shareholders and recommending acceptance of the Offer and adoption of
the Merger and this Agreement by the shareholders of the Company, (ii) the
Company has taken all necessary action to render the provisions of any
anti-takeover statute, rule or regulation that to the Company's knowledge may be
applicable to the Transactions (including Sections 2538 through 2588, inclusive,
of the PBCL) inapplicable with respect to the Transactions, and (iii) Boenning &
Scattergood, Inc. ("B&S") has delivered to the Company's Board of Directors its
opinion (the "Fairness Opinion") that the Common Stock Price to be received by
the Company's shareholders is fair, from a financial point of view, to such
shareholders and a complete and correct signed copy of such opinion has been
delivered by the Company to Parent. The Company has been authorized by B&S to
permit the inclusion of the Fairness Opinion (and, subject to prior review and
consent by B&S, a reference thereto) in the Offer Documents and in the Schedule
14D-9 referred to below and the Proxy Statement. The Company hereby consents to
the inclusion in the Offer Documents of the recommendations of the Company's
Board of Directors described in this Section 1.2. The Company has been advised
that all of its directors and executive officers presently intend either to
tender their shares of Company Common Stock pursuant to the Offer or (solely in
the case of directors and executive officers who would as a
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result of the tender incur liability under Section 16(b) of the Exchange Act) to
vote in favor of the Merger.
(b) The Company shall file with the SEC on the date of the
commencement of the Offer a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall comply in all material
respects with the provisions of applicable federal securities laws, and will
contain such recommendations of the Board in favor of the Offer and the Merger,
and shall disseminate the Schedule 14D-9 as required by Rule 14d-9 promulgated
under the Exchange Act and shall mail such Schedule 14D-9 together with the
Offer Documents that are mailed to the Company's shareholders. The Company shall
deliver the proposed forms of the Schedule 14D-9 and the exhibits thereto to
Parent within a reasonable time prior to the commencement of the Offer for
review and comment by Parent and its counsel. Parent and its counsel shall be
given a reasonable opportunity to promptly review any amendments and supplements
to the Schedule 14D-9 and the exhibits thereto prior to their filing with the
SEC or dissemination to shareholders of the Company. The Company agrees to
provide Parent and its counsel in writing any comments that the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after receipt thereof. Each of the Company, Parent and Purchaser shall
promptly correct any information provided by it for use in the Schedule 14D-9
that shall have become false or misleading in any material respect and the
Company further agrees to take all steps necessary to cause such Schedule 14D-9
as so corrected to be filed with the SEC and disseminated to the shareholders of
the Company, as and to the extent required by applicable federal securities
laws.
Section 1.3. Stockholder Lists. In connection with the Offer, the Company
shall promptly furnish to, or cause to be furnished to, Parent and Purchaser
mailing labels, security position listings, any non-objecting beneficial owner
lists and any available listing or computer file containing the names and
addresses of the record holders of shares of Company Common Stock as of a recent
date and of those persons becoming record holders subsequent to such date (to
the extent available), together with all other relevant, material information in
the Company's possession or control regarding the beneficial owners of shares of
Company Common Stock and shall furnish Parent and Purchaser with such
information and assistance as Parent, Purchaser or their respective agents may
reasonably request in communicating the Offer to the record and beneficial
holders of shares of Company Common Stock. Subject to the requirements of law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Merger, Parent and Purchaser
shall, and shall cause each of their affiliates to, hold the information
contained in any of such labels and lists in confidence, use such information
only in connection with the Offer and the Merger, and, if this Agreement is
terminated, deliver to the Company all copies of such information or extracts
therefrom then in their possession or under their control.
Section 1.4. Directors; Section 14(f).
(a) Immediately upon the acceptance for payment of and payment
for any shares of Common Stock by Purchaser or any of its affiliates pursuant to
the Offer (the "Share Acquisition Date"), Purchaser shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company as will give
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Purchaser, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board of Directors of the Company equal to the product of
(i) the total number of directors on the Board of Directors of the Company
(giving effect to the increase in the size of such Board pursuant to this
Section 1.4) and (ii) the percentage that the number of shares of Company Common
Stock beneficially owned by Purchaser and its affiliates (including shares of
Company Common Stock so accepted for payment and purchased) bears to the number
of shares of Company Common Stock then outstanding. In furtherance thereof,
concurrently with such acceptance for payment and payment for such shares of
Company Common Stock the Company shall, upon request of Parent and in compliance
with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder,
use its best efforts promptly either to increase the size of its Board of
Directors or to secure the resignations of such number of its incumbent
directors, or both, as is necessary to enable such designees of Parent to be so
elected or appointed to the Company's Board of Directors, and, subject to
applicable law, the Company shall take all actions available to the Company to
cause such designees of Parent to be so elected or appointed. At such time, the
Company shall, if requested by Parent and subject to applicable law, also take
all action necessary to cause persons designated by Parent to constitute at
least the same percentage (rounded up to the next whole number) as is on the
Company's Board of Directors of (i) each committee of the Company's Board of
Directors (other than any committee of the Board established to take action
under this Agreement of the type described in Section 1.4(c) hereof or to the
extent such appointment would be contrary to applicable law or any exchange on
which the Company Common Stock is then listed), (ii) each board of directors (or
similar body) of each subsidiary of the Company and (iii) each committee (or
similar body) of each such board. Subject to applicable law, the Company shall
promptly take all action reasonably requested by Parent necessary to effect any
such election, including mailing to its shareholders the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder (or, at
Parent's request upon reasonable advance notice, furnishing such information to
Parent for inclusion in the Offer Documents initially filed with the SEC and
distributed to the shareholders of the Company) as is necessary to enable
Purchaser's designees to be elected to the Company's Board of Directors. Such
designees of Purchaser shall be assigned to the classes of directors selected by
the Purchaser (except that the Independent Directors described in Section 1.4(b)
below shall remain in their current classes). Parent or Purchaser shall supply
to the Company in writing, and be solely responsible for any information so
supplied by them, any information with respect to Parent or Purchaser or their
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1 to be included in the appropriate information statement.
(b) Notwithstanding the foregoing, the Company shall use its best
efforts to ensure that, in the event that Purchaser's designees are elected to
the Board of Directors of the Company, such Board of Directors shall have, at
all times prior to the Effective Time, at least two directors who are directors
on the date of this Agreement and who are not officers or affiliates of the
Company (it being understood that for purposes of this sentence, a director of
the Company shall not be deemed an affiliate of the Company solely as a result
of his status as a director of the Company), Parent or any of their respective
affiliates (the "Independent Directors"); and provided further, that, in such
event, if the number of Independent Directors shall be reduced below two for any
reason whatsoever the remaining Independent Director may designate a person to
fill such vacancy who is not an officer or affiliate of the Company, Parent, or
any of their respective affiliates and such person shall be deemed to be an
Independent Director for purposes of this Agreement or, if no Independent
Directors then remain, the other
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directors may designate two persons to fill such vacancies who shall not be
officers or affiliates of the Company, Parent or any of their respective
subsidiaries, and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. Subject to applicable law, the Company shall
promptly take all action reasonably requested by Parent necessary to effect any
such election, including mailing to its shareholders the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder (or, at
Parent's request, furnishing such information to Parent for inclusion in the
Offer Documents initially filed with the SEC and distributed to the shareholders
of the Company).
(c) From and after the time, if any, that Parent's designees
constitute a majority of the Company's Board of Directors and prior to the
Effective Time, (i) any amendment of the articles of incorporation or bylaws of
the Company or the authorization of any other action ("Other Action") to be
taken by the Company under this Agreement (including the consent of the Company
pursuant to Section 2.1), if such amendment or Other Action materially and
adversely affects the holders of shares of Company Common Stock other than
Parent and its affiliates or (ii) any amendment of this Agreement, any extension
by the Company of the time for the performance of any of the obligations or
other acts of Parent or Purchaser hereunder, any waiver of any of the Company's
rights hereunder or any termination of this Agreement by the Company, may be
effected only by the action of a majority of the Independent Directors of the
Company, which action shall be deemed to constitute the action of any committee
specifically designated by the Board of Directors of the Company to approve the
actions contemplated hereby and the full Board of Directors of the Company;
provided, that, if there shall be no Independent Directors, such actions may be
effected by majority vote of the entire Board of Directors of the Company.
ARTICLE II
THE MERGER
Section 2.1. The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the PBCL, Purchaser
shall be merged with and into the Company as soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VII. Following the
Merger, the Company shall continue as the surviving corporation (the "Surviving
Corporation") under the name "Xxxxxx Holdings, Ltd." and shall continue its
existence under the laws of the Commonwealth of Pennsylvania, and the separate
corporate existence of Purchaser shall cease. At the election of Parent, with
the consent of the Company (which consent will not be unreasonably withheld or
delayed), any direct or indirect wholly owned subsidiary of Parent may be
substituted for Purchaser as a constituent corporation in the Merger.
Notwithstanding the foregoing, with the consent of the Company (which consent
will not be unreasonably withheld or delayed), Parent may elect at any time
prior to the time that the notice of the meeting of shareholders of the Company
to consider approval of the Merger and this Agreement (the "Shareholder
Meeting") is first given to the Company's shareholders that instead of merging
Purchaser into the Company as hereinabove provided, to merge the Company into
Purchaser or another direct or indirect wholly owned subsidiary of Parent;
provided, however, that the Company shall not be deemed to have breached any of
its representations, warranties or covenants herein solely by reason of such
election and it shall not be a condition to the consummation of the Offer or the
Merger that any consents, licenses, permits or other
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authorizations be obtained that would not otherwise be necessary if the form of
the Merger had not been so modified. In such event the parties shall execute an
appropriate amendment to this Agreement in order to reflect the foregoing and to
provide that Purchaser or such other subsidiary of Parent shall be the Surviving
Corporation and shall continue under the name "Xxxxxx Holdings, Ltd."
Section 2.2. Effective Time. As soon as practicable after the satisfaction
or waiver of the conditions set forth in Article VII, the parties hereto shall
cause the Merger to be consummated by filing articles of merger (the "Articles
of Merger") with the Department of State of the Commonwealth of Pennsylvania
(the "Department of State"), in such form as required by and executed in
accordance with the relevant provisions of the PBCL (the date and time of the
filing of the Articles of Merger with the Department of State (or such later
time as is specified in the Articles of Merger) being the "Effective Time").
Section 2.3. Effects of the Merger. The Merger shall have the effects set
forth in the applicable provisions of the PBCL. Without limiting the generality
of the foregoing and subject thereto, at the Effective Time all the property,
rights, privileges, immunities, powers and franchises of the Company and
Purchaser shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Purchaser shall become the debts, liabilities and
duties of the Surviving Corporation.
Section 2.4. Articles of Incorporation; Bylaws. (a) At the Effective Time
and without any further action on the part of the Company and Purchaser, the
Articles of Incorporation of the Company, as in effect immediately prior to the
Effective Time until thereafter further amended as provided therein and under
the PBCL, shall be the articles of incorporation of the Surviving Corporation
following the Merger.
(b) At the Effective Time and without any further action on the
part of the Company and Purchaser, the Bylaws of the Purchaser shall be the
Bylaws of the Surviving Corporation and thereafter may be amended or repealed in
accordance with their terms or the Articles of Incorporation of the Surviving
Corporation and as provided by law.
Section 2.5. Directors and Officers. The directors of Purchaser immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation, and the officers of
Purchaser immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.
Section 2.6. Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Purchaser, the Company or the
holders of any of the following securities:
(a) Each share of common stock, par value $0.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time shall
be converted into one validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation.
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(b) Each share of Company Common Stock held in the treasury of
the Company and each share of Company Common Stock owned by Parent or Purchaser
or any direct or indirect subsidiary of the Company, Parent or Purchaser, in
each case immediately prior to the Effective Time, shall be cancelled and
retired without any conversion thereof and no payment or distribution shall be
made with respect thereto.
(c) Each issued and outstanding share of Company Common Stock
(other than shares cancelled pursuant to Section 2.6(b) and any Dissenting
Shares (as defined in Section 2.7(a))), including the associated Rights issued
pursuant to the Company Rights Agreement, shall be converted into the right to
receive the Common Stock Price or any higher price that may be paid for shares
of Company Common Stock pursuant to the Offer (the "Merger Consideration")
payable to the holder thereof, in each case without interest, upon surrender of
the certificate formerly representing such share in the manner provided in
Section 2.8, less any required withholding taxes.
Section 2.7. Dissenting Shares. (a) Notwithstanding any provision of this
Agreement to the contrary, any issued and outstanding shares of Company Common
Stock held by a Dissenting Shareholder (as defined below) ("Dissenting Shares")
shall not be converted into the Merger Consideration but shall, solely to the
extent required by the PBCL, become the right to receive such consideration as
may be determined to be due to such Dissenting Shareholder pursuant to the PBCL;
provided, however, that each share of Company Common Stock outstanding
immediately prior to the Effective Time and held by a Dissenting Shareholder
who, after the Effective Time, loses his or her right of appraisal, pursuant to
the PBCL, shall be deemed to be converted as of the Effective Time into the
right to receive the Merger Consideration, without any interest thereon. As used
in this Agreement, the term "Dissenting Shareholder" means any record holder or
beneficial owner of shares of Company Common Stock who complies with all
provisions of the PBCL (including the provisions of Sections 1574 through 1580
and Section 1930 of the PBCL) concerning the right of holders of Company Common
Stock to dissent from the Merger and obtain fair value for their shares.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal pursuant to the applicable provisions of the PBCL received
by the Company, withdrawals of such demands, and any other instruments served
pursuant to the PBCL and received by the Company and (ii) the opportunity to
participate in all negotiations and proceedings with respect to demands for
appraisal under the PBCL. The Company shall not, except with the prior written
consent of Parent, make any payment with respect to any such demands for
appraisal or offer to settle or settle any such demands.
Section 2.8. Surrender of Shares. (a) Prior to the earlier of the mailing
of the Proxy Statement and the Effective Time, Parent shall appoint a bank or
trust company which is reasonably satisfactory to the Company to act as paying
agent (the "Paying Agent") for the payment of the Merger Consideration. When and
as needed for each former holder of Company Common Stock who becomes entitled to
receive the Merger Consideration in accordance with Section 2.8(b) below, Parent
shall cause the Surviving Corporation to deposit with the Paying Agent for the
benefit of such former holders of shares of Company Common Stock sufficient
funds to make all payments pursuant to this Section 2.8. Such funds shall be
invested by the Paying Agent as directed by the Surviving Corporation. Any net
profit resulting from, or interest
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or income produced by, such investments will be payable to the Surviving
Corporation or as it directs.
(b) Promptly after the Effective Time, the Surviving Corporation
shall cause to be mailed to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented shares of Company Common Stock (the "Certificates"), a letter
of transmittal in customary form (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent) and instructions for
use in effecting the surrender of the Certificates for payment of the Merger
Consideration therefor. Upon surrender to the Paying Agent of a Certificate,
together with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor the aggregate amount of Merger
Consideration into which the number of shares of Company Common Stock previously
represented by such Certificate or Certificates surrendered shall have been
converted pursuant to this Agreement. If any Merger Consideration is to be
remitted to a person whose name is other than that in which the Certificate for
shares of Company Common Stock surrendered for exchange is registered, it shall
be a condition of such exchange that the Certificate so surrendered shall be
properly endorsed, with signature guaranteed, or otherwise in proper form for
transfer, and that the person requesting such exchange shall have paid any
transfer and/or other taxes required by reason of the remittance of Merger
Consideration to a person whose name is other than that of the registered holder
of the Certificate surrendered, or the person requesting such exchange shall
have established to the satisfaction of the Surviving Corporation that such tax
either has been paid or is not applicable. No interest shall be paid or accrued,
upon the surrender of the Certificates, for the benefit of holders of the
Certificates on any Merger Consideration. Parent and the Surviving Corporation
shall pay all fees and expenses of the Paying Agent in connection with the
distribution of the Merger Consideration.
(c) At any time following six months after the Effective Time,
the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds (including any interest received with respect thereto)
which had been deposited with the Paying Agent and which have not been disbursed
to holders of Certificates, and thereafter such holders shall be entitled to
look only to the Surviving Corporation (subject to abandoned property, escheat
or other similar laws) and only as general creditors thereof for payment of
their claim for Merger Consideration to which such holders may be entitled.
(d) Notwithstanding the provisions of Section 2.8(c), neither the
Surviving Corporation nor the Paying Agent shall be liable to any person in
respect of any Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any Certificates
representing shares of Company Common Stock shall not have been surrendered
prior to six months after the Effective Time (or immediately prior to such
earlier date on which any Merger Consideration in respect of such Certificate
would otherwise escheat to or become the property of any governmental entity),
any such cash shall, to the extent permitted by applicable law, become the
property of the Parent, free and clear of all claims or interest of any person
previously entitled thereto.
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(e) Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any former holder
of shares of Company Common Stock such amounts as Parent (or any affiliate
thereof) is required to deduct and withhold with respect to the making of such
payment under the Code (as defined herein), or any provision of any applicable
federal, state, local or foreign law, rule or regulation. To the extent that
amounts are so withheld by Parent and paid by Parent to the applicable taxing
authority, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the former holder of shares of Company Common
Stock in respect of which such deduction and withholding was made by Parent.
Section 2.9. No Further Transfer or Ownership Rights. After the Effective
Time, there shall be no further transfer on the records of the Company (or the
Surviving Corporation) or its transfer agent of certificates representing shares
of Company Common Stock which have been converted pursuant to this Agreement
into the right to receive Merger Consideration, and if such certificates are
presented to the Company for transfer, they shall be cancelled against delivery
of the Merger Consideration therefor. From and after the Effective Time, the
holders of Certificates evidencing ownership of shares of Company Common Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Company Common Stock except as otherwise
provided for herein or by applicable law. All Merger Consideration paid upon the
surrender for exchange of Certificates representing shares of Company Common
Stock in accordance with the terms of this Article II shall be deemed to have
been paid in full satisfaction of all rights pertaining to the shares of Company
Common Stock exchanged for Merger Consideration theretofore represented by such
Certificates.
Section 2.10. Treatment of Options. Simultaneously with the execution of
this Agreement, the Board of Directors of the Company (or, if appropriate, any
committee thereof) has adopted appropriate resolutions, and the Company hereby
agrees to take all other actions necessary after the date hereof, if any, to
provide that each outstanding stock option (each "Option") heretofore granted by
the Company, whether under the Company's 1996 Stock Incentive Plan (the "Company
Stock Option Plan") or otherwise, shall at the Effective Time be cancelled, and
each holder of outstanding Options which are vested and exercisable immediately
prior to the Effective Time shall be entitled to receive a payment in cash as
provided in Section 6.8 hereof (subject to any applicable withholding taxes, the
"Cash Payment"). As provided herein, all Options (whether or not vested or
exercisable) and the Company Stock Option Plan (and any feature of any Benefit
Plan or other plan, program or arrangement providing for the issuance or grant
of any other interest in respect of the capital stock of the Company or any
subsidiary) shall terminate as of the Effective Time. The Company will take all
steps necessary to ensure that none of the Company or any of its subsidiaries is
or will be bound by any Options, other options, warrants, rights or agreements
which would entitle any person, other than the current shareholders of Purchaser
or its affiliates, to acquire any capital stock of the Surviving Corporation or
any of its subsidiaries or, to receive any payment in respect thereof (except
for Cash Payments to be made as provided in Section 6.8 hereof to holders of
Options that are vested and exercisable immediately prior to the Effective Time)
and to cause the Options to be cancelled or cause the holders of the Options to
agree to such cancellation thereof as provided herein.
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Section 2.11. Closing. Upon the terms and subject to the conditions hereof,
as soon as practicable after consummation of the Offer, and to the extent
required by the PBCL after the vote of the shareholders of the Company in favor
of the approval of the Merger and this Agreement has been obtained, the Company
and Purchaser (or Parent if appropriate) shall execute and file with the
Department of State the Articles of Merger, and the parties shall take all such
other and further actions as may be required by law to make the Merger
effective. Prior to the filing referred to in this Section 2.11, a closing (the
"Closing") will be held at the offices of Dechert LLP, 4000 Xxxx Atlantic Tower,
0000 Xxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000-0000 (or such other place as the
parties may agree) for the purpose of confirming all of the foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser as
follows:
Section 3.1. Organization and Qualification
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania and has
the requisite corporate power and corporate authority and possesses all
governmental franchises and Permits (as defined herein) necessary to enable it
to own, lease and operate its properties and assets and to carry on its business
as it is now being conducted except where failure to possess such franchises and
Permits, individually or in the aggregate, has not had and could not reasonably
be expected to have a Material Adverse Effect on the Company. The Company is
duly qualified as a foreign corporation or licensed to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or leased or the nature of its activities makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed or in good
standing, individually or in the aggregate, has not had and could not reasonably
be expected to have a Material Adverse Effect on the Company.
(b) The only subsidiaries of the Company are those set forth on
Section 3.1(b) of the Company Disclosure Schedule. Each subsidiary of the
Company is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation (which jurisdiction is set
forth opposite its name in Section 3.1(b) of the Company Disclosure Schedule)
and has the requisite corporate power and corporate authority and possesses all
governmental franchises and Permits necessary to enable it to own, lease and
operate its properties and assets and to carry on its business as it is now
being conducted except where failure to possess such franchises and Permits,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Material Adverse Effect on the Company. Each subsidiary of
the Company is duly qualified as a foreign corporation or licensed to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or leased or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed or in good standing, individually or in the aggregate, has
not had and could not reasonably be expected to have a Material Adverse Effect
on the Company. None of the subsidiaries of the Company own any capital stock of
the Company.
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(c) All of the outstanding shares of capital stock of each such
subsidiary have been validly issued and are fully paid and non-assessable and,
except as set forth in Section 3.1(c) of the Company Disclosure Schedule, are
owned by the Company, by another wholly owned subsidiary of the Company or by
the Company and another such wholly owned subsidiary, free and clear of all
pledges, claims, equities, options, liens, charges, call rights, rights of first
refusal, "tag" or "drag" along rights, encumbrances and security interests of
any kind or nature whatsoever (collectively, "Liens"). Except for the capital
stock of its subsidiaries or as set forth on Section 3.1(c)(i) of the Company
Disclosure Schedule, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation, partnership,
limited liability company, joint venture or other entity. The Company has
delivered to Parent complete and correct copies of its Articles of Incorporation
and Bylaws and the comparable charters and bylaws or other organizational
documents of the subsidiaries set forth on Section 3.1(c)(ii) of the Company
Disclosure Schedule, in each case as amended to the date of this Agreement.
Section 3.2. Capitalization.
(a) The authorized capital stock of the Company consists of
20,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock, par value $.01 per share ("Company Preferred Stock"). All of the issued
and outstanding shares of Company Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable and are not subject to
preemptive rights. As of the date hereof, (i) 5,271,926 shares of Company Common
Stock were issued and outstanding, (ii) no shares of Company Preferred Stock
were issued and outstanding, (iii) no shares of Company Common Stock and no
shares of Company Preferred Stock were held in the treasury of the Company, (iv)
2,360,675 shares of Company Common Stock were reserved for issuance pursuant to
outstanding Options, including Options for 726,675 shares issued under the
Company Stock Option Plan and Options for 1,634,000 shares issued outside of the
Company Stock Option Plan and (v) no shares of Company Preferred Stock were
reserved for issuance, except for a series of 2,000 shares of Company Preferred
Stock designated as Series B Junior Participating Preferred Stock reserved for
issuance pursuant to the Company Rights Agreement, none of which is issued and
outstanding as of the date hereof. Such shares of Company Common Stock reserved
for issuance upon the exercise of Options, whether under the Company Stock
Option Plan or otherwise, have not been issued and will not be issued prior to
the Effective Time, and no commitment has been or will be made for their
issuance, other than possible issuances under the Options described in the
preceding sentence and issued and outstanding as of the date of this Agreement.
At the Effective Time, each Option shall be cancelled and the holder thereof
shall not be entitled to receive any consideration therefor other than the cash
payments provided by Sections 2.10 and (without duplication) 6.8 of this
Agreement. Section 3.2(a) of the Company Disclosure Schedule sets forth the
exercise prices and number of shares of Company Common Stock in respect of
outstanding Options and the dates on which any unvested Options are scheduled to
vest or become exercisable. As of the date hereof and, except to the extent any
unvested Options vest and become exercisable on the dates set forth on Section
3.2(a) of the Company Disclosure Schedule or are otherwise cancelled, as of the
Effective Time, all of the Options will be vested and exercisable and entitled
to receive the Cash Payment at the Effective Time, and no Options will be
terminated without payment as of the Effective Time. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or
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exchangeable for, securities having the right to vote) on any matters on which
shareholders of the Company may vote ("Voting Company Debt"). Except for the
Rights issued pursuant to the Company Rights Agreement, and except as set forth
above, there are no outstanding securities, options, warrants, calls, rights,
convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights ("SARs"), stock-based performance units, commitments,
agreements, arrangements or undertakings of any kind to which the Company or any
of its subsidiaries is a party or by which any of them is bound obligating the
Company or any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other voting
securities of the Company or any of its subsidiaries or obligating the Company
or any of its subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, unit, commitment, agreement, arrangement
or undertaking. There are not any outstanding contractual obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire,
or providing preemptive or registration rights (except for the registration
rights provided for in the Tender and Option Agreement) with respect to, any
shares of, or any outstanding options, warrants or rights of any kind to acquire
any shares of, or any outstanding securities that are convertible into or
exchangeable for any shares of, capital stock of the Company or any of its
subsidiaries. The Company and its subsidiaries do not have outstanding any loans
to any person in respect of the purchase of securities issued by the Company and
its subsidiaries.
(b) There are no voting trusts, proxies or other agreements,
commitments or understandings of any character to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
is bound with respect to the voting of any shares of capital stock of the
Company or any of its subsidiaries or with respect to the registration of the
offering, sale or delivery of any shares of capital stock of the Company or any
of its subsidiaries under the Securities Act of 1933, as amended (the
"Securities Act") except for the rights provided for in the Tender and Option
Agreement.
Section 3.3. Authority Relative to this Agreement.
(a) The Company has all requisite corporate power and corporate
authority to execute and deliver this Agreement and each instrument required
hereby to be executed and delivered by the Company prior to or at the Effective
Time, to perform its obligations hereunder and thereunder, and to consummate the
Transactions (subject to the Company Shareholder Approval (as defined herein)
with respect to the Merger). The execution and delivery of this Agreement and
each instrument required hereby to be executed and delivered by the Company
prior to or at the Effective Time and the performance of its obligations
hereunder and thereunder and the consummation by the Company of the Transactions
have been duly and validly authorized by the Board of Directors of the Company
and no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the Transactions (other than the
Company Shareholder Approval and the filing and recordation of appropriate
merger documents as required by the PBCL). This Agreement has been duly and
validly executed and delivered by the Company, and, assuming this Agreement
constitutes a valid and binding obligation of Parent and Purchaser, this
Agreement constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms.
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(b) The only vote of holders of any class or series of capital
stock of the Company or any of its subsidiaries necessary to adopt or approve
this Agreement and the Merger is the adoption and approval of this Agreement and
the Merger by the holders of a majority of the votes cast by the holders of
shares of Company Common Stock at the Shareholder Meeting, with each share of
Company Common Stock entitled to one vote per share (the "Company Shareholder
Approval"). The affirmative vote of the holders of any capital stock or other
securities (or any separate class thereof) of the Company or any of its
subsidiaries, or any of them, is not necessary to consummate the Offer or any
transaction contemplated by this Agreement other than as set forth in the
preceding sentence. Notwithstanding the foregoing, if Purchaser shall acquire
80% or more of the then outstanding shares of Company Common Stock, the
Purchaser may without a meeting of the shareholders of the Company and otherwise
in accordance with Section 1924(b)(1) of the PBCL (including, without
limitation, adoption by the board of directors of Purchaser of a short-form plan
of merger in accordance with the PBCL and consistent with the terms of the
Merger) effect the Merger.
Section 3.4. Absence of Certain Changes. Except as set forth in Section 3.4
of the Company Disclosure Schedule, since December 31, 2002, the Company and its
subsidiaries have conducted their business only in the ordinary course, and
during such period there has not been any event, change, effect or development
that, individually or in the aggregate, has had or could reasonably be expected
to have a Material Adverse Effect on the Company, and the Company and its
subsidiaries are not aware of any event, change, effect or development which may
reasonably be expected to occur or exist that, individually or in the aggregate,
would have a Material Adverse Effect on the Company. Except as specifically
disclosed in the Company's filings and reports (including proxy statements)
under the Exchange Act filed since December 31, 2002 and publicly available
prior to the date of this Agreement (the "Filed Company SEC Documents") or as
set forth in Section 3.4 of the Company Disclosure Schedule, since December 31,
2002 there has not been (a) any declaration, setting aside or payment of any
dividend or other distribution in respect of the capital stock of the Company or
any redemption or other acquisition by the Company of any capital stock of the
Company; (b) any entry into any agreement, commitment or transaction by the
Company or any of its subsidiaries which is material to the Company and its
subsidiaries taken as a whole, except agreements, commitments or transactions in
the ordinary course of business, consistent with prior practice; (c) any split,
combination or reclassification of the Company's capital stock or of any other
equity interests in the Company, or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or of any other equity interests in the Company;
(d)(i) any granting by the Company or any of its subsidiaries to any officer,
director or key employee of the Company or any of its subsidiaries of any
increase in compensation, except in the ordinary course of business consistent
with prior practice or as was required under employment agreements in effect as
of the date of the most recent audited financial statements included in the
Filed Company SEC Documents, (ii) any granting by the Company or any of its
subsidiaries to any such officer, director or key employee of any increase in
severance or termination pay, except as was required under employment, severance
or termination agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents or (iii) any
entry by the Company or any of its subsidiaries into any employment, severance
or termination agreement with any such officer, director or key employee; (e)
any damage, destruction or loss, whether or not covered by insurance, that,
individually or in the aggregate, has had or could reasonably be expected to
have a Material
-15-
Adverse Effect on the Company; (f) any change in accounting methods, principles
or practices by the Company or any subsidiary materially affecting the
consolidated assets, liabilities, results of operations or business of the
Company or its subsidiaries, except insofar as may have been required by a
change in generally accepted accounting principles; or (g) any making or
revocation of any material Tax election (except in a manner consistent with past
practice), any change of a method of accounting for Tax purposes, or any
settlement or compromise of any material Tax liability with any Governmental
Entity or any agreement to an extension of a statute of limitations.
Section 3.5. Reports. (a) Since January 1, 2000, the Company has timely
filed all required forms, reports and documents with the SEC required to be
filed by it pursuant to the federal securities laws and the SEC rules and
regulations thereunder (collectively, the "Company SEC Documents"), all of which
have complied as of their respective filing dates in all material respects with
all applicable requirements of the Securities Act and the Exchange Act, and the
rules promulgated thereunder. The Company has delivered or made available copies
of all such forms, reports or documents to Parent, except to the extent they are
available via the SEC's Electronic Data Gathering, Analysis and Retrieval
("XXXXX") system. None of such forms, reports or documents at the time filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any Company SEC
Document has been revised or superseded by a later-filed Company SEC Document
filed and publicly available prior to the date hereof, none of the Company SEC
Documents contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the Company
SEC Documents (including the notes thereto) complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto (including, without limitation, the
furnishing of any certification under the Xxxxxxxx-Xxxxx Act of 2002), have been
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in accordance with generally accepted
accounting principles the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (and include, in
the case of any unaudited interim financial statements, reasonable accruals for
normal year-end adjustments). No subsidiaries of the Company are required to
file periodic reports with the SEC under the Exchange Act.
(b) Since January 1, 2000, the Company and its subsidiaries have
filed all reports required to be filed with any Governmental Entity other than
the SEC, including state securities administrators, except where the failure to
file any such reports of the Company and its subsidiaries, individually or in
the aggregate, has not had and could not reasonably be expected to have a
Material Adverse Effect on the Company. Such reports of the Company and its
subsidiaries, including all those filed after the date of this Agreement and
prior to the Effective Time, were prepared in all material respects in
accordance with the requirements of applicable law.
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Section 3.6. Proxy Statement. If a Proxy Statement is required for the
consummation of the Merger under applicable law, the Proxy Statement will comply
in all material respects with the Exchange Act, except that no representation is
made by the Company with respect to information supplied by or on behalf of
Parent or any affiliate of Parent specifically for inclusion in the Proxy
Statement. None of the information supplied by the Company specifically for
inclusion in the Proxy Statement shall, at the time the Proxy Statement is
mailed or at the time of the Shareholder Meeting or at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided however that the Company makes no representation or
warranty as to any of the information relating to and supplied by or on behalf
of Parent and Purchaser specifically for inclusion in the Proxy Statement. The
letter to shareholders, notice of meeting, proxy statement and form of proxy, or
the information statement, as the case may be, to be distributed to shareholders
in connection with the Merger, or any schedule required to be filed by the
Company with the SEC in connection therewith, together with any amendments or
supplements thereto, are collectively referred to herein as the "Proxy
Statement." If, at any time prior to the Effective Time, any event relating to
the Company or any of its affiliates, officers or directors is discovered by the
Company that should be set forth in a supplement to the Proxy Statement, the
Company will promptly inform Parent and Purchaser and prepare, file and
disseminate such supplement as may be required by applicable law.
Section 3.7. Consents and Approvals; No Violation. Subject to obtaining the
Company Shareholder Approval (if required under the PBCL) and the taking of the
actions described in the immediately succeeding sentence, except as set forth in
Section 3.7 of the Company Disclosure Schedule, the execution, delivery and
performance of this Agreement, the Tender and Option Agreement and the Top-up
Option Agreement do not, and the consummation of the Transactions (including the
changes in ownership of shares of Company Common Stock or the composition of the
Board of Directors of the Company) and compliance with the provisions of this
Agreement, the Tender and Option Agreement and the Top-up Option Agreement will
not, conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of a material benefit
under, or result in the creation of any Lien upon any of the material properties
or assets of the Company or any of its subsidiaries under, or result in the
termination of, or require that any consent be obtained or any notice be given
with respect to, (i) the Articles of Incorporation or Bylaws of the Company or
the comparable charter or organizational documents of any of its subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease,
license or other agreement, instrument, Contract or Permit applicable to the
Company or any of its subsidiaries or their respective properties or assets,
(iii) any judgment, order, writ, injunction or decree, or material law, statute,
ordinance, rule or regulation applicable to the Company or any of its
subsidiaries or their respective properties or assets or (iv) material license,
sublicense, consent or other agreement (whether written or otherwise) pertaining
to Intellectual Property (as defined herein) used by the Company in the conduct
of its business, and by which the Company licenses or otherwise authorizes a
third party to use any Intellectual Property (the "Licenses"), other than, in
the case of clauses (ii)and (iv), any such conflicts, violations, defaults,
rights, Liens, losses of a material benefit, consents or notices that,
individually or in the aggregate, have not and could not reasonably be expected
to have a Material Adverse Effect on the Company. No consent, approval, order or
authorization of, or
-17-
registration, declaration or filing with, any Federal, state or local government
or any court, administrative or regulatory agency or commission or other
governmental authority or agency, domestic or foreign (a "Governmental Entity")
is required by the Company or any of its subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the Transactions, except for (i) the filing with the SEC of (x)
the Schedule 14D-9 and a current report on Form 8-K, as well as an amendment to
Form 8-A in reference to the Rights Agreement that was originally filed on
September 15, 1998, (y) if required, the Proxy Statement relating to the
approval by the Company's shareholders of this Agreement and (z) such reports
under Sections 13(a) and 14(f) of the Exchange Act as may be required in
connection with this Agreement and the Transactions contemplated by this
Agreement, (ii) the filing of the Articles of Merger pursuant to the PBCL, (iii)
as set forth in Section 3.7 of the Company Disclosure Schedule and (iv) such
consents, approvals, orders, authorizations, registrations, declarations or
filings which, individually or in the aggregate, have not had and could not be
reasonably expected to have a Material Adverse Effect on the Company.
Section 3.8. Brokerage Fees and Commissions. Except for those fees and
expenses payable to (i) Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Capital pursuant to that
certain letter agreement dated June 27, 2002, as amended by that certain letter
agreement dated October 7, 2003, and (ii) B&S in connection with the Fairness
Opinion pursuant to that certain letter agreement dated September 10, 2003, no
person is entitled to receive any investment banking, brokerage or finder's fee
or commission in connection with this Agreement or the Transactions based upon
arrangements made by or on behalf of the Company or any of its subsidiaries or
by any affiliate of the Company or any of its subsidiaries. A copy of the above
agreements and any amendments or supplements thereto have previously been
delivered to Parent. The estimated fees and expenses incurred and to be incurred
by the Company for counsel, accountants, investment bankers, financial printers,
experts and consultants in connection with this Agreement and the Transactions
are set forth in Section 3.8 of the Company Disclosure Schedule, such estimated
fees and expenses being the most recent such information available to the
Company as of the date hereof; provided, however, that the Company makes no
representations concerning such information except that the Company has no
actual knowledge that such information was not reasonable as of the date stated
or as of the date hereof.
Section 3.9. Schedule 14D-9; Offer Documents. Neither the Schedule 14D-9,
any other document required to be filed by the Company with the SEC in
connection with the Transactions, nor any information supplied by the Company in
writing for inclusion in the Offer Documents or the Schedule TO shall, at the
respective times the Schedule 14D-9, any such other filings by the Company, the
Schedule TO, the Offer Documents or any amendments or supplements thereto are
filed with the SEC or are first published, sent or given to shareholders of the
Company, as the case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Schedule 14D-9 and any other document
required to be filed by the Company with the SEC in connection with the
Transactions will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder.
Notwithstanding the foregoing, no representation or warranty is made by the
Company with respect to statements made or
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incorporated by reference therein based on information supplied by or on behalf
of Parent or Purchaser specifically for inclusion or incorporation by reference
therein.
Section 3.10. Litigation. Except as disclosed in Section 3.10 of the
Company Disclosure Schedule, there is no claim, suit, action or proceeding
(including arbitration proceedings) pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries that, individually or
in the aggregate, has since December 31, 2002 had or could reasonably be
expected to have a Material Adverse Effect on the Company, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any of its subsidiaries which,
individually or in the aggregate, has since December 31, 2002 had or could
reasonably be expected to have a Material Adverse Effect on the Company. The
most recent financial statements contained in the Filed Company SEC Documents
reflect an adequate reserve for all claims, suits, actions, proceedings,
judgments, decrees, injunctions, rules or orders pending or, to the knowledge of
the Company, threatened against the Company or any of its subsidiaries through
the date of such financial statements.
Section 3.11. Absence of Changes in Benefit Plans. Except as disclosed in
Section 3.11 of the Company Disclosure Schedule, or as contemplated in Section
2.10 and Section 6.8 of this Agreement or as required by applicable law, since
January 1, 2002, there has not been any adoption or amendment in any material
respect by the Company or any of its subsidiaries of any collective bargaining
agreement or any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or understanding (whether or
not legally binding) providing benefits to any current or former employee,
officer or director of the Company or any of its subsidiaries or for which the
Company or any of its subsidiaries is liable. Except as filed or incorporated by
reference as an exhibit to the Company Form 10-K or disclosed in Section 3.11 of
the Company Disclosure Schedule, there exist no employment, compensation, loan,
consulting, severance, termination or indemnification agreements, arrangements
or understandings between either of the Company or any of its subsidiaries and
any current or former officer or director of either of the Company or any of its
subsidiaries or for which either of the Company or any of its subsidiaries is
liable.
Section 3.12. ERISA Compliance. (a) Section 3.12(a) of the Company
Disclosure Schedule sets forth a complete list of all "employee benefit plans"
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") including without limitation, all "multiemployer
pension plans" as defined in Section 3(37) of ERISA), employment contracts,
bonus, pension, profit sharing, deferred compensation, incentive compensation,
excess benefit, stock, stock option, severance, termination pay, change in
control or other employee benefit plans, programs or arrangements, including,
but not limited to, those providing medical, dental, vision, disability, life
insurance and vacation benefits (other than those required to be maintained by
law), whether written or unwritten, qualified or unqualified, funded or
unfunded, foreign or domestic currently maintained, or contributed to, or
required to be maintained or contributed to, by the Company or any other person
or entity that, together with the Company, is treated as a single employer under
Section 414 of the Internal Revenue Code of 1986, as amended (the "Code") (each
an "ERISA Affiliate") for the benefit of any current or former employees,
officers or directors of the Company or any of its subsidiaries or with respect
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to which the Company or any of its subsidiaries has any liability (collectively,
the "Benefit Plans"). Except as disclosed on Section 3.12(a) of the Company
Disclosure Schedule, as applicable with respect to each Benefit Plan, the
Company has delivered or made available to Purchaser, true and complete copies
of (i) each Benefit Plan, including all amendments thereto, and in the case of
an unwritten Benefit Plan, a written description thereof, (ii) all trust
documents, investment management contracts, custodial agreements and insurance
contracts relating thereto, (iii) the current summary plan description and each
summary of material modifications thereto, (iv) the three most recent annual
reports (Form 5500 and all schedules thereto) filed with the Internal Revenue
Service ("IRS"), (v) the most recent IRS determination letter and each currently
pending application to the IRS for a determination letter, (vi) the three most
recent summary annual reports, financial statements and trustee reports, and
(vii) all records, notices and filings concerning IRS or Department of Labor
audits or investigations, "prohibited transactions" within the meaning of
Section 406 of ERISA or Section 4975 of the Code and "reportable events" within
the meaning of Section 4043 of ERISA.
(b) No event has occurred and, to the knowledge of the Company,
there exists no condition or set of circumstances in connection with which the
Company or any ERISA Affiliate could reasonably be expected to be subject to any
liability under the terms of any Benefit Plan, under ERISA, or, with respect to
any Benefit Plan, under the Code or any other applicable law, rule or
regulation, domestic or foreign, other than any condition or set of
circumstances that, individually or in the aggregate has not had and could not
reasonably be expected to have a Material Adverse Effect on the Company. Each of
the Benefit Plans has been administered in material compliance with its terms
and all applicable laws. All contributions that are required to be made by the
Company or any ERISA Affiliate to any Benefit Plan have been made. The Company's
only ERISA Affiliates currently, and during any period for which any relevant
statute of limitations remains open are, and have been, the subsidiaries listed
on Section 3.1(b) of the Company Disclosure Schedule.
(c) The Benefit Plans which are "employee pension benefit plans"
within the meaning of Section 3(2) of ERISA and which are intended to meet the
qualification requirements of Section 401(a) of the Code, other than those plans
that are multiemployer plans (each a "Pension Plan") now meet, and at all times
since their inception have met the requirements for such qualification in all
material respects, and the related trusts are now, and at all times since their
inception have been, exempt from taxation under Section 501(a) of the Code. All
Pension Plans have received determination letters from the IRS or utilize a
prototype plan document for which an IRS opinion is available to the effect that
such Pension Plans are qualified in form and the related trusts are exempt from
federal income taxes and no determination letter with respect to any Pension
Plan has been revoked nor, to the knowledge of the Company is there any reason
for such revocation, nor has any Pension Plan been amended, or failed to be
amended, since the date of its most recent determination letter in any respect
which would adversely affect its qualification. The Company has furnished or
made available to Parent the three most recent actuarial reports with respect to
each Benefit Plan, other than a multiemployer plan, that is a defined benefit
pension plan, as defined by Section 3(35) of ERISA. The information supplied to
the actuary by the Company and its ERISA Affiliates for use in preparing those
reports was complete and accurate in all material respects. The conclusions
expressed in those reports are complete and correct in all material respects. No
event has occurred since the date of the most recent such actuarial report that
had, or is reasonably likely to have, a materially adverse effect on
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the ratio of plan assets to the actuarial present value of plan obligations for
accumulated benefits shown in such report.
(d) Section 3.12(d) of the Company Disclosure Schedule lists: (1)
the excess of the liabilities, determined using the accumulated benefit
obligation methodology of Statement of Financial Accounting Standards No. 87, of
any Benefit Plan subject to Title IV of ERISA, other than any Benefit Plan that
is a multiemployer plan, over the fair market value of such Benefit Plan's
assets (2) the amount of any unfunded deferred compensation and (3) the
actuarially determined present value of any obligation to provide retiree
medical or life insurance benefits determined in accordance with Statement of
Financial Accounting Standard No. 106. For the purposes of this Section 3.12(d)
unfunded liabilities and projected costs have been determined by the Company and
its actuaries using actuarial methods and assumptions that are, singly and in
the aggregate, reasonable taking into account circumstances known to them on the
date of this Agreement, and, except as adjusted to satisfy the requirements that
such assumptions be reasonable, consistent with prior practice.
(e) Multiemployer Plans.
(i) Section 3.12(e)(i) of the Company Disclosure Schedule
lists each Benefit Plan that is a multiemployer pension plan.
(ii) All required contributions, withdrawal liability
payments or other payments of any type that the Company or any ERISA Affiliate
have been obligated to make to any multiemployer pension plan have been duly and
timely made. Any withdrawal liability incurred with respect to any multiemployer
pension plan has been fully paid as of the date hereof.
(iii) Neither the Company nor any ERISA Affiliate has
undertaken any course of action that could reasonably be expected to lead to a
complete or partial withdrawal from any multiemployer pension plan.
(iv) Neither the Company nor any ERISA Affiliate is subject
to any liability, contingent or accrued, arising out of a transaction described
in Section 4204 of ERISA.
(v) Set forth next to each multiemployer pension plan listed
on Section 3.12(e)(i) of the Company Disclosure Schedule, is the estimated
amount of the withdrawal liability that would be incurred by the Company or any
ERISA Affiliate with respect to such plan, under Section 4201 of ERISA, if the
Company or any ERISA Affiliate were to completely withdraw from such
multiemployer pension plan, such estimated amount being the most recent such
information available to the Company with respect to each such plan; provided,
however, that the Company makes no representations concerning such information
except that the Company has no reason to believe that such information was not
valid as of the date stated.
(f) Except as set forth on Section 3.12(f) of the Company
Disclosure Schedule, the execution and delivery of this Agreement do not, and
the consummation of the Transactions will not (i) require the Company, any ERISA
Affiliate or any of the Company's subsidiaries to pay greater compensation or
make a larger contribution to, or pay greater benefits
-21-
or accelerate payment or vesting of a benefit under, any Benefit Plan or any
other program, agreement, policy or arrangement or (ii) create or give rise to
any additional vested rights or service credits under any Benefit Plan or any
other program, agreement, policy or arrangement.
(g) Except as set forth in Section 3.12(g) of the Company
Disclosure Schedule, neither the Company nor any ERISA Affiliate nor any of the
Company's subsidiaries is a party to or is bound by any severance agreement,
program or policy.
(h) Except as set forth in Section 3.12(h) of the Company
Disclosure Schedule, no Benefit Plan provides benefits, including without
limitation, death or medical benefits, beyond termination of employment or
retirement other than (i) coverage mandated by law or (ii) death or retirement
benefits under a Benefit Plan qualified under Section 401(a) of the Code.
Neither the Company nor any ERISA Affiliate or any of the Company's subsidiaries
is contractually or otherwise obligated (whether or not in writing) to provide
any person with life, medical, dental or disability benefits for any period of
time beyond retirement or termination of employment, other than as required by
the provisions of Sections 601 through 608 of ERISA and Section 4980B of the
Code.
(i) With respect to any Benefit Plan that is an employee welfare
benefit plan (as defined in Section 3(1) of ERISA), other than any such Benefit
Plan that is a multiemployer plan, and except as set forth in Section 3.12(i) of
the Company Disclosure Schedule, (i) no such Benefit Plan is funded through a
"welfare benefit fund", as such term is defined in Section 419(e) of the Code,
(ii) each such Benefit Plan that is a "group health plan", as such term is
defined in Section 5000(b)(l) of the Code, complies, and has complied for each
taxable year of the Company or any relevant ERISA Affiliate for which the
statute of limitations on assessment of taxes remains open, in all material
respects with the applicable requirements of Sections 601 through 608 of ERISA
and Section 4980B(f) of the Code, (iii) each such Benefit Plan (including any
such Plan covering retirees or other former employees) may be amended or
terminated without material liability to the Company or any ERISA Affiliate or
any of the Company's subsidiaries on or at any time after the consummation of
the Offer and (iv) the Company, each ERISA Affiliate and each such Benefit Plan
that is a covered entity as that term is defined in regulations issued under the
Health Insurance Portability and Accountability Act of 1996 ("HIPAA") are in
compliance, in all material respects, with the applicable requirements of the
privacy regulations issued under HIPAA.
(j) Except as set forth in Section 3.12(a) of the Company
Disclosure Schedule, there is no material pension, welfare, bonus, stock
purchase, stock ownership, stock option, deferred compensation, incentive,
severance, termination or other compensation plan or arrangement, or other
material employee fringe benefit plan presently maintained by, or contributed to
by the Company, or any ERISA Affiliate which is for the benefit of any employee
of the Company or any ERISA Affiliate, including any such plan required to be
maintained or contributed to by the law of the relevant jurisdiction, maintained
outside the jurisdiction of the United States.
(k) The Company and its subsidiaries have not incurred any
liability under, and have complied in all respects with, the Worker Adjustment
Retraining Notification Act and the regulations promulgated thereunder (the
"WARN Act") and do not reasonably
-22-
expect to incur any such liability as a result of actions taken or not taken
prior to the Effective Time. Section 3.12(k) of the Company Disclosure Schedule
lists (i) all the employees terminated or laid off by the Company and its
subsidiaries during the 90 days prior to the date hereof and (ii) all the
employees of the Company or its subsidiaries who have experienced a reduction in
hours of work of more than 50% (other than voluntary reductions in hours per
week) during any month during the 90 days prior to the date hereof and describes
all notices given by the Company and its subsidiaries in connection with the
WARN Act. The Company will not be deemed to be in breach of this Agreement as a
result of any WARN Act liability due to actions taken by the Purchaser or
actions that Purchaser causes the Company to take after the Share Acquisition
Date.
Section 3.13. Taxes. Except to the extent the failure of any of the
following has not had and could not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect on the Company:
(a) (i) All federal income and other Tax Returns (as defined
herein) that are required to be filed by or with respect to the Company or any
of its subsidiaries have been timely filed (taking into account any extensions
of time to file obtained before the date hereof), and all such Tax Returns are
true, complete and accurate and correctly reflect the income, or other measure
of Tax (as defined herein), required to be shown thereon, (ii) except as
disclosed in Section 3.13(a)(ii) of the Company Disclosure Schedule, all Taxes
that are due have been paid in full (or adequate provision for the payment
thereof has been made), other than those being contested in good faith, and
(iii) the most recent financial statements contained in the Filed Company SEC
Documents reflect an adequate reserve for all Taxes of the Company and its
subsidiaries for all taxable periods and portions thereof through the date of
such financial statements.
(b) Except as set forth in Section 3.13(b) of the Company
Disclosure Schedule, to the knowledge of the Company, no Tax Return of the
Company or any of its subsidiaries is under audit or examination by any
Governmental Entity, and no written notice of such an audit or examination has
been received by the Company or a subsidiary.
(c) Except as set forth in Section 3.13(c) of the Company
Disclosure Schedule, there is not in force any extension of time with respect to
the due date for the filing of any Tax Return or any waiver or agreement for any
extension of time for the assessment or payment of any Tax due.
(d) Except as set forth in Section 3.13(d) of the Company
Disclosure Schedule, there is no issue raised or claim against the Company or
any of its subsidiaries for any Taxes, and no assessment, deficiency or
adjustment has been asserted or proposed with respect to any Tax Return and no
issues relating to Taxes were raised in writing by a Governmental Entity in a
completed audit or examination that can reasonably be expected to recur in a
later taxable period.
(e) Except as set forth in Section 3.13(e) of the Company
Disclosure Schedule, none of the Company and its subsidiaries, has been a member
of an affiliated group filing a consolidated federal income Tax Return other
than the affiliated group of which the Company is the common parent corporation.
-23-
(f) There are no Liens for Taxes on the assets of the Company or
any of its subsidiaries except for Liens for Taxes not yet due and payable.
(g) Except as set forth in Section 3.13(g) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is bound by
any tax sharing, tax indemnity or similar agreement with respect to Taxes.
(h) Except as set forth in Section 3.13 (h) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries has (a)
been the subject of a Tax ruling that would have continuing effect after the
Effective Time, (b) been the subject of a closing agreement with any
Governmental Entity that would have continuing effect after the Effective Time,
or (c) granted a power of attorney with respect to any Tax matter that would
have continuing effect after the Effective Time.
As used herein, "Tax Returns" shall mean all returns and reports of or
with respect to any Tax which are required to be filed by or with respect to the
Company or any of its subsidiaries, and "Taxes" shall mean (i) all taxes,
charges, imposts, tariffs, fees, levies or other similar assessments or
liabilities, including income taxes, ad valorem taxes, value-added taxes, excise
taxes, withholding taxes, stamp taxes or other taxes of or with respect to gross
receipts, premiums, real property, personal property, windfall profits, sales,
use, transfers, licensing, employment, payroll and franchises imposed by or
under any statute, law, rule or regulation, and such terms shall include any
interest, fines, penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any such tax or any contest or
dispute thereof; (ii) liability of the Company or any subsidiary for the payment
of any amounts of the type described in clause (i) as a result of being a member
of an affiliated, combined, consolidated or unitary group for any taxable period
and (iii) liability of the Company or any subsidiary for the payment of any
amounts of the type described in clauses (i) or (ii) as a result of any express
or implied obligation to indemnify any other person.
Section 3.14. No Excess Parachute Payments; Termination Payments; Section
162(m) of the Code. Except as set forth in Section 3.14 of the Company
Disclosure Schedule, any amount that could be received (whether in cash or
property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer or director of either of
the Company or any of their affiliates who is a "disqualified individual" (as is
defined in Treasury Regulation Section 1.280G-1) under any employment,
severance, change of control or termination agreement, other compensation
arrangement or Benefit Plan would not be characterized as an "excess parachute
payment" (as is defined in Section 280G(b)(1) of the Code). Except as set forth
in Section 3.14 of the Company Disclosure Schedule, there are no payments that
the Company or any of its subsidiaries, or the Surviving Corporation is or would
be required to make to any of the Company's current or former employees or to
any third party which payment is contingent upon a change of control of the
Company or any of its subsidiaries or payable as a result of the Transactions,
including, without limitation, the termination of any of the Company's or any of
its subsidiaries' employees after the Effective Time. The disallowance of a
deduction under Section 162(m) of the Code for employee remuneration will not
apply to any amount paid or payable by the Company or any of its subsidiaries
under any commitment, program, arrangement or understanding.
-24-
Section 3.15. Compliance with Applicable Laws; Environmental. Except for
any of the following which, individually or in the aggregate, has not had and
could not reasonably be expected to have a Material Adverse Effect on the
Company or which are otherwise specifically disclosed in the Filed Company SEC
Documents or set forth on Section 3.15 of the Company Disclosure Schedule:
(a) The Company and its subsidiaries has in effect all Federal,
state, local and foreign governmental approvals, authorizations, certificates,
filings, franchises, licenses, notices, permits and rights ("Permits") necessary
for it to own, lease or operate its properties and assets and to carry on its
business as now conducted, and there has occurred no default under any such
Permit. Each of the Company and its subsidiaries is in compliance with all
applicable statutes, laws, ordinances, rules, orders and regulations of any
Governmental Entity.
(b) Each of the Company and its subsidiaries and their respective
properties, assets, businesses and operations is, and has been, and each of the
Company's former subsidiaries, while subsidiaries of the Company and their
respective properties, assets, businesses and operations, was, in compliance
with all applicable Environmental Laws and Environmental Permits. The term
"Environmental Laws" means any federal, state, local or foreign law, statute,
code, ordinance, rule, regulation, policy, guideline, permit, consent, approval,
license, judgment, order, writ, decree, injunction or other authorization
relating to the generation, treatment, storage, recycling, disposal, use,
handling, manufacturing, transportation, shipment, emission, discharge, release
or threatened release of Hazardous Material (as defined herein) into the
environment, buildings, facilities or structures, including, without limitation,
into ambient air, soil, sediments, land surface or subsurface, surface water,
groundwater, publicly owned treatment works, septic systems or land, including
without limitation, the following statutes, their implementing regulations and
any state corollaries: the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq., the Comprehensive Environmental Response, Compensation and
Liability Act, as amended by the Superfund Amendments and Reauthorization Act,
42 U.S.C. Section 9601 et seq., the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq. and
the Clean Air Act, 42 U.S.C. Section 7401 et seq. The term "Environmental
Permit" means any permit, license, approval or other authorization issued under
any Environmental Law.
(c) There have been no releases (as defined herein) of Hazardous
Material in, on, under, or from any currently or previously owned or operated
properties or in connection with the operation of the Company which has
contaminated such properties or any surrounding site or any off-site location
(excluding any Releases by persons other than the Company or any of its past or
present affiliates at previously owned or operated properties for which the
Company does not have knowledge). "Hazardous Materials" means (l) hazardous
materials, pollutants or contaminants, medical, hazardous or infectious wastes,
hazardous waste constituents, hazardous chemicals, hazardous or toxic
pollutants, and hazardous or toxic substances as those terms are defined in or
regulated by any Environmental Law, (2) petroleum, including crude oil and any
fractions thereof, (3) natural gas, synthetic gas and any mixtures thereof, (4)
radioactive materials including, without limitation, source byproduct or special
nuclear materials, (5) pesticides and (6) asbestos and asbestos-containing
materials. "Releases"
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means spills, leaks, discharges, disposal, pumping, pouring, emissions,
injection, emptying, leaching, dumping or allowing to escape.
(d) The Company and its subsidiaries and their respective
properties, assets, businesses and operations are not subject to any
Environmental Claims (direct or contingent) or Environmental Liabilities (as
such terms are defined herein) arising from or based upon any act, omission,
event, condition or circumstance occurring or existing on or prior to the date
hereof or for which the Company and its subsidiaries are responsible, including
without limitation, any such Environmental Claims or Environmental Liabilities
arising from or based upon the ownership or operation of assets, businesses or
properties of the Company or any subsidiary or, to the Company's knowledge,
their respective predecessors, and (ii) neither the Company nor any of its
subsidiaries has received any notice of any violation of any Environmental Law
or Environmental Permit or any Environmental Claim in connection with their
respective assets, properties, businesses or operations.
(e) The Company has provided or made available to Purchaser and
has disclosed on Section 3.15(e) of the Company Disclosure Schedule all material
environmental assessment reports prepared by, on behalf of or, to the extent in
the Company's or any subsidiary's possession or control, relating to the Company
or any subsidiary regarding the environmental condition of the Company's
properties or the compliance with applicable Environmental Laws by the Company
or any subsidiary.
(f) The term "Environmental Claim" means any third party
(including governmental agencies, regulatory agencies, employees or other
private parties) action, lawsuit, claim, investigation or proceeding (including
claims or proceedings under the Occupational Safety and Health Act or similar
laws relating to safety of employees) which seeks to impose liability under
Environmental Laws or common law relating to the exposure to the release of
Hazardous Materials, or for (i) noise; (ii) pollution or contamination of the
air, surface water, ground water, land or structure; (iii) the generation,
handling, treatment, storage, disposal or transportation of Hazardous Materials,
including wastes; (iv) exposure to Hazardous Materials; (v) the safety or health
of employees; or (vi) the manufacture, processing, distribution in commerce,
use, or storage of Hazardous Materials. An "Environmental Claim" includes, but
is not limited, to, a common law action, as well as a proceeding to issue,
modify or terminate an Environmental Permit of the Company or any of its
subsidiaries. The term "Environmental Liabilities" includes all costs arising
from any Environmental Claim or violation or alleged violation or circumstance
or condition which would give rise to a violation or liability under any
Environmental Permit or Environmental Law under any recognized theory of
recovery, at law or in equity, and whether based on negligence, strict liability
or otherwise, including but not limited to: remedial, removal, response,
abatement, investigative, monitoring, personal injury and damage to property,
and any other related costs, expenses, losses, damages, penalties, fines,
liabilities and obligations, including reasonable attorney's fees and court
costs.
Section 3.16. State Takeover Statutes. The Company has taken all action
necessary (except for the notice filing required to be filed by Purchaser with
the Pennsylvania Securities Commission under Section 8(a) of the Pennsylvania
Takeover Disclosure Law (the "Notice Filing)) to render the provisions of any
anti-takeover statute, rule or regulation that may be applicable to the
Transactions under Pennsylvania law (including Sections 2538 through 2588,
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inclusive, of the PBCL) inapplicable to Parent, Purchaser and their respective
affiliates, and to the Offer, the Merger and the Tender and Option Agreement,
the Top-up Option Agreement and this Agreement and the other Transactions. The
Board of Directors of the Company has approved the Merger, the Tender and Option
Agreement, the Top-up Option Agreement and this Agreement and the other
Transactions. Except for the requirement to make the Notice Filing, no
Pennsylvania anti-takeover statute, rule or regulation (other than Sections 1921
through 1930 of the PBCL and provisions of the PBCL generally applicable to the
powers of a corporation and the duties and powers of its board of directors in a
takeover context, including Sections 1502(a)(18), 1525(b), 1715 and 2513) is
applicable to the Transactions, including the Merger. To the Company's
knowledge, no other "fair price," "moratorium," "control share acquisition,"
"business combination," or other state takeover statute or similar statute or
regulation applies or purports to apply to the Company, Parent, Purchaser,
affiliates of Parent or Purchaser, the Offer, the Merger, the Tender and Option
Agreement, the Top-up Option Agreement, this Agreement, or any of the other
Transactions based upon the Company's operations. As a result of the foregoing
actions, the only corporate action required to authorize the Merger is the
Company Shareholder Approval and no further action is required to authorize the
other Transactions.
Section 3.17. Contracts. Section 3.17 to the Company Disclosure Schedule
lists, under the relevant heading, all oral or written contracts, agreements,
arrangements, guarantees, licenses, leases and executory commitments (each a
"Contract"), other than Benefit Plans and agreements disclosed on Section 3.11
to the Company Disclosure Schedule or filed with the SEC and currently publicly
available via XXXXX, that exist as of the date hereof to which the Company or
any of its subsidiaries is a party or by which it is bound and which fall within
any of the following categories: (a) Contracts not entered into in the ordinary
course of the Company's and its subsidiaries' businesses other than those that
individually or in the aggregate are not material to the business of the Company
and its subsidiaries, taken as a whole, (b) joint venture and partnership
agreements, (c) Contracts containing covenants purporting to limit the freedom
of the Company or any of its subsidiaries to compete in any line of business in
any geographic area or to hire any individual or group of individuals, (d)
Contracts which after the consummation of any of the Transactions would have the
effect of limiting the freedom of Parent or any of its subsidiaries to compete
in any line of business in any geographic area or to hire any individual or
group of individuals, (e) Contracts which contain minimum purchase conditions in
excess of $25,000 and which cannot be canceled by the Company without penalty or
further payment and with less than 90 days notice, or requirements or other
terms that restrict or limit the purchasing or distribution relationships of the
Company or its affiliates (including after consummation of any of the
Transactions), Parent or any of its affiliates, or any customer, licensee or
lessee thereof, (f) Contracts relating to any outstanding commitment for capital
expenditures in excess of $25,000, (g) indentures, mortgages, promissory notes,
loan agreements or guarantees of borrowed money, letters of credit or other
agreements or instruments of the Company or its subsidiaries or commitments for
the borrowing or the lending by the Company or any of its subsidiaries of
amounts in excess of $25,000 in the aggregate or providing for the creation of
any charge, security interest, encumbrance or lien upon any of the assets of the
Company or any of its subsidiaries with an aggregate value in excess of $25,000,
(h) Contracts providing for "earn-outs" or other contingent payments by the
Company or any of it subsidiaries involving more than $25,000 per contract over
the terms of all such Contracts, (i) Contracts associated with off balance sheet
financing in excess of $25,000 in the aggregate, including but not limited to
arrangements for the sale of receivables, (j) Licenses, (k) stock purchase
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agreements, asset purchase agreements or other acquisition or divestiture
agreements where the consideration in any individual transaction exceeds $25,000
since January 1, 2001, (l) material Contracts with respect to which a change in
the ownership (whether directly or indirectly) of shares of Company Common Stock
or the composition of the Board of Directors of the Company may result in a
violation of or default under, or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of benefits under such
Contract or (m) any other agreement involving goods, services, payments or
liabilities in excess of $50,000. All Contracts to which the Company or any
subsidiary is a party or by which it is bound are valid and binding obligations
of the Company or such subsidiary and, to the knowledge of the Company, the
valid and binding obligation of each other party thereto except such Contracts
which if not so valid and binding could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company. Neither
the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any other party thereto is in violation of or in default in respect of, nor has
there occurred an event or condition which with the passage of time or giving of
notice (or both) would constitute a default under or permit the termination of,
any such Contract except such violations or defaults under or terminations
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on the Company. Set forth in Section 3.17(n) to
the Company Disclosure Schedule is the amount of the annual premium currently
paid by the Company for its directors' and officers' liability insurance. The
Company has delivered or made available to Parent true and correct copies of the
Contracts and Licenses set forth on Section 3.17(o) to the Company Disclosure
Schedule and the waivers and consents thereto as are necessary to provide that
the consummation of the transactions contemplated by this Agreement will not
have any affect on the Company's rights or obligations under such Contracts or
Licenses or conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
material benefit under, or result in the creation of any Lien upon any of the
material properties or assets of the Company or any subsidiaries under, or
result in the termination of such Contracts or Licenses.
Section 3.18. Labor Matters. Except to the extent set forth in Section 3.18
of the Company Disclosure Schedule, (a) no employee of the Company or any of its
subsidiaries is represented by any union or other labor organization; (b) the
Company and all of its subsidiaries are in material compliance with applicable
laws respecting employment and employment practices, terms and conditions of
employment and wages and hours, and are not engaged in any unfair labor
practices which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect on the Company; (c) there is no unfair labor
practice complaint against the Company or any of its subsidiaries pending or, to
the knowledge of the Company, threatened by or before the National Labor
Relations Board or any other Governmental Entity; (d) there are no labor
strikes, disputes, slowdowns, representation campaigns or work stoppages pending
or, to the knowledge of the Company, threatened against or affecting the Company
or any of its subsidiaries which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on the Company; (e) no
grievances or arbitration proceedings arising out of or under collective
bargaining agreements are pending and no claims therefor have been asserted
against the Company or its subsidiaries which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on the Company;
and (f) neither the Company nor any of its subsidiaries has experienced any
material work stoppage since
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January 1, 2001. The Company and its subsidiaries are in material compliance
with all applicable federal, state, local or foreign labor laws, rules and
regulations.
Section 3.19. Title to Properties. (a) The Company and its subsidiaries
have good, valid and marketable title to, or valid leasehold interests in, all
their material tangible properties (including real property) and assets except
for such as are no longer used or useful in the conduct of their respective
businesses or as have been disposed of in the ordinary course of business and
except for defects in title, easements, restrictive covenants and similar
encumbrances or impediments that, in the aggregate, do not and will not
materially interfere with their ability to conduct their respective businesses
as currently conducted or are otherwise set forth on Section 3.19 of the Company
Disclosure Schedule. All such material properties and assets, other than
properties and assets in which the Company or any of its subsidiaries has
leasehold interests, are free and clear of all Liens, except for Liens that,
individually or in the aggregate, do not and will not materially interfere with
the ability of the Company and its subsidiaries to conduct their respective
businesses substantially as currently conducted.
(b) Section 3.19(b) of the Company Disclosure Schedule sets forth
the addresses of (i) the real property currently owned by the Company or its
subsidiaries (the "Owned Real Property") and (ii) any real property formerly
owned or leased by the Company or its subsidiaries since the later of (x) 10
years prior to the date of this Agreement and (y) in the case of Copper Craft,
Inc. and Xxxxxx Metal Products, Inc., the date of their respective acquisitions.
The Company is in actual possession of the Owned Real Property. The Company has
delivered to Parent complete and correct copies of all existing title insurance
policies held by the Company, and all surveys possessed by the Company with
respect to the Owned Real Property (and, to the knowledge of the Company, such
surveys are accurate in all material respects and no material changes or
improvements have been made to such properties which would be reflected in an
updated new survey). Except as set forth in Section 3.19(b) of the Company
Disclosure Schedule, and to the knowledge of the Company, no portion of any of
the improvements erected on the Owned Real Property encroaches on adjoining
property or public streets in any material respect and no portion of any of the
Owned Real Property is, or has been subjected to an ad valorem tax valuation
such that a change in ownership or use (whether now existing or in the future)
has caused or will cause material additional ad valorem taxes to be imposed upon
the Owned Real Property. The water, gas, electricity and other utilities serving
each of the Owned Real Property is adequate to service the normal operation of
each of the Owned Real Property in all material respects.
(c) Section 3.19(c) of the Company Disclosure Schedule is an
accurate and complete list of all leases or rights of occupancy pursuant to
which the Company or any of its subsidiaries leases or subleases any real
property or interest therein (collectively, the "Real Property Leases"). Except
as set forth in Section 3.19(c) of the Company Disclosure Schedule, the Company
or one of its subsidiaries is the lessee under all Real Property Leases, and no
party other than the Company or one of its subsidiaries has any right to
possession, occupancy or use of any of the properties demised under the Real
Property Leases. A true and correct copy of each Real Property Lease has been
delivered to Buyer, together with all amendments and modifications thereto, and
all subordination, non-disturbance and/or attornment agreements related thereto,
and no changes have been made thereto since the date of delivery except as
disclosed in Section 3.19(c) of the Company Disclosure Schedule. Each Real
Property Lease to
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which the Company or any subsidiary is a party or by which it is bound is a
valid and binding obligation of the Company or such subsidiary and, to the
knowledge of the Company, the valid and binding obligation of each other party
thereto. Neither the Company nor any of its subsidiaries nor, to the knowledge
of the Company, any other party thereto is in material violation of or in
material default in respect of, nor has there occurred an event or condition
which with the passage of time or giving of notice (or both) would constitute a
material default under or permit the termination of, any such Real Property
Lease.
(d) The Company or one of its subsidiaries is in actual
possession of the properties demised under the Real Property Leases. The Company
or one of its subsidiaries has good, valid and indefeasible title to all the
leasehold estates conveyed under the Real Property Leases free and clear of all
Liens except for Liens that, individually or in the aggregate, do not and will
not materially interfere with the ability of the Company and its subsidiaries to
conduct their respective businesses substantially as currently conducted. Except
as set forth in Section 3.19(d) of the Company Disclosure Schedule, the basic
rent and all additional rent payable under the Real Property Leases have been
paid to date and not more than one (1) month in advance. The total basic rent
and all additional rent paid by the Company and its subsidiaries under the Real
Property Leases was $748,000 in fiscal year 2002. All work required to be
performed under the Real Property Leases by the landlords thereunder or by the
Company or any of its subsidiaries has been performed, except where the failure
to so perform could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company, and, to the extent
that the Company or any of its subsidiaries is responsible for payment of such
work, has been fully paid for, whether directly to the contractor performing
such work or to such landlord as reimbursement therefor, except for items which
the Company or any of its Subsidiaries is disputing in good faith (which items
are set forth in Section 3.19(d) of the Company Disclosure Schedule). There have
been no casualties which could result in the termination of any Real Property
Lease or the application of any buy-out provisions contained in any Real
Property Lease relative to damage by casualty.
Section 3.20. Undisclosed Liabilities; Indebtedness.
(a) Except as and to the extent specifically disclosed in the
Filed Company SEC Documents or accrued on the June 30, 2003 balance sheet
included in the Filed Company SEC Documents, or as set forth in Section 3.20(a)
of the Company Disclosure Schedule, and except for liabilities incurred in the
ordinary course of business consistent with prior practice and otherwise not in
contravention of this Agreement, neither the Company nor any of its subsidiaries
have any liabilities or obligations of any nature (whether absolute, contingent
or otherwise, and whether or not required to be reflected or reserved against in
a consolidated balance sheet of the Company and its subsidiaries prepared in
accordance with United States generally accepted accounting principles) that
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company.
(b) Except as and to the extent specifically disclosed on Section
3.20(b) of the Company Disclosure Schedule (indicating the dollar amount of
Indebtedness outstanding, the person or entity to whom such Indebtedness is owed
and the agreement under which such Indebtedness was incurred), as of the date
hereof neither the Company nor any of its subsidiaries have incurred or have
outstanding any Indebtedness. For purposes of this
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Agreement, "Indebtedness" shall mean (i) any indebtedness for borrowed money,
(ii) all obligations for the deferred purchase price of property or services
(other than trade accounts payable in the ordinary course of business and
consistent with past practice), (iii) all obligations evidenced by notes, bonds,
debentures or other similar instruments, (iv) all obligations of the Company as
lessee or lessees under leases that have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases and (v) all
obligations, contingent or otherwise, under acceptance, letter of credit or
similar facilities. As of the date hereof, the Company and its subsidiaries have
at least $2,000,000 of borrowing availability under the Company's existing
revolving credit facility disclosed on Section 3.17 of the Company Disclosure
Schedule.
Section 3.21. Opinion of Company Financial Advisor. The Company has
received the opinion of B&S, dated the date of this Agreement, to the effect
that, as of such date, the consideration to be received in the Offer and the
Merger by the Company's shareholders is fair to the Company's shareholders from
a financial point of view, a signed copy of which opinion has been delivered to
Parent, and such opinion has not been amended, modified or revoked in a manner
adverse to Parent or Purchaser. The Company has been authorized by B&S to permit
the inclusion of such fairness opinion (and, subject to prior review and consent
by B&S, a reference thereto) in the Offer Documents and in Schedule 14D-9 and
the Proxy Statement.
Section 3.22. Intellectual Property.
(a) Except to the extent the failure of any of the following
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company:
(i) Except as disclosed in Section 3.22(a)(i) of the Company
Disclosure Schedule, the Company and each of its subsidiaries owns free and
clear of any Liens, claims, or similar encumbrances, and has the right to bring
actions for the infringement, dilution, misappropriation or other violation of,
and/or is licensed to use all patents and patent applications, trademarks,
service marks, trade names, and registrations and applications for registration
of industrial designs, copyrights, mask works, trademarks, service marks, trade
names, trade dress, and all domain names, technology, inventions, know-how,
trade secrets, product designs, services procedures, processes and all
agreements and other rights with respect to intellectual property and computer
programs (collectively, "Intellectual Property") used in or necessary for the
conduct of the Company's and its subsidiaries' businesses as currently
conducted.
(ii) To the extent that any works of authorship, materials,
products, technology or software have been developed or created independently or
jointly by any person other than the Company or its subsidiaries for which the
Company or any of its subsidiaries has, directly or indirectly, paid, the
Company or such subsidiary has a written agreement with such person with respect
thereto, and the Company or such subsidiary thereby has obtained ownership of,
and is the exclusive owner of, all Intellectual Property therein or thereto by
operation of law or by valid assignment. In each case in which either the
Company or any of its subsidiaries has acquired any Intellectual Property from
any person, the Company or such subsidiary has obtained a valid and enforceable
assignment sufficient to irrevocably transfer all rights in such Intellectual
Property to the Company or such subsidiary.
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(iii) All of the patents, industrial design registrations,
trademark and service xxxx registrations, copyright registrations, mask work
registrations and domain name registrations, and all applications for such
registrations, owned by the Company or any of its subsidiaries are, and, to the
knowledge of the Company, those licensed to the Company or any of its
subsidiaries are, valid and in full force and effect, are (in the case of those
owned by the Company or any of its subsidiaries) held of record in the name of
the Company or such subsidiary, are not the subject of any cancellation or
reexamination proceeding or any other proceeding challenging their extent or
validity, and all necessary registration, maintenance and renewal fees in
connection with such patents and registrations have been paid and all necessary
documents and certificates in connection with such patents and registrations
have been filed with the relevant patent, copyright, trademark or other
authorities in the United States for the purposes of maintaining such patents
and registrations. Since January 1, 2002, the Company and its subsidiaries have
had sales outside the United States not exceeding $500,000 in the aggregate.
(iv) To the knowledge of the Company, except as disclosed in
Section 3.22(a)(iv) of the Company Disclosure Schedule, the use of such
Intellectual Property by the Company and its subsidiaries in the conduct of
their business as currently conducted does not infringe on the rights of any
party.
(v) Except as disclosed in Section 3.22(a)(v) of the Company
Disclosure Schedule, and to the knowledge of the Company, no person is
infringing on any right of the Company or any of its subsidiaries with respect
to such Intellectual Property.
(vi) The Company and its subsidiaries are not, and the
consummation of the Transactions will not cause them to be, in breach or
violation of any agreement relating to the use of any of its Intellectual
Property, and they have not received any notification, written or oral, from any
third party that there is any such violation, breach, or inability to perform
under any such agreement.
(vii) There are no agreements, written or oral, which limit
any rights by the Company or any of its subsidiaries to use any of the
Intellectual Property owned by any of them in the manner such Intellectual
Property is currently used by the Company and its subsidiaries.
(viii) To the Company's knowledge, none of the material
trade secrets, know-how or other confidential or proprietary information of the
Company or any of its subsidiaries has been disclosed to any person unless such
disclosure was necessary, and was made pursuant to an appropriate
confidentiality agreement.
(ix) Except as disclosed in Section 3.22(a)(ix) of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries has
given any indemnification to any third party against infringement of such
Intellectual Property rights, and neither the Company nor any of its
subsidiaries has agreed to, or assumed, any obligation or duty to indemnify,
reimburse, hold harmless, guaranty or otherwise assume or incur any obligation
or liability or provide a right of rescission to any third party with respect to
the infringement, dilution, misappropriation or other violation of the
Intellectual Property of the Company or any of its subsidiaries or any other
third party.
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(b) The Company and each of its affiliates have in fact received
or will obtain prior to the expiration date of the Offer an executed employee
confidentiality agreement with the employees listed on Section 3.22(b) of the
Company Disclosure Schedule that, among other things, obligates such employees
to protect the Company's confidential information and the confidential
information the Company receives from its customers and vendors.
Section 3.23. Insurance. The Company or its subsidiaries maintain policies
of fire and casualty, liability and other forms of insurance set forth in
Section 3.23 of the Company's Disclosure Schedule (disclosing in reasonable
detail for each policy the title and issuer of the policy, the type of policy
and risks/losses covered, the persons covered, the coverage limits and
deductibles, and the annual premiums). All such policies are in full force and
effect, all premiums due and payable thereon have been paid, and no notice of
cancellation or termination has been received with respect to any such policy.
Section 3.24. Affiliate Transactions. Section 3.24 of the Company
Disclosure Schedule sets forth a true and complete list (including names of
parties, amounts involved and brief descriptions) of all transactions,
agreements, arrangements or understandings (or series thereof), written or oral,
between the Company or any of its subsidiaries and any of its or their directors
or executive officers (including, in the case of natural persons, any of such
persons' relatives or affiliates, but excluding any dealings exclusively among
the Company and its subsidiaries) currently existing or effected or entered into
since January 1, 2001, other than any such transactions, agreements,
arrangements or understandings otherwise specifically disclosed in the Filed
Company SEC Documents.
Section 3.25. Indemnification Claims. Other than as set forth on Section
3.25 of the Company Disclosure Schedule, the Company is not aware of any
indemnification, breach of contract or similar claims by or against the Company
or any of its subsidiaries which are pending or, to the knowledge of the
Company, threatened (or which could be reasonably expected to be made in the
future), in each case in excess of $25,000 in amount, with respect to any
acquisition or disposition by the Company of any assets or businesses.
Section 3.26. Absence of Questionable Payments. To the Company's knowledge,
neither the Company nor any of its subsidiaries nor any director, officer,
agent, employee or other person acting on behalf of the Company or any of its
subsidiaries, has used any corporate or other funds for unlawful contributions,
payments, gifts, or entertainment, or made any unlawful expenditures relating to
political activity to government officials or others or established or
maintained any unlawful or unrecorded funds in violation of (i) Section 30A of
the Exchange Act or (ii) Section 104 of the Foreign Corrupt Practices Act of
1977 (15 U.S.C. (S)79dd-2), as amended, or (iii) any other applicable foreign,
federal or state law. To the Company's knowledge, neither the Company nor any of
its subsidiaries nor any current director, officer, agent, employee or other
person acting on behalf of the Company or any of its subsidiaries, has accepted
or received any unlawful contributions, payments, gifts, or expenditures. To the
Company's knowledge, the Company and each of its subsidiaries which is required
to file reports pursuant to Section 12 or 15(d) of the Exchange Act is in
compliance with the provisions of Section 13(b) of the Exchange Act, except
where the failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
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Section 3.27. Products Liability. There are no (a) liabilities, known or
unknown, fixed or contingent, with respect to any products of the Company or its
subsidiaries that are based on a theory of strict product liability, negligence
or other tort theories (as distinct from product warranty claims described in
clause (b) below), or (b) liabilities of the Company or its subsidiaries, known
or unknown, fixed or contingent, which have been asserted, for the breach of any
express or implied product warranty or any other similar claim with respect to
any product manufactured or sold by the Company or its subsidiaries (other than
any claim based on standard warranty obligations made by the Company or its
subsidiaries in the ordinary course of the conduct of their business to
purchasers of their products), which as to (a) and (b) above, individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect on
the Company. Section 3.27 of the Company Disclosure Schedule contains copies of
the Company's and its subsidiaries' standard warranties and return policies. The
Company and each of its subsidiaries and predecessors has not and does not
produce, market, distribute, sell or otherwise use in the operation of its
business any product or component that contains asbestos.
Section 3.28. Relationship with Customers and Suppliers. There are no
suppliers of raw materials to the Company and its subsidiaries for which there
are not adequate alternative suppliers of such raw materials on commercially
reasonable terms. As of the date of this Agreement, the Company knows of no
written or (to the extent known by an officer or director of the Company) oral
communication, fact, event or action which exists or has occurred within 12
months prior to the date hereof, which would lead the Company reasonably to
believe that (i) any of its customers who accounted for the ten largest dollar
volume of purchases from the Company and its subsidiaries for the 12 months
ended June 30, 2003 (the "Major Customers") or (ii) any of its suppliers who
accounted for the ten largest dollar volume of purchases by the Company and its
subsidiaries for the 12 months ended June 30, 2003, will terminate or materially
and adversely modify its business relationship with Company or its subsidiaries.
Section 3.29. Company Rights Agreement. Each right issued under the Company
Rights Agreement is represented by the certificate representing the associated
shares of Company Common Stock and is not exercisable or transferable apart from
the associated shares of Company Common Stock, and the Company has taken all
necessary actions so that (a) the Company Rights Agreement will not be
applicable to this Agreement, the Offer, the Merger and the other transactions
contemplated hereby and (b)(i) none of Parent, Purchaser or their Affiliates is
an Acquiring Person (as defined in the Company Rights Agreement) pursuant to the
Company Rights Agreement and (ii) a Distribution Date, a Triggering Event or a
Stock Acquisition Date (as such terms are defined in the Company Rights
Agreement) does not occur, in the case of clauses (i) and (ii), by reason of the
execution of this Agreement and the consummation of the Offer, the Merger and
the other transactions contemplated hereby.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as follows:
Section 4.1. Organization and Qualification. Each of Parent and Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and corporate authority to carry on its business as it is now being
conducted. Each of Parent and Purchaser is duly qualified as a foreign
corporation or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or leased or the nature
of its activities makes such qualification or licensing necessary, except where
the failure to be so qualified or licensed and in good standing could not
reasonably be expected to prevent or materially delay the consummation of the
Offer or the Merger. Purchaser is an indirect wholly owned subsidiary of Parent.
Section 4.2. Authority Relative to this Agreement. Each of Parent and
Purchaser has all requisite corporate power and corporate authority to execute
and deliver this Agreement and each instrument required hereby to be executed
and delivered by Parent or Purchaser prior to or at the Effective Time, to
perform its obligations hereunder and thereunder, and to consummate the
Transactions. The execution and delivery by Parent and Purchaser of this
Agreement and each instrument required hereby to be exercised and delivered by
Parent or Purchaser prior to or at the Effective Time and the performance of
their respective obligations hereunder and thereunder, and the consummation by
Parent and Purchaser of the Transactions have been duly and validly authorized
by the respective Boards of Directors of Parent and Purchaser, and the
shareholders of Purchaser and Parent, and no other corporate proceedings on the
part of Parent or Purchaser are necessary to authorize this Agreement, or
commence the Offer or to consummate the Transactions (including the Offer) other
than filing and recordation of appropriate merger documents as required by the
PBCL. This Agreement has been duly and validly executed and delivered by each of
Parent and Purchaser and, assuming this Agreement constitutes a valid and
binding obligation of the Company, this Agreement constitutes a valid and
binding agreement of each of Parent and Purchaser, enforceable against each of
Parent and Purchaser in accordance with its terms.
Section 4.3. Proxy Statement. None of the information supplied in writing
by Parent, Purchaser and their respective affiliates specifically for inclusion
in the Proxy Statement, if required, shall, at the time the Proxy Statement is
mailed, at the time of the Shareholder Meeting or at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that Parent and Purchaser make no representation
or warranty as to any of the information relating to and supplied by or on
behalf of the Company specifically for inclusion in the Proxy Statement. If, at
any time prior to the Effective Time, any event relating to Parent or any of its
affiliates, officers or directors is discovered by Parent that should be set
forth in a supplement to the Proxy Statement, Parent will promptly inform the
Company.
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Section 4.4. Consents and Approvals; No Violation. Subject to the taking of
the actions described in the immediately succeeding sentence, the execution and
delivery of this Agreement, the Tender and Option Agreement and the Top-up
Option Agreement do not, and the consummation of the Transactions will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the material properties
or assets of Parent under (i) the certificate of incorporation or bylaws of
Parent or Purchaser, (ii) any loan or credit agreement, note, bond, indenture,
lease or other agreement, instrument or Permit applicable to Parent or Purchaser
or their respective properties or assets, or (iii) any judgment, order, writ,
injunction or decree, or material law, statute, ordinance, rule or regulation
applicable to Parent or Purchaser or their respective properties or assets,
other than, in the case of clause (ii), (A) the Company's Second Amended and
Restated Credit Agreement, dated as of March 15, 2002, as amended, by and among
the Company, its subsidiaries, the lenders party thereto and BNP Paribas as
Agent (the "Existing Parent Credit Agreement") and (B) any such conflicts,
violations, defaults, rights or Liens that individually or in the aggregate
would not (x) impair in any material respect the ability of Parent and Purchaser
to perform their respective obligations under this Agreement or (y) prevent or
impede the consummation of any of the Transactions. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Entity or any other person is required by Parent or Purchaser in
connection with the execution and delivery of this Agreement or the consummation
by Parent or Purchaser, as the case may be, of any of the Transactions, except
(A) pursuant to the Securities Act and the Exchange Act, (B) the filing of the
Articles of Merger pursuant to the PBCL, (C) such filings and approvals as may
be required under the "blue sky," takeover or securities laws of various states,
(D) the consent of the lenders under the Existing Parent Credit Agreement or (E)
where the failure to obtain any such consent, approval, authorization or permit,
or to make any such filing or notification, would not prevent or delay
consummation of the Offer or the Merger or would not otherwise prevent Parent
from performing its obligations under this Agreement.
Section 4.5. Schedule TO; Offer Documents. Neither the Schedule TO, the
Offer Documents nor any information supplied by Parent or Purchaser in writing
for inclusion in the Schedule 14D-9 shall, at the respective times the Schedule
14D-9, the Schedule TO, the Offer Documents or any amendments or supplements
thereto are filed with the SEC or are first published, sent or given to
shareholders of the Company, as the case may be, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Schedule TO and the
Offer Documents will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder.
Notwithstanding the foregoing, no representation or warranty is made by Parent
or Purchaser with respect to statements made or incorporated by reference
therein based on information supplied by the Company specifically for inclusion
or incorporation by reference therein.
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ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1. Conduct of Business of the Company Pending the Merger. The
Company hereby covenants and agrees that, prior to the Effective Time, unless
otherwise expressly contemplated by this Agreement or consented to in writing by
Parent, it will and will cause each of its subsidiaries to:
(a) operate its business in the usual and ordinary course
consistent with past practices;
(b) use its commercially reasonable best efforts to preserve
intact its business organization, maintain its rights and franchises, retain the
services of its respective key employees and maintain its relationships with its
respective customers and suppliers and others having business dealings with it
to the end that its goodwill and ongoing business shall be unimpaired at the
Effective Time;
(c) use its commercially reasonable best efforts to maintain and
keep its material properties and assets in as good repair and condition as at
present, ordinary wear and tear excepted, and to maintain supplies and
inventories in quantities consistent with its customary business practice; and
(d) use its commercially reasonable best efforts to keep in full
force and effect insurance and bonds comparable in amount and scope of coverage
to that currently maintained.
Section 5.2. Prohibited Actions by the Company. Without limiting the
generality of Section 5.1, except as set forth in Section 5.2 of the Company
Disclosure Schedule, the Company covenants and agrees that, except as expressly
contemplated by this Agreement or otherwise consented to in writing by Parent,
from the date of this Agreement until the Effective Time, it will not do, and
will not permit any of its subsidiaries to do, any of the following:
(a) (i) increase the compensation (or benefits) payable to or to
become payable to any director or employee, except for increases in salary or
wages of employees in the ordinary course of business and consistent with past
practice; (ii) grant any severance or termination pay (other than pursuant to
the normal severance policy or practice of the Company or its subsidiaries as
disclosed in Section 3.12 of the Company Disclosure Schedule and in effect on
the date of this Agreement) to, or enter into or amend in any material respect
any employment or severance agreement with, any employee; (iii) establish,
adopt, enter into or amend any collective bargaining agreement or Benefit Plan
of the Company or any ERISA Affiliate; or (iv) take any action to accelerate any
rights or benefits, or make any determinations not in the ordinary course of
business consistent with past practice, under any collective bargaining
agreement or Benefit Plan of the Company or any ERISA Affiliate;
(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of (whether in cash, stock or property), outstanding
shares of capital stock,
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except for dividends by a wholly owned subsidiary of the Company to the Company
or another wholly owned subsidiary of the Company;
(c) redeem, purchase or otherwise acquire, or offer or propose to
redeem, purchase or otherwise acquire, any outstanding shares of capital stock
of, or other equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests in,
or any outstanding options, warrants or rights of any kind to acquire any shares
of capital stock of, or other equity interests in, the Company or any of its
subsidiaries (other than (i) any such acquisition by the Company or any of its
wholly owned subsidiaries directly from any wholly owned subsidiary of the
Company in exchange for capital contributions or loans to such subsidiary, or
(ii) any acquisition, purchase, forfeiture or retirement of shares of Company
Common Stock or the Options occurring pursuant to the terms (as in effect on the
date of this Agreement) of any existing Benefit Plan of the Company or any of
its subsidiaries, in a manner otherwise consistent with the terms of this
Agreement);
(d) effect any reorganization or recapitalization; or split,
combine or reclassify any of the capital stock of, or other equity interests in,
the Company or any of its subsidiaries or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of such capital stock or such equity interests;
(e) except as contemplated by the Company Rights Agreement and
not in violation of this Agreement (including without limitation Sections 3.29
and 5.2(q) hereof), offer, sell, issue or grant, or authorize or propose the
offering, sale, issuance or grant of, any shares of capital stock of, or other
equity interests in, any securities convertible into or exchangeable for (or
accelerate any right to convert or exchange securities for) any shares of
capital stock of, or other equity interest in, or any options, warrants or
rights of any kind to acquire any shares of capital stock of, or other equity
interests in, or any Voting Company Debt or other voting securities of, the
Company or any of its subsidiaries, or any "phantom" stock, "phantom" stock
rights, SARs or stock-based performance units, other than issuances of shares of
Company Common Stock upon the exercise of the Options outstanding at the date of
this Agreement in accordance with the terms thereof (as in effect on the date of
this Agreement);
(f) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets of, or in
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire any assets
of any other person (other than the purchase of inventories and supplies from
suppliers or vendors in the ordinary course of business and consistent with past
practice and other than asset acquisitions which do not exceed $25,000 in any
individual transaction or $50,000 in the aggregate);
(g) sell, lease, exchange or otherwise dispose of, or grant any
Lien with respect to, any of the properties or assets of the Company or any of
its subsidiaries that have a fair market or book value (whichever is greater) of
more than $25,000 individually or $50,000 in the aggregate, except for
dispositions of excess or obsolete assets and sales of inventories in the
ordinary course of business and consistent with past practice;
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(h) propose or adopt any amendments to its articles of
incorporation or bylaws or other organizational documents;
(i) effect any change in any accounting methods, principles or
practices in effect as of December 31, 2002 affecting the reported consolidated
assets, liabilities or results of operations of the Company, except as may be
required by a change in generally accepted accounting principles;
(j) (i) incur any Indebtedness (other than borrowings for working
capital purposes under the Company's existing revolving credit facility
disclosed on Section 3.17 of the Company Disclosure Schedule), issue or sell any
debt securities or warrants or other rights to acquire any debt securities of
the Company or any of its subsidiaries, guarantee any such indebtedness or debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, or (ii) make any
loans, advances or capital contributions to, or investments in, any other
person, other than to or in the Company or any direct or indirect wholly owned
subsidiary of the Company;
(k) enter into any Contract described in Section 3.17 other than
Contracts with customers and suppliers for goods or services entered into in the
ordinary course of business and consistent with past practices that are not
expected to result in payments to or liabilities of the Company and its
subsidiaries in excess of $100,000 for any single Contract or series of related
Contracts which are reasonably expected to be performed within 90 days of entry
or as permitted by other subsections of this Section 5.2 ; provided, however,
that Parent agrees that it shall not unreasonably withhold or delay its consent
to Contracts of the type specified in sub-clause (j) of Section 3.17 to the
extent not permitted by the foregoing;
(l) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in the most
recent consolidated financial statements (or the notes thereto) of the Company
included in the Filed Company SEC Documents (but not in excess of the amount so
reflected or reserved) or incurred since the date of such financial statements
in the ordinary course of business consistent with past practice;
(m) take any of the actions set forth in Section 3.4 not
otherwise specified herein;
(n) settle the terms of any material litigation affecting the
Company or any of its subsidiaries, including any litigation with shareholders
of the Company or involving this Agreement or the Transactions;
(o) make or revoke any Tax election except in a manner consistent
with past practice, change any method of accounting for Tax purposes, settle or
compromise any material Tax liability, or agree to an extension of time of a
statute of limitations;
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(p) make or agree to make any new capital expenditures other than
capital expenditures made in the ordinary course of business and consistent with
past practices which individually do not exceed $100,000 and which in the
aggregate do not exceed $250,000;
(q) (i) amend or waive any provisions of the Company Rights
Agreement (other than such amendments as are necessary to accommodate this
Agreement and the Transactions, but not with respect to any other Acquisition
Proposal) or redeem any Rights or (ii) implement or adopt any other so-called
"poison pill," shareholder rights plan or other similar plan; provided, however,
that the Company may delay the "Distribution Date" (as defined in the Company
Rights Agreement) as contemplated by Section 3(a)(ii) of the Company Rights
Agreement to a date not later than the date described in Section 3(a)(i) of the
Company Rights Plan without the consent of Parent; or
(r) agree in writing or otherwise to take any of the foregoing
actions or any action which would make any representation or warranty of the
Company in this Agreement, the Tender and Option Agreement or the Top-up Option
Agreement untrue or incorrect in any material respect or cause any condition set
forth in Annex A to occur or any condition in Article VII to be unsatisfied.
ARTICLE VI
COVENANTS
Section 6.1. No Solicitation.
(a) From and after the date hereof until the Effective Time or
the termination of this Agreement in accordance with Section 8.1, neither the
Company nor any of its subsidiaries will directly or indirectly initiate,
solicit or encourage (including by way of furnishing non-public information or
assistance), or take any other action to facilitate, any inquiries or the making
or submission of any Acquisition Proposal (as defined herein) or enter into or
maintain or continue discussions or negotiate with any person or group in
furtherance of such inquiries or to obtain or induce any person or group to make
or submit an Acquisition Proposal or agree to or endorse any Acquisition
Proposal or assist or participate in, facilitate or encourage, any effort or
attempt by any other person or group to do or seek any of the foregoing or
authorize or permit any of its officers, directors or employees or any of its
subsidiaries or affiliates or any investment banker, financial advisor,
attorney, accountant or other representative or agent retained by it or any of
its subsidiaries to take any such action; provided, however, that nothing
contained in this Agreement shall prohibit the Company or the Board of Directors
of the Company from, prior to the earlier to occur of acceptance for payment of
shares of Company Common Stock pursuant to the Offer or adoption of this
Agreement by the requisite vote of the shareholders of the Company, furnishing
information to or entering into discussions or negotiations with any person or
entity that makes an unsolicited (i.e. not solicited after the date of this
Agreement) written, bona fide Acquisition Proposal that the Board of Directors
of the Company determines reasonably and in good faith constitutes or presents a
reasonable likelihood of resulting in a Superior Proposal (as defined herein),
if, and only to the extent that prior to taking such action (other than the
negotiation of the confidentiality agreement referred to in the following clause
(y) prior to the disclosure of any Company information) the Company (x)
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delivers to Parent and Purchaser the notice required pursuant to Section 6.1(c)
stating that it is taking such action and (y) receives from such person or group
an executed confidentiality agreement that is not, in any material respect, less
restrictive as to such person or entity than the Confidentiality Agreement and
which, in any event, contains customary confidentiality and standstill
restrictions and shall not contain any exclusivity provisions which would
prohibit the Company from complying with its obligations under this Section 6.1
or otherwise under this Agreement. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in this Section 6.1
by any officer, director, employee or affiliate of the Company or any of its
subsidiaries or any investment banker, attorney, accountant or other advisor,
agent or representative of the Company or any of its subsidiaries, whether or
not such person is purporting to act on behalf of the Company or any of its
subsidiaries or otherwise, shall be deemed to be a breach of this Section 6.1 by
the Company.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw, modify in a manner adverse to Parent or
Purchaser or fail to make, or propose to withdraw, modify in a manner adverse to
Parent or Purchaser or fail to make its approval or recommendation of the Offer
or the Merger or of the Tender and Option Agreement, this Agreement and the
other Transactions, (ii) except as permitted by Section 6.1(e), approve or
recommend, or propose to approve or recommend, any Acquisition Proposal, (iii)
take any action not previously taken to render the provisions of any
anti-takeover statute, rule or regulation (including Sections 2538 through 2588,
inclusive, of the PBCL) inapplicable to any person (other than Parent, Purchaser
or their affiliates) or group or to any Acquisition Proposal, or (iv) cause the
Company to accept such Acquisition Proposal and/or enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
(each, an "Acquisition Agreement") related to any Acquisition Proposal.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) above, the Company shall promptly (and in any event,
within one business day) advise Parent orally and in writing of any request for
information or the submission or receipt after the date of this Agreement of any
Acquisition Proposal, or any inquiry with respect to or which could reasonably
be expected to lead to any Acquisition Proposal, the material terms and
conditions of such request, Acquisition Proposal or inquiry, and the identity of
the person making any such request, Acquisition Proposal or inquiry and the
Company's response or responses thereto. The Company will keep Parent fully
informed of the status and details (including amendments or proposed amendments)
of any such request, Acquisition Proposal or inquiry. Immediately following the
execution of this Agreement, the Company will cease and cause to be terminated
any existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing.
(d) "Acquisition Proposal" means an inquiry, offer or proposal
regarding any of the following (other than the Transactions contemplated by this
Agreement) involving the Company or any of its subsidiaries: (i) any merger,
consolidation, share exchange, recapitalization, liquidation, dissolution,
business combination or other similar transaction; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 20% or more of the
assets of the Company and its subsidiaries, taken as a whole, or of any Material
Business (as defined herein) or of any subsidiary or subsidiaries responsible
for a Material Business in a single transaction or series of related
transactions; (iii) any tender offer (including a self tender
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offer) or exchange offer that, if consummated, would result in any person or
group beneficially owning more than 20% of the outstanding shares of any class
of equity securities of the Company or its subsidiaries (or in the case of a
person or group which beneficially owns more than 20% of the outstanding shares
of any class of equity securities of the Company as of the date hereof, would
result in such person or group increasing the percentage or number of shares of
such class beneficially owned by such person or group) or the filing of a
registration statement under the Securities Act in connection therewith; (iv)
any acquisition of 20% or more of the outstanding shares of capital stock of the
Company or the filing of a registration statement under the Securities Act in
connection therewith or any other acquisition or disposition the consummation of
which would prevent or materially diminish the benefits to Parent of the Merger;
or (v) any public announcement by the Company or any third party of a proposal,
plan or intention to do any of the foregoing or of any agreement to engage in
any of the foregoing. "Superior Proposal" means any proposal made by one or more
third parties (the "Bidders") to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger, consolidation, share
exchange, business combination, recapitalization, liquidation, dissolution or
other similar transaction, all the shares of Company Common Stock then
outstanding or all or substantially all of the assets of the Company and its
subsidiaries, for consideration consisting of all cash and for which such
Bidders have such consideration immediately available and such proposal is not
otherwise subject to a financing condition, which the Board of Directors of the
Company determines reasonably and in good faith (after receiving a fairness
opinion of B&S or another financial advisor of nationally recognized reputation)
to be superior to the holders of Company Common Stock from a financial point of
view (taking into account any changes to the terms of this Agreement and the
Offer that have been proposed by Parent in response to such proposal) and to be
more favorable to the Company and the holders of Company Common Stock (taking
into account all financial and strategic considerations, including relevant
legal, financial, regulatory and other aspects of such proposal and the third
party making such proposal and the conditions and prospects for completion of
such proposal) than the Offer, the Merger and the other Transactions taken as a
whole. "Material Business" means any business (or the assets needed to carry out
such business) that contributed or represented 20% or more of the net sales, the
net income or the assets (including equity securities) of the Company and its
subsidiaries taken as a whole.
(e) Nothing contained in this Section 6.1 shall prohibit the
Company or the Board of Directors of the Company from taking and disclosing to
its shareholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act or from making any disclosure to the Company's
shareholders if the Board of Directors of the Company, after consultation with
independent legal counsel (who may be the Company's regularly engaged
independent counsel), determines reasonably and in good faith that the failure
to take such action would reasonably be expected to constitute a breach of the
fiduciary duty of the Board of Directors under applicable law; provided that
neither the Board of Directors of the Company nor any committee thereof
withdraws or modifies, or proposes to withdraw or modify, the approval or
recommendation of the Board of Directors of the Company of the Offer or the
Merger.
Section 6.2. Access to Information. Between the date of this Agreement and
the Effective Time, subject to applicable law and the Confidentiality and
Exclusivity Agreement dated August 4, 2003 (the "Confidentiality Agreement")
between Parent and the Company, the
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Company shall, and shall cause its subsidiaries to (a) afford to Parent and its
officers, directors, employees, accountants, consultants, legal counsel, agents
and other representatives reasonable access during normal business hours and at
all other reasonable times to the officers and certain employees, agents,
properties, offices and other facilities of the Company and its subsidiaries and
to their books and records (including all Tax Returns and all books and records
related to Taxes and such returns), (b) permit Parent to make such inspections
as it may reasonably require (and the Company shall cooperate with Parent in any
such inspections, including, without limitation, environmental due diligence),
and (c) furnish promptly to Parent and its representatives a copy of each
report, schedule, registration statement and other document filed by it during
such period pursuant to the requirements of federal or state securities laws and
such other information concerning the business, properties, contracts, records
and personnel of the Company and its subsidiaries (including financial,
operating and other data and information) in the possession of the Company or
the Company's counsel, accountants or other consultants or agents as may be
reasonably requested, from time to time, by or on behalf of Parent.
Section 6.3. Confidentiality Agreement. The parties agree that the
provisions of the Confidentiality Agreement shall remain binding and in full
force and effect in accordance with its terms, except that the ninth (9th)
paragraph thereof (regarding non-solicitation) is superseded by Section 6.1 of
this Agreement. The parties shall comply with, and shall cause their respective
representatives to comply with, all of their respective obligations under the
Confidentiality Agreement until the Effective Time, at which time the
Confidentiality Agreement shall terminate and be of no further force and effect.
Notwithstanding anything herein (or in the Confidentiality Agreement) to the
contrary, any party subject to confidentiality obligations hereunder or under
any related document (and any employee, representative or other agent of such
party) may disclose to any and all persons, without limitation of any kind, any
information with respect to the U.S. federal income tax treatment and U.S.
federal income tax structure of the transactions contemplated herein and all
materials of any kind (including opinions or other tax analyses) that are
provided to it relating to such tax treatment and tax structure. To the extent
not inconsistent with the immediately preceding sentence, this authorization
does not extend to disclosure of any other information, including without
limitation (a) the identities of participants or potential participants in this
transaction, (b) the existence or status of any negotiations, or (c) or any
other term or detail, or portion of any documents or other materials, not
related to the tax treatment or tax structure of the potential transaction.
Section 6.4. Commercially Reasonable Best Efforts. (a) Subject to the terms
and conditions herein (including Section 6.1), each of the parties hereto agrees
to use its commercially reasonable best efforts to take, or cause to be taken,
all appropriate action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective as soon as reasonably practicable the Transactions. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement, the Top-up Option Agreement and the
Tender and Option Agreement, the proper officers and directors of each party to
this Agreement shall take all such necessary action. Such commercially
reasonable best efforts shall apply to, without limitation, (i) the obtaining of
all necessary consents, approvals or waivers from third parties and Governmental
Entities necessary to the consummation of the Transactions and (ii) opposing
vigorously any litigation or administrative proceeding relating to this
Agreement and the Tender and Option Agreement or the transactions contemplated
hereby and thereby,
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including, without limitation, promptly appealing any adverse court or agency
order. Notwithstanding the foregoing or any other provisions contained in this
Agreement or the Tender and Option Agreement to the contrary, neither Parent nor
any of its affiliates shall be under any obligation of any kind to (i) enter
into any negotiations or to otherwise agree with or litigate against any
Governmental Entity, including but not limited to any governmental or regulatory
authority with jurisdiction over the enforcement of any applicable federal,
state, local and foreign antitrust, competition or other similar laws, or (ii)
otherwise agree with any Governmental Entity or any other party to sell or
otherwise dispose of, agree to any limitations on the ownership or control of,
or hold separate (through the establishment of a trust or otherwise) particular
assets or categories of assets or businesses of any of the Company, its
subsidiaries, Parent or any of Parent's affiliates. Parent and the Company
acknowledge and agree that the failure to obtain any consents under any of the
agreements listed in Section 3.7 of the Company Disclosure Schedule shall not
result in the failure to satisfy the condition set forth in clause (j) of Annex
A, except to the extent such agreements are marked with an asterisk (*) on
Section 3.7 of the Company Disclosure Schedule.
(b) The Company shall give and make all required and material
notices and reports to the appropriate persons with respect to the Permits and
Environmental Permits that may be necessary for the sale and purchase of the
business and the ownership, operation and use of the assets of Surviving
Corporation by Parent and Purchaser after the Effective Time. Subject to the
other terms of this Agreement, each of the Company, Parent and Purchaser shall
cooperate and use their respective commercially reasonable best efforts to make
all filings, to obtain all actions or nonactions, waivers, Permits and orders of
Governmental Entities necessary to consummate the Transactions and to take all
reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by, any Governmental Entity. Each of the parties
hereto will furnish to the other parties such necessary information and
reasonable assistance as such other parties may reasonably request in connection
with the foregoing.
(c) The Company and its Board of Directors shall (i) ensure that
no state takeover statute or similar statute, rule or regulation (including
Sections 2538 through 2588, inclusive, of the PBCL) is or becomes applicable to
the Offer, the Merger, this Agreement, the Tender and Option Agreement or any of
the other Transactions contemplated by the foregoing and (ii) if any state
takeover statute or similar statute, rule or regulation becomes applicable to
the Offer, the Merger, this Agreement, the Tender and Option Agreement or any
other Transactions, ensure that the Offer, the Merger and the other
Transactions, including the transactions contemplated by this Agreement and the
Tender and Option Agreement may be consummated as promptly as practicable on the
terms contemplated by this Agreement and the Tender and Option Agreement and
otherwise to minimize the effect of such statute or regulation on the Offer, the
Merger and the other Transactions, including the Transactions contemplated by
this Agreement, and the Tender and Option Agreement. Purchaser agrees to make
the Notice Filing.
Section 6.5. Indemnification of Directors and Officers.
(a) Parent and Purchaser agree that all rights to indemnification
for acts or omissions occurring prior to the Effective Time existing as of the
date hereof in favor of
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the current or former directors or officers of the Company and its subsidiaries
(including any director or officer of the Company or its subsidiaries acting in
their capacity as directors, officers, agents or trustees of any Benefit Plan
for employees of the Company and its subsidiaries) as provided in the Company
and/or, if greater, such subsidiaries' respective articles of incorporation or
bylaws shall survive the Merger and shall continue in full force and effect in
accordance with their terms for a period of six years from the Effective Time
(notwithstanding any subsequent amendment of the respective articles of
incorporation or bylaws, provided that any amendment shall explicitly retain
these rights for these persons). Parent shall cause to be purchased, promptly
following the Share Acquisition Date, an extension covering a period of six
years from the Effective Time for the Company's directors' and officers'
insurance and indemnification policy in effect on the date of this Agreement
(the "D&O Insurance"), so long as the aggregate premium to be paid by the
Company for such D&O Insurance extension would not exceed $168,750.
(b) If any claim or claims shall, subsequent to the Share
Acquisition Date and within six years after the Effective Time, be made in
writing against any present or former director or officer of the Company or its
subsidiaries based on or arising out of the services of such person prior to the
Effective Time in the capacity of such person as a director or officer of the
Company or its subsidiaries (and such director or officer shall have given
Parent written notice of such claim or claims within such six year period), the
provisions of Section 6.5(a) respecting the rights to indemnify the current or
former directors or officers under the articles of incorporation and bylaws of
the Company and/or its subsidiaries shall continue in effect until the final
disposition of all such claims.
(c) Notwithstanding anything to the contrary in this Section 6.5,
neither Parent nor the Surviving Corporation shall be liable for any settlement
effected without its written consent, which shall not be unreasonably withheld.
(d) In the event the Surviving Corporation or Parent or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger, or (ii) transfers all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision shall be made (whether by operation of law or otherwise if necessary)
so that the successors and assigns of Parent or the Surviving Corporation, as
the case may be, assume the obligations set forth in this Section 6.5.
Section 6.6. Event Notices and Other Actions. (a) From and after the date
of this Agreement until the Effective Time, the Company shall promptly notify
Parent and Purchaser of (i) the occurrence or nonoccurrence of any event, the
occurrence or nonoccurrence of which has resulted in, or could reasonably be
expected to result in, any condition to the Offer set forth in Annex A, or any
condition to the Merger set forth in Article VII, not being satisfied, (ii) the
Company's failure to comply with any covenant or agreement to be complied with
by it pursuant to this Agreement which has resulted in, or could reasonably be
expected to result in, any condition to the Offer set forth in Annex A, or any
condition to the Merger set forth in Article VII, not being satisfied and (iii)
any representation or warranty made by the Company contained in this Agreement
that is qualified as to materiality becoming untrue or inaccurate in any respect
or any such representation or warranty that is not so qualified as to
materiality becoming untrue
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or inaccurate in any material respect. The Company's delivery of any notice
pursuant to this Section 6.6(a) shall not cure any breach of any representation
or warranty of the Company contained in this Agreement or otherwise limit or
affect the remedies available hereunder to Parent or Purchaser.
(b) The Company shall not, and shall not permit any of its
subsidiaries to, take any action or nonaction that will, or that could
reasonably be expected to, result in (i) any of the representations and
warranties of the Company set forth in this Agreement that is qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
that is not so qualified becoming untrue in any material respect or (iii) except
as otherwise permitted by Section 6.1 and subject to Section 6.4(a), any
condition to the Offer set forth in Annex A, or any condition to the Merger set
forth in Article VII, not being satisfied.
Section 6.7. Third Party Standstill Agreements. During the period from the
date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any material provision of any confidentiality
or standstill or similar agreement to which the Company or any of its
subsidiaries is a party (other than any involving Parent or Purchaser). Subject
to the foregoing, during such period, the Company agrees to enforce and agrees
to permit (and, to the fullest extent permitted under applicable law, hereby
assigns its rights thereunder to Parent and Purchaser) Parent and Purchaser to
enforce on its behalf and as third party beneficiaries thereof, to the fullest
extent permitted under applicable law, the provisions of any such agreements,
including obtaining injunctions to prevent any breaches of such agreements and
to enforce specifically the terms and provisions thereof in any court or other
tribunal having jurisdiction. In addition, the Company hereby waives any rights
the Company may have under any standstill or similar agreements to object to the
transfer to Purchaser of all shares of Company Common Stock held by shareholders
covered by such standstill or similar agreements and hereby covenants not to
consent to the transfer of any shares of Company Common Stock held by such
shareholders to any other person unless (i) the Company has obtained the
specific, prior written consent of Parent with respect to any such transfer or
(ii) this Agreement has been terminated pursuant to Article VIII.
Section 6.8. Employee Stock Options; Employee Plans and Benefits and
Employment Contracts.
(a) Company Stock Option Plans. Simultaneously with the execution
of this Agreement, the Board of Directors of the Company (or, if appropriate,
any committee administering the Company Stock Option Plans) shall adopt such
resolutions or take such other actions as are required to effect the
transactions contemplated by Section 2.10 in respect of all outstanding Options
and thereafter the Board of Directors of the Company (or any such committee)
shall adopt any such additional resolutions and take such additional actions as
are required in furtherance of the foregoing.
(b) Payments in Respect of Options. Each Option vested and
exercisable immediately prior to the Effective Time and cancelled pursuant to
Section 2.10 shall, upon cancellation, be converted into the right to receive an
amount in cash equal to the product of (i) the number of shares of Company
Common Stock subject to such Option and (ii) the excess, if any, of the Merger
Consideration for Company Common Stock over the exercise price
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per share subject or related to such Option. All other Options shall be
cancelled without payment immediately prior to the Effective Time.
(c) Time of Payment. The amount described in subsection (b) shall
be paid by the Company immediately before the Effective Time.
(d) Taxes; Interest. All amounts payable pursuant to Section 2.10
and Section 6.8(b) and (c) shall be subject to any required withholding of taxes
and shall be paid without interest.
(e) Termination of Equity-Based Compensation. No further grants
of Options shall be made under the Company Stock Option Plan or otherwise by the
Company after the date of this Agreement, and the provision in any other Benefit
Plan providing for the potential issuance, transfer or grant of any capital
stock of the Company or any of its subsidiaries or any interest, or release of
restrictions in respect of any capital stock of the Company or any of its
subsidiaries shall be deleted, and the Company Stock Options Plan shall be
terminated, as of the Effective Time, and the Company shall ensure that
following the Effective Time no holder of an Option (whether or not outstanding
as of the Effective Time), restricted stock, derivative security, or any
participant in any other Benefit Plan shall have any right thereunder to acquire
any capital stock of the Company or any of its subsidiaries or the Surviving
Corporation. No participant in the Company Stock Option Plan or other holder of
Options shall be entitled to receive any other payment or benefit thereunder
except as provided in Section 2.10 and Section 6.8.
(f) No Right to Employment; Benefit Plans. Except as provided in
this Section 6.8(f), nothing contained in this Agreement shall confer upon any
employee of the Company, any ERISA Affiliate or any of the Company's
subsidiaries any right with respect to employment by Parent, the Purchaser or
any of the Parent's subsidiaries or the Surviving Corporation or any of its
ERISA Affiliates, nor shall anything herein interfere with the right of Parent,
the Purchaser or any of the Parent's subsidiaries, or the Surviving Corporation
or any of its ERISA Affiliates, to terminate the employment of any employee who
continues employment with the Surviving Corporation or any ERISA Affiliate after
the Effective Time ("Continuing Employee") at anytime, with or without cause, or
except as otherwise expressly provided in this Section 6.8 restrict Parent, the
Purchaser or any of the Parent's subsidiaries in the exercise of their
independent business judgment in modifying any other terms and conditions of the
employment of any Continuing Employee. No provision of this Agreement shall
create any third party beneficiary rights in any Continuing Employee, any
beneficiary or any dependent thereof with respect to the compensation, terms and
conditions of employment or benefits that may be provided to any Continuing
Employee by the Surviving Corporation or its ERISA Affiliates or under any
Benefit Plan which the Surviving Corporation or its ERISA Affiliates may
maintain or cause to be maintained with respect to such Continuing Employee.
Notwithstanding the forgoing, Parent agrees that following the Share Acquisition
Date (assuming Purchaser's designees under Section 1.4(a) constitute at least a
majority of the Board of Directors) it will use its commercially reasonable best
efforts to cause the Company and the Surviving Corporation to comply with the
applicable terms and provisions of the agreements listed on Section 6.8(f) of
the Company Disclosure Schedule if such agreements are then in effect. Nothing
herein shall require Parent or the Surviving Corporation to continue any
particular Benefit Plan, agreement,
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policy or arrangement or prevent the amendment or termination thereof; provided,
however, that subject to applicable law the Company's employees shall receive
full credit for prior years of service to the Company under, and shall not be
subject to any waiting periods under, any benefit plans which Parent or the
Surviving Corporation make available to Continuing Employees.
Section 6.9. Purchase of Shares. Except pursuant to the Offer, the Tender
and Option Agreement, or the Top-Up Agreement, neither Parent nor Purchaser nor
any subsidiary of Parent shall acquire beneficial ownership (within the meaning
of Rule 13d-3 under the Exchange Act) of any Company Common Stock without the
prior written consent of the Company.
Section 6.10. Meeting of the Company's Shareholders.
(a) To the extent required by applicable law, the Company shall
promptly after consummation of the Offer take all action necessary in accordance
with the PBCL and its Articles of Incorporation and Bylaws to convene a
Shareholder Meeting to consider and vote on the Merger and this Agreement. At
the Shareholder Meeting, all of the shares of Company Common Stock then owned by
Parent, Purchaser or any other subsidiary of Parent shall be voted to approve
the Merger and this Agreement. The Board of Directors of the Company shall
recommend that the Company's shareholders vote to approve the Merger and this
Agreement if such vote is sought, shall use its commercially reasonable best
efforts to solicit from shareholders of the Company proxies in favor of the
Merger and shall use its best efforts to take all other action in its judgment
necessary and appropriate to secure the vote of shareholders required by the
PBCL to effect the Merger.
(b) Parent and Purchaser shall not, and they shall cause their
subsidiaries not to, sell, transfer, assign, encumber or otherwise dispose of
the shares of Company Common Stock acquired pursuant to the Offer or otherwise
prior to the Shareholder Meeting; provided, however, that this Section 6.10(b)
shall not apply to the sale, transfer, assignment, encumbrance or other
disposition of any or all such shares of Company Common Stock in transactions
involving solely Parent, Purchaser and/or one or more of their wholly owned
subsidiaries. Parent and Purchaser shall, or shall cause their subsidiaries to,
vote any shares of Company Common Stock owned by them in favor of the Merger.
(c) Notwithstanding the foregoing, in the event that Purchaser
shall acquire at least 80% of the Company Common Stock, the parties hereto agree
to take all necessary and appropriate action to cause the Merger to become
effective, in accordance with Section 1924(b)(1)(ii) of the PBCL, as soon as
reasonably practicable after such acquisition, without a meeting of the
shareholders of the Company.
Section 6.11. Proxy Statement. If required under applicable law, the
Company and Parent shall prepare the Proxy Statement, file it with the SEC under
the Exchange Act as promptly as practicable after Purchaser purchases Company
Common Stock pursuant to the Offer, and use all reasonable efforts to have it
cleared by the SEC. As promptly as practicable after the Proxy Statement has
been cleared by the SEC, the Company shall mail the Proxy Statement to the
shareholders of the Company as of the record date for the Shareholder Meeting.
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Section 6.12. Public Announcements. Parent and the Company will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Offer, the Merger or the other Transactions and
shall not issue any such press release or make any such public statement without
the prior consent of the other party, except as the disclosing party reasonably
believes may be required by law or by obligations pursuant to any listing
agreement with any exchanges or the National Association of Securities Dealers,
Inc., in which case Parent or Company, as the case may be, will use its
reasonable efforts to provide the other party with reasonable time to promptly
comment on such release or statement in advance of its issuance. The parties
agree that they will file a current report on Form 8-K announcing the execution
of this Agreement and attaching copies of this Agreement and the jointly
approved press release.
Section 6.13. Shareholder Litigation. The Company shall give Parent the
opportunity to participate in the defense or settlement of any shareholder
litigation against the Company and its directors relating to any of the
Transactions until the purchase of shares of Company Common Stock pursuant to
the Offer, and thereafter, shall give Parent the opportunity to direct the
defense of such litigation and, if Parent so chooses to direct such litigation,
Parent shall give the Company and its directors an opportunity to participate in
such litigation; provided, however, that no such settlement shall be agreed to
without Parent's or the Company's consent, which consent shall not be
unreasonably withheld; and provided further that no settlement requiring a
payment by a director shall be agreed to without such director's consent.
Section 6.14. FIRPTA. The Company shall deliver to Purchaser prior to the
expiration of the Offer a certified statement, prepared in accordance with
Treasury Regulation Section 1.1445-2(c), that the shares of Company Common Stock
are not "United States real property interests" within the meaning of Section
897 of the Code.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1. Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of the
following conditions:
(a) if required by the PBCL, this Agreement shall have been
approved by the requisite affirmative vote of the shareholders of the Company in
accordance with applicable law;
(b) no statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated, or enforced by any
court or Governmental Entity which is in effect and has the effect of
prohibiting the consummation of the Merger; and
(c) (x) in the case of the Company's obligations, all
governmental consents, orders and approvals legally required for the
consummation of the Merger and the transactions contemplated hereby shall have
been obtained and be in effect at the Effective Time, except where the failure
to obtain any such consent would not reasonably be expected to subject
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any officer, director, employee or shareholder of the Company to civil or
criminal liability in respect of the failure to obtain such consent, and (y) in
the case of Parent's and Purchaser's obligations, (A) all governmental consents,
orders and approvals legally required for the consummation of the Merger and the
transactions contemplated hereby shall have been obtained and be in effect at
the Effective Time, and (B) there shall not be threatened or pending any suit,
action, or proceeding by any Governmental Entity, or by any other person which
has a reasonable possibility of success, with respect to this Agreement or the
Transactions, except where the failure to obtain any such consent or the
existence of any such suit, action or proceeding would not reasonably be
expected to (i) have a Material Adverse Effect on the Company or Parent, (ii)
materially impede or limit the ownership, operation or use of any of the
Company's or any of its subsidiaries' assets or business after the Closing, or
to compel the Company or Parent or any of their respective subsidiaries or
affiliates to dispose of or hold separate any of their businesses or assets as a
result of the Offer, the Merger or any of the Transactions, (iii) impose
material limitations on the ability of Parent or Purchaser to acquire or hold,
or exercise full rights of ownership of, any shares of Company Common Stock
accepted for payment pursuant to the Offer including, without limitation, the
right to vote the shares of Company Common Stock accepted for payment by it on
all matters properly presented to the shareholders of the Company, (iv) prohibit
Parent or any of its subsidiaries or affiliates from effectively controlling the
businesses of the Company and its subsidiaries in any material respect, or (v)
require divestiture by Purchaser or any of its affiliates of any shares of
Company Common Stock; provided, however, that Parent shall be deemed to have
waived this condition with respect to any failure to obtain or be in effect any
such consent, order or approval or the existence of any such suit, action or
proceeding, which failure or existence existed prior to the acceptance for
payment by Purchaser of shares of Company Common Stock pursuant to the Offer.
Section 7.2. Conditions to Obligations of Parent and Purchaser to Effect
the Merger. The obligations of Parent and Purchaser to effect the Merger are
further subject to the satisfaction or waiver pursuant to Section 1.1, prior to
the Effective Time, of the condition that the Purchaser shall have accepted for
payment and paid for shares of Company Common Stock tendered pursuant to the
Offer.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.1. Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time (notwithstanding approval
thereof by the shareholders of the Company) prior to the Effective Time:
(a) by mutual written consent duly authorized by the Boards of
Directors of the Company, Parent and Purchaser;
(b) by Parent, Purchaser or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued a final order,
decree or ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the consummation of the Offer or the Merger and such
order, decree or ruling or other action is or shall have become nonappealable;
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(c) by Parent or Purchaser, if due to an occurrence or
circumstance (except where Parent's or Purchaser's breach of any of their
respective obligations under this Agreement is the cause of or directly resulted
in such occurrence or circumstance) which would result in the occurrence and
continued existence of any of the conditions set forth in Annex A hereto,
Purchaser shall have (i) failed to commence the Offer in accordance with Section
1.1 hereof, (ii) terminated the Offer without purchasing any shares of Company
Common Stock pursuant to the Offer or (iii) failed to accept for payment shares
of Company Common Stock pursuant to the Offer prior to January 31, 2004;
(d) by the Company if there shall not have been and be continuing
a material breach of any representation, warranty, covenant or agreement on the
part of the Company, and Purchaser shall have (A) failed to commence the Offer
in violation of Section 1.1 hereof, (B) terminated the Offer without purchasing
all the shares of Company Common Stock validly tendered and not withdrawn
pursuant to the Offer, or (C) failed to accept for payment shares of Company
Common Stock pursuant to the Offer prior to January 31, 2004;
(e) by Parent or Purchaser prior to the purchase of shares of
Company Common Stock pursuant to the Offer, if (i) (x) any representations and
warranties of the Company contained in this Agreement which are qualified by
materiality shall not be true and correct at any time prior to the acceptance
for payment of shares of Company Common Stock pursuant to the Offer (without
regard to any knowledge qualifications therein), (y) the representations and
warranties of the Company contained in this Agreement which are not qualified by
materiality shall not be true and correct in any material respect at any time
prior to the acceptance for payment of shares of Company Common Stock pursuant
to the Offer (without regard to any knowledge qualifications therein) or (z) the
representations and warranties of the Company in the Agreement shall not be true
and correct at any time prior to the acceptance for payment of shares of Company
Common Stock pursuant to the Offer (determined without regard to any materiality
or knowledge qualifications therein) except to the extent any failures of the
representations or warranties to be true and correct in the aggregate could not
reasonably be expected to have a Material Adverse Effect on the Company (other
than to the extent such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties shall not be
true and correct as of such date), or (ii) the Company shall not have performed
and complied with, in all material respects (without reference to any
materiality qualifications therein), each covenant or agreement contained in the
Agreement and required to be performed or complied with by it, and which breach,
in the case of clause (i) and (ii) above, shall not have been cured prior to the
earlier of (A) 10 business days following notice of such breach to the Company
by Parent or Purchaser and (B) January 31, 2004; provided, however, that the
Company shall have no right to cure and Parent and Purchaser may immediately
terminate this Agreement in the event that such breach by the Company was
willful, in the event of a material breach of Section 6.1 (whether or not
willful), or in the event that such breach is not reasonably capable of being
cured within such period of time or (iii) the Board of Directors of the Company
or any committee thereof shall have withdrawn, or modified, amended or changed
(including by amendment of the Schedule 14D-9) in a manner adverse to Parent or
Purchaser its approval or recommendation of the Offer, the Merger, any of the
Transactions or this Agreement, or shall have approved or recommended to the
Company's shareholders an Acquisition Proposal or any other acquisition of
shares of Company Common Stock other than the Offer and the Merger, or shall
have adopted any resolutions to effect any of the foregoing or
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(iv) the Board of Directors of the Company shall have failed to publicly
reaffirm their approval or recommendation of the Offer, the Merger, the
Transactions or this Agreement within two business days following Parent's or
Purchaser's written request to do so;
(f) by the Company prior to the purchase of any shares of Company
Common Stock pursuant to the Offer if (i) there shall have been a material
breach of any representation or warranty in this Agreement on the part of Parent
or Purchaser which materially adversely affects (or materially delays) the
consummation of the Offer or the Merger or (ii) Parent or Purchaser shall not
have performed or complied with, in all material respects (without reference to
any materiality qualifications therein), each covenant or agreement contained in
this Agreement and required to be performed or complied with by them, and such
breach materially adversely affects the Company, its shareholders generally or
its employees generally or which materially adversely affects (or materially
delays) the consummation of the Offer or the Merger, and which breach, in the
case of both clause (i) and clause (ii) above, shall not have been cured prior
to the earlier of (A) 10 business days following notice of such breach to Parent
and Purchaser by the Company and (B) January 31, 2004; provided, however, that
Parent and Purchaser shall have no right to cure such breach and the Company may
immediately terminate this Agreement in the event that such breach by Parent or
Purchaser was willful or in the event such breach is not reasonably capable of
being cured within such period of time;
(g) by Parent or Purchaser prior to the purchase of shares of
Company Common Stock pursuant to the Offer if any person or group (which
includes a "person" or "group" as such terms are defined in Section 13(d)(3) of
the Exchange Act) other than Parent, Purchaser, any of their affiliates, or any
group of which any of them is a member, shall have acquired beneficial ownership
of more than 20% of the outstanding shares of Company Common Stock or shall have
consummated or entered into a definitive agreement or an agreement in principle
with the Company or any of its subsidiaries to consummate an Acquisition
Proposal or if any person or group which, prior to the date of this Agreement,
had a Schedule 13D or 13G on file with the SEC shall have acquired beneficial
ownership of additional shares of any class or series of capital stock of the
Company, through the acquisition of stock, the formation of a group or
otherwise, which together with the shares of capital stock of the Company
previously beneficially owned by such person or group, constitutes 20% or more
of any such class or series, or shall have been granted any option, right or
warrant, conditional or otherwise, to acquire beneficial ownership of additional
shares of any class or series of capital stock of the Company (including the
Company Common Stock) which together with the shares of capital stock of the
Company previously beneficially owned by such person or group, constitutes 20%
or more of any such class or series (it being understood that the execution of
the Tender and Option Agreement by the Company shareholders that are parties
thereto and the performance of their obligations thereunder shall not, in
itself, be deemed to constitute such an acquisition of beneficial ownership
triggering this provision);
(h) by Parent or Purchaser if the Company or any shareholder
party to the Tender and Option Agreement shall have breached in any material
respect any of its or their obligations under the Tender and Option Agreement
and such breach shall not have been cured, provided that there shall be no right
to cure in respect of breaches that are not reasonably capable of cure;
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(i) by Parent or Purchaser due to the occurrence of (x) any of
the events or circumstances specified in subsection (c) of Annex A which, to the
extent curable, is not cured within 60 days, (y) any of the events or
circumstances specified in subsection (d) of Annex A which, to the extent
curable, is not cured within 30 days if involving a Governmental Entity or 60
days if not involving a Governmental Entity or (z) any of the events or
circumstances specified in subsection (e) of Annex A which, to the extent
curable, is not cured within 30 days;
(j) by the Company prior to the purchase of any shares of Company
Common Stock pursuant to the Offer and not earlier than 5 business days after
the Company gives Parent prior written notice if (i) after the date hereof the
Board of Directors of the Company shall receive an unsolicited bona fide
Acquisition Proposal and the Board of Directors determines reasonably and in
good faith (after receiving a fairness opinion of B&S or another financial
advisor of nationally recognized standing with respect to the Acquisition
Proposal) that the Acquisition Proposal is a Superior Proposal (after
considering any changes made to Parent's Offer within the 5 business day notice
period); provided, that such Superior Proposal was not solicited by the Company
after the date hereof and did not otherwise result from a breach of Section 6.1;
provided, further, that the Company's ability to terminate this Agreement
pursuant to this (j) is conditioned upon the payment by the Company to Parent of
any amounts owed by it pursuant to Section 8.3(b) and 8.3(c); or
(k) by Parent, Purchaser or the Company if the Share Acquisition
Date shall not have occurred by March 31, 2004.
Section 8.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1, this Agreement, except
for the provisions of Sections 6.3, 8.2, 8.3, 9.3, 9.4 and 9.7 and the last
sentence of Section 1.3, shall forthwith become void and have no effect, without
any liability on the part of any party or its affiliates, directors, officers or
shareholders except as provided in Sections 8.3 and 9.3 of this Agreement.
Notwithstanding anything herein to the contrary, to the extent the Company then
owes Parent a Termination Fee (as defined herein) pursuant to the provisions of
Section 8.3 hereof at the time of such termination, termination by the Company
pursuant to Section 8.1 shall not be effective unless prior to or simultaneously
therewith such Termination Fee is paid to the Parent.
Section 8.3. Expenses; Termination Fee.
(a) Except as provided in Section 8.3(b) and 8.3 (c) of this
Agreement, all fees and expenses incurred by the parties hereto shall be borne
solely and entirely by the party which has incurred such fees and expenses.
(b) If:
(i) (x) Parent or Purchaser terminates this Agreement
pursuant to Section 8.1(c), 8.1(i) or 8.1(k), or the Company terminates this
Agreement pursuant to Section 8.1(d), in either case, in circumstances when,
prior to such termination any third party shall have acquired beneficial
ownership of 20% or more of the outstanding shares of Company Common Stock (or
any person or group with a Schedule 13D or 13G on file with the SEC (including
the
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shareholders party to the Tender and Option Agreement except as expressly
permitted in that agreement) shall have acquired beneficial ownership of
additional shares of any class or series of capital stock of the Company
(including Company Common Stock), through the acquisition of stock, the
formation of a group or otherwise, which together with the shares of capital
stock of the Company previously beneficially owned by such person or group,
constitutes 20% or more of any such class or series, or shall have been granted
any option, right or warrant, conditional or otherwise, to acquire beneficial
ownership of additional shares of any class or series of capital stock of the
Company (including the Company Common Stock) which together with the shares of
capital stock of the Company previously beneficially owned by such person or
group, constitutes 20% or more of any such class or series (it being understood
that the execution of the Tender and Option Agreement by the Company
shareholders that are parties thereto and the performance of their obligations
thereunder shall not, in itself, be deemed to constitute such an acquisition of
beneficial ownership triggering this provision)) or shall have made or
consummated or announced an intention to make or consummate an Acquisition
Proposal (or with respect to any proposal that may be existing on the date
hereof, not withdrawn such Acquisition Proposal) or (y) Parent or Purchaser
terminates this Agreement pursuant to Section 8.1(g), and, in any such case
described in clauses (x) or (y) in this Section 8.3(b)(i), within 12 months
after such termination the Company or any of its subsidiaries enters into or
publicly announces an intention to enter into a definitive agreement with
respect to an Acquisition Proposal, or consummates or publicly announces an
intention to consummate an Acquisition Proposal;
(ii) Parent or Purchaser terminates this Agreement pursuant
to (x) clauses (i) or (ii) of Section 8.1(e) as a result of a willful and
material breach of this Agreement by the Company or any material breach of
Section 6.1 (whether or not willful), (y) clauses (iii) or (iv) of Section
8.1(e) or (z) Section 8.1(h);
(iii) the Company terminates this Agreement pursuant to
Section 8.1(f) in circumstances when Parent or Purchaser shall also have the
right to terminate this Agreement pursuant to the circumstances described in
Section 8.3(b)(i) or 8.3(b)(ii); or
(iv) the Company terminates this Agreement pursuant to
Section 8.1(j)
then, in each case, the Company shall pay to Parent, within two business days
following the execution and delivery of such agreement or such occurrence, as
the case may be, or prior to or simultaneously with such termination by the
Company as contemplated by 8.3(b)(i), (b)(iii) or (b)(iv), a fee, in cash, of
$1.1 million (a "Termination Fee"); provided, that the Company in no event shall
be obligated to pay more than one such Termination Fee with respect to all such
agreements and occurrences and such termination. Any payment required to be made
pursuant to this subsection (b) shall be made to Parent by wire transfer of
immediately available funds to an account designated by Parent. The provisions
of this Section 8.3 shall not derogate from any other rights or remedies which
Parent or Purchaser may possess under this Agreement (including as provided in
Section 9.3) or under applicable law, and the payment of the Termination Fee
shall not be deemed to constitute liquidated damages.
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(c) Subject to and without limiting the rights set forth in
Section 9.3, if a party breaches this Agreement and such breach is not a
material and willful breach by the breaching party or a material breach by the
Company of Section 6.1 of this Agreement whether or not such breach is willful,
the breaching party shall not be liable in any amount in excess of the
non-breaching party's reasonable costs and expenses incurred in connection with
the negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby, including all fees and expenses of counsel,
accountants, investment bankers, printers, experts and consultants to the
non-breaching party and its affiliates (collectively, the "Expenses"), except to
the extent that a Termination Fee is payable pursuant to Section 8.3(b) (which
shall be payable in addition to any amount owing under this Section 8.3(c));
provided, however, that in no event shall Expenses payable pursuant to this
Section 8.3(c) under any circumstances by any party exceed $500,000 in the
aggregate.
Section 8.4. Amendment. To the extent permitted by applicable law, this
Agreement may be amended by action taken by or on behalf of the Boards of
Directors of the Company, Parent and Purchaser (in accordance with the
provisions of Section 1.4(c)) at any time before or after approval of this
Agreement by the shareholders of the Company but, after any such shareholder
approval, no amendment shall be made that by law requires the further approval
of such shareholders without the approval of such shareholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of all
the parties.
Section 8.5. Extension; Waiver. At any time prior to the Effective Time and
subject to the provisions of Section 1.4(c), a party may (a) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties of the
other parties contained herein or in any documents, certificate or writing
delivered pursuant hereto, and (c) waive compliance with any of the agreements
or conditions of the other parties hereto contained herein; provided that after
the approval of the Merger by the shareholders of the Company, no extensions or
waivers shall be made that by law require further approval by such shareholders
without the approval of such shareholders. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Non-Survival of Representations and Warranties. None of the
representations and warranties made in this Agreement shall survive after the
Effective Time. This Section 9.1 shall not limit any covenant or agreement of
the parties hereto which by its terms contemplates performance after the
Effective Time. Notwithstanding anything to the contrary contained in this
Agreement, (i) to the extent Purchaser acquires shares of Company Common Stock
on the Share Acquisition Date in an amount equal to or greater than the amount
required by the Minimum Condition as in effect on the date of this Agreement or
(ii) to the extent after the Share Acquisition Date the Parent or Purchaser, or
any director of the Company appointed by Parent after the Share Acquisition Date
(or any officer of the Company appointed after the Share Acquisition Date by the
Board assuming Purchaser's designees constitute at least a majority of the Board
of Directors), consents to or instructs the Company to take the action in
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question, the Company shall not be deemed to be in breach of any
representations, warranties or covenants contained in this Agreement due to
actions so taken by the Company after the Share Acquisition Date.
Section 9.2. Entire Agreement; Assignment. This Agreement (including the
Company Disclosure Schedule), the Tender and Option Agreement, the Top-up Option
Agreement and, to the extent contemplated in Section 6.3, the Confidentiality
Agreement, (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof and (b) shall not be assigned by operation
of law or otherwise, provided that Parent or Purchaser may assign any of their
rights and obligations to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent or Purchaser of its
obligations hereunder. Any of Parent, Purchaser or any direct or indirect wholly
owned subsidiary of Parent may purchase shares of Company Common Stock under the
Offer. Any attempted assignment in violation of this Section 9.2 shall be void.
Subject to the preceding sentences, this Agreement will be binding upon, inure
to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
Section 9.3. Enforcement of the Agreement. The Company agrees that
irreparable damage could occur to Parent and Purchaser in the event that any of
the provisions of this Agreement were not performed by the Company in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that Parent and Purchaser shall be entitled to seek an injunction or injunctions
to prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which they are
entitled at law or in equity including those set forth in Section 8.3 of this
Agreement. The Company further agrees to waive any requirement for the securing
or posting of any bond in connection with obtaining any such injunction or other
equitable relief.
Section 9.4. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance of
the Transactions is not affected in any manner materially adverse to any party.
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the Transactions
contemplated hereby are fulfilled to the extent possible. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.
Section 9.5. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given upon receipt if
delivered personally, mailed by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
or sent by electronic transmission to the facsimile number specified below (or
at such other address or facsimile number of a party as shall be specified by
like notice):
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if to Parent or Purchaser:
Euramax International, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Dechert LLP
0000 Xxxx Xxxxxxxx Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxxx
Facsimile: 000-000-0000
if to the Company:
Xxxxxx Holdings, Ltd.
000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: President
Facsimile: 000-000-0000
with a copy to:
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: 000-000-0000
Notice given by facsimile shall be deemed received on the day the sender
receives facsimile confirmation that such notice was received at the facsimile
number of the addressee. Notice given by mail as set out above shall be deemed
received three days after the date the same is postmarked.
Section 9.6. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right.
Section 9.7. Governing Law; Consent to Jurisdiction. This Agreement shall
be governed by and construed in accordance with the substantive laws of the
Commonwealth of
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Pennsylvania regardless of the laws that might otherwise govern under principles
of conflicts of laws applicable thereto. In addition, the Company, Parent and
Purchaser hereby (i) consent to submit to the exclusive jurisdiction of the
United States District Court for the Eastern District of Pennsylvania and, in
the absence of Federal jurisdiction, to the exclusive jurisdiction of the state
courts located in Philadelphia County in the event any dispute arises out of
this Agreement or any of the Transactions, (ii) agree not to attempt to deny or
defeat such jurisdiction by motion or other request for leave from any such
court, (iii) subject to the terms of the Tender and Option Agreement, agree not
to bring any action relating to this Agreement or any of the Transactions in any
court other than the United States District Court for the Eastern District of
Pennsylvania and, in the absence of Federal jurisdiction, the state courts
located in Philadelphia County and (iv) waive any right to trial by jury with
respect to any claim or proceeding related to or arising out of this Agreement
or any of the Transactions. In furtherance of the foregoing, the Company, Parent
and Purchaser hereby irrevocably and unconditionally waive any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the Transactions in the courts of the United States District Court for the
Eastern District of Pennsylvania and, in the absence of Federal jurisdiction,
the state courts located in Philadelphia County, and hereby further irrevocably
and unconditionally waive and agree not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
Section 9.8. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 9.9. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement (except
as set forth in Section 6.5 hereof which is intended to and shall create third
party beneficiary rights if the Offer and the Merger are consummated).
Section 9.10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 9.11. Certain Definitions. For purposes of this Agreement
(including Annex A hereto), the following terms shall have the meanings ascribed
to them below:
(a) "affiliate" of a person shall mean (i) a person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first-mentioned person and (ii) an
"associate", as that term is defined in Rule 12b-2 promulgated under the
Exchange Act as in effect on the date of this Agreement.
(b) "beneficial owner" (including the term "beneficially own" or
correlative terms) shall have the meaning ascribed to such term under Rule
13d-3(a) under the Exchange Act.
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(c) "business day" shall have the meaning ascribed to such term
under Rule 14d-1 of the Exchange Act.
(d) "Company Disclosure Schedule" shall mean a letter dated the
date of the Agreement delivered by the Company to Parent and Purchaser
concurrently with the execution of the Agreement, which, among other things,
shall identify exceptions to the Company's representations and warranties
contained in Article III and covenants contained in Article V by specific
section and subsection references.
(e) "control" (including the terms "controlling," "controlled by"
and "under common control with" or correlative terms) shall mean the possession,
directly or indirectly or as trustee or executor, of the power to direct or
cause the direction of the management and policies of a person, whether through
ownership of voting securities or as trustee or executor, by contract or credit
arrangement, or otherwise.
(f) "Fully Diluted Shares" means all outstanding shares of
Company Common Stock on a fully diluted basis, after giving effect to the
exercise and conversion of all outstanding options, warrants and securities
exercisable or convertible into Company Common Stock (but excluding any Options
for which under the Tender and Option Agreement Parent has a valid Purchase
Option (as defined in the Tender and Option Agreement) which has not been
disputed or disavowed by the holder of such Options; provided, that the Options
are not deemed exercisable if their ability to be exercised is suspended until
termination of the Merger Agreement or consummation of the Merger); provided
further, that Parent may, at its option exercisable in its sole discretion,
exclude at any time from the above calculation any or all other Options.
(g) "group" shall have the meaning ascribed to such term under
Rule 13d-3(a) under the Exchange Act.
(h) "Material Adverse Effect" shall mean (i) any adverse change
or effect in the condition (financial or otherwise), assets (including
intangible assets), liabilities, business, properties, or results of operations
of a specified person or its subsidiaries, which change or effect is material,
individually or in the aggregate with any other changes or effects, to the
specified person and its subsidiaries taken as a whole, or (ii) any event,
matter, condition or effect which materially impairs the ability of a specified
person to perform on a timely basis its obligations under this Agreement, the
Tender and Option Agreement, or the consummation of the Transactions; provided
that in no event shall any of the following, alone or in combination, be deemed
to constitute, nor shall any of the following be taken into account in
determining whether there has been or will be, a Material Adverse Effect on the
Company: (a) any change in the Company's stock price or trading volume, in and
of itself (but not any change or effect underlying such decrease to the extent
such change or effect would otherwise constitute a Material Adverse Effect on
the Company); or (b) any change, event, circumstance or effect that results from
changes affecting the United States economy or the Company's industry generally,
which change, event, circumstance or effect does not disproportionately affect
the Company in any material respect. For purposes of analyzing whether any
change, effect, event, matter or condition constitutes a "Material Adverse
Effect" under this definition, the parties agree that (A) materiality shall be
analyzed from the viewpoint of whether there is a reasonable likelihood that
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the disclosure of such change, effect, event, matter or condition could be
reasonably viewed as having altered the total mix of information if the total
mix of information had consisted solely of the representations and warranties of
the Company contained in this Agreement, (B) the analysis of materiality shall
not be limited to the viewpoint of a long-term investor, and (C) the words of
the definition of "Material Adverse Effect" are intended to be read literally
without any regard to the holding or reasoning of IBP, Inc. x. Xxxxx Foods,
Inc., No. 18373, 2001 Del. Ch. LEXIS 81 (Del. Ch. June 18, 2001).
(i) "person" shall mean a natural person, company, corporation,
partnership, association, trust or any unincorporated organization.
(j) "subsidiary" shall mean, when used with reference to a
person, any corporation or other business entity of which such person directly
or indirectly owns (i) the majority of the outstanding voting securities or (ii)
voting securities or equity interests which give such person the power to elect
a majority of the board of directors or similar governing body of such entity.
Section 9.12. Interpretation. (a) The words "hereof," "herein" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without limitation." All terms defined in
this Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms. Any agreement,
instrument, statute or rule defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument, statute
or rule as from time to time amended, modified or supplemented, including (in
the case of agreements and instruments) by waiver or consent and (in the case of
statutes and rules) by succession of comparable successor statutes and rules and
all attachments thereto and instruments incorporated therein. References to a
person are also to its permitted successors and assigns.
(b) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, on the day
and year first above written.
EURAMAX INTERNATIONAL, INC.
By: /s/ J. Xxxxx Xxxxx
------------------------------------
Name: J. Xxxxx Xxxxx
Title: President
AMERIMAX PENNSYLVANIA, INC.
By: /s/ J. Xxxxx Xxxxx
------------------------------------
Name: J. Xxxxx Xxxxx
Title: President
XXXXXX HOLDINGS, LTD.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
-61-
ANNEX A
to
Agreement and Plan of Merger
Conditions to the Offer. Notwithstanding any other provision of the
Offer or the Merger Agreement, in addition to (and not in limitation of)
Purchaser's rights pursuant to the Agreement to extend and amend the Offer in
accordance with the Merger Agreement, Purchaser shall not be required to accept
for payment or, subject to Rule 14e-1(c) of the Exchange Act, pay for and may
delay the acceptance for payment of or, subject to Rule 14e-1(c) of the Exchange
Act, the payment for, any shares of Company Common Stock not theretofore
accepted for payment or paid for, and Purchaser may terminate or amend the Offer
(subject to Section 1.1 of the Merger Agreement) if in the sole judgment of
Purchaser (i) a number of shares of Company Common Stock representing at least
80% of the Fully Diluted Shares shall not have been validly tendered and not
withdrawn immediately prior to the expiration of the Offer or otherwise acquired
by Parent or any of its affiliates prior to the expiration of the Offer (the
"Minimum Condition") or (ii) at any time on or after the date of the Merger
Agreement and prior to the time of acceptance of such shares of Common Stock for
payment or the payment therefor, any of the following conditions has occurred
and continues to exist:
(a) (x) any representations and warranties of the Company in the
Agreement which are qualified by materiality shall not be true and correct
(determined without regard to any knowledge qualifications therein) as of such
time, (y) the representations and warranties of the Company in the Agreement
which are not qualified by materiality shall not be true and correct (determined
without regard to any knowledge qualifications therein) in any material respect,
as of such time or (z) the representations and warranties of the Company in the
Agreement shall not be true and correct (determined without regard to any
materiality or knowledge qualifications therein), as of such time, except to the
extent the failure of any representations or warranties to be true and correct
in the aggregate could not reasonably be expected to have a Material Adverse
Effect on the Company, (other than to the extent such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall not be true and correct as of such date)
and which breach or breaches shall not have been cured prior to the earlier of
(i) 10 business days following notice of such breach and (ii) January 31, 2004;
provided, however, that the Company shall have no right to cure such breach in
the event that such breach by the Company was willful or in the event such
breach is not reasonably capable of being cured within such period of time;
(b) the Company shall not have performed and complied with, in all
material respects (without reference to any materiality qualifications therein),
each covenant or agreement contained in the Agreement and required to be
performed or complied with by it and which breach shall not have been cured
prior to the earlier of (i) 10 business days following notice of such breach and
(ii) January 31, 2004; provided, however, that the Company shall have no right
to cure such breach in the event that such breach by the Company was willful, if
such breach involves a material breach of Section 6.1 of the Agreement (whether
or not such breach was willful) or in the event such breach is not reasonably
capable of being cured within such period of time;
(c) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange (excluding any coordinated trading halt triggered as a
result of a specified decrease in a market index), (ii) any material adverse
change in the financial markets in the United States, (iii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States by any Governmental Entity, (iv) any mandatory limitation, by any
Governmental Entity on, or other event that materially affects, the extension of
credit by banks or other lending institutions, (v) a commencement of a war,
armed hostilities or other national or international calamity directly or
indirectly involving the United States which could reasonably be expected to
have a Material Adverse Effect on the Company or materially adversely affect or
delay the consummation of the Offer, (vi) in the case of any of the foregoing
existing on the date of the Agreement, a material acceleration or worsening
thereof, or (vii) a decline in the Standard & Poor's Index of 500 Industrial
Companies by an amount in excess of 25%, measured from the close of business on
the date of the Merger Agreement;
(d) there shall be threatened or pending any suit, action, or
proceeding by any Governmental Entity, or there shall be pending any suit,
action or proceeding by any other person which has a reasonable possibility of
success, (i) challenging the acquisition by Parent or Purchaser of the shares of
Company Common Stock, seeking to make illegal, materially delay, make materially
more costly or otherwise directly or indirectly restrain or prohibit the making
or consummation of the Offer and the Merger or the performance of any of the
other Transactions or seeking to obtain from the Company, Parent or Purchaser
any damages that are material in relation to the Company and its subsidiaries
taken as whole, (ii) seeking to prohibit or materially limit the ownership or
operation by the Company, Parent or any of their respective subsidiaries or
affiliates of any of the businesses or assets of the Company, Parent or any of
their respective subsidiaries or affiliates, or to compel the Company, Parent or
any of their respective subsidiaries or affiliates to dispose of or hold
separate any of the material businesses or assets of the Company, Parent or any
of their respective subsidiaries or affiliates, as a result of the Offer, the
Merger or any of the other Transactions, (iii) seeking to impose material
limitations on the ability of Parent or Purchaser to acquire or hold, or
exercise full rights of ownership of, any shares of Company Common Stock
accepted for payment pursuant to the Offer including, without limitation, the
right to vote the shares of Company Common Stock accepted for payment by it on
all matters properly presented to the shareholders of the Company, (iv) seeking
to prohibit Parent or any of its subsidiaries or affiliates from effectively
controlling in any material respect the business or operations of the Company or
its subsidiaries, (v) requiring divestiture by Purchaser or any of its
affiliates of any shares of Company Common Stock or (vi) which otherwise could
reasonably be expected to have a Material Adverse Effect on the Company or
Parent;
(e) there shall be any statute, rule, regulation, judgment, order or
injunction (including with respect to competition or antitrust matters) enacted,
entered, enforced, promulgated or issued, or any statute, rule or regulation
which has been proposed by the relevant legislative or regulatory body and is
reasonably likely to be enacted, with respect to or deemed applicable to, or any
material consent or approval withheld or any other action shall be taken with
respect to (i) Parent, the Company or any of their respective subsidiaries or
affiliates or (ii) the Offer or the Merger or any of the other Transactions by
any Governmental Entity or court, that has resulted or could reasonably be
expected to result, directly or indirectly, in any of the consequences referred
to in clauses (i) though (vi) of paragraph (d) above;
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(f) (i) the Board of Directors of the Company or any other committee
thereof shall have (A) withdrawn, or modified, amended or changed (including by
amendment of the Schedule 14D-9) in a manner materially adverse to Parent or
Purchaser; its approval or recommendation of the Offer, the Merger Agreement and
the Merger or any of the other Transactions, (B) approved or recommended to the
Company's shareholders an Acquisition Proposal or any other acquisition of
shares of Company Common Stock other than the Offer and the Merger, or (C)
adopted any resolution to effect any of the foregoing, or (ii) the Board of
Directors of the Company shall have failed to publicly reaffirm their approval
or recommendation of the Offer, the Merger, the Transactions or this Agreement
within two business days following Parent's or Purchaser's written request to do
so;
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
(h) any person or group (which includes a "person" or "group" as such
terms are defined in Section 13(d)(3) of the Exchange Act) other than Parent,
Purchaser, any of their affiliates, or any group of which any of them is a
member, shall have acquired beneficial ownership of more than 20% of the
outstanding shares of Company Common Stock or shall have consummated or entered
into a definitive agreement or an agreement in principle with the Company or any
of its subsidiaries to consummate an Acquisition Proposal or if any person or
group which, prior to the date of the Merger Agreement, had a Schedule 13D or
13G on file with the SEC shall have acquired beneficial ownership of additional
shares of any class or series of capital stock of the Company, through the
acquisition of stock, the formation of a group or otherwise, which together with
the shares of capital stock of the Company previously beneficially owned by such
person or group, constitutes 20% or more of any such class or series, or shall
have been granted any option, right or warrant, conditional or otherwise, to
acquire beneficial ownership of additional shares of any class or series of
capital stock of the Company (including the Company Common Stock) which together
with the shares of capital stock of the Company previously beneficially owned by
such person or group, constitutes 20% or more of any such class or series (it
being understood that the execution of the Tender and Option Agreement by the
Company shareholders that are parties thereto shall not, in itself, be deemed to
constitute such an acquisition of beneficial ownership triggering this
provision);
(i) the Company or any shareholder shall have breached in any material
respect any of its or their obligations under the Tender and Option Agreement;
(j) (i) all consents and approvals of and notices to or filings with
Governmental Entities and third parties required in connection with the Offer,
the Merger and any of the other Transactions shall not have been obtained or
made other than those the absence of which, individually or in the aggregate,
would not have a Material Adverse Effect or prevent or materially delay
consummation of any of the Offer, the Merger or any of the other Transactions,
or (ii) all consents and approvals of third parties required in connection with
the Offer, the Merger and any of the other Transactions and listed on Section
3.7 of the Company Disclosure Schedule pursuant to agreements marked with an
asterisk (*) on Section 3.7 of the Company Disclosure Schedule shall not have
been obtained or made;
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which, in the sole judgment of Purchaser, in any such case, and regardless of
the circumstances giving rise to any such condition (including any action or
inaction by Parent or any of its affiliates not in violation of this Agreement),
makes it inadvisable to proceed with the Offer or with such acceptance for
payment, purchase of, or payment for shares of Company Common Stock.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition and may be waived by Purchaser
or Parent, in whole or in part, at any time and from time to time, in the sole
discretion of Purchaser or Parent. The failure by Purchaser or Parent or any of
their respective affiliates at any time to exercise any of the foregoing rights
will not be deemed a waiver of any right, the waiver of any such right with
respect to particular facts and circumstances shall not be deemed a waiver with
respect to any other facts and circumstances and each right will be deemed an
ongoing right which may be asserted at any time and from time to time.
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