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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AUTOTOTE CORPORATION,
ATX ENTERPRISES, INC.
and
SCIENTIFIC GAMES HOLDINGS CORP.
Dated as of May 18, 2000
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Table of Contents
Page
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ARTICLE I THE MERGER .........................................................................................1
SECTION 1.01. The Merger...................................................................................1
SECTION 1.02. Effective Time...............................................................................1
SECTION 1.03. Effect of the Merger.........................................................................2
SECTION 1.04. Certificate of Incorporation; By-laws........................................................2
SECTION 1.05. Directors and Officers.......................................................................2
SECTION 1.06. Conversion of Shares.........................................................................2
SECTION 1.07. Dissenting Shares............................................................................3
SECTION 1.08. Surrender of Shares..........................................................................4
SECTION 1.09. Options......................................................................................5
SECTION 1.10. No Further Ownership Rights in Company Common Stock..........................................5
SECTION 1.11. Lost, Stolen or Destroyed Certificates.......................................................6
SECTION 1.12. Taking of Necessary Action; Further Action...................................................6
SECTION 1.13. Material Adverse Effect......................................................................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................7
SECTION 2.01. Organization and Qualification; Subsidiaries.................................................7
SECTION 2.02. Certificate of Incorporation and By-laws.....................................................7
SECTION 2.03. Capitalization...............................................................................8
SECTION 2.04. Authority Relative to This Agreement.........................................................9
SECTION 2.05. Material Contracts; No Conflict; Required Filings and Consents...............................9
SECTION 2.06. Compliance; Permits.........................................................................10
SECTION 2.07. SEC Filings; Financial Statements...........................................................11
SECTION 2.08. Absence of Certain Changes or Events........................................................11
SECTION 2.09. No Undisclosed Liabilities..................................................................11
SECTION 2.10. Absence of Litigation.......................................................................12
SECTION 2.11. Employee Benefit Plans; Employment Agreements...............................................12
SECTION 2.12. Employment and Labor Matters................................................................15
SECTION 2.13. Proxy Statement.............................................................................17
SECTION 2.14. Restrictions on Business Activities.........................................................17
SECTION 2.15. Title to Property...........................................................................18
SECTION 2.16. Taxes.......................................................................................18
SECTION 2.17. Environmental Matters.......................................................................19
SECTION 2.18. Brokers.....................................................................................20
SECTION 2.19. Intellectual Property.......................................................................20
SECTION 2.20. Interested Party Transactions...............................................................22
SECTION 2.21. Opinion of Financial Advisor................................................................22
SECTION 2.22. Rights Agreement............................................................................22
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB........................................................................................22
SECTION 3.01. Organization and Qualification; Subsidiaries................................................22
SECTION 3.02. Authority Relative to This Agreement........................................................23
SECTION 3.03. No Conflict.................................................................................23
SECTION 3.04. Absence of Litigation.......................................................................23
SECTION 3.05. Parent Not an Interested Stockholder or an Acquiring Person.................................24
SECTION 3.06. Proxy Statement.............................................................................24
SECTION 3.07. Ownership of Merger Sub.....................................................................24
SECTION 3.08. Solvency....................................................................................24
SECTION 3.09. Financing Arrangements......................................................................24
SECTION 3.10. Ownership of Shares.........................................................................25
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER.............................................................25
SECTION 4.01. Conduct of Business by the Company Pending the Merger.......................................25
SECTION 4.02. No Solicitation.............................................................................28
ARTICLE V ADDITIONAL AGREEMENTS...............................................................................29
SECTION 5.01. Proxy Statement.............................................................................29
SECTION 5.02. Company Stockholders Meeting................................................................30
SECTION 5.03. Access to Information; Confidentiality......................................................30
SECTION 5.04. Consents; Approvals.........................................................................30
SECTION 5.05. Indemnification and Insurance...............................................................31
SECTION 5.06. Notification of Certain Matters.............................................................32
SECTION 5.07. Further Action..............................................................................33
SECTION 5.08. Public Announcements........................................................................34
SECTION 5.09. Conveyance Taxes............................................................................34
SECTION 5.10. Option Plans and Benefits, Etc..............................................................34
SECTION 5.11. Rights Agreement............................................................................35
SECTION 5.12. Accountant's Letters........................................................................35
SECTION 5.13. Standstill..................................................................................35
ARTICLE VI CONDITIONS TO THE MERGER...........................................................................35
SECTION 6.01. Conditions to Obligation of Each Party to Effect the Merger.................................35
SECTION 6.02. Additional Conditions to Obligations of Parent and Merger Sub...............................36
SECTION 6.03. Additional Conditions to Obligation of the Company..........................................37
ARTICLE VII TERMINATION.......................................................................................37
SECTION 7.01. Termination.................................................................................38
SECTION 7.02. Effect of Termination.......................................................................40
SECTION 7.03. Parent's Fees and Expenses..................................................................40
SECTION 7.04. Company's Fees and Expenses.................................................................41
ARTICLE VIII GENERAL PROVISIONS...............................................................................42
SECTION 8.01. Effectiveness of Representations, Warranties and Agreements.................................42
SECTION 8.02. Notices.....................................................................................43
SECTION 8.03. Certain Definitions.........................................................................45
SECTION 8.04. Amendment...................................................................................45
SECTION 8.05. Waiver......................................................................................46
SECTION 8.06. Headings....................................................................................46
SECTION 8.07. Severability................................................................................46
SECTION 8.08. Entire Agreement............................................................................46
SECTION 8.09. Assignment..................................................................................46
SECTION 8.10. Parties in Interest.........................................................................46
SECTION 8.11. Failure or Indulgence Not Waiver; Remedies Cumulative.......................................47
SECTION 8.12. Governing Law; Jurisdiction.................................................................47
SECTION 8.13. Counterparts................................................................................47
SECTION 8.14. WAIVER OF JURY TRIAL........................................................................47
SECTION 8.15. Performance of Obligations..................................................................47
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 18, 2000 (this
"Agreement"), among Autotote Corporation, a Delaware corporation ("Parent"),
ATX Enterprises, Inc., a Delaware corporation and a direct, wholly owned
subsidiary of Parent ("Merger Sub"), and Scientific Games Holdings Corp., a
Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Merger Sub and
the Company have each determined that it is advisable and in the best interests
of their respective stockholders, and consistent with and in furtherance of
their respective business strategies and goals, for Parent to acquire all of
the outstanding shares of the Company through the merger of Merger Sub with and
into the Company upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards of
Directors of Parent, Merger Sub and the Company have each approved the merger
(the "Merger") of Merger Sub with and into the Company in accordance with the
applicable provisions of the Delaware General Corporation Law (the "DGCL"), and
upon the terms and subject to the conditions set forth herein;
WHEREAS, pursuant to the Merger, each outstanding share (a
"Share") of the Company's Common Stock, par value $.001 per share (the "Company
Common Stock"), other than Shares to be cancelled pursuant to Section 1.06(b)
and other than any Dissenting Shares (as hereinafter defined), shall be
converted into the right to receive $26.00 per Share (the "Per Share Amount")
in cash payable to the holder thereof, upon the terms and subject to the
conditions set forth herein; and
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. (a) At the Effective Time (as
defined in Section 1.02), and subject to and upon the terms and conditions of
this Agreement and the DGCL, Merger Sub shall be merged with and into the
Company, the separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation. The Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
SECTION 1.02. Effective Time. Unless this Agreement shall
have been terminated and the transactions herein contemplated shall have been
abandoned pursuant to Section 7.01, as promptly as practicable (and in any
event within two business days) after the satisfaction or waiver of the
conditions set forth in Article VI, the parties hereto shall cause the
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Merger to be consummated by filing a certificate of merger as contemplated by
the DGCL (the "Certificate of Merger"), together with any required related
certificates, with the Secretary of State of the State of Delaware, in such
form as is required by, and executed in accordance with, the relevant
provisions of the DGCL. The Merger shall become effective at the time of such
filing, or at such later time as may be agreed to by each of the parties hereto
in writing (which will be as soon as reasonably practicable), specified in the
Certificate of Merger (the "Effective Time"). Prior to such filings, a closing
(the "Closing") shall be held at the offices of Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx
LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, unless another time or place is
agreed to in writing by the parties hereto, for the purpose of confirming the
satisfaction or waiver, as the case may be, of the conditions set forth in
Article VI.
SECTION 1.03. Effect of the Merger. At the Effective Time,
the effect of the Merger shall be as provided in this Agreement, the
Certificate of Merger and the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time all the property, rights, privileges, powers and franchises of the Company
and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 1.04. Certificate of Incorporation; By-laws.
(a) Certificate of Incorporation. Unless otherwise determined
by Parent prior to the Effective Time, subject to the provisions of Section
5.05(a), at the Effective Time the Amended and Restated Certificate of
Incorporation in the form attached as Exhibit A hereto, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by the DGCL and such Certificate of Incorporation.
(b) By-laws. Unless otherwise determined by Parent prior to
the Effective Time, and subject to the provisions of Section 5.05(a), at the
Effective Time the By-laws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter amended as provided by the DGCL, the Certificate of Incorporation of
the Surviving Corporation and such By-laws.
SECTION 1.05. Directors and Officers. The directors of Merger
Sub immediately prior to the Effective Time shall be the initial directors of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-laws of the Surviving Corporation, and the
officers of the Company 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 and qualified.
SECTION 1.06. Conversion of Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holder of any of the securities specified below:
(a) Each Share issued and outstanding immediately prior to
the Effective Time (other than Shares to be cancelled pursuant to Section
1.06(b) and other than any Dissenting Shares (as hereinafter defined)) shall be
converted into the right to receive the Per Share Amount in cash payable to the
holder thereof, without interest, upon surrender of the certificate
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representing such Share in accordance with Section 1.08 hereof. From and after
the Effective Time, the holders of certificates evidencing ownership of Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Shares except as otherwise provided for herein or
by applicable law.
(b) Each Share owned by the Company or any of its
subsidiaries, Parent, Merger Sub or any direct or indirect wholly owned
subsidiary of Parent immediately prior to the Effective Time shall be
cancelled, and no payment or other consideration shall be made with respect
thereto.
(c) The shares of Merger Sub's common stock, par value $.01
per share, issued and outstanding immediately prior to the Merger shall be
converted into and constitute a number of validly issued, fully paid and
nonassessable shares of common stock of the Surviving Corporation equal to the
number of Shares owned by Parent, Merger Sub or any direct or indirect wholly
owned subsidiary of Parent immediately prior to the Effective Time.
(d) The fact that any Share which is issued and outstanding
immediately prior to the Effective Time is restricted and/or not yet vested
under any Company stock purchase or stock grant plan, shall not affect the
right of the holder thereof to receive the Per Share Amount and all such Shares
shall without action by any party be deemed to be vested as of the Effective
Time, any provision of any such plan or this Agreement to the contrary
notwithstanding.
SECTION 1.07. Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, any Shares issued and outstanding immediately prior to the Effective
Time and held by a holder who has demanded and perfected his demand for
appraisal of his Shares in accordance with the DGCL and as of the Effective
Time has neither effectively withdrawn nor lost his right to such appraisal
("Dissenting Shares") shall not be converted into or represent a right to
receive the Per Share Amount pursuant to Section 1.06 hereof, but the holder
thereof shall be entitled only to such rights as are granted by the DGCL.
(b) Notwithstanding the provisions of Section 1.07(a) hereof,
if any holder of Shares who demands appraisal of his Shares under the DGCL
shall effectively withdraw or lose (through failure to perfect or otherwise)
his right to appraisal, then as of the Effective Time or the occurrence of such
event, whichever occurs later, such holder's Shares shall automatically be
treated as if converted at the Effective Time into, and thereafter represent
only, the right to receive the Per Share Amount as provided in Section 1.06(a)
hereof, without interest thereon, upon surrender of the certificate or
certificates representing such Shares.
(c) The Company shall give Parent (i) prompt notice of any
written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands and any other instruments served pursuant to the
DGCL received by the Company after the date hereof and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal
under the DGCL. The Company shall not voluntarily make any payment with respect
to any demands for appraisal and shall not, except with the prior written
consent of Parent, settle or offer to settle any such demands.
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SECTION 1.08. Surrender of Shares.
(a) Prior to the Effective Time, Parent shall appoint First
Union National Bank or such other commercial bank or trust company as may be
designated by Parent and reasonably acceptable to the Company to act as
exchange agent hereunder (the "Exchange Agent") for the payment of the Per
Share Amount upon surrender of certificates representing the Shares. All the
fees and expenses of the Exchange Agent shall be borne by the Surviving
Corporation, provided, however, that, if the Merger shall not be consummated,
such fees and expenses shall be borne by Parent.
(b) At or before the Effective Time, Parent shall cause the
Surviving Corporation to provide the Exchange Agent with cash in the amounts
necessary to pay the Per Share Amount in respect of all the Shares pursuant to
Section 1.06(a) hereof (including, if necessary, by providing or causing to be
provided cash for this purpose to the Surviving Corporation) to be held for the
benefit of and distributed to the holders of such Shares in accordance with
this Section.
(c) On the Closing Date, the Surviving Corporation shall
instruct the Exchange Agent to mail promptly to each holder of record of a
certificate or certificates representing any Shares canceled upon the Merger
pursuant to Section 1.06(a) hereof (i) a form of letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to
the certificates shall pass, only upon delivery of the certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of such certificates. Each holder of a certificate or certificates
representing any Shares canceled upon the Merger pursuant to Section 1.06(a)
hereof may thereafter surrender such certificate or certificates to the
Exchange Agent, as agent for such holder, to effect the surrender of such
certificate or certificates on such holder's behalf for a period ending one
year after the Effective Time. Upon the surrender of certificates representing
the Shares, the Surviving Corporation shall cause the Exchange Agent to pay the
holder of such certificates in respect thereof cash in an amount equal to the
Per Share Amount multiplied by the number of Shares represented by such
certificate. Until so surrendered, each such certificate representing Shares
cancelled upon the Merger pursuant to Section 1.06(a) hereof shall represent
solely the right to receive the aggregate Per Share Amount relating thereto.
(d) If payment of cash in respect of canceled Shares is to be
made to a person other than the person in whose name a surrendered certificate
is registered, it shall be a condition to such payment that the certificate so
surrendered shall be properly endorsed or shall otherwise be in proper form for
transfer by delivery and that the person requesting such payment shall have
paid any transfer and other taxes required by reason of such payment in a name
other than that of the registered holder of the certificate or instrument
surrendered or shall have established to the satisfaction of Parent or the
Exchange Agent that such tax either has been paid or is not payable.
(e) At the Effective Time, the stock transfer books of the
Company shall be closed, and no transfer of Shares shall be made thereafter,
other than transfers of Shares that have occurred prior to the Effective Time
and, if necessary, entries reflecting (i) the purchase and issuance of up to
200,000 Shares as of June 30, 2000 in accordance with the Company's Employee
Stock Purchase Plan and (ii) entries reflecting the Company's purchase in the
open market of Shares outstanding on the date of this Agreement to the extent
necessary to satisfy the
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Company's matching obligations under its 401(k) plan, which entries, in the
case of either (i) or (ii), shall be made solely for the purpose of paying the
Per Share Amount with respect to each such Share. In the event that, after the
Effective Time, certificates representing Shares (other than any Dissenting
Shares) are presented to the Surviving Corporation, they shall be canceled and
exchanged for cash as provided in Section 1.06(a).
(f) The Per Share Amount paid in the Merger shall be net to
the holder of Shares in cash, and without interest thereon, subject to
reduction only for any applicable withholding taxes and, but only if the Per
Share Amount is to be paid other than to the registered holder, any applicable
stock transfer taxes payable by such holder.
(g) Promptly following the date which is one year after the
Effective Time, the Exchange Agent shall deliver to the Surviving Corporation
all cash, certificates and other documents in its possession relating to the
transactions contemplated hereby, and the Exchange Agent's duties shall
terminate. Thereafter, each holder of a certificate representing Shares (other
than certificates representing Dissenting Shares and certificates representing
Shares held directly or indirectly by the Surviving Corporation or Parent) may
surrender such certificate to the Surviving Corporation and (subject to any
applicable abandoned property, escheat or similar law) receive in respect
thereof the aggregate Per Share Amount relating thereto, without any interest
thereon.
(h) None of the Company, Parent, Merger Sub, the Surviving
Corporation or the Exchange Agent shall be liable to any holder of Shares for
any cash delivered to a public official pursuant to any abandoned property,
escheat or similar law, rule, regulation, statute, order, judgment or decree.
SECTION 1.09. Options. Each option to purchase Shares under
any stock option plan or agreement of the Company (including, without
limitation, the Company's non-employee Directors Plan) outstanding immediately
prior to the Effective Time (a "Company Option"), whether or not exercisable as
provided under the terms thereof, shall be cancelled and the holder thereof
shall receive from the Exchange Agent on the Closing Date or as promptly
thereafter as practicable an amount in cash equal to the positive difference,
if any, between the Per Share Amount and the exercise price of the Company
Option multiplied by the number of Shares for which the Company Option would
have been exercisable (assuming all such Company Options were by their terms
exercisable) immediately prior to the Effective Time, subject to reduction only
for any applicable withholding taxes (as reasonably determined and certified by
the Company to the Exchange Agent). At or before the Effective Time, Parent
shall cause the Surviving Corporation to provide the Exchange Agent with cash
in amounts necessary to pay the difference between the Per Share Amount and the
exercise price of the Company Options as above provided. In no event will any
Company Options be exercisable after the Effective Time, except to receive cash
as provided in the first sentence of this Section 1.09.
SECTION 1.10. No Further Ownership Rights in Company Common
Stock. The Per Share Amount delivered upon the surrender for exchange of Shares
in accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Surviving Corporation
of Shares which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, certificates representing Shares are presented to the
Surviving Corporation,
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the Parent or the Exchange Agent for any reason, they shall be canceled and
exchanged as provided in this Article I.
SECTION 1.11. Lost, Stolen or Destroyed Certificates. In the
event any certificates shall have been lost, stolen or destroyed, the Exchange
Agent shall pay in respect of such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof, such Per Share
Amount as may be required pursuant to Section 1.06(a); provided, however, that
Parent may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Parent, the Surviving Corporation or the
Exchange Agent with respect to the certificates alleged to have been lost,
stolen or destroyed.
SECTION 1.12. Taking of Necessary Action; Further Action.
Each of Parent, Merger Sub and the Company will take all such reasonable and
lawful actions in connection with the Closing as may be necessary or
appropriate in order to effectuate the Merger and the other transactions
contemplated by this Agreement in accordance with this Agreement as promptly as
possible, upon the terms and subject to the conditions hereof. If, at any time
after the Effective Time, any such further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Surviving Corporation
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of the Company and Merger Sub, the officers
and directors of the Company and Merger Sub immediately prior to the Effective
Time are fully authorized in the name of their respective corporations or
otherwise to take, and will take, all such lawful and necessary action.
SECTION 1.13. Material Adverse Effect.
(a) When used in connection with the Company or any of its
subsidiaries or Parent or any of its subsidiaries, as the case may be, the term
"Material Adverse Effect" means any change, effect or circumstance that is or
is reasonably likely to be materially adverse to the business, assets
(including intangible assets), financial condition or results of operations,
taken as a whole, of the Company and its subsidiaries or Parent and its
subsidiaries, as the case may be.
(b) The failure of a representation or warranty to be true
and correct, either individually or together with the failure of other
representations or warranties to be true and correct, or the failure to perform
an obligation, agreement or covenant shall be deemed to have a Material Adverse
Effect if (x) the business, assets (including intangible assets), financial
condition, or results of operations, taken as a whole, of the Company and its
subsidiaries, or Parent and its subsidiaries, as the case may be, are or are
reasonably likely to be materially worse than if such representation or
warranty had been true and correct or such obligation, agreement or covenant
had been performed, (y) in the case of the Company, such representation or
warranty materially misstates the capitalization of the Company or the
capitalization of its subsidiaries taken as a whole or (z) the failure of such
representation or warranty to be true and correct or the failure to perform
such obligation, agreement or covenant materially and adversely affects the
ability of the Company or Parent, as the case may be, to consummate the
transactions substantially as contemplated by this Agreement.
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EXHIBIT 99.1
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Merger Sub as follows:
SECTION 2.01. Organization and Qualification; Subsidiaries.
Each of the Company and its subsidiaries is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or other organization, as the case may be, and has the requisite
corporate or other power and authority necessary to own, lease and operate the
properties it purports to own, operate or lease and to carry on its business as
it is now being conducted or is proposed to be conducted, except where the
failure to be so organized, existing and in good standing or to have such power
or authority would not have a Material Adverse Effect. Each of the Company and
its subsidiaries is duly qualified or licensed as a foreign corporation or other
organization, as the case may be, to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not have a Material Adverse Effect. A
true and complete list of all of the Company's "significant" subsidiaries, as
defined in Regulation S-X, is included as an exhibit to the Company's Annual
Report on Form 10-K for the year ended December 31, 1999 (the "Company
Significant Subsidiaries"). The Company has furnished to Parent a list of all
subsidiaries of the Company together with the jurisdiction of incorporation or
organization of each such subsidiary and the percentage of each such
subsidiary's outstanding capital stock or other equity interest owned by the
Company or another subsidiary of the Company in Section 2.01 of the written
disclosure schedule delivered by the Company to Parent (the "Company Disclosure
Schedule"). Except as set forth in Section 2.01 of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries directly or indirectly
owns any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity
(other than its wholly owned subsidiaries), in each case with respect to which
interest the Company or a subsidiary, individually or in the aggregate, has
invested (and currently owns) or is required to invest $2,000,000 or more,
excluding securities in any publicly traded company held for investment by the
Company and comprising less than one percent of the outstanding stock of such
company.
SECTION 2.02. Certificate of Incorporation and By-laws. The
Company has heretofore made available to Parent and Merger Sub complete and
correct copies of (i) its Second Amended and Restated Certificate of
Incorporation and Third Amended and Restated By-laws, each as amended to date
(the "Company's Charter Documents"), and (ii) the Certificate of Incorporation
and By-laws (or equivalent organizational documents) the "Subsidiary Documents")
of each of its subsidiaries. All such Company Charter Documents and Subsidiary
Documents are in full force and effect. Neither the Company nor any of its
subsidiaries is in violation of any of the provisions of their respective
Certificate of Incorporation or By-laws or equivalent organizational documents,
except, in the case of any such subsidiaries, where such violations would not,
individually or in the aggregate, have a Material Adverse Effect.
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SECTION 2.03. Capitalization. The authorized capital stock of
the Company consists of 25,750,000 shares of Company Common Stock and 3,000,000
shares of the Company's Preferred Stock (the "Company Preferred Stock"), par
value $.001 per share. As of April 28, 2000, (i) 11,414,199 shares of Company
Common Stock were issued and outstanding, all of which are validly issued, fully
paid and nonassessable, (ii) 509,200 shares of Company Common Stock were held in
treasury, (iii) no shares of Company Preferred Stock were outstanding or held in
treasury, (iv) no shares of Company Common Stock or Company Preferred Stock were
held by subsidiaries of the Company, (v) 1,173,213 shares of Company Common
Stock were issuable upon the exercise of outstanding Company Options (whether or
not presently exercisable) granted under the Company's stock option plans, (vi)
up to 200,000 shares of Company Common Stock were issuable pursuant to the
Company's Employee Stock Purchase Plan, (vii) 9,824 shares of Company Common
Stock were issued subject to vesting pursuant to the Company's Restricted Stock
Plan (all of which were included in clause (i) above) and (viii) 500,000 shares
of Company Preferred Stock are reserved for issuance in accordance with the
Company's Rights Agreement (as defined in Section 2.22). Except as set forth in
the preceding (i) through (viii), no other shares of capital stock of the
Company, or rights to acquire such shares, have been authorized or are
outstanding as of such date. Except as set forth in Section 2.03 of the Company
Disclosure Schedule, no change in such capitalization has occurred as of the
date hereof, except for changes resulting from the exercise of Company Options
(included in (v) above) in an aggregate amount of not more than 1,097,037 shares
of Company Common Stock, the issuance pursuant to the Company's Employee Stock
Purchase Plan of not more than 200,000 shares of Company Common Stock (included
in (vi) above) or the vesting pursuant to the Company's Restricted Stock Plan of
not more than 9,824 shares of Company Common Stock (included in (vii) above).
Except as set forth in Section 2.01, this Section 2.03 or Section 2.11 or
Section 2.03 or Section 2.11 of the Company Disclosure Schedule or for rights
granted pursuant to the Company's Rights Agreement (as defined in Section 2.22),
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character binding on the Company or any of its subsidiaries
relating to the issued or unissued capital stock of, or other equity interests
in, the Company or any of its subsidiaries or obligating the Company or any of
its subsidiaries to issue or sell any shares of capital stock of, or other
equity interests in, the Company or any of its subsidiaries. All shares of
Company Common Stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 2.03 of the Company Disclosure
Schedule, there are no obligations, contingent or otherwise, of the Company or
any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of
Company Common Stock or the capital stock of any subsidiary. Except as set forth
in Section 2.01 or 2.03 of the Company Disclosure Schedule, and other than
intercompany loans in the ordinary course of business between the Company and
any of its subsidiaries or between any such subsidiaries, there are no
obligations, contingent or otherwise, of the Company or any of its subsidiaries
to make any investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary or any other entity other than guarantees of
bank obligations of subsidiaries entered into in the ordinary course of business
and other obligations not exceeding, in the aggregate, $1,000,000. Except as set
forth in Section 2.01 or 2.03 of the Company Disclosure Schedule, all of the
outstanding shares of capital stock (other than directors' qualifying shares
identified as such in Section 2.03 of the Company Disclosure Schedule) of, or
other equity interests in, each of the Company's subsidiaries are duly
authorized, validly issued, fully paid and nonassessable, and all such shares
(other than such
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directors' qualifying shares), or other equity interests, are owned by the
Company or another subsidiary free and clear of all security interests, liens,
claims, pledges, agreements, limitations in the Company's voting rights, charges
or other encumbrances of any nature whatsoever, except, in the case of any
subsidiaries of the Company other than Company Significant Subsidiaries, for
items which would not reduce the Company's equity interest therein and would
not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 2.04. Authority Relative to This Agreement. The
Company has all necessary corporate power and authority to execute and deliver
this Agreement and, subject in the case of consummation of the Merger to
obtaining the Company Stockholder Approval (as defined in Section 5.02), to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions so contemplated (other than the
approval of the Merger and the adoption of this Agreement by the Company's
stockholders in accordance with the DGCL and the filing and recording of
appropriate merger documents consistent with this Agreement as required by the
DGCL). As of the date hereof, the Board of Directors of the Company has declared
that it is advisable and in the best interests of the Company's stockholders for
the Company to enter into this Agreement and to consummate the Merger upon the
terms and subject to the conditions of this Agreement. This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Merger Sub of this
Agreement, constitutes a legal, valid and binding obligation of the Company.
SECTION 2.05. Material Contracts; No Conflict; Required
Filings and Consents.
(a) Section 2.05 of the Company Disclosure Schedule includes,
as of the date hereof, a list of (i) all loan agreements, indentures, mortgages,
pledges, conditional sale or title retention agreements, security agreements,
guaranties, standby letters of credit (as to which the Company or any subsidiary
is the responsible party), equipment leases or lease purchase agreements, each
in an amount exceeding, individually or in the aggregate as to any related items
due to the same party or relating to the same transactions, $1,000,000, to which
the Company or any of its subsidiaries is a party or by which any of them is
bound; (ii) all other contracts, agreements, commitments or other understandings
or arrangements to which the Company or any of its subsidiaries is a party or by
which any of them or any of their respective properties or assets are bound or
affected, but excluding contracts, agreements, commitments or other
understandings or arrangements involving, in the case of any such contract,
agreement, commitment, or other understanding or arrangement, payments or
receipts by the Company or any of its subsidiaries, individually or in the
aggregate as to any related items due to the same party or relating to the same
transactions, of less than $1,000,000 and (iii) all agreements which are
required to be filed as "material contracts" with the United States Securities
and Exchange Commission ("SEC") pursuant to the requirements of the United
States Securities Exchange Act of 1934, as amended, and the SEC's rules and
regulations thereunder (the "Exchange Act") but have not been so filed with the
SEC.
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(b) Except as set forth in Section 2.05 of the Company
Disclosure Schedule, the execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will not, subject
as to consummation of the Merger to the obtaining of the Company Stockholder
Approval, and the taking of the actions described in clause (c) of this Section,
(i) conflict with or violate the Company's Charter Documents or the Subsidiary
Documents, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company or any of its subsidiaries or by
which any of their respective properties is bound or affected or (iii) result in
any breach of, or constitute a default (or an event that with notice or lapse of
time or both would become a default) or impair the Company's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on
(including a right to purchase) any of the properties or assets of the Company
or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their respective
properties is bound or affected, except, in the case of clause (ii) or (iii),
for any such conflicts, violations, breaches, defaults or other occurrences that
would not, individually or in the aggregate, have a Material Adverse Effect.
(c) Except as set forth in Section 2.05 of the Company
Disclosure Schedule, the execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any United States or foreign governmental or regulatory
authority (each, a "Governmental Authority"), except (i) for applicable
requirements, if any, of the Exchange Act, the pre-merger notification
requirements of the United States Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder (the "HSR Act"),
filings and consents under any applicable foreign laws intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade ("Non-U.S. Monopoly Laws"), and the filing and recordation of
appropriate merger or other documents as required by the DGCL, and (ii) where
the failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or materially delay
consummation of the Merger, or otherwise prevent or materially delay the Company
from performing its material obligations under this Agreement or prevent or
materially delay Parent from realizing substantially all of the benefits of this
Agreement, and would not otherwise, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 2.06. Compliance; Permits.
(a) Except as disclosed in Section 2.06 of the Company
Disclosure Schedule or the Company's periodic filings under the Exchange Act,
from December 31, 1998 through the date of this Agreement (as such documents
have since the time of filing been amended or supplemented, collectively, the
"Company SEC Reports"), neither the Company nor any of its subsidiaries is in
conflict with, or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its subsidiaries
or by which any of their respective properties is bound or affected or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
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or any of their respective properties is bound or affected, except for any such
conflicts, defaults or violations which would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) Except as disclosed in Section 2.06 of the Company
Disclosure Schedule or the Company SEC Reports, the Company and its subsidiaries
hold all permits, licenses, easements, variances, exemptions, consents,
certificates, orders and approvals from Governmental Authorities which are
material to the operation of the business of the Company or any of its
subsidiaries, as it is now being conducted (collectively, the "Company
Permits"), except where the failure to hold such Company Permits would not,
individually or in the aggregate, have a Material Adverse Effect. The Company
and its subsidiaries are in compliance with the terms of the Company Permits,
except as described in the Company SEC Reports or where the failure to so comply
would not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 2.07. SEC Filings; Financial Statements.
(a) The Company has filed all Company SEC Reports. Except as
disclosed in Section 2.07 of the Company Disclosure Schedule, as of their
respective dates, the Company SEC Reports (i) complied as to form in all
material respects with the requirements of the United States Securities Act of
1933, as amended, and the SEC's rules and regulations thereunder (the
"Securities Act") or the Exchange Act, as the case may be, and (ii) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. None of the Company's subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Company SEC Reports
was prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or in the Company SEC
Reports), and each fairly presents in all material respects the consolidated
financial position of the Company and its subsidiaries as at the respective
dates thereof and the consolidated results of its operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount.
SECTION 2.08. Absence of Certain Changes or Events. Except as
set forth in Section 2.08 and Section 4.01 of the Company Disclosure Schedule or
the Company SEC Reports, since December 31, 1999, the Company and each of its
subsidiaries has conducted its business in the ordinary course, and: (i) there
has not occurred any change, effect or circumstance constituting, individually
or in the aggregate, a Material Adverse Effect; and (ii) neither the Company nor
any if its subsidiaries has taken any action which, if taken after the date of
this Agreement, would constitute a breach of any provision of Section 4.01.
SECTION 2.09. No Undisclosed Liabilities. Except as set forth
in Section 2.09 of the Company Disclosure Schedule or the Company SEC Reports,
neither the Company nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise), except liabilities (a) in the aggregate
adequately provided for in the Company's balance sheet (including
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any related notes thereto) as of December 31, 1999 included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999 (the "1999
Company Balance Sheet"), (b) incurred in the ordinary course of business and not
required under GAAP to be reflected on the 1999 Company Balance Sheet (including
the notes thereto), (c) incurred since December 31, 1999 in the ordinary course
of business, (d) specifically contemplated by this Agreement or (e) not
otherwise excepted by clauses (a) through (d), inclusive, which otherwise
non-excepted liabilities would not, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 2.10. Absence of Litigation. Except as set forth in
Section 2.10 and Section 2.19 of the Company Disclosure Schedule or the Company
SEC Reports, there are no claims, actions, suits, proceedings or investigations
pending or, to the best knowledge of the Company, threatened against the Company
or any of its subsidiaries, or any properties or rights of the Company or any of
its subsidiaries, before any court, arbitrator or administrative body or
Governmental Authority, that would, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 2.11. Employee Benefit Plans; Employment Agreements.
(a) Section 2.11 of the Company Disclosure Schedule lists all
"Pension Plans" (as defined in Section 3(2) of the United States Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), all employee
welfare benefit plans (as defined in Section 3(1) of ERISA), and all other
bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar fringe or employee benefit
plans, policies, programs, agreements or arrangements (including those which
contain change of control or pending change of control or similar provisions),
written or otherwise, as amended, modified or supplemented, for the benefit of,
or relating to, any former or current employee, officer, director or consultant
(or any of their beneficiaries) of the Company or any subsidiary of the Company,
as well as each plan with respect to which the Company, a subsidiary or any
other entity (whether or not incorporated) which is a member of a controlled
group, including the Company, or which is under common control with the Company
within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section
4001(a)(14) or (b) of ERISA (a "Company ERISA Affiliate") could incur liability
under Section 4980B of the Code or Part 6 of Subtitle B of Title I of ERISA
(hereinafter, "COBRA"), Title IV of ERISA or Section 412 of the Code (together,
for the purposes of this Section 2.11, the "Company Employee Plans") that are
maintained in the United States (the "U.S.") or cover primarily U.S. employees.
Section 2.11 of the Company Disclosure Schedule lists all Company Employee Plans
maintained outside the U.S. and covering primarily non-U.S. employees (each, a
"Non-U.S. Company Plan"), provided that any such plan, agreement or arrangement
described in Section 2.11(d) of this Agreement shall be listed only if it is (x)
an employment agreement with any of the three most highly compensated officers
or employees of the Company or any subsidiary having an annual salary in excess
of $100,000, (y) a plan, program, agreement, policy or arrangement of the
Company which contains one or more change-in-control provisions which could
result in an increase in the amount of compensation or benefits or accelerate
the vesting or timing of payment of any benefits or compensation payable in
respect of any non-U.S. Company employee or (z) a severance plan, program,
policy or agreement which provides nonstatutory benefits. The Company has made
available for inspection by Parent prior to the date of this Agreement, copies
of (i) each written Company Employee Plan (or a written description of any
Company Employee Plan which is not written)
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and all related trust agreements, insurance and other contracts (including
policies), summary plan descriptions, summaries of material modifications and
communications distributed to plan participants that are inconsistent with any
Company Employee Plan or any provision under any Company Employee Plan or which
could result in any additional liability to the Company or such plan (including,
but not limited to, any communications that have not expressly reserved the
right of the Company to amend, terminate or otherwise modify any Company
Employee Plan), (ii) the three most recent annual reports on Form 5500 series,
with accompanying schedules and attachments, filed with respect to each Company
Employee Plan required to make such a filing, (iii) the most recent actuarial
valuation for each Company Employee Plan subject to Title IV of ERISA, (iv) the
latest reports which have been filed with the Department of Labor with respect
to each Company Employee Plan required to make such filing or that is required
to exempt any Company Employee Plan from filing a Form 5500 series annual report
and (v) the most recent favorable determination letters issued for each Company
Employee Plan and related trust which is intended to be qualified under Section
401(a) of the Code (and, if an application for such determination is pending, a
copy of the application for such determination).
(b) (i) Except as set forth in Section 2.11 of the Company
Disclosure Schedule, none of the Company Employee Plans promises or provides
medical or life insurance benefits to any director, officer, employee or
consultant (or any of their beneficiaries) after their service with the Company
terminates, other than as required by COBRA, or any similar state laws; (ii)
none of the Company Employee Plans is a "multiemployer plan" within the meaning
of Section 3(37) of ERISA or Section 414(f) of the Code or a "multiple employer
plan" within the meaning of Section 3(40) of ERISA or Section 413(c) of the Code
nor is a member of a "multiple employer welfare arrangement" as defined in
Section 3(40) of ERISA; (iii) none of the Company Employee Plans is or was
subject to Title IV of ERISA or the funding provisions of Section 412 of the
Code; (iv) no party in interest or disqualified person (as defined in Section
3(14) of ERISA and Section 4975 of the Code) has at any time engaged in a
transaction with respect to any Company Employee Plan which could subject the
Company or any Company ERISA Affiliate, directly or indirectly, to a tax,
penalty or other material liability for prohibited transactions under ERISA or
Section 4975 of the Code; (v) no fiduciary of any Company Employee Plan has
breached any of the responsibilities or obligations imposed upon fiduciaries
under Title I of ERISA, which breach would have a Material Adverse Effect; (vi)
all Company Employee Plans have been established and maintained in accordance
with their terms and have operated in compliance in all material respects with
the requirements of applicable law (including, but not limited to, the
applicable notification and other requirements of COBRA, the Health Insurance
Portability and Accountability Act of 1996, the Newborns' and Mothers' Health
Protection Act of 1996, the Mental Health Parity Act of 1996, and the Women's
Health and Cancer Rights Act of 1998), and may by their terms be amended and/or
terminated at any time subject to applicable law and to any requirements
relating to the payment of accrued benefits in accordance with the terms
thereof, and the Company and each of its subsidiaries have performed all
material obligations required to be performed by them under, are not in any
material respect in default under or violation of, and have no knowledge of any
material default or violation by any other party to, any of the Company Employee
Plans; (vii) each Company Employee Plan which is intended to be qualified under
Section 401(a) of the Code is the subject of a favorable determination letter
from the United States Internal Revenue Service (the "IRS"), and, to the
Company's knowledge, nothing has occurred which could reasonably be expected to
impair such determination or qualification; (viii) all contributions required to
be made with respect to any
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Company Employee Plan (pursuant to the terms of such plan, any collective
bargaining agreement or otherwise pursuant to applicable law) have been made on
or before their due dates (including any extensions thereof); (ix) no filing or
application has been made with respect to any Company Employee Plan relating to
any voluntary compliance resolution program or closing agreement program; (x)
none of the Company, any Company ERISA Affiliate or any subsidiary thereof has
incurred or reasonably expects to incur any material liability under Title IV of
ERISA including, without limitation, with respect to an event described in
Section 4062, 4063 or 4041 of ERISA (other than liability for premium payments
to the Pension Benefit Guaranty Corporation (the "PBGC") arising in the ordinary
course); (x) other than routine claims for benefits made in the ordinary course
of the operation of the Company Employee Plans, there are no material pending,
nor to the Company's knowledge threatened, claims, investigations or causes of
action with respect to any Company Employee Plan, whether made by a participant
or beneficiary of such a plan, a governmental agency or otherwise, against the
Company, any Company director, officer or employee, any Company Employee Plan or
any fiduciary of a Company Employee Plan.
(c) Section 2.11 of the Company Disclosure Schedule sets forth
a true and complete list of each current or former employee, officer or director
of the Company or any of its subsidiaries who holds, as of the close of business
on May 2, 2000, (i) any option to purchase Company Common Stock as of the date
hereof, together with the number of shares of Company Common Stock subject to
such option, the exercise price of such option (to the extent determined as of
the date hereof), whether such option is intended to qualify as an incentive
stock option within the meaning of Section 422(b) of the Code (an "ISO"), and
the expiration date of such option; (ii) any shares of Company Common Stock that
are restricted; and (iii) any other right, directly or indirectly, to receive
Company Common Stock, together with the number of shares of Company Common Stock
subject to such right. No option to purchase Company Common Stock has been
granted between May 2, 2000 and the date of this Agreement.
(d) Section 2.11 of the Company Disclosure Schedule sets forth
a true and complete list of (i) all employment agreements with officers or
employees of the Company or any of its subsidiaries involving an annual salary
in excess of $100,000 who perform services in the U.S., other than any offer
letter or similar agreement that does not alter the at-will nature of the
individual's employment with the Company or any subsidiary; (ii) all agreements
with consultants who are former employees or directors involving annual payments
in excess of $75,000, (iii) all agreements with respect to the services of
independent contractors performing personal services for the Company or its
subsidiaries or leased employees, whether or not they participate in any of the
Company Employee Plans involving annual payments in excess of $75,000, (iv) all
severance agreements, programs and policies of the Company or any of its
subsidiaries with or relating to its employees and under which there is a
current or contingent obligation with the exception of statutory plans
maintained outside the U.S.; and (v) all plans, programs, agreements and other
arrangements of the Company which contain change of control provisions providing
any benefits to any employees, directors or independent contractors of the
Company or any of its subsidiaries who perform services primarily in the United
States. All agreements described in this Section 2.11(d) have been made
available for inspection by Parent prior to the date of this Agreement; to the
extent any such agreement has been entered into by the Company and one or more
individuals pursuant to one or more standard forms, the Company may make
available one example of each such standard form, together with a schedule
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specifying each individual who has entered into an agreement with the Company
using such standard form, the expiration date of the agreement and any material
non-standardized terms included in the agreement.
(e) Except as set forth in Section 2.11 of the Company
Disclosure Schedule, (i) the Company does not and has never maintained an
employee stock ownership plan (within the meaning of Section 4975(e)(7) of the
Code) or, any other Company Employee Plan that invests in, provides for
investment in or provides benefits in or by reference to the value of Company
stock; and (ii) since December 31, 1999, the Company has not proposed nor agreed
to any material increase in benefits under any Company Employee Plan (or the
creation of material new benefits) or change in employee coverage which would
materially increase the expense of maintaining any Company Employee Plan other
than in the renewal of any insured employee welfare plans in the ordinary course
of business.
(f) Except pursuant to those plans, programs, agreements or
other arrangements listed in Section 2.11 of the Company Disclosure Schedule,
neither the execution of this Agreement nor the consummation of the transactions
contemplated by this Agreement, either alone or in combination with another
event, will result in (i) any payment (including, without limitation, severance,
unemployment compensation, golden parachute or bonus payments or otherwise)
becoming due to any current or former director, officer, employee or consultant
of the Company, (ii) any increase in the amount of compensation or benefits
payable in respect of any director, officer, employee or consultant of the
Company, (iii) accelerate the vesting or timing of payment of any benefits or
compensation payable in respect of any current or former director, officer,
employee or consultant of the Company, or (iv) result in any "parachute payment"
under Section 280G of the Code, whether or not such amount may be considered
reasonable compensation for personal services rendered.
(g) To the best knowledge of the Company, each Non-U.S.
Company Plan has been maintained in compliance with its terms and with the
requirements prescribed by any and all applicable laws (including any special
provisions relating to registered or qualified plans where such Non-U.S. Company
Plan was intended to so qualify) and has been maintained in good standing with
applicable regulatory authorities. To the best knowledge of the Company, except
as set forth in Section 2.11 of the Company Disclosure Schedule, each Non-U.S.
Company Plan which is required by contract or under applicable local law to be
funded has been funded at least to the extent so required; if and to the extent
any Non-U.S. Company Plan is not funded, the obligations under such Non-U.S.
Company Plan are reflected on the books and records of the entity maintaining
the plan and on the consolidated financial statements of the Company.
SECTION 2.12. Employment and Labor Matters.
Except as disclosed in Section 2.12 of the Company Disclosure Schedule:
(a) The Company and its subsidiaries have, as of the date
hereof, approximately 1,600 employees and the Company believes they have
generally good relationships with such employees.
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(b) The Company believes it is in substantial compliance with
all applicable laws (including any legal obligation to engage in affirmative
action), agreements and contracts relating to employment practices, terms and
conditions of employment, and the employment of former, current, and prospective
employees, independent contractors and "leased employees" (within the meaning of
section 414(n) of the Code) of the Company or its subsidiaries, or employees of
any other entity with respect to whom the Company or its subsidiaries have any
responsibility under the "joint-employer doctrine" or any similar rule of law.
The Company believes that the Company and its subsidiaries are not engaged in
any unfair labor practice.
(c) (i) No collective bargaining agreement with respect to the
business of the Company or its subsidiaries is currently in effect or being
negotiated, (ii) to the best knowledge of the Company, the Company and its
subsidiaries have no obligation to negotiate any other collective bargaining
agreement, and, (iii) to the best knowledge of the Company, there is no
indication that the employees not covered by such an agreement of the Company or
its subsidiaries desire to be covered by a collective bargaining agreement.
(d) No strike or material slowdown or work stoppage has
occurred or, to the best knowledge of the Company, been threatened with respect
to the employees of the Company or its subsidiaries, nor, to the best knowledge
of the Company, has any such strike or material slowdown or work stoppage
occurred or been threatened within two years prior to the date hereof.
(e) There is no representation claim or petition pending
before the United States National Labor Relations Board or any similar foreign,
state or local labor agency of which the Company has been notified and, to the
best knowledge of the Company, no question concerning representation has been
raised or threatened respecting the employees of the Company or its
subsidiaries.
(f) No notice has been received by the Company of any
complaint filed against the Company or its subsidiaries claiming that the
Company or its subsidiaries have violated in any material respect any applicable
employment standards, human rights or other labor legislation or any complaints
or proceedings of any kind involving the Company or its subsidiaries or, to the
knowledge of the Company, against any of the employees of the Company or
threatened to be filed against the Company or its subsidiaries before any
federal, state, local or foreign agency or labor relations board, including
without limitation the National Labor Relations Board and the Equal Employment
Opportunity Commission. No notice has been received by the Company of the intent
of any federal, state, local or foreign agency responsible for the enforcement
of labor or employment laws to conduct an investigation of the Company or its
subsidiaries, and, to the knowledge of the Company, no such investigation is in
progress.
(g) There are no outstanding material orders or charges
against the Company or, to the best knowledge of the Company, any of its
subsidiaries, under any occupational health or safety legislation and to the
best knowledge of the Company none have been threatened. All material levies,
assessments and penalties made against the Company or, to the best knowledge of
the Company, any of its subsidiaries, pursuant to all applicable workers
compensation legislation as of the date of the Balance Sheet have been paid or
have been reserved for or properly accrued on the books of the Company and the
Company has not, as of the Closing Date, been reassessed under any such
legislation. Except as set forth in Section 2.12 of the Company
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Disclosure Schedule, there are no outstanding material levies, assessments or
penalties against the Company or, to the best knowledge of the Company, any of
its subsidiaries.
(h) Section 2.12 of the Company Disclosure Schedule accurately
sets forth all unpaid severance or continuing payments of any kind (other than
pursuant to a plan or program described in Section 4.11 hereof) in excess of
$75,000 which, as of the date of this Agreement, are due or claimed in writing
to be due from the Company or any subsidiary to any person whose employment with
the Company or any subsidiary was terminated.
(i) The Company has made no binding commitments to any
employees of the Company or its subsidiaries regarding continued employment of
such employees subsequent to the date hereof or the Closing Date.
(j) To the best knowledge of the Company, no contractor,
manufacturer or supplier used by or under contract with the Company or any
subsidiary is in material violation of any law relating to labor or employment
matters which could reasonably result in liability on the part of the Company or
any subsidiary.
SECTION 2.13. Proxy Statement. The information supplied by the
Company in writing specifically for inclusion in the proxy statement to be sent
to the stockholders of the Company in connection with the meeting of the
stockholders of the Company to consider the Merger (the "Company Stockholders
Meeting") (such proxy statement as amended or supplemented being referred to
herein as the "Proxy Statement") will not, on the date the Proxy Statement (or
any amendment thereof or supplement thereto) is first mailed to stockholders or
at the time of the Company Stockholders Meeting, contain any statement which, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made therein not false
or misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholders Meeting which has become false or
misleading. If at any time prior to the Effective Time any event relating to the
Company or any of its respective affiliates, officers or directors should be
discovered by the Company which should be set forth in a supplement to the Proxy
Statement, the Company shall promptly inform Parent and Merger Sub. The Proxy
Statement shall comply as to form in all material respects with the requirements
of the Exchange Act. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by or on
behalf of Parent or Merger Sub in writing for inclusion in the Proxy Statement
or any information incorporated by reference therein from documents filed by
Parent or any of its subsidiaries with the SEC.
SECTION 2.14. Restrictions on Business Activities. Except as
set forth in Section 2.14 of the Company Disclosure Schedule or the Company SEC
Reports, there is no agreement, judgment, injunction, order or decree binding
upon the Company or any of its subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or impairing the conduct of business
by the Company or any of its subsidiaries as currently conducted by the Company
or such subsidiary, except for any prohibition or impairment as would not,
individually or in the aggregate, have a Material Adverse Effect.
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SECTION 2.15. Title to Property. Except as set forth in
Section 2.15 of the Company Disclosure Schedule or the Company SEC Reports, the
Company and each of its subsidiaries have good title to or have valid leasehold
interests in or valid rights under contract to use all of the real properties
and other assets, individually or in the aggregate, material to the conduct of
the business of the Company and its subsidiaries, taken as a whole, free and
clear of all liens, charges and encumbrances, except liens for taxes not yet due
and payable and such liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property affected thereby or which would not, individually or in the aggregate,
have a Material Adverse Effect, and except for liens which secure indebtedness
reflected in the 1999 Company Balance Sheet; and all leases pursuant to which
the Company or any of its subsidiaries lease from others any real or personal
property, are in good standing, valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default), on the part of the Company or any of its
subsidiaries or, to the best knowledge of the Company, any third party, except
where the lack of such good standing, validity and effectiveness or the
existence of such default or event of default would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 2.16. Taxes.
(a) The Company and each of its subsidiaries has timely filed,
or caused to be timely filed, all material Tax Returns (as hereinafter defined)
required to be filed by it, and has paid, collected or withheld, or caused to be
paid, collected or withheld, all material amounts of Taxes (as hereinafter
defined) shown as payable thereon, other than such Taxes for which adequate
reserves in the 1999 Company Balance Sheet have been established which are being
contested in good faith by appropriate procedures. Except as set forth in
Section 2.16 of the Company Disclosure Schedule, there are no material claims or
assessments pending against the Company or any of its subsidiaries for any
alleged deficiency in any Tax, there are no pending or threatened audits or
investigations for or relating to any liability in respect of any Taxes, and the
Company has not been notified of any proposed Tax claims or assessments against
the Company or any of its subsidiaries (other than in each case, claims or
assessments for which adequate reserves in the 1999 Company Balance Sheet have
been established which are being contested in good faith).
(b) For purposes of this Agreement, the term "Tax" shall mean
any United States or non-United States federal, national, state, provincial,
local or other jurisdictional income, gross receipts, property, sales, use,
license, excise, franchise, employment, payroll, alternative or add-on minimum,
ad valorem, transfer or excise tax, or any other tax, custom, duty, governmental
fee or other like assessment or charge imposed by any Governmental Authority,
together with any interest or penalty imposed thereon. The term "Tax Return"
shall mean a report, return or other information (including any attached
schedules or any amendments to such report, return or other information)
required to be supplied to or filed with a Governmental Authority with respect
to any Tax, including an information return, claim for refund, amended return or
declaration or estimated Tax.
(c) Except as set forth in Section 2.16 of the Company
Disclosure Schedule, other than with respect to the Company and its
subsidiaries, neither the Company nor any of its
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subsidiaries is liable for Taxes of any other person, or is currently under any
contractual obligation to indemnify any person with respect to Taxes (except for
customary agreements to indemnify lessors, lenders or security holders pursuant
to agreements disclosed elsewhere in the Company Disclosure Schedule), or is a
party to any tax sharing agreement or any other agreement providing for payments
by the Company or any of its subsidiaries with respect to Taxes. Except as set
forth in Section 2.16 of the Company Disclosure Schedule, there are no
outstanding powers of attorney enabling any party to represent the Company or
any subsidiary with respect to tax matters.
SECTION 2.17. Environmental Matters.
(a) Except as set forth in Section 2.17 of the Company
Disclosure Schedule or the Company SEC Reports or as would not, individually or
in the aggregate, have a Material Adverse Effect, the operations and properties
of the Company and its subsidiaries are in compliance with all Environmental
Laws (as hereinafter defined), which compliance includes the possession by the
Company and its subsidiaries of all permits and governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof.
(b) Except as set forth in Section 2.17 of the Company
Disclosure Schedule or the Company SEC Reports or as would not, individually or
in the aggregate, have a Material Adverse Effect, there are no Environmental
Claims (as hereinafter defined), pending or, to the best knowledge of the
Company, threatened against the Company or any of its subsidiaries or against
any person or entity whose liability for any Environmental Claim the Company or
any of its subsidiaries has expressly retained or assumed.
(c) Except as set forth in Section 2.17 of the Company
Disclosure Schedule or the Company SEC Reports to the best knowledge of the
Company, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including the release, emission, discharge,
presence or disposal of any Materials of Environmental Concern (as hereinafter
defined), that are reasonably likely to form the basis of any Environmental
Claim against the Company or any of its subsidiaries or against any person or
entity whose liability for any Environmental Claim the Company or any of its
subsidiaries have expressly retained or assumed, except for such Environmental
Claims that would not, individually or in the aggregate, have a Material Adverse
Effect.
(d) Except as set forth in Section 2.17 of the Company
Disclosure Schedule or the Company SEC Reports to the best knowledge of the
Company, (i) there are no off-site locations where the Company or any of its
subsidiaries has stored, disposed or arranged for the disposal of Materials of
Environmental Concern which have been listed on the United States National
Priority List (the "National Priorities List") or any state Superfund site list,
and the Company and its subsidiaries have not been notified or become aware that
any of them may be potentially responsible party at any such location, and (ii)
except as would not, individually or in the aggregate, have a Material Adverse
Effect, (A) there are no underground storage tanks located on property owned or
leased by the Company or any of its subsidiaries, (B) there is no material
containing friable asbestos contained in or forming part of any building,
building component, structure or office space owned, leased or operated by the
Company or any of its subsidiaries and (C) there are no polychlorinated
biphenyls ("PCBs") or PCB-containing items contained in or
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forming part of any building, building component, structure or office space
owned, leased or operated by the Company or any of its subsidiaries.
(e) For purposes of this Agreement:
(i) "Environmental Claim" means any claim, allegation,
accusation, action, cause of action, investigation or written notice by
any person or entity alleging potential liability (including potential
liability for investigatory costs, cleanup costs, response costs
incurred by any Governmental Authority or other person, natural
resources damages, property damages, personal injuries or penalties)
arising out of, based on or resulting from the presence, or release
into the environment, of any Material of Environmental Concern at any
location, whether or not owned or operated by the Company or any of its
subsidiaries.
(ii) "Environmental Laws" means all United States and
non-United States federal, national, state, provincial, local or other
jurisdictional laws, regulations, codes and ordinances relating to
pollution or protection of human health and the environment (including
ambient air, surface water, ground water, land surface or sub-surface
strata), including laws and regulations relating to emissions,
discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Materials of Environmental Concern, including, but not
limited to, the United States Comprehensive Environmental Response
Compensation and Liability Act 42 U.S.C.ss.9601 et seq., the United
States Resource Conservation and Recovery Act 42 U.S.C.ss.6901 et seq.,
the United States Toxic Substances Control Act 15 U.S.C.ss.2601 et
seq., the United States Occupational Safety and Health Act 29 X.X.X.xx.
651 et seq., the United States Clean Air Act 42 U.S.C.ss.7401 et seq.,
the United States Clean Water Act 33 U.S.C.ss.1251 et seq., Proposition
65, as codified in the California Health and Safety Codess. 25249.5 et
seq., and any other analogous state laws, each as amended or
supplemented, and any applicable transfer statutes or laws.
(iii) "Materials of Environmental Concern" means chemicals,
pollutants, contaminants, hazardous materials, hazardous substances and
hazardous wastes, medical waste, toxic substances, petroleum and
petroleum products, asbestos-containing materials, polychlorinated
biphenyls, and any other chemicals, pollutants or substances regulated
under any Environmental Law.
SECTION 2.18. Brokers. Except as set forth in Section 2.18 of
the Company Disclosure Schedule, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company or any of its stockholders.
SECTION 2.19. Intellectual Property.
(a) As used herein, the term "Intellectual Property Assets"
shall mean all worldwide intellectual property rights, including, without
limitation, patents, trademarks, service marks and copyrights, and registrations
and applications therefor, trade names, common law marks, know-how, trade
secrets, computer software programs and proprietary information. As
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used herein, "Company Intellectual Property Assets" shall mean the Intellectual
Property Assets used or owned by the Company or any of its subsidiaries.
(b) Except as set forth in Section 2.19 of the Company
Disclosure Schedule, the Company and each of its subsidiaries owns, or is
licensed or otherwise possesses legally enforceable rights to use, all
Intellectual Property Assets that are material to the conduct of the business of
the Company and its subsidiaries, taken as a whole, as currently conducted,
without conflict with the rights of others, except for conflicts, if any, which
would not, individually or in the aggregate, have a Material Adverse Effect.
(c) Except as set forth in Section 2.19 of the Company
Disclosure Schedule or as would not, individually or in the aggregate, have a
Material Adverse Effect, no claims (i) are currently pending or, to the best
knowledge of the Company, are threatened by any person with respect to the
Company Intellectual Property Assets or (ii) are, to the best knowledge of the
Company, currently pending or threatened by any person with respect to the
Intellectual Property Assets of a third party (the "Third Party Intellectual
Property Assets") to the extent arising out of any use, reproduction or
distribution of such Third Party Intellectual Property Assets by or through the
Company or any of its subsidiaries.
(d) Except as set forth in Section 2.19 of the Company
Disclosure Schedule or as would not have a Material Adverse Effect, neither the
Company nor any of its subsidiaries knows of any valid grounds for any bona fide
claim to the effect that the manufacture, sale or licensing or use of any
product or service now used, sold or licensed or proposed for use, sale or
license by the Company or any of its subsidiaries infringes on any Third Party
Intellectual Property Assets.
(e) Section 2.19 of the Company Disclosure Schedule sets forth
a list of (i) all material patents and patent applications owned by the Company
or any of its subsidiaries worldwide; (ii) all material trademark and service
xxxx registrations and all trademark and service xxxx applications; (iii)
material common law trademarks, material trade dress and material slogans, and
all material trade names owned by the Company or any of its subsidiaries
worldwide; (iv) all material copyright registrations and copyright applications
owned by the Company or any of its subsidiaries worldwide; and (v) all material
licenses owned by the Company or any of its subsidiaries in which the Company or
such subsidiary is (A) a licensor with respect to any of the patents,
trademarks, service marks, trade names or copyrights listed in Section 2.19 of
the Company Disclosure Schedule or (B) a licensee of any other person's patents,
trade names, trademarks, service marks or copyrights material to the Company
except for any licenses of software programs that are commercially available
"off the shelf." Except as disclosed in Section 2.19 of the Company Disclosure
Schedule, the Company and each of its subsidiaries has made all necessary
filings and recordations to protect and maintain its interest in the patents,
patent applications, trademark and service xxxx registrations, trademark and
service xxxx applications, copyright registrations and copyright applications
and licenses material to the conduct of the business of the Company and its
subsidiaries, taken as a whole, except where the failure to so protect or
maintain would not, individually or in the aggregate, have a Material Adverse
Effect.
(f) To the best knowledge of the Company, except as set forth
in Section 2.19 of the Company Disclosure Schedule or the Company SEC Reports:
(i) each material patent, patent
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application, trademark or service xxxx registration, trademark or service xxxx
application, copyright registration and copyright application of the Company
and each of its subsidiaries is valid and subsisting and (ii) each material
license of Company Intellectual Property Assets is to the best knowledge of the
Company valid, subsisting and enforceable.
(g) To the best knowledge of the Company, except as set forth
in Section 2.19 of the Company Disclosure Schedule, to the Company's knowledge,
there is no unauthorized use, infringement or misappropriation of any of the
Company's Intellectual Property Assets by any third party, including any
employee, former employee, independent contractor or consultant of the Company
or any of its subsidiaries which could reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Effect.
(h) Except as set forth in Section 2.19 of the Company
Disclosure Schedule, the disclosure under the heading "Impact of Year 2000"
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999 is accurate as of the date hereof in all material respects.
SECTION 2.20. Interested Party Transactions. Except as set
forth in Section 2.20 of the Company Disclosure Schedule or the Company SEC
Reports, since the Company's proxy statement dated April 19, 2000, no event has
occurred that would be required to be reported as a Certain Relationship or
Related Transaction pursuant to Item 404 of Regulation S-K promulgated by the
SEC.
SECTION 2.21. Opinion of Financial Advisor. The Board of
Directors of the Company has received an opinion of its financial advisor,
Xxxxxxx Xxxxx Xxxxxx Inc., to the effect that, as of the date of this
Agreement, the Per Share Amount to be received in the Merger by the holders of
Shares is fair to such holders from a financial point of view.
SECTION 2.22. Rights Agreement. The Board of Directors of the
Company has authorized and approved an amendment to the Rights Agreement
between the Company and First Union National Bank, dated as of July 10, 1997,
amended as of October 15, 1999 (the "Rights Agreement"), in the form set forth
in Section 2.22 of the Company Disclosure Schedule. The Company and the Rights
Agent (as defined in the Rights Agreement) shall execute such amendment to the
Rights Agreement prior to the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally,
represent and warrant to the Company as follows:
SECTION 3.01. Organization and Qualification; Subsidiaries.
Each of Parent and Merger Sub is an entity duly organized and validly existing
under the laws of the jurisdiction of its incorporation and has the requisite
corporate or other power and authority necessary to own, lease and operate the
properties it purports to own, operate or lease and to carry on its business as
it is now being conducted, except where the failure to be so organized and
existing or
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to have such power or authority could not reasonably be expected to have a
Material Adverse Effect. Each of Parent and its subsidiaries is duly qualified
or licensed as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that could not reasonably be expected to have a
Material Adverse Effect.
SECTION 3.02. Authority Relative to This Agreement. Each of
Parent and Merger Sub has all necessary corporate power and authority to
execute and deliver this Agreement, as applicable, and to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on the
part of Parent and Merger Sub, and no other corporate proceedings on the part
of Parent or Merger Sub are necessary to authorize this Agreement or to
consummate the transactions so contemplated. The Board of Directors of Parent
has determined that it is advisable and in the best interests of Parent's
stockholders for Parent to enter into this Agreement, and for Parent to
consummate the Merger upon the terms and subject to the conditions of this
Agreement. This Agreement has been duly and validly executed and delivered by
Parent and Merger Sub, and, assuming due authorization, execution and delivery
by the Company, constitutes the legal, valid and binding obligation of Parent
and Merger Sub.
SECTION 3.03. No Conflict. Except as set forth in Section
3.03 of the Parent and Merger Sub Disclosure Schedule, the execution and
delivery of this Agreement by Parent and Merger Sub do not, and the performance
of this Agreement by Parent and Merger Sub will not, (i) violate Parent or
Merger Sub's certificate of incorporation or by-laws (or equivalent
organizational documents) (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Parent, Merger Sub or any
of their subsidiaries or by which any of their respective properties is bound
or affected or (iii) result in any breach of, or constitute a default (or an
event that with notice or lapse of time or both would become a default) or
impair Parent, Merger Sub's or any of their subsidiaries' rights or alter the
rights or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on (including a right to purchase) any of the
properties or assets of Parent, Merger Sub or any of their subsidiaries
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent,
Merger Sub or any of their subsidiaries is a party or by which Parent, Merger
Sub or any of their subsidiaries or any of their respective properties is bound
or affected, except, in the case of clause (ii) or (iii), for any such
conflicts, violations, breaches, defaults or other occurrences that would,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.04. Absence of Litigation. There are no claims,
actions, suits, proceedings or investigations pending or, to the best knowledge
of Parent or Merger Sub, threatened against Parent, Merger Sub or any of their
subsidiaries, or any properties or rights of Parent, Merger Sub or any of their
subsidiaries, before any court, arbitrator or administrative body or
Governmental Authority, that would, individually or in the aggregate, have a
material adverse effect on the ability of Parent and Merger Sub to consummate
the transactions
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contemplated by this Agreement. Neither Parent nor Merger Sub is subject to any
Order of any Governmental or Regulatory Authority that would, individually or in
the aggregate have a material adverse effect on the ability of Parent and Merger
Sub to consummate the transactions contemplated by this Agreement.
SECTION 3.05. Parent Not an Interested Stockholder or an
Acquiring Person. Other than by reason of this Agreement or the transactions
contemplated hereby, to the best knowledge of Parent, neither Parent nor any of
its affiliates or associates (as such terms are defined in Section 203 of the
DGCL) is an "interested stockholder" (as such term is defined in Section 203 of
the DGCL), or an "Acquiring Person" as such term is defined in the Company
Rights Agreement.
SECTION 3.06. Proxy Statement. Subject to the accuracy of the
representations of the Company in Section 2.13, the information supplied by
Parent or Merger Sub in writing specifically for inclusion in the Proxy
Statement will not, on the date the Proxy Statement (or any amendment thereof
or supplement thereto) is first mailed to stockholders or at the time of the
Company Stockholders Meeting, contain any statement which, at such time and in
light of the circumstances under which it shall be made, is false or misleading
with respect to any material fact, or omit to state any material fact necessary
in order to make the statements therein not false or misleading, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Company
Stockholders Meeting which has become false or misleading. If at any time prior
to the Effective Time any event relating to Parent, Merger Sub or any of their
respective affiliates, officers or directors should be discovered by Parent or
Merger Sub which should be set forth in a supplement to the Proxy Statement,
Parent or Merger Sub will promptly inform the Company.
SECTION 3.07. Ownership of Merger Sub. Merger Sub is a
direct, wholly owned subsidiary of Parent.
SECTION 3.08. Solvency. The consummation by Parent and Merger
Sub of the transactions contemplated by this Agreement, including without
limitation, the entering into of any financing agreement which may be necessary
in connection therewith, will not render Parent or the Surviving Corporation
insolvent or unable to pay its obligations as they mature.
SECTION 3.09. Financing Arrangements.
(a) Parent has, on or prior to the date hereof, entered into
a commitment letter, in form furnished to the Company, pursuant to which the
issuer of such commitment has committed, subject to the conditions contained in
this Agreement and such letter and no other conditions, to lend an aggregate of
up to $440 million or more in cash to Parent for purposes of financing the
Merger and refinancing certain indebtedness of Parent or its affiliates (the
"Debt Financing").
(b) Parent has, on or prior to the date of this Agreement,
entered into one or more commitment letters, in form furnished to the Company,
pursuant to which the subscribers thereunder have, subject to the conditions
set forth in this Agreement and such letters and no other conditions, agreed to
make an equity investment in Parent in an aggregate amount of $75 million in
cash at the time of the Closing and to make an equity investment in Parent in an
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aggregate amount of $35 million in cash thereafter, in each case for the
payment of certain indebtedness and other obligations of Parent or its
affiliates (the "Equity Investment" and together with the Debt Financing, the
"Financing").
(c) The Debt Financing is sufficient to pay the aggregate
consideration to the holders of Shares and Company Options as contemplated by
this Agreement and to make all other necessary payments of fees and expenses
required to be paid by Parent and Merger Sub in connection with the
transactions contemplated by this Agreement.
SECTION 3.10. Ownership of Shares. As of the date hereof,
neither Parent nor Merger Sub owns, beneficially or of record, any Shares.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. Conduct of Business by the Company Pending the
Merger.
The Company covenants and agrees that, during the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, unless Parent shall otherwise agree in
writing (which consent shall not be unreasonably withheld, delayed or
conditioned), and except as set forth in Section 4.01 of the Company Disclosure
Schedule, the Company shall conduct its business and shall cause the businesses
of its subsidiaries to be conducted only the ordinary course of business; and
the Company shall use reasonable commercial efforts to preserve substantially
intact in all material respects the business organization of the Company and
its subsidiaries, to keep available the services of the present key officers,
employees and consultants of the Company and its subsidiaries and to preserve
the present relationships of the Company and its subsidiaries with customers,
suppliers and other persons with which the Company or any of its subsidiaries
has significant business relations. By way of amplification and not limitation,
except as contemplated by this Agreement, neither the Company nor any of its
subsidiaries shall, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, and except as set forth in Section 4.01 of the Company
Disclosure Schedule, directly or indirectly do, or propose to do, any of the
following without the prior written consent of Parent, which in the case of
clauses (c), (e), (g), (h) and (i), which will not be unreasonably withheld,
delayed or conditioned:
(a) amend or otherwise change the Company's Charter Documents
or the Subsidiary Documents except as contemplated by this Agreement;
(b) issue, sell, pledge, dispose of or encumber, or authorize
the issuance, sale, pledge, disposition or encumbrance of, any shares
of its capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any
shares of capital stock, or any other ownership interest (including,
without limitation, any phantom interest) in the Company, any of its
subsidiaries (except for (A) the issuance of shares of Company Common
Stock issuable pursuant to Company Stock Options outstanding on the
date hereof, (B) the issuance of shares of Company Common Stock
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pursuant to any employer stock fund under any Company Benefit Plan or
the Company's Employee Stock Purchase Plan in accordance with their
respective terms as in effect on the date hereof, (C) the issuance of
Company Stock Options in the ordinary course and consistent with past
practice and (D) the granting of Company Stock Options pursuant to
written offers of employment that were extended prior to the date
hereof);
(c) sell, pledge, dispose of or encumber any assets of the
Company or any of its subsidiaries (except for (i) sales of assets in
the ordinary course of business, (ii) dispositions of obsolete assets
or assets no longer useful to the Company in its business and (iii)
sales of assets which are not, individually or in the aggregate,
material to the Company and its subsidiaries, taken as a whole);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly
owned subsidiary of the Company may declare and pay a dividend to its
parent that is not a cross-border dividend (except as provided in
clause (ii) below), (ii) declare or allow any subsidiary of the
Company to declare cross-border dividends, or make or allow any
subsidiary of the Company to make cross-border capital contributions,
in an amount that exceed $250,000 individually or $500,000 in the
aggregate; (iii) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its capital
stock; (iv) except as required by the terms of any security as in
effect on the date hereof, and except to the extent necessary to
effect any right of a grantee to have shares of Company Common Stock
withheld to meet minimum tax withholding obligations in connection
with any equity award under any Company Employee Plan that is
outstanding and in effect on the date of this Agreement, amend the
terms or change the period of exercisability of, purchase, repurchase,
redeem or otherwise acquire, or permit any subsidiary to amend the
terms or change the period of exercisability of, purchase, repurchase,
redeem or otherwise acquire, any of its securities or any securities
of its subsidiaries, including, without limitation, shares of Company
Common Stock, or any option, warrant or right, directly or indirectly,
to acquire any such securities; or (v) settle, pay or discharge any
claim, suit or other action brought or threatened against the Company
with respect to or arising out of a stockholder's equity interest in
the Company;
(e) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof, or any equity interest therein,
other than those listed on Section 4.01 of the Company Disclosure
Schedule; (ii) incur any indebtedness for borrowed money, except for
borrowings and reborrowings under the Company's or any of its
subsidiaries' existing credit facilities listed on Section 2.05 of the
Company Disclosure Schedule and other borrowings not in excess of
$500,000 in the aggregate, or issue any debt securities or assume,
guarantee (other than guarantees of the Company's subsidiaries entered
into in the ordinary course of business) or endorse, or otherwise as
an accommodation become responsible for, the obligations of any
person, or make any loans or advances, except in any such case in the
ordinary course of business; (iii) authorize any capital expenditures
or purchases of fixed assets other than pursuant to the Company's
existing capital expenditures budget, a copy of which has been
delivered to Parent, except for capital expenditures or purchases
which
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are, in the aggregate, not in excess of $1,000,000, and except for the
repair or replacement of damaged assets from the proceeds of insurance
with respect thereto; or (iv) enter into or materially amend any
contract, agreement, commitment or arrangement to effect any of the
matters prohibited by this Section 4.01(e);
(f) (i) increase the compensation or severance payable or to
become payable to its directors, officers or employees, except for
increases in salary or wages of employees of the Company or its
subsidiaries in the ordinary course of business; (ii) grant any
severance or termination pay to any director, officer or employee of
the Company or any of its subsidiaries (except to make payments
required to be made under obligations existing on the date hereof in
accordance with the terms of such obligations); (iii) enter into any
employment or severance agreement with respect to which the total
annual compensation or the aggregated severance payments exceed
$150,000 with any prospective officer or employee of the Company or
any of its subsidiaries; (iv) enter into or modify any agreement with
any director of the Company or any of its subsidiaries; (v) establish,
adopt, enter into or amend any collective bargaining agreement,
Company Employee Plan, trust, fund, policy or arrangement for the
benefit of any current or former directors, officers or employees or
any of their beneficiaries, except, in each case of this clause, (x)
as may be required by law or (y) as would not result in a material
increase in the cost of maintaining such collective bargaining
agreement, Company Employee Plan, trust, fund, policy or arrangement
and would not otherwise impose any material restraint on the business
or operations of the Company or any of its subsidiaries;
(g) take any action to change accounting policies or
procedures (including, without limitation, procedures with respect to
revenue recognition, payments of accounts payable and collection of
accounts receivable), except in the ordinary course of business or as
required by law or GAAP;
(h) make any tax election or settle or compromise any United
States federal, state, local or non-United States tax liability if the
effect thereof would be adverse in any material respect to the
Company;
(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), except for the payment, discharge or satisfaction in the
ordinary course of business of liabilities reflected or reserved
against in the financial statements contained in the Company SEC
Reports filed prior to the date of this Agreement or incurred in the
ordinary course of business and except for any other payment,
discharge or satisfaction in an amount not to exceed $75,000 in the
aggregate, which settlement, discharge or satisfaction, in either such
case, provides for a complete release for the Company and its
subsidiaries and which imposes no obligation on the Company and its
subsidiaries other than the payment of money as aforesaid;
(j) make any loan to any director, officer, employee or
independent contractor of the Company or any of its subsidiaries, with
the exception of loans made in order to effect a cashless exercise of
any Stock Option in accordance with its terms or the terms of the plan
under which it was granted or advances for expenses in the ordinary
course of business; or
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(k) take, or agree in writing or otherwise to take, any of
the actions described in Sections 4.01(a) through (j) above.
SECTION 4.02. No Solicitation.
(a) The Company shall not, directly or indirectly, through
any officer, director, representative or agent of the Company or any of its
subsidiaries, and the Company shall use its best efforts to ensure that the
employees of the Company and its subsidiaries do not, solicit or encourage the
initiation of (including by way of furnishing information) any inquiries or
proposals regarding any merger, sale of assets, sale of shares of capital stock
(including, without limitation, by way of a tender offer) or similar
transactions involving the Company or any subsidiaries of the Company that if
consummated would constitute an Alternative Transaction (as defined in Section
7.01) (any of the foregoing inquiries or proposals being referred to herein as
an "Acquisition Proposal"). Nothing contained in this Agreement shall prevent
the Board of Directors of the Company from (i) furnishing information to a
third party which has made a bona fide Acquisition Proposal that is a Superior
Proposal (as defined below) not solicited in violation of this Agreement,
provided that such third party has executed an agreement with confidentiality
provisions substantially similar to those then in effect between the Company
and Parent (except that such agreement may permit such third party, consistent
with the other terms hereof, to present one or more further proposals to the
Board of Directors of the Company), (ii) subject to compliance with the other
terms of this Section 4.02, including Section 4.02(c), considering and
negotiating a bona fide Acquisition Proposal that is a Superior Proposal not
solicited in violation of this Agreement, (iii) following receipt of an
Acquisition Proposal, taking and disclosing to its stockholders a position as
required by Rules 14d-9 and 14e-2(a) of the Exchange Act or otherwise making
disclosure to the Company's stockholders to the extent required by applicable
law and (iv) following receipt of an Acquisition Proposal that is a Superior
Proposal, modifying its recommendations referred to in Section 5.02 (subject to
the terms of such Section 5.02); provided, however, that, as to each of clauses
(i) and (ii), (x) such actions occur at a time prior to approval of the Merger
and this Agreement at the Company Stockholders Meeting (or, if the Merger has
not been consummated within 30 days after the Company Stockholders Meeting
(except by reason of the Company's failure to fulfill any obligation under this
Agreement), such actions occur more than 30 days after such Company
Stockholders Meeting) and (y), as to each of clauses (i), (ii), (iii) and (iv),
the Board of Directors of the Company determines in good faith (on the advice
of independent counsel), that there is a reasonable risk that the Board of
Directors would be required to do so in order to discharge properly its
fiduciary duties. For purposes of this Agreement, a "Superior Proposal" means
any proposal made by a third party to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, all of the equity
securities of the Company entitled to vote generally in the election of
directors or all or substantially all the assets of the Company, on terms which
the Board of Directors of the Company in good faith determines to be more
favorable from a financial point of view to its stockholders than the Merger
and the transactions contemplated by this Agreement taking into account at the
time of determination any changes to the financial terms of this Agreement
proposed by Parent.
(b) The Company shall promptly notify Parent and Merger Sub
after receipt of any Acquisition Proposal, or any modification of or amendment
to any Acquisition Proposal, or any request for nonpublic information relating
to the Company or any of its subsidiaries in connection with an Acquisition
Proposal or for access to the properties, books or records of the
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Company or any subsidiary by any person or entity that informs the Board of
Directors of the Company or such subsidiary that it is considering making, or
has made, an Acquisition Proposal. Such notice shall be made orally and in
writing, and shall indicate the identity of the person making the Acquisition
Proposal or intending to make an Acquisition Proposal or requesting non-public
information or access to the books and records of the Company, the terms of any
such Acquisition Proposal or modification or amendment to an Acquisition
Proposal, and whether the Company is providing or intends to provide the person
making the Acquisition Proposal with access to information concerning the
Company as provided in Section 4.02(a). The Company shall also immediately
notify Parent and Merger Sub, orally and in writing, if it enters into
negotiations concerning material terms and conditions of any Acquisition
Proposal.
(c) Except to the extent the Board of Directors of the
Company determines in good faith (on the advice of independent counsel) that
there is a reasonable risk that the Board of Directors would be required to act
to the contrary in order to discharge properly its fiduciary duties (and, with
respect to the approval, recommendation or entering into any understanding with
respect to any Acquisition Proposal, it may take such contrary action only
after the second business day following Parent's and Merger Sub's receipt of
written notice of the Board of Directors' intention to do so), neither the
Company nor the Board of Directors of the Company shall withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent or Merger Sub, the
approval by such Board of Directors of this Agreement or the Merger; provided,
however, that in all events, unless this Agreement has been terminated in
accordance with its terms, the Merger and this Agreement shall be submitted for
approval and adoption by the Company's stockholders at the Company Stockholders
Meeting and the Board of Directors shall not recommend that stockholders vote
against approval of the Merger and adoption of this Agreement.
(d) The Company shall immediately cease and cause to be
terminated any existing discussions or negotiations with any persons (other
than Parent and Merger Sub) conducted heretofore with respect to any of the
foregoing. The Company agrees not to release any third party from the
confidentiality and standstill provisions of any agreement to which the Company
is a party. Unless this Agreement has been terminated in accordance with its
terms, the Company shall not redeem the Rights or waive or amend any provision
of the Rights Agreement to permit or facilitate the consummation of any
Acquisition Proposal or Alternative Transaction.
(e) The Company shall ensure that the officers and directors
of the Company and the Company Significant Subsidiaries and any investment
banker or other advisor or representative retained by the Company are aware of
the restrictions described in this Section 4.02.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Proxy Statement. As promptly as practicable
after the execution of this Agreement, the Company (subject to reasonable
review by and consultation with Parent) shall prepare and file with the SEC)
preliminary proxy materials which shall constitute the Proxy Statement. As
promptly as practicable after comments are received from the SEC thereon and
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after the furnishing by the Company (subject to reasonable review by and
consultation with Parent) of all information required to be contained therein,
the Company and Parent shall file with the SEC the definitive Proxy Statement
relating to the approval of the Merger and the adoption of this Agreement by
the stockholders of the Company pursuant to this Agreement.
SECTION 5.02. Company Stockholders Meeting. The Company shall
call the Company Stockholders Meeting as promptly as practicable for the
purpose of voting upon the approval of the Merger and adoption of the Merger
Agreement (the "Company Stockholder Approval"), and the Company shall use its
reasonable best efforts to hold the Company Stockholders Meeting by June 30,
2000. The Proxy Statement shall include the recommendation of the Board of
Directors of the Company in favor of this Agreement and the Merger. The Company
shall solicit from its stockholders proxies in favor of approval of this
Agreement and the Merger and shall take all other reasonable action necessary
or advisable to secure the vote or consent of stockholders in favor of such
approval. Notwithstanding anything to the contrary herein, the Company shall
not be obligated to take any of the actions set forth in the two preceding
sentences of this Section 5.02 (but not the first sentence of this Section
5.02) to the extent that the Board of Directors of the Company determines in
good faith (on the advice of independent counsel) that there is a reasonable
risk that any such action would be inconsistent with the proper discharge of
its fiduciary duties; provided, however, that in no event shall the Board of
Directors recommend that the Company's stockholders vote against approval of
the Merger and adoption of the Merger Agreement at the Company Stockholders
Meeting unless this Agreement has been terminated in accordance with its terms.
SECTION 5.03. Access to Information; Confidentiality. Upon
reasonable notice and subject to restrictions contained in confidentiality
agreements or court orders to which such party is subject (from which the
Company shall use reasonable efforts to be released), the Company shall (and
shall cause its subsidiaries to) (i) afford to the officers, employees,
accountants, counsel and other representatives (collectively the
"Representatives") of Parent and, subject to reasonable confidentiality
requirements, its financing sources reasonable access, upon reasonable prior
notice and during normal business hours during the period after the execution
and delivery of this Agreement and prior to the Effective Time, to its
properties, books, contracts, commitments and records but only to the extent
that such access does not unreasonably interfere with the business and
operations of the Company and its Subsidiaries and (ii) during such period,
furnish promptly to Parent all other information concerning its business,
properties and personnel as Parent may reasonably request, and shall make
available to Parent the appropriate individuals (including attorneys,
accountants and other professionals) for discussion of its business, properties
and personnel as Parent may reasonably request. Each party shall keep such
information confidential, and shall cause their respective Representatives to
keep such information confidential in accordance with the terms of the existing
confidentiality letters (the "Confidentiality Letters"), between Parent and the
Company.
SECTION 5.04. Consents; Approvals. Each of the Company,
Parent and Merger Sub each use commercially reasonable efforts to obtain all
consents, waivers, approvals, authorizations or orders (including, without
limitation, all United States and non-United States governmental and regulatory
rulings and approvals), and the Company, Merger Sub and Parent shall make all
filings (including, without limitation, all filings with United States and
non-United States governmental or regulatory agencies) required in connection
with the authorization,
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execution and delivery of this Agreement by the Company, Merger Sub and Parent
and the consummation by them of the transactions contemplated hereby. The
Company, Merger Sub and Parent shall furnish all information required to be
included in the Proxy Statement or for any application or other filing to be
made pursuant to the rules and regulations of any United States or non-United
States governmental body in connection with the transactions contemplated by
this Agreement. The Company, Merger Sub and Parent shall fully cooperate with
each other in order to obtain all consents, waivers, approvals, authorizations
or orders and to make all required filings in connection therewith.
SECTION 5.05. Indemnification and Insurance.
(a) The Certificate of Incorporation and By-laws of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Company's Charter Documents, which provisions
shall not be amended, modified or otherwise repealed for a period of seven
years from the Effective Time in any manner that would adversely affect the
rights thereunder as of the Effective Time of individuals who at the Effective
Time were directors, officers, employees or agents of the Company, unless such
modification is required after the Effective Time by law and then only to the
minimum extent required by such law.
(b) The Parent and Surviving Corporation shall, to the
fullest extent permitted under applicable law or under the Surviving
Corporation's Certificate of Incorporation or By-laws, indemnify and hold
harmless, each present and former director, officer or employee of the Company
or any of its subsidiaries (collectively, the "Indemnified Parties") against
any costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, (x) arising out of or
pertaining to (in whole or in part) the transactions contemplated by this
Agreement or (y) otherwise with respect to (in whole or in part) any acts or
omissions occurring at or prior to the Effective Time, to the same extent as
provided in the Company's Charter Documents or any applicable contract or
agreement set forth in the Company Disclosure Schedule, as in effect on the
date hereof, in each case for a period of seven years after the date hereof. In
the event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time) and subject to the specific terms
of any indemnification contract, (i) any counsel retained by the Indemnified
Parties for any period after the Effective Time shall be reasonably
satisfactory to the Surviving Corporation, (ii) the Parent and Surviving
Corporation shall pay expenses in advance of the final disposition of any such
claim, action, suit, proceeding or investigation to each Indemnified Party to
the full extent permitted by applicable law, provided that the person to whom
expenses are advanced provides an undertaking to repay such advance if it is
ultimately determined that such person is not entitled to indemnification,(iii)
after the Effective Time, the Parent and the Surviving Corporation shall pay
the reasonable fees and expenses of such counsel, promptly after statements
therefor are received and (iv) the Surviving Corporation will use all
commercially reasonable efforts to assist in the vigorous defense of any such
matter; provided, however, that the Surviving Corporation shall not be liable
for any settlement effected without its written consent (which consent shall
not be unreasonably withheld); and provided, further, that, in the event that
any claim or claims for indemnification are asserted or made within such
seven-year period, all rights to indemnification in respect of any such claim
or claims shall continue until the disposition of any and all such claims. The
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Indemnified Parties as a group may retain only one law firm to represent them
in each applicable jurisdiction with respect to any single action unless there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties,
in which case each Indemnified Person with respect to whom such a conflict
exists (or group of such Indemnified Persons who among them have no such
conflict) may retain one separate law firm in each applicable jurisdiction.
(c) The Surviving Corporation shall honor and fulfill in all
respects the obligations of the Company pursuant to indemnification agreements
and employment agreements set forth in the Company Disclosure Schedule, (the
employee parties under such agreements being referred to as the "Officer
Employees") with the Company's directors and officers (including former
directors and officers) existing at or before the Effective Time, provided such
agreements have not been entered into or modified in violation of Section
4.01(f).
(d) In addition, Parent will provide, or cause the Surviving
Corporation to provide, for a period of not less than six years after the
Effective Time, the Company's current directors and officers an insurance and
indemnification policy with a reputable and financially sound insurer that
provides coverage for events occurring at or prior to the Effective Time (the
"D&O Insurance") that is no less favorable than the policy maintained by the
Company and its Subsidiaries as of the date hereof or, if substantially
equivalent insurance coverage is unavailable, the most generally favorable
coverage reasonably available; provided, however, that Parent and the Surviving
Corporation, in the aggregate, shall not be required to pay an annual premium
for the D&O Insurance in excess of 150% of the annual premium currently paid by
the Company for such insurance (plus a percentage equal to any cumulative
increase in annual premiums for the same period in any D&O Insurance policy
maintained by Parent), but in such case shall purchase as much such coverage as
is reasonably available for such amount.
(e) From and after the Effective Time, Parent shall
unconditionally guarantee the timely payment of all funds owing by, and the
timely performance of all other obligations of, the Surviving Corporation under
this Section 5.05.
(f) This Section shall survive the consummation of the Merger
at the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, the Officer Employees and their
respective heirs and legal representatives, shall be binding on all successors
and assigns of the Surviving Corporation and shall be enforceable by the
Indemnified Parties.
(g) In the event the Company, Parent or the Surviving
Corporation 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 so that the
successors and assigns of the Company, Parent or the Surviving Corporation, as
the case may be, or at Parent's option, Parent, shall assume the obligations
set forth in paragraphs (a) and (b) of this Section.
SECTION 5.06. Notification of Certain Matters. The Company
shall give prompt notice to Parent and Merger Sub, and Parent and Merger Sub
shall give prompt notice to the Company, of (i) the occurrence or nonoccurrence
of any event the occurrence or nonoccurrence
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of which would reasonably be expected to cause any representation or warranty
of the notifying party contained in this Agreement to be materially untrue or
inaccurate, or (ii) any failure of the Company, Parent or Merger Sub, as the
case may be, materially to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
SECTION 5.07. Further Action.
(a) Upon the terms and subject to the conditions hereof, each
of the parties hereto shall use all commercially reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, to obtain in a
timely manner all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and otherwise to satisfy or cause to be
satisfied all conditions precedent to its obligations under this Agreement. The
foregoing covenant shall not include any obligation by Parent to agree to
divest, abandon, license or take similar action with respect to any material
assets (tangible or intangible) of Parent or the Company or any of their
subsidiaries. The term "material" for purposes of the preceding sentence means
any assets to which are attributable annual revenues in an amount equal to 10%
or more of the Company's annual revenues for the fiscal year ended December 31,
1999.
(b) Without limitation the generality of the foregoing, the
Company will provide, and will cause its subsidiaries and its and their
respective officers, employees and advisors to provide (at the sole cost and
expense of Parent), all reasonable cooperation in connection with the
arrangement of any equity investment and debt financing proposed to be
consummated by Parent substantially contemporaneously with the closing referred
to in Section 1.02 in respect of the transactions contemplated by this
Agreement, or thereafter, including, without limitation, (x) participation in
meetings, due diligence sessions and "road shows," (y) the preparation of
offering memoranda, private placement memoranda, and similar documents, and (z)
the execution and delivery of any customary commitment letters, documents, or
other requested certificates or documents, including comfort letters of
accountants and legal opinions, in each case as may be reasonably requested by
Parent or Merger Sub, provided that the form and substance of any of the
documents referred to in clause (y), and the terms and conditions of any of the
agreements and other documents referred to in clause (z), shall be consistent
with the consummation by Parent of the transactions contemplated by this
Agreement. In connection with the foregoing, Parent hereby agrees to indemnify,
defend and hold harmless, to the same extent, in the same manner and subject to
the same limitations set forth in Section 5.05, each person participating in
any such activities from and against any and all costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim,
action, suit, proceeding or investigation arising out of or pertaining to such
participation, except in the case of such person's bad faith, willful
misconduct or gross negligence.
(c) Neither Parent nor Merger Sub, on one hand, nor the
Company nor any of its subsidiaries, on the other, shall take any action which
the officer or director authorizing such action believes or should reasonably
believe (x) would make any of the representations or
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warranties of any such party contained in this Agreement materially untrue or
incorrect or (y) prevent any such party from performing or cause such party not
to perform its covenants hereunder (other than, in the case of the Company,
actions permitted by Section 4.02).
SECTION 5.08. Public Announcements. Parent and the Company
shall consult with each other before issuing any press release or making any
written public statement with respect to the Merger or this Agreement and shall
not issue any such press release or make any such public statement without the
prior consent of the other party, which shall not be unreasonably withheld;
provided, however, that either party may, without the prior consent of the
other, issue such press release or make such public statement as may upon the
advice of counsel be required by law or the applicable rules and regulations of
the New York Stock Exchange or the American Stock Exchange, as the case may be,
if it has used all reasonable efforts to consult with the other party.
SECTION 5.09. Conveyance Taxes. Parent, Merger Sub and the
Company shall cooperate in the preparation, execution and filing of all
returns, questionnaires, applications or other documents regarding any real
property transfer or gains, sales, use, transfer, value added, stock transfer
and stamp taxes, any transfer, recording, registration and other fees, and any
similar taxes which become payable in connection with the transactions
contemplated hereby that are required or permitted to be filed on or before the
Effective Time, and the Surviving Corporation shall be responsible for the
payment of all such taxes and fees.
SECTION 5.10. Option Plans and Benefits, Etc.
(a) Prior to the Effective Time, the parties to this
Agreement shall take all such actions as shall be necessary to effectuate the
provisions of Section 1.09, including without limitation, timely action by the
Board of Directors of the Company, if any is required, in accordance with the
applicable option plans to elect to pay holders of Company Options, upon any
exercise thereof, the applicable cash amount in lieu of delivery of the Shares
and take any additional action required to ensure that no such Company Options
remain otherwise outstanding after the Effective Time (in each case, including,
without limitation, Company Options granted under the Company's non-employee
Directors Plan).
(b) Parent shall either (i) cause the Company Employee Plans
in effect at the date of this Agreement to remain in effect until the third
anniversary of the Effective Time or (ii) maintain until such date, employee
benefit plans which in the aggregate, provide a substantially similar level of
benefits as those provided under comparable Company Employee Plans with respect
to employees of the Company covered under such plans as of the date of this
Agreement; provided, however, that the foregoing shall not apply to any
provisions of any Company Employee Plan under which employees may receive, or
under which employee benefits are based on, Company Common Stock or to the
extent inconsistent with any employment agreement with any employee.
(c) Parent shall, and shall cause the Surviving Corporation
to, honor without modification all employee severance plans (or policies) and
employment and severance agreements of the Company or any of its Subsidiaries
(i) which have been delivered to Parent prior to the execution and delivery of
this Agreement, or (ii) which are hereafter entered into
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accordance with Section 4.01 of the Company Disclosure Schedule as such
agreements shall be in effect in accordance with the terms of this Agreement at
the Effective Time.
SECTION 5.11. Rights Agreement. The Board of Directors of the
Company shall take all further action (in addition to that referred to in
Section 2.22), if any, necessary in order to render the Rights (as defined in
the Rights Agreement) inapplicable to the Merger and the other transactions
contemplated by this Agreement (including any financing in connection
therewith).
SECTION 5.12. Accountant's Letters. Upon reasonable notice
from Parent, the Company shall use reasonable efforts to cause Ernst & Young
LLP to deliver to Merger Sub, a letter covering such matters as are reasonably
requested by Parent, and as are customarily addressed in accountants' "comfort
letters."
SECTION 5.13. Standstill. Each of Parent, on one hand, and
the Company, on the other hand, agrees that until the expiration of six months
from the date of termination of this Agreement, without the prior written
consent of the other party, it will not (a) in any manner acquire, agree to
acquire or make any proposal to acquire, directly or indirectly (i) a
substantial portion of the assets of the other party and its subsidiaries taken
as a whole or (ii) five percent (5%) or more of the issued and outstanding
shares of common stock of the other party, (b) make or in any way participate,
directly or indirectly, in any "solicitation" of "proxies" (as such terms are
used in the proxy rules of the SEC) to vote, or seek to advise or influence any
person with respect to the voting of, any voting securities of the other party
or any of its subsidiaries or (c) form, join or in any way participate in a
"group" (within the meaning of Section 13(d) of the Exchange Act) with respect
to any voting securities of the other party or any of its subsidiaries.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to Obligation of Each Party to
Effect the Merger. The respective obligations of each party to effect the
Merger shall be subject to the satisfaction at or prior to the Effective Time
of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the stockholders of the
Company;
(b) Antitrust. All waiting periods applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated, and all clearances and approvals required to be obtained in respect
of the Merger prior to the Effective Time under any Non-U.S. Monopoly Laws
shall have been obtained, except where the failure to have obtained any such
clearances or approvals with respect to any Non-U.S. Monopoly Laws could not
reasonably be expected to have a Material Adverse Effect on the Company, Parent
or their respective subsidiaries;
(c) Governmental Actions. There shall not have been
instituted, pending or threatened any action or proceeding (or any
investigation or other inquiry that is reasonably likely to result in such an
action or proceeding) by any governmental authority or administrative
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agency before any governmental authority, administrative agency or court of
competent jurisdiction, United States or non-United States, that is reasonably
likely to result in an order, nor shall there be in effect any judgment, decree
or order of any governmental authority, administrative agency or court of
competent jurisdiction, or any other legal restraint (i) preventing or seeking
to prevent consummation of the Merger or (ii) as a condition to the obligations
of Parent and Merger Sub, prohibiting or seeking to prohibit, or limiting or
seeking to limit, Parent from exercising all material rights and privileges
pertaining to its ownership of the Surviving Corporation or any investor in
Parent from owning and exercising all material rights and privileges pertaining
to its ownership of its interest therein or the ownership or operation by Parent
or any of its subsidiaries of all or a material portion of the business or
assets of the Surviving Corporation and its subsidiaries, or compelling or
seeking to compel Parent or any of its subsidiaries to dispose of or hold
separate all or any material portion of the business or assets of Parent or any
of its subsidiaries (including the Surviving Corporation and its subsidiaries),
as a result of the Merger or the transactions contemplated by this Agreement;
and
(d) Illegality. No statute, rule, regulation or order shall be
enacted, entered, enforced or deemed applicable to the Merger which makes the
consummation of the Merger illegal.
SECTION 6.02. Additional Conditions to Obligations of Parent
and Merger Sub. The obligations of Parent and Merger Sub to effect the Merger
are also subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and correct
in all respects (without for this purpose giving effect to qualifications of
materiality contained in such representations and warranties) on and as of the
Effective Time, with the same force and effect as if made on and as of the
Effective Time, except for (i) changes contemplated by this Agreement, (ii)
those representations and warranties which address matters only as of a
particular date (which shall have been true and correct as of such date, subject
to clause (iii)), or (iii) where the failure to be true and correct would not,
individually or in the aggregate with all other such failures, have a Material
Adverse Effect, and Parent and Merger Sub shall have received a certificate of
the Company to such effect signed by the Chief Executive Officer or Chief
Financial Officer of the Company;
(b) Agreements and Covenants. The Company shall in all
material respects have performed or complied with the agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to
the Effective Time, and Parent and Merger Sub shall have received a certificate
to such effect signed by the Chief Executive Officer or Chief Financial Officer
of the Company; and
(c) Consents Obtained. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and all filings
required to be made, by the Company for the authorization, execution and
delivery of this Agreement and the consummation by it of the transactions
contemplated hereby shall have been obtained and made by the Company, except
where the failure to receive such consents, waivers, approvals, authorizations
or orders would not, individually or in the aggregate with all other such
failures, have a Material Adverse Effect on the Company or Parent.
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(d) Rights Agreement. A Distribution Date shall not have
occurred under the Rights Agreement.
SECTION 6.03. Additional Conditions to Obligation of the
Company. The obligation of the Company to effect the Merger is also subject to
the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained in this Agreement (other than
those set forth in Sections 3.03(iii) or 3.04) shall be true and correct in all
respects (without for this purpose giving effect to qualifications of
materiality contained in such representations and warranties) on and as of the
Effective Time, with the same force and effect as if made on and as of the
Effective Time, except for (i) changes contemplated by this Agreement, (ii)
those representations and warranties which address matters only as of a
particular date (which shall have been true and correct as of such date, subject
to clause (iii)), or (iii) where the failure to be true and correct would not,
individually or in the aggregate with all other such failures, have a Material
Adverse Effect, and the Company shall have received a certificate to such effect
signed by the Chief Executive Officer or Chief Financial Officer of Parent;
(b) Agreements and Covenants. Parent and Merger Sub shall in
all material respects have performed or complied with the agreements and
covenants required by this Agreement to be performed or complied with by them on
or prior to the Effective Time, and the Company shall have received a
certificate of Parent and Merger Sub to such effect signed by the Chief
Executive Officer or Chief Financial Officer of Parent and the President or Vice
President of Merger Sub;
(c) Consents Obtained. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and all filings
required to be made, by Parent or Merger Sub for the authorization, execution
and delivery of this Agreement and the consummation by them of the transactions
contemplated hereby shall have been obtained and made by Parent or Merger Sub,
except where the failure to receive such consents, waivers, approvals,
authorizations or orders would not, individually or in the aggregate with all
other such failures, have a Material Adverse Effect on the Company or Parent;
(d) Financial Advisor Opinion. The opinion from Xxxxxxx Xxxxx
Xxxxxx Inc. referred to in Section 2.21 shall not have been withdrawn as of the
date of the Proxy Statement; and
(e) Solvency. The Company shall have received from an
investment banking or accounting firm satisfactory to the Company an opinion in
form and substance satisfactory to the Company to the effect that the
consummation by Parent and Merger Sub of the transactions contemplated by this
Agreement, including, without limitation, the entering into of any financing
agreement which may be necessary in connection therewith, will not render Parent
or the Surviving Corporation insolvent or unable to pay its obligations as they
mature.
ARTICLE VII
TERMINATION
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SECTION 7.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not
have been consummated by September 30, 2000 (other than for the reasons
set forth in clause (d) below); provided, however, that the right to
terminate this Agreement under this Section 7.01(b) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the principal cause of, or resulted in, the
failure of the Merger to be consummated on or prior to such date; or
(c) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission having authority with respect thereto shall have issued a
nonappealable final order, decree or ruling or taken any other
nonappealable final action having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger; or
(d) by Parent if the Company Stockholders Meeting has not been
held by July 31, 2000 or by Parent or the Company if the stockholders
of the Company shall not have approved the Merger and adopted this
Agreement at the Company Stockholders Meeting; or
(e) by Parent, if, whether or not permitted to do so by this
Agreement, the Board of Directors of the Company or the Company shall
(x) (i) withdraw, modify or change its approval or recommendation of
this Agreement or the Merger in a manner adverse to Parent; (ii)
approve or recommend to the stockholders of the Company an Alternative
Transaction; or (iii) approve or recommend that the stockholders of the
Company tender their shares in any tender or exchange offer that is an
Alternative Transaction, or (y) take any position or make any
disclosures to the Company's stockholders permitted pursuant to Section
4.02 which has the effect of any of the foregoing; or
(f) by the Company, in order to accept a Superior Proposal,
provided that the Merger and this Agreement shall not theretofore have
been approved at the Company Stockholders Meeting, the Board of
Directors of the Company determines in good faith (on the advice of
independent counsel), that there is a reasonable risk that it would be
required to accept such proposal in order to discharge properly its
fiduciary duties, the Company shall in fact accept such proposal, and
the Company shall have complied in all respects with the provisions of
Section 4.02; or
(g) by Parent or the Company, if any representation or
warranty of the Company, or Parent and Merger Sub, respectively, set
forth in this Agreement shall be untrue in any material respect when
made, such that the conditions set forth in Section 6.02(a) or 6.03(a),
as the case may be, would not be satisfied (in each case, a
"Terminating Misrepresentation"); provided that, if such Terminating
Misrepresentation is curable prior to September 30, 2000 by the Company
or Parent, as the case may be, through the
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exercise of its reasonable best efforts to eliminate, undo or reverse
the event or circumstance giving rise to such Terminating
Misrepresentation and for so long as the Company or Parent, as the case
may be, continues to exercise such reasonable best efforts, neither
Parent nor the Company, respectively, may terminate this Agreement
under this Section 7.01(g); or
(h) by Parent, if any representation or warranty of the
Company shall have become untrue in any material respect such that the
condition set forth in Section 6.02(a) would not be satisfied, or by
the Company, if any representation or warranty of Parent and Merger Sub
shall have become untrue in any material respect such that the
condition set forth in Section 6.03(a) would not be satisfied (in each
case, a "Terminating Change"), in either case other than by reason of a
Terminating Breach (as hereinafter defined); provided that, if any such
Terminating Change is curable prior to September 30, 2000 by the
Company or Parent, as the case may be, through the exercise of its
reasonable best efforts, and for so long as the Company or Parent, as
the case may be, continues to exercise such reasonable best efforts,
neither Parent nor the Company, respectively, may terminate this
Agreement under this Section 7.01(h); or
(i) by Parent or the Company, upon a material breach of any
covenant or agreement on the part of the Company or Parent,
respectively, set forth in this Agreement such that the conditions set
forth in Section 6.02(b) or 6.03(b), as the case may be, would not be
satisfied (in each case, a "Terminating Breach"); provided that, except
for any breach of the Company's obligations under Section 4.02, if such
Terminating Breach is curable prior to September 30, 2000 by the
Company or Parent, as the case may be, through the exercise of its
reasonable best efforts and for so long as the Company or Parent, as
the case may be, continues to exercise such reasonable best efforts,
neither Parent nor the Company, respectively, may terminate this
Agreement under this Section 7.01(i).
As used herein, "Alternative Transaction" means any of (i) a
transaction pursuant to which any person (or group of persons) other than Parent
or its affiliates (a "Third Party") acquires or would acquire more than 20% of
the outstanding shares of any class of equity securities of the Company, whether
from the Company or pursuant to a tender offer or exchange offer or otherwise,
(ii) a merger or other business combination involving the Company pursuant to
which any Third Party acquires more than 20% of the outstanding equity
securities of the Company or the entity surviving such merger or business
combination, or (iii) any transaction pursuant to which any Third Party acquires
or would acquire control of assets (including for this purpose the outstanding
equity securities of subsidiaries of the Company and securities of the entity
surviving any merger or business combination including any of the Company's
subsidiaries) of the Company, or any of its subsidiaries, having a fair market
value (as determined by the Board of Directors of the Company in good
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faith) equal to more than 20% of the fair market value of all the assets of the
Company and its subsidiaries, taken as a whole, immediately prior to such
transaction, or (iv) any other material consolidation, business combination,
recapitalization, redemption, extraordinary dividend or similar transaction
involving the Company or any of the Company Significant Subsidiaries (other than
any acquisition by the Company, for fair market value, of any business, or any
equity interest therein, having a fair market value (as determined by the Board
of Directors of the Company in good faith) equal to no more than 20% of the fair
market value of all the assets of the Company and its subsidiaries, taken as a
whole, immediately prior to such transaction), other than the transactions
contemplated by this Agreement; provided, however, that the term Alternative
Transaction shall not include any acquisition of securities by a broker dealer
in connection with a bona fide public offering of such securities. In the case
of any Alternative Transaction which has not, directly or indirectly, through
any officer, director, employee, representative or agent of the Company or any
of its subsidiaries, been solicited or encouraged by the Company, and which the
Board of Directors of the Company has rejected, recommended that stockholders of
the Company do not accept or approve, and used reasonable best efforts in good
faith to prevent, each reference to the figure 20% in the preceding sentence
shall refer instead to the figure 35%.
SECTION 7.02. Effect of Termination. In the event of the valid
termination of this Agreement pursuant to Section 7.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto or any of its affiliates, directors, officers or stockholders except that
(i) the Company or Parent or Merger Sub may have liability as set forth in
Section 5.07, Section 7.03 and Section 8.01 hereof, and (ii) nothing herein
shall relieve the Company, Parent or Merger Sub from liability for any willful
material breach hereof (it being understood that the mere existence of a
Material Adverse Effect, by itself, shall not constitute such a willful material
breach).
SECTION 7.03. Parent's Fees and Expenses.
(a) Except as set forth in this Section 7.03, all fees and
expenses incurred by Parent and/or Merger Sub in connection with this Agreement
and the transactions contemplated hereby shall be paid by Parent and/or Merger
Sub, whether or not the Merger is consummated; provided, however, that Parent
and the Company shall share equally all SEC filing fees and printing expenses
incurred in connection with the printing and filing of the Proxy Statement
(including any preliminary materials related thereto) and any amendments or
supplements thereto.
(b) The Company shall pay to Parent (x) Parent's and Merger
Sub's respective actual, documented and reasonable out-of-pocket expenses,
relating to the transactions contemplated by this Agreement (including, but not
limited to, reasonable fees and expenses of counsel and accountants, commitment
fees with respect to the Financing and out-of-pocket expenses and reasonable
fees of financial advisors) ("Parent Expenses"), such payment of Parent Expenses
not to exceed $1,000,000, and (y) a fee of 3% of the total of the Per Share
Amounts respecting all the Shares (the "Parent Fee"), in each case upon the
first to occur of any of the following events:
(i) the termination of this Agreement by Parent or the Company
pursuant to Section 7.01(d) or (e)(i), provided that, if this Agreement is
terminated because the stockholders have not approved and adopted the Merger and
this Agreement at the Company's Stockholders Meeting, the Parent Fee and Parent
Expenses shall only be payable under this clause (i) if there shall occur a
Payment Trigger; or
(ii) the termination of this Agreement by Parent pursuant to
clause (x)(ii) or (x)(iii) of Section 7.01(e) or the corresponding application
of clause (y) thereof to clause (x)(ii) or (x)(iii); or
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(iii) the termination of this Agreement by the Company
pursuant to Section 7.01(f); or
(iv) the termination of this Agreement by Parent pursuant to
Section 7.01(i) as a result of a willful breach by the Company; provided that
the Parent Fee and Parent Expenses shall only be payable under this clause (iv)
if there shall occur a Payment Trigger.
The term "Payment Trigger" means either (A) at the time of the
Company Stockholders Meeting, in the case of clause (i) above, or at the time of
the Terminating Breach, in the case of clause (iv) above, there shall be
outstanding or purport to be outstanding an Acquisition Proposal which has been
made directly to stockholders of the Company or has otherwise become publicly
known or known to holders of 10% or more of the Company Common Stock or there
shall be outstanding an announcement by any credible third party of an intention
to make an Acquisition Proposal which, in either case, would if consummated
constitute an Alternative Transaction, or (B) an Alternative Transaction shall
be publicly announced by the Company or any Third Party and such transaction
shall be consummated within twelve months following the date of termination of
this Agreement on substantially the terms so announced.
(c) Upon a termination of this Agreement by Parent pursuant to
Section 7.01(g) or (i), the Company shall pay to Parent the Parent Expenses
relating to the transactions contemplated by this Agreement, but in no event
more than $1,000,000.
(d) The Parent Fee and/or Parent Expenses payable pursuant to
Section 7.03(b) or Section 7.03(c) shall be paid within three business days
after a demand for payment following the first to occur of any of the events
described in Section 7.03(b) or Section 7.03(c).
(e) Parent agrees that the payments provided for in Section
7.03 shall be the sole and exclusive remedies of Parent upon a termination of
this Agreement (but only, in the case of Sections 7.01(g) or (i), if the
Terminating Misrepresentation or Terminating Breach is not the result of willful
misconduct).
SECTION 7.04. Company's Fees and Expenses.
(a) Except as set forth in this Section 7.04, all fees and
expenses incurred by the Company in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Company, whether or not
the Merger is consummated; provided, however, that the Company and Parent shall
share equally all SEC filing fees and printing expenses incurred in connection
with the printing and filing of the Proxy Statement (including any preliminary
materials related thereto) and any amendments or supplements thereto.
(b) Parent shall pay to the Company (x) the Company's actual,
documented and reasonable out-of-pocket expenses, relating to the transactions
contemplated by this Agreement (including, but not limited to, reasonable fees
and expenses of counsel and accountants, and out-of-pocket expenses and
reasonable fees of financial advisors) ("Company Expenses"), such payment of
Company Expenses not to exceed $1,000,000, and (y) a fee of 1% of the total of
the
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Per Share Amounts respecting all the Shares (the "Company Fee") upon the
termination of this Agreement by Company pursuant to Section 7.01(i) as a result
of a willful breach by Parent or Merger Sub of any material covenant herein
contained.
(c) Upon a termination of this Agreement by the Company
pursuant to Section 7.01(g) or (i), the Parent shall pay to the Company the
Company Expenses relating to the transactions contemplated by this Agreement,
but in no event more than $1,000,000.
(d) The Company Expenses and/or Company Fee payable pursuant
to Section 7.04(b) or Section 7.04(c) shall be paid within three business days
after a demand for payment following the first to occur of any of the events
described in Section 7.04(b) or Section 7.04(c).
(e) The Company agrees that the payments provided for in
Section 7.04 shall be the sole and exclusive remedies of the Company upon a
termination of this Agreement (but only, in the case of Sections 7.01(g) or (i),
if the Terminating Misrepresentation or Terminating Breach is not the result of
willful misconduct). The Company and Parent agree that the Company Fee and
Company Expenses shall be payable in the event that the Merger is not
consummated because Parent does not receive the proceeds of financing therefor,
in which case payment of the Company Fee and Company Expenses shall be the
Company's sole and exclusive remedy.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Effectiveness of Representations, Warranties and
Agreements.
(a) Except as otherwise provided in this Section 8.01, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. To the extent that as of the date hereof (i) a Responsible
Officer of Parent had actual knowledge that any representation or warranty of
the Company was untrue or incorrect such that conditions to the obligations of
Parent and Merger Sub to effect the Merger pursuant to Section 6.02(a) would not
be satisfied and (ii) no Responsible Officer of the Company had actual knowledge
that such representation or warranty was untrue or incorrect, then the failure
of such representation or warranty to be true and correct in such respect shall
no longer be a condition to the obligations of Parent and Merger Sub to effect
the Merger. To the extent that as of the date hereof (i) a Responsible Officer
of the Company had actual knowledge that any representation or warranty of
Parent or Merger Sub was untrue or incorrect such that the conditions to the
Company's obligations to effect the Merger pursuant to Section 6.03(a) would not
be satisfied and (ii) no Responsible Officer of Parent had actual knowledge that
such representation or warranty was untrue or incorrect, then the failure of
such representation or warranty to be true and correct in such respect shall no
longer be a condition to the Company's obligation to effect the Merger. The
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section
7.01, as the case may be, except that the agreements set forth in Article I and
this Article VIII and Sections 5.05, 5.07 and 5.10 and any other agreement in
this Agreement
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which contemplates performance after the Effective Time shall survive the
Effective Time indefinitely in accordance with their terms and those set forth
in Sections 5.07(b), 5.13, 7.02 and 7.03 and this Article VIII shall survive the
termination of this Agreement. The provisions of the Confidentiality Letters
(except the "standstill" or similar provisions therein limiting Parent from
proposing or entering into certain transactions or taking certain actions
involving the Company or its securities, which shall be superseded by Section
5.13 hereof) regarding the non-disclosure of confidential information shall
survive termination of this Agreement.
(b) Any disclosure made with reference to one or more Sections
of the Company Disclosure Schedule shall be deemed disclosed with respect to
each other section therein as to which such disclosure is relevant provided that
such relevance is reasonably apparent. Disclosure of any matter in the Company
Disclosure Schedule shall not be deemed an admission that such matter is
material. No statement contained in any certificate or schedule required to be
furnished by any party hereto pursuant to the provisions of this Agreement,
including the Company Disclosure Schedule shall contain any untrue statement of
material fact.
SECTION 8.02. Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made if and when delivered personally or by overnight courier
to the parties at the following addresses or sent by electronic transmission,
with confirmation received, to the telecopy numbers specified below (or at such
other address or telecopy number for a party as shall be specified by like
notice):
(a) If to Parent:
Autotote Corporation
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: A. Xxxxx Xxxx, Chairman and Chief
Executive Officer
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
With a copy to:
Autotote Corporation
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Vice President and
General Counsel
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
With a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
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Attn: Xxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
If to Merger Sub:
ATX Enterprises, Inc.
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
With a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
(b) If to the Company:
Scientific Games Holdings Corp.
0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Chairman, President
and Chief Executive Officer
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
With a copy to:
Scientific Games Holdings Corp.
0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Attn: C. Xxxx Xxxxxx, Vice President,
Secretary and General Counsel
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
With a copy to:
Xxxxx, Xxxxxxxx & Xxxxxxx, LLP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
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00
Xxxxxxx, XX 00000
Attn.: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
SECTION 8.03. Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliates" means 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;
(b) "business day" means any day other than a day on which
banks in New York are required or authorized to be closed;
(c) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or
as trustee or executor, of the power to direct or cause the direction
of the management or policies of a person, whether through the
ownership of stock, as trustee or executor, by contract or credit
arrangement or otherwise;
(d) "dollars" or "$" means United States dollars;
(e) "knowledge" or "best knowledge" means, with respect to any
matter in question, that the Responsible Officers of the Company or
Parent or Merger Sub, as the case may be, have or at any time had
actual knowledge of such matters. "Responsible Officers" for purposes
of this definition means the Chief Executive Officer, the President,
any Executive or Senior Vice President or Corporate Vice President, the
Chief Financial Officer or the General Counsel of any such person;
(f) "person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated
organization, other entity or group (as defined in Section 13(d)(3) of
the Exchange Act); and
(g) "subsidiary" or "subsidiaries" of the Company, the
Surviving Corporation, Parent or any other person means any
corporation, partnership, joint venture or other legal entity of which
the Company, the Surviving Corporation, Parent or such other person, as
the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, more than 50% of the stock
or other equity interests the holders of which are generally entitled
to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
SECTION 8.04. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after approval of the Merger and this Agreement by the stockholders of the
Company, no amendment may be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
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SECTION 8.05. Waiver. At any time prior to the Effective Time,
any party hereto may with respect to any other party hereto (a) extend the time
for the performance of any of the obligations or other acts, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, or (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
SECTION 8.06. Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 8.07. Severability.
(a) 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 or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon a 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.
(b) The Company and Parent agree that the Fee is fair and
reasonable in the circumstances. If a court of competent jurisdiction shall
nonetheless, by a final, non-appealable judgment, determine that the amount of
the Fee exceeds the maximum amount permitted by law, then the amount of the Fee
shall be reduced to the maximum amount permitted by law in the circumstances, as
determined by such court of competent jurisdiction.
SECTION 8.08. Entire Agreement. This Agreement constitutes the
entire agreement and supersedes all prior agreements and undertakings (other
than the Confidentiality Letters, except to the extent specifically superseded
hereby), both written and oral, among the parties, or any of them, with respect
to the subject matters hereof and thereof, except as otherwise expressly
provided herein.
SECTION 8.09. Assignment. This Agreement shall not be assigned
by operation of law or otherwise, except that all or any of the rights of Parent
and/or Merger Sub hereunder may be assigned to any wholly-owned, direct or
indirect, subsidiary of Parent, provided that no such assignment shall relieve
the assigning party of its obligations hereunder.
SECTION 8.10. 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 or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, including, without limitation, by way of subrogation,
other than Section 5.05 (which is intended to be for the benefit of the
Indemnified Parties and Officer Employees and may be enforced by such
Indemnified Parties and Officer Employees).
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SECTION 8.11. 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 any
other or further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 8.12. Governing Law; Jurisdiction.
(a) This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware applicable to
contracts executed and fully performed within the State of Delaware.
(b) Each of the parties hereto submits to the exclusive
jurisdiction of the state and federal courts of the United States located in the
State of Delaware with respect to any claim or cause of action arising out of
this Agreement or the transactions contemplated hereby.
(c) Each of the parties to this Agreement (i) consents to
submit itself to the personal jurisdiction of such court in the event that any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (iii) agrees that it will not bring any action in relation to this
Agreement, the Merger or any of the other transactions contemplated by this
Agreement in any court other than such court in the State of Delaware.
SECTION 8.13. Counterparts. This Agreement may be executed in
two or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 8.14. WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB
AND THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 8.15. Performance of Obligations. Unless otherwise
previously performed, Parent shall cause Merger Sub to perform all of its
obligations set forth in this Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
AUTOTOTE CORPORATION
By /s/
--------------------------------
Name:
Title:
ATX ENTERPRISES, INC.
By /s/
--------------------------------
Name:
Title:
SCIENTIFIC GAMES HOLDINGS CORP.
By /s/
--------------------------------
Name:
Title:
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