EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
AMONG
CHURCH & XXXXXX CO., INC.,
US ACQUISITION CORP.
AND
USA DETERGENTS, INC.
DATED AS OF MARCH 30, 2001
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 30, 2001, is entered
into by and among CHURCH & XXXXXX CO., INC., a Delaware corporation ("PARENT"),
US ACQUISITION CORP., a Delaware corporation ("PURCHASER") and a wholly-owned
subsidiary of Parent, and USA DETERGENTS, INC., a Delaware corporation (the
"COMPANY").
WHEREAS, the Board of Directors of each of the Company, Parent and
Purchaser has, in light of and subject to the terms and conditions set forth
herein, (a) determined that a business combination between Parent and the
Company is fair to their respective stockholders and in the best interests of
such stockholders and (b) accordingly has approved a merger of Purchaser with
and into the Company, with the Company as the surviving corporation (the
"SURVIVING CORPORATION"), upon the terms and subject to the conditions set forth
herein (the "MERGER"); and
WHEREAS, by resolutions duly adopted, the respective Boards of Directors of
the Company, Parent and Purchaser have approved and adopted this Agreement and
the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, the Company, Parent and
Purchaser hereby agree as follows:
ARTICLE 1
THE OFFER
Section 1.1. The Offer.
(a) Provided that this Agreement has not been terminated in accordance with
Article 7 and none of the events or conditions set forth in Annex I hereto has
occurred and is existing, then, as promptly as reasonably practicable after the
public announcement of the terms of this Agreement, but in no event later than
ten (10) Business Days after the date hereof, Purchaser shall, and Parent shall
cause Purchaser to, commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")), an offer (the
"OFFER") for all of the outstanding shares of common stock, par value $0.01 per
share, of the Company (individually a "SHARE" and, collectively, the "SHARES")
at a price per Share of $7.00, net to the seller in cash (the "OFFER PRICE").
Purchaser shall, and Parent shall cause Purchaser to, accept for payment Shares
that have been validly tendered and not withdrawn pursuant to the Offer at the
earliest time permitted by law, subject to the prior satisfaction or waiver of
the conditions to the Offer (but not waiver of the Minimum Condition). The
obligation of Purchaser to accept for payment and to pay for any Shares tendered
shall be subject only to (i) the condition that at least fifty-one percent (51%)
of the Shares (including all Shares then owned by Parent and/or Purchaser, which
for this purpose will be deemed to be validly tendered and not withdrawn) on a
fully-diluted basis (including for purposes of such calculation all Shares
issuable upon exercise or conversion of all Stock Options (as defined below),
warrants and convertible securities having an exercise or conversion price of
$7.00 per Share or less that vest
prior to the Effective Time (as defined below), but excluding any Shares held by
the Company or any of its subsidiaries), be validly tendered and not withdrawn
(the "MINIMUM CONDITION"), and (ii) the other conditions set forth in Annex I
hereto. Purchaser expressly reserves the right to increase the Offer Price or to
make any other changes in the terms and conditions of the Offer; provided,
however, that, without the prior written consent of the Company, no change may
be made that (u) increases the Minimum Condition; (v) changes the form of
consideration to be paid; (w) decreases the price per Share or the number of
Shares sought in the Offer; (x) imposes conditions to the Offer in addition to
the Minimum Condition and those set forth in Annex I; (y) changes the Expiration
Date (as defined below), except as provided in this Agreement; or (z) is adverse
to the holders of the Shares. No Shares held by the Company or any of its
subsidiaries will be tendered in the Offer.
(b) The Offer will initially be scheduled to expire thirty (30) Business
Days following the commencement thereof (the initial "EXPIRATION DATE," and any
expiration date established pursuant to an authorized extension of the Offer, as
so extended, also an "Expiration Date"). Notwithstanding the foregoing,
Purchaser shall, and Parent shall cause Purchaser to, without the consent of the
Company: (i) extend the Offer for one or more additional periods of ten (10)
Business Days each if any conditions to the Offer have not been satisfied (other
than conditions which are not capable of being satisfied) or waived; or (ii)
extend the Offer for any period required by any rule, regulation, interpretation
or position of the United States Securities and Exchange Commission (the "SEC")
or the staff thereof applicable to the Offer or for any period required by any
other law applicable to the Offer. Furthermore, if all the conditions to the
Offer, including, without limitation, the Minimum Condition, are satisfied or
waived but the number of Shares validly tendered and not withdrawn is less than
ninety percent (90%) of the then outstanding number of Shares, Purchaser may,
and Parent may cause Purchaser to, without the consent of the Company: (x)
extend the Offer for up to two (2) additional periods of five (5) Business Days
each beyond the latest Expiration Date; provided that Purchaser shall accept for
payment and promptly pay for Shares that have been validly tendered and not
withdrawn pursuant to the Offer at the earliest time permitted by law after the
earlier of (1) the expiration of any such five-Business Day period at the end of
which such ninety percent (90%) threshold is reached or (2) the expiration of
the last such five-Business Day period; and/or (y) extend the Offer for a
subsequent offering period (as provided in Rule 14d-11 under the Exchange Act)
of up to twenty (20) days in order to acquire over ninety percent (90%) of the
outstanding Shares; provided that Purchaser shall accept for payment and
promptly pay for Shares that have been validly tendered and not withdrawn
pursuant to the Offer, prior to the date of extension under this clause (y), and
otherwise meets the requirements of Rule 14d-11 under the Exchange Act.
(c) As soon as practicable on the date the Offer is commenced, Parent and
Purchaser shall file with the SEC a Tender Offer Statement on Schedule TO
(together with all amendments and supplements thereto, and including all
exhibits thereto, the "SCHEDULE TO") with respect to the Offer. The Schedule TO
shall contain as an exhibit or incorporate by reference the Offer to Purchase
(or portions thereof) and forms of the related letter of transmittal and summary
advertisement. Parent and Purchaser shall cause the Schedule TO, the Offer to
Purchase and all amendments or supplements thereto (which collectively
constitute the "OFFER DOCUMENTS") to comply in all material respects with the
Exchange Act and the rules and regulations thereunder and other applicable laws.
Each of Parent, Purchaser and the Company shall promptly correct any information
provided by it for use in the Offer Documents if and to
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the extent that such information becomes false or misleading in any material
respect, and Parent and Purchaser further shall take all steps necessary to
cause the Schedule TO as so corrected to be filed with the SEC and the other
Offer Documents as so corrected to be disseminated to holders of Shares, in each
case as and to the extent required by applicable federal securities laws. The
Company and its counsel shall be given reasonable opportunity to review and
comment on the Schedule TO prior to the filing thereof with the SEC. Parent and
Purchaser shall provide the Company and its counsel with any comments Parent,
Purchaser or their counsel may receive from the SEC or its staff with respect to
the Schedule TO, promptly after receipt of such comments, and shall provide the
Company and its counsel a reasonable opportunity to comment on the proposed
response of Parent and Purchaser with respect to such comments.
(d) Without in any way limiting Section 1.2(a) hereof, the Company hereby
waives and represents that the Company's Board of Directors has agreed to waive,
solely for the purposes of the Offer and the Merger, the provisions of Section 7
of that certain Stock Purchase Agreement, dated as of June 14, 2000 (the "STOCK
PURCHASE AGREEMENT"), by and among Parent, the Company and Xxxxxxxxx X. Xxxxx.
Section 1.2. Company Action.
(a) The Company hereby consents to the Offer and represents that the
Company's Board of Directors, at a meeting duly called and held, has (i)
unanimously determined that this Agreement and the transactions contemplated
hereby, including, without limitation, the Offer and the Merger, are fair to and
in the best interests of the Company's stockholders; (ii) unanimously approved
and adopted this Agreement and the transactions contemplated hereby, including,
without limitation, the Offer and the Merger, in accordance with the
requirements of the Delaware General Corporation Law ("DGCL"), including,
without limitation, Section 203 of the DGCL; and (iii) unanimously resolved to
recommend acceptance of the Offer and approval and adoption of this Agreement
and the Merger by its stockholders; provided, however, that such recommendation
may be withdrawn, modified or amended, as provided in Section 5.5 hereof. The
Company hereby consents to the inclusion of such recommendation and approval in
the Offer Documents. The Company has been advised that all of its directors who
own Shares intend to tender their Shares pursuant to the Offer.
(b) As soon as practicable on the day that the Offer is commenced, the
Company shall file with the SEC and disseminate to holders of Shares, in each
case as and to the extent required by applicable federal securities laws, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "SCHEDULE 14D-9") that will reflect,
subject to Section 5.5 hereof, the recommendations of the Company's Board of
Directors referred to above. The Company shall cause the Schedule 14D-9 to
comply in all material respects with the Exchange Act and the rules and
regulations thereunder and other applicable laws. Parent and its counsel shall
be given an opportunity to review and comment on the Schedule 14D-9 prior to its
being filed with the SEC. The Company shall provide Parent and its counsel with
any comments the Company or its counsel may receive from the SEC or its staff
with respect to the Schedule 14D-9 promptly after the receipt of such comments
and shall provide Parent and its counsel an opportunity to participate in the
response of the Company to such comments. The Company, Parent and Purchaser each
shall promptly correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it
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becomes false or misleading in any material respect. The Company shall take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws.
(c) The Company shall, or cause its transfer agent to, promptly furnish
Parent with a list of its stockholders of record, mailing labels and any
available listing or computer file containing the names and addresses of all
record holders of Shares and lists of securities positions of Shares held in
stock depositories, in each case true and correct as of the most recent
practicable date. The Company shall provide to Parent such additional
information (including updated lists of stockholders of record, mailing labels
and lists of securities positions) and such other assistance as Parent may
reasonably request in connection with the Offer. Parent and Purchaser and their
agents shall hold in confidence the information contained in any such labels,
listings and files, shall use such information only in connection with the Offer
and the Merger and, if this Agreement is terminated, Parent and Purchaser shall,
upon request, deliver, and shall use their reasonable efforts to cause their
agents to deliver, to the Company (or destroy) all copies and any extracts or
summaries from such information then in their possession or control.
Section 1.3. Directors.
(a) Promptly upon the purchase of and payment for such number of Shares by
Parent or Purchaser that satisfy the Minimum Condition, Parent shall be entitled
to designate such number of directors, rounded up to the next whole number, on
the Company's Board of Directors that equals the product of (i) the total number
of directors on the Company's Board of Directors (giving effect to the election
of any additional directors pursuant to this Section 1.3) multiplied by (ii) the
percentage that the number of Shares beneficially owned by Parent and/or
Purchaser (including Shares accepted for payment) bears to the total number of
Shares outstanding. The Company shall take all action necessary to cause
Parent's designees to be elected or appointed to the Company's Board of
Directors, including increasing the number of directors and seeking and
accepting resignations of incumbent directors. At such time, to the extent
requested by Parent, the Company shall also use its best efforts to cause
individuals designated by Parent to constitute the number of members, rounded up
to the next whole number, on (x) each committee of the Board of Directors and
(y) each Board of Directors of each subsidiary of the Company (and each
committee thereof) that represents the same percentage as such individuals
represent on the Company's Board of Directors as permitted by the rules of The
Nasdaq Stock Market. Notwithstanding the provisions of this Section 1.3, the
parties hereto shall use their respective best efforts to ensure that at least
two (2) of the members of the Company's Board of Directors shall, at all times
prior to the Effective Time, be directors of the Company who were directors of
the Company on the date hereof (the "CONTINUING DIRECTORS") (which, in the case
of Parent, shall include the voting of all Shares held by it for the election of
such persons as directors of the Company); provided that if there are in office
fewer than two Continuing Directors for any reason, the Company's Board of
Directors shall cause a person designated by the remaining Continuing Director
to fill such vacancy who shall be deemed to be a Continuing Director for all
purposes of this Agreement, or if no Continuing Directors then remain, the other
directors of the Company then in office shall designate two (2) persons to fill
such vacancies who will not be officers or employees or affiliates of the
Company, Parent or Purchaser or any of their respective subsidiaries and such
persons shall be deemed to be Continuing Directors for all purposes of this
Agreement.
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(b) The Company's obligations to appoint Parent's designees to the
Company's Board of Directors shall be subject to Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all
actions, and shall include in the Schedule 14D-9 such information with respect
to the Company and its directors and officers, as Section 14(f) and Rule 14f-1
require in order to fulfill its obligations under this Section 1.3, so long as
Parent has provided to the Company on a timely basis the information referred to
in the following sentence. Parent shall supply to the Company in writing and be
solely responsible for any information with respect to itself and its nominees,
directors, officers and affiliates required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's designees pursuant to
Section 1.3(a) and until the Effective Time, the approval of a majority of the
Continuing Directors shall be required to authorize (and such authorization
shall constitute the authorization of the Company's Board of Directors and no
other action on the part of the Company, including any action by any other
director of the Company, shall be required to authorize) any termination of this
Agreement by the Company, any amendment of this Agreement requiring action by
the Company's Board of Directors, any extension of time for performance of any
obligation or action hereunder by Parent or Purchaser, any waiver of compliance
with any of the agreements or conditions contained herein for the benefit of the
Company, any consent or action by the Company's Board of Directors hereunder and
any other action of the Company hereunder which adversely affects the holders of
Shares (other than Parent or Purchaser) or holders of Stock Options (as defined
below).
ARTICLE 2
THE MERGER
Section 2.1. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (defined below), in accordance with this
Agreement and the DGCL, Purchaser shall be merged with and into the Company.
Following the Merger, the separate existence of Purchaser shall cease and the
Company shall continue as the Surviving Corporation.
Section 2.2. Effect of the Merger. The Merger will have the effects set
forth in the applicable provisions of the DGCL. Without limiting the generality
of the foregoing and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of Purchaser shall vest in the
Surviving Corporation and all the debts, liabilities and duties of Purchaser
shall become the debts, liabilities and duties of the Surviving Corporation.
Section 2.3. Closing. Unless this Agreement has been terminated, and
subject to the satisfaction or waiver of the conditions to the obligations of
the parties to effect the Merger set forth herein, the completion of the Merger
(the "Closing") will take place as promptly as practicable, but in no event
later than 10:00 a.m. on the second (2nd) Business Day following the
satisfaction or waiver of all the conditions (other than conditions which, by
their nature, are to be satisfied at the Closing, but subject to those
conditions) to the obligations of the parties to effect the Merger set forth
herein (the "Closing Date"), at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, New
York, New York, unless another time, date or place is agreed to by the parties
hereto.
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Section 2.4. Completion of the Merger. Upon the Closing, the parties hereto
shall cause the Merger to be completed by filing with the Secretary of State of
the State of Delaware a properly executed certificate of merger (the "MERGER
CERTIFICATE") in accordance with the DGCL, which shall be effective upon filing
or on such later date as may be agreed by the parties and specified therein (the
time of such effectiveness being the "EFFECTIVE TIME").
Section 2.5. Certificate of Incorporation; Bylaws; Directors and Officers.
(a) The Certificate of Incorporation of Purchaser in effect at the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation (except that such Certificate of Incorporation shall be amended to
provide that the name of the Surviving Corporation shall be "USA Detergents,
Inc.") until thereafter amended in accordance with the provisions thereof and as
provided by the DGCL. The Bylaws of Purchaser in effect at the Effective Time
shall be the Bylaws of the Surviving Corporation until thereafter amended in
accordance with the provisions thereof, the Certificate of Incorporation of the
Surviving Corporation and the DGCL.
(b) From and after the Effective Time and until their respective successors
are duly elected or appointed and qualified, or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws, (i) the directors of Purchaser at the
Effective Time shall be the directors of the Surviving Corporation and (ii) the
officers of Purchaser at the Effective Time shall be the officers of the
Surviving Corporation.
Section 2.6. Effect on Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of any holder of Shares or any
shares of capital stock of Purchaser:
(a) Each share of common stock, par value $0.01 per share, of Purchaser
that is issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of common
stock, par value $0.01 per share, of the Surviving Corporation;
(b) Each Share that is owned by Parent or Purchaser or any subsidiary or
affiliate of Parent or Purchaser, or by any of the Company's subsidiaries or
held in the treasury of the Company, but not Shares held in any Company benefit
plan (collectively, the "EXCLUDED SHARES"), shall automatically be canceled and
retired and shall cease to exist, and no cash or other consideration shall be
delivered or deliverable in exchange therefor;
(c) Each Share issued and outstanding immediately prior to the Effective
Time (other than the Excluded Shares and any Dissenting Shares (as defined
below)) shall be converted into the right to receive the highest price paid per
Share pursuant to the Offer, without interest (the "MERGER CONSIDERATION"); and
(d) Notwithstanding anything in this Agreement to the contrary, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
properly demanded, and perfected, appraisal rights for such Shares in accordance
with Section 262 of the DGCL (if
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Section 262 of the DGCL provides for appraisal rights for such Shares in the
Merger) ("DISSENTING SHARES"), will not be converted into the right to receive
the Merger Consideration. Instead, such holder of Dissenting Shares will be
entitled to receive payment of the appraised value of the Dissenting Shares in
accordance with the provisions of Section 262 of the DGCL, unless and until such
holder fails to perfect, withdraws or otherwise loses such holder's right to
appraisal and payment under the DGCL. If after the Effective Time, any such
holder fails to perfect, withdraws or otherwise loses such holder's right to
appraisal and payment under the DGCL, such holder's Dissenting Shares will
thereupon be treated as if they had been converted as of the Effective Time into
the right to receive the Merger Consideration, if any, to which the holder is
entitled, without interest or dividends thereon. The Company shall give Parent
prompt written notice of any demands received by the Company for appraisal of
Shares and, prior to the Effective Time, Parent will have the right to
participate in all negotiations and proceedings with respect to such demands.
The Company shall not, without the prior written consent of Parent, make any
payment with respect to, settle or offer to settle any such demands for
appraisal.
Section 2.7. Exchange of Certificates.
(a) As of the Effective Time, Parent shall deposit with Mellon Investor
Services LLC, or such other agent or agents as may be appointed by Parent and
Purchaser (the "EXCHANGE AGENT"), for the benefit of the holders of Shares, for
exchange in accordance with this Article 2, through the Exchange Agent an amount
of cash equal to the aggregate Merger Consideration payable pursuant to Section
2.6 (such amount of cash is hereinafter referred to as the "EXCHANGE FUND"), in
exchange for outstanding Shares.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "CERTIFICATES") whose shares were converted into the
right to receive Merger Consideration pursuant to Section 2.6: (i) a 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 the Certificates in exchange for Merger
Consideration. Upon surrender of a Certificate to the Exchange Agent, together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor a check representing the
Merger Consideration for the Shares represented by such Certificate, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, a check representing the proper amount of Merger Consideration
may be issued to a transferee if the Certificate representing such Shares is
presented to the Exchange Agent accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.7, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the appropriate amount
of Merger Consideration.
(c) In the event that any Certificate for Shares has been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange therefor, upon the making
of an affidavit of that fact by the holder thereof, the appropriate amount of
Merger Consideration, as may be
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required pursuant to this Agreement; provided, however, that Parent or the
Exchange Agent, may, in its discretion, require the delivery of a suitable bond
and/or indemnity.
(d) Any portion of the Exchange Fund which remains undistributed to the
stockholders of the Company for one (1) year after the Effective Time shall be
delivered to Parent, upon demand, and any stockholders of the Company who have
not theretofore complied with this Article 2 shall thereafter look only to
Parent as general creditors for payment of their claims for Merger
Consideration.
(e) Neither Parent nor the Company shall be liable to any holder of Shares
for any amount of cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
Section 2.8. Stock Options.
(a) At the Effective Time, each outstanding option or warrant to purchase
Shares (a "STOCK OPTION" or, collectively, the "STOCK OPTIONS") issued pursuant
to (i) the Company's 1995 Stock Option Plan, as amended and restated; (ii) the
Company's Stock Option Plan for Non-Employee Directors, as amended and restated
(clauses (i) and (ii), together, the "OPTION PLANS"); or (iii) any other plan or
instrument, whether vested or unvested, shall be cancelled in exchange for a
single lump sum cash payment (less any applicable income or employment tax
withholding) payable by Parent at the Effective Time equal to the Cash-Out Price
(as defined below). The "CASH-OUT PRICE" will be paid only if the exercise price
per Share of the Stock Option is less than the Merger Consideration and will be
equal to the product of (i) the number of Shares subject to any Stock Option
vested immediately prior to the Effective Time (including any Stock Option which
becomes vested on or prior to the Effective Time in accordance with the terms of
an automatic acceleration provision in existence as of the date hereof and
disclosed to Parent hereunder), multiplied by (ii) the excess of the Merger
Consideration over the exercise price per Share of such Stock Option.
(b) Prior to the Effective Time, the Company shall use its best efforts to
take all actions (including, if appropriate, amending the terms of the Option
Plans or the Stock Options) and obtain such consents as are necessary to give
effect to the transactions contemplated by Section 2.8(a).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser that, except as
set forth in the Company's disclosure schedule attached hereto (the "COMPANY
DISCLOSURE SCHEDULE," which will be arranged so that each exception will
specifically identify the numbered and lettered section of this Agreement to
which the exception relates) or the SEC Reports:
Section 3.1. Organization and Qualification; Subsidiaries.
(a) Each of the Company and its subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has all requisite power and authority to own,
lease and operate its properties
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and to carry on its businesses as now being conducted, except where the failure
to be so organized, existing and in good standing or to have such power and
authority would not, individually or in the aggregate, have a Material Adverse
Effect (as defined below) on the Company.
(b) The Company has heretofore delivered to Parent accurate and complete
copies of the Certificate of Incorporation and Bylaws (or similar governing
documents), as currently in effect, of the Company and each of its subsidiaries.
Each of the Company and each of its subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
Section 3.2. Capitalization of the Company and its Subsidiaries.
(a) The authorized capital stock of the Company consists of 30,000,000
Shares and 1,000,000 shares of preferred stock, of which 14,192,776 Shares and
no shares of preferred stock are issued and outstanding. All of the outstanding
Shares have been validly issued, and are fully paid, nonassessable and free of
preemptive rights. All of the outstanding Shares have been issued in compliance
with all applicable United States federal and state and foreign securities laws.
Other than (x) as set forth in the first sentence of this Section 3.2(a); (y) an
aggregate of 1,975,000 Shares reserved for issuance for awards under Option
Plans, of which 1,561,564 Shares are subject to outstanding Stock Options issued
under such Option Plans; and (z) an aggregate of 1,078,524 Shares subject to
outstanding Stock Options issued outside of the Options Plans, there are no
other outstanding (i) shares of capital stock or other voting securities of the
Company; (ii) securities of the Company or its subsidiaries convertible into or
exercisable or exchangeable for shares of capital stock or voting securities of
the Company; (iii) options or other rights to acquire from the Company or its
subsidiaries, or obligations of the Company or its subsidiaries to issue, any
capital stock, voting securities or securities convertible into or exercisable
or exchangeable for capital stock or voting securities of the Company; and (iv)
equity equivalents, interests in the ownership or earnings of the Company or its
subsidiaries or other similar rights (clauses (i) through (iv) above,
collectively, "COMPANY SECURITIES"). There are no outstanding obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any Company Securities. There are no stockholder agreements, voting trusts or
other agreements or understandings to which the Company is a party or by which
it is bound relating to the voting or registration of any shares of capital
stock of the Company.
(b) Section 3.2(b) of the Company Disclosure Schedule identifies each
subsidiary of the Company as of the date hereof and shows the jurisdiction of
incorporation or organization of each such subsidiary. Other than as set forth
in Section 3.2(b) of the Company Disclosure Schedule, all of the outstanding
capital stock of the Company's subsidiaries (other than directors' qualifying
shares in the case of certain foreign subsidiaries) is owned by the Company,
directly or indirectly, free and clear of any Lien (as defined below) or any
other limitation or restriction (including any restriction on the right to vote
or sell the same, except as may be provided as a matter of law). There are no
securities of the Company or its subsidiaries
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convertible into or exercisable or exchangeable for, no options or other rights
to acquire from the Company or its subsidiaries, and no other contract,
understanding, arrangement or obligation (whether or not contingent) providing
for the issuance or sale, directly or indirectly, of, any capital stock or other
ownership interests in, or any other securities of, any subsidiary of the
Company. There are no outstanding contractual obligations of the Company or any
of its subsidiaries to repurchase, redeem or otherwise acquire any outstanding
shares of capital stock or other ownership interests in any subsidiary of the
Company. "LIEN" means, with respect to any asset (including, without limitation,
any security) any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset or any agreement to grant any
of the foregoing.
(c) The Shares constitute the only class of equity securities of the
Company or its subsidiaries registered or required to be registered under the
Exchange Act.
Section 3.3. Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and, subject (if required) to the approval and adoption of this Agreement by the
stockholders of the Company in accordance with the DGCL and the Company's
Certificate of Incorporation and Bylaws (the "STOCKHOLDER APPROVAL"), to
complete the transactions contemplated hereby. The execution and delivery of
this Agreement and the completion of the transactions contemplated hereby have
been duly and validly authorized by the Company's Board of Directors and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to complete the transactions contemplated hereby,
except, with respect to completion of the Merger, the Stockholder Approval (if
required). This Agreement has been duly and validly executed and delivered by
the Company and, assuming this Agreement constitutes the valid and binding
agreement of Parent and Purchaser, constitutes a valid, legal and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except that the enforcement hereof may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law) (clauses (a) and (b), the "ENFORCEABILITY
EXCEPTIONS").
Section 3.4. SEC Reports; Financial Statements.
(a) The Company has filed all forms, reports and documents required to be
filed by it with the SEC since January 1, 1998, each of which, as amended, has
complied in all material respects with all applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the Exchange Act,
each as in effect on the dates such forms, reports and documents were filed. The
Company has heretofore delivered, made available or promptly shall deliver or
make available to Parent, in the form filed with the SEC (including any
amendments thereto and all exhibits), (i) its Annual Reports on Form 10-K for
each of the fiscal years ended December 31, 1998 and 1999 and a draft of its
Annual Report on Form 10-K, provided on March 28, 2001 by counsel to the
Company, (ii) all definitive proxy statements relating to the Company's meetings
of stockholders (whether annual or special) held since January 1, 1998 and (iii)
all other reports or registration statements filed by the Company with the SEC
since January 1, 1998 (clauses (i) through (iii), collectively, the "SEC
REPORTS"). None of the SEC Reports, including, without limitation, any financial
statements or schedules included or
10
incorporated by reference therein, contained, when filed, or, if amended, to the
extent amended on the date of filing of such amendment, any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The consolidated balance sheets and the related consolidated
statements of operations, stockholders' equity and cash flows (including the
related notes thereto) of the Company included in the SEC Reports comply in form
and substance in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto (each as
then in effect), have been prepared in conformity with generally accepted
accounting principles (as then in effect) applied on a consistent basis (except
as otherwise noted therein), and present fairly the consolidated financial
position of the Company and its consolidated subsidiaries as of their respective
dates and their consolidated results of operations and its cash flows for the
periods presented therein (subject, in the case of unaudited interim financial
statements, to normal year-end adjustments).
(b) The Company has heretofore made, or promptly shall make, available to
Parent a complete and correct copy of any amendments or modifications, which are
or will be required to be filed with the SEC but have not yet been so filed, to
agreements, documents or other instruments which previously have been filed by
the Company with the SEC pursuant to the Exchange Act.
Section 3.5. Information Supplied. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in the
Offer Documents will, at the time the Offer Documents are filed with the SEC or
disseminated to the holders of Shares, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. Each of the Schedule
14D-9 and the other documents required to be filed by the Company with the SEC
in connection with the Offer, the Merger and the other transactions contemplated
hereby, will comply as to form, in all material respects, with the requirements
of the Securities Act and the Exchange Act and will not, at the time such
document is filed with the SEC or disseminated to the holders of Shares, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
Section 3.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and ISRA (as defined below), and except for
applicable foreign governmental approvals and the filing and recordation of the
Merger Certificate as required by the DGCL and other appropriate documents with
the relevant authorities of other states in which the Company or any of its
subsidiaries is authorized to do business, no filing with or notice to, and no
permit, authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency or authority, whether
domestic or foreign (a "Governmental Entity"), is necessary for the execution
and delivery by the Company of this Agreement or the completion by the Company
of the transactions contemplated hereby, except where the failure to obtain such
permits,
11
authorizations, consents or approvals or to make such filings or give such
notices would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. Except as set forth in Section 3.6 of the Company
Disclosure Schedule, neither the execution, delivery and performance of this
Agreement by the Company nor the completion by the Company of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the respective Certificate of Incorporation or Bylaws (or similar
governing documents) of the Company or any of its subsidiaries; (ii) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or any Lien) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation 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 may be bound, except for such violations, breaches and
defaults (or rights of termination, amendment, cancellation or acceleration or
Liens) as to which requisite waivers or consents have been obtained or which
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company; or (iii) violate any order, writ, injunction, decree, or any law,
statute, rule or regulation applicable to the Company or any of its subsidiaries
or any of their respective assets, except for such violations which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
The purchase by Parent of 2,142,857 Shares on June 14, 2000 (including the put
and call agreement with Xxxxxxxxx Xxxxx and the subsequent exercise of the put
agreement) constituted a transaction approved by the board of directors of the
Company as set forth in Section 203(a)(1) of the DGCL.
Section 3.7. No Default. None of the Company or any of its subsidiaries is
in breach, default or violation in any material respect (and no event has
occurred which with notice or the lapse of time or both would constitute a
breach, default or violation by the Company or any of its subsidiaries in any
material respect) of any term, condition or provision of (i) its Certificate of
Incorporation or Bylaws (or similar governing documents); (ii) any note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument or
obligation 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 may be bound,
except for such breaches, defaults and violations which would not, individually
or in the aggregate, have a Material Adverse Effect on the Company; or (iii) any
order, writ, injunction, decree, or any law, statute, rule or regulation
applicable to the Company, any of its subsidiaries or any of their respective
properties or assets, except for such breaches, defaults and violations which
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company. Each note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation 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 may be bound is in full force and effect (except for those
deficiencies which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company) and is not subject to any default thereunder of
which the Company has any knowledge by any party obligated to the Company or any
subsidiary thereunder.
Section 3.8. No Undisclosed Liabilities; Absence of Changes. Except as set
forth on Schedule 3.8 of the Company Disclosure Schedule, since September 30,
2000: (a) the business of the Company and its subsidiaries has been carried on
only in the ordinary and usual course of business, consistent with past
practice, and, other than in the ordinary course of business, there
12
has not occurred any change which, individually or in the aggregate, has
resulted or would result in a Material Adverse Effect on the Company, and (b)
except as specifically set forth in the SEC Reports, this Agreement or the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries has
taken or omitted to take any action which would constitute a breach of Section
5.1 hereof had it been taken subsequent to the date hereof. Section 3.8 of the
Company Disclosure Schedule sets forth a detailed list of all "earn-out" or
similar obligations (of whatever form, name or description, related to the past,
present or future performance of the Company, any of its subsidiaries or any
portions of any of their respective businesses) of the Company or any of its
subsidiaries, arising out of or related to acquisitions of persons (whether by
merger, stock purchase, share exchange, asset purchase, or otherwise) by the
Company or any of its subsidiaries and which obligations either have not expired
by their own terms or with respect to which there exist as of the date hereof or
may exist in the future any liabilities of the Company or any of its
subsidiaries to any person, whether fixed or contingent, liquidated or
unliquidated, accrued or unaccrued. Section 3.8 of the Company Disclosure
Schedule also sets forth a list of the Company's current outstanding debt,
including, without limitation, the current outstanding principal balances under
each of the loan facilities with FINOVA Capital Corporation.
Section 3.9. Litigation. Except as set forth in Section 3.9 of the Company
Disclosure Schedule and the SEC Reports, there is no suit, claim, action,
proceeding or investigation (collectively, a "PROCEEDING") pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries or any of their respective properties or assets which would have,
individually or in the aggregate, a Material Adverse Effect on the Company or
would reasonably be expected to prevent or materially delay the completion of
the transactions contemplated by this Agreement. None of the Company or any of
its subsidiaries is subject to any outstanding order, writ, injunction or decree
which would have, individually or in the aggregate, a Material Adverse Effect on
the Company or would reasonably be expected to prevent or materially delay the
completion of the transactions contemplated by this Agreement.
Section 3.10. Compliance with Applicable Law. The businesses of the Company
and its subsidiaries are not being conducted in violation of any law, ordinance,
rule or regulation of any Governmental Entity, including, without limitation,
federal, state, municipal and foreign laws and regulations relating to the
protection of the health and safety of employees and equal employment
opportunity, except for violations and failures to comply which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
There are no unresolved notices of deficiency or charges of violation brought
or, to the knowledge of the Company, threatened against the Company or any of
its subsidiaries, including under any federal, state, local or foreign
regulation or otherwise, and there are no facts or circumstances known to the
Company that would constitute a reasonable basis on which any such proceedings,
notices or actions may be instituted, issued or brought hereafter. Except as set
forth in Section 3.10 of the Company Disclosure Schedule, no investigation or
review by any Governmental Entity with respect to the Company or any of its
subsidiaries is pending or, to the knowledge of the Company, threatened, nor, to
the knowledge of the Company, has any Governmental Entity indicated an intention
to conduct the same.
13
Section 3.11. Employee Benefit Plans; Labor Matters.
(a) Section 3.11(a) of the Company Disclosure Schedule lists all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), and all bonus, stock option, stock
purchase, incentive, deferred compensation, supplemental retirement, severance
and other similar fringe or employee benefit plans, programs or arrangements,
and any severance, consulting or retention agreements, written or otherwise,
funded or unfunded, formal or informal and whether or not subject to ERISA, for
the benefit of, or relating to, any current or former employee or director of
the Company, any trade or business (whether or not incorporated) which is a
member of a controlled group including the Company or which is under common
control with the Company (an "ERISA AFFILIATE") within the meaning of Section
414 of the Internal Revenue Code of 1986, as amended (the "CODE"), as well as
each plan with respect to which the Company or an ERISA Affiliate could incur
liability under Section 4069 (if such plan has been or were terminated) or
Section 4212(c) of ERISA (together, the "EMPLOYEE PLANS"). The Company has
delivered or made available to Parent, if applicable, complete and accurate
copies of (i) the three (3) most recent annual reports on Form 5500 and related
schedules and financial statements filed with the Internal Revenue Service (the
"IRS") for each Employee Plan, including any actuarial and auditor reports
required to be filed with the annual reports; (ii) the most recent plan
documents and related trust documents, adoption agreements, nondiscrimination
test reports for the last three (3) years, and all amendments thereto for each
Employee Plan currently proposed or final, including, in the case of any
Employee Plan not set forth in writing, a written description thereof; (iii) the
most recent summary plan description for each Employee Plan; (iv) the most
recent favorable IRS determination letter and antecedent application materials
for each Employee Plan; (v) the most recent funding and service agreements and
most current insurance policies or contracts with respect to the Employee Plans;
(vi) all COBRA forms and related notices, (vii) all registration statements,
annual reports (Form 11-K and all attachments thereto) and prospectuses prepared
in connection with each Employee Plan and (viii) all written policies, rules, or
procedures applicable to employees of the Company and the employment
relationship. No person who is not a current or former employee or director of
the Company or an ERISA Affiliate, or the surviving spouse, beneficiary, or
dependent of such a current or former employee or director is entitled to
benefits under any Employee Plan.
(b) (i) Except as set forth in Section 3.11(b)(i) of the Company Disclosure
Schedule, neither the Company nor any ERISA Affiliate has, implies, or
represents any liability to provide retiree life insurance, retiree health,
or other retiree employee welfare benefits to any person for any reason,
except as may be required by COBRA or other applicable statute;
(ii) None of the Employee Plans is a "multiemployer plan" as such term
is defined in Section 3(37) of ERISA, a "multiple employer plan" as such
term is defined in Section 4063 or 4064 of ERISA, maintained in connection
with any trust described in Section 501(c)(9) of the Code or subject to
either Section 412 of the Code or Title IV of ERISA; and no director,
officer or employee of the Company has committed a material breach of any
responsibility or obligation imposed upon fiduciaries by Title I of ERISA
with respect to any Employee Plan;
14
(iii) No "prohibited transaction" within the meaning of Section 4975
of the Code or Sections 406 or 407 of ERISA has occurred for which
exemption is not available with respect to any Employee Plan and no penalty
or tax under Section 502(i) of ERISA or Section 4975 of the Code has been
imposed upon the Company;
(iv) Each Employee Plan is, and at all times since its establishment
been, in compliance in all material respects both with its terms and in
operation with the requirements prescribed by all applicable statutes
(including ERISA and the Code), orders, or governmental rules and
regulations currently in effect with respect thereto, 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 in violation of, and have no knowledge of any material default or
violation by any other party to, any of the Employee Plans;
(v) Each Employee Plan intended to qualify under Section 401(a) of the
Code has obtained a currently effective favorable determination letter (or
opinion letter, if applicable) as to its qualified status under the Code.
Each Employee Plan intended to qualify under Section 401(a) of the Code and
each trust intended to qualify under Section 501(a) of the Code is, and at
all times since its establishment been, so qualified and no event has
occurred and no condition or circumstance has existed or exists which may
reasonably be expected to result in the disqualification of such Employee
Plan or the imposition of any material liability, penalty or tax under
ERISA or the Code;
(v) All contributions required to be made to any Employee Plan
pursuant to Section 412 of the Code (without regard to any waivers of such
requirements) or the terms of the Employee Plan, have been made on or
before their due dates (including any contractual or statutory grace
periods). Neither the Company nor any ERISA Affiliate has incurred material
liability under Title IV of ERISA arising in connection with the
termination of, or the complete or partial withdrawal within the last six
(6) years from, any plan covered or previously covered by Title IV of
ERISA;
(vi) Other than routine claims for benefits, there is no claim pending
or to the knowledge of the Company, threatened, involving any Employee Plan
by any person against such Employee Plan, the Company, any subsidiary of
the Company or any ERISA Affiliate;
(vii) There is no pending or, to the knowledge of the Company,
threatened claim or investigation involving any Employee Plan by the
Department of Labor or any other governmental authority except where such
claim individually or in the aggregate shall not have or could not
reasonably be expected to have a Material Adverse Effect on the Company;
(viii) Each Employee Plan can be amended, terminated or otherwise
discontinued after the Effective Time in accordance with its terms within
thirty (30) days of Closing without liability to the Company or any ERISA
Affiliate (other than ordinary administrative expenses); and
(ix) With respect to any Employee Plan which is a "group health plan"
as such term is defined in Section 5000(b)(1) of the Code, the Company,
each subsidiary of the
15
Company and each ERISA Affiliate has complied in all respects with the
provisions of Part 6 of Title I of ERISA and Sections 4980B, 9801, 9802,
9811 and 9812 of the Code except where such failure to so comply
individually or in the aggregate shall not have or could not reasonably be
expected to have a Material Adverse Effect on the Company. Neither the
Company nor any ERISA Affiliate has contributed to a nonconforming health
plan (as defined in Section 5000(c) of the Code) and no ERISA Affiliate has
incurred a tax under Section 5000(a) of the Code that is or could become a
liability of the Company.
(c) Except as disclosed in Section 3.11(c) of the Company Disclosure
Schedule, neither the Company nor any ERISA Affiliate maintains or has an
obligation to contribute to any Employee Plan which is subject to any laws,
regulations, or jurisdiction outside the United States.
(d) Except as disclosed in Section 3.11(d) of the Company Disclosure
Schedule, there has been no amendment to, written interpretation, or
announcement (whether or not written) by the Company or any ERISA Affiliate
relating to employee participation or coverage under any Employee Plan that
would materially increase the expense of maintaining such plan above the level
of the expense incurred in respect of such plan for the year ended December 31,
2000.
(e) Section 3.11(e) of the Company Disclosure Schedule sets forth a true
and complete list, as of the date of this Agreement, of each person who holds
any Stock Options or restricted stock, together with the number of Shares which
are subject thereto, the date of grant, the extent to which such Stock Option or
restricted stock is vested (or will become vested within six (6) months from the
date hereof, or as a result of the completion of the Offer or the Merger, or
upon termination of employment following the completion of the Offer or the
Merger), the exercise price of such Stock Option, the purchase price of such
restricted stock, whether such Stock Option is intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code, and the
expiration date of such Stock Option. Section 3.11(e) of the Company Disclosure
Schedule also sets forth the total number of incentive stock options and
nonqualified options. Other than the automatic vesting of Stock Options or
restricted stock that may occur without any action on the part of the Company or
its officers or directors and except as otherwise expressly contemplated by this
Agreement, the Company has not taken any action that would result in any Stock
Options that are unvested becoming vested or their terms being extended in
connection with or as a result of the execution and delivery of this Agreement
or the completion of the transactions contemplated hereby.
(f) The Company has made available to Parent (i) a schedule listing all
officers and members of senior management of the Company including each
individual's job title, current salary and target bonus; (ii) copies of all
employment agreements with officers and members of senior management of the
Company; (ii) copies of all agreements with any former employee of the Company
obligating the Company to make annual cash payments in an amount exceeding
$50,000; (iii) a schedule listing all officers and members of senior management
of the Company who have executed a non-competition agreement with the Company;
(iv) copies (or descriptions) of all current and proposed severance agreements,
programs and policies of the Company with or relating to its directors or
employees; and (v) copies of all plans, programs,
16
agreements and other arrangements of the Company with or relating to its
directors or employees which contain change in control provisions.
(g) Except as set forth in Section 3.11(g) of the Company Disclosure
Schedule or as otherwise expressly contemplated by this Agreement, there shall
be no payment, accrual of additional benefits, acceleration of payments,
vesting, or term extension of any benefit under any Employee Plan or any
agreement or arrangement disclosed under this Section 3.11 solely by reason of
entering into or in connection with the transactions contemplated by this
Agreement.
(h) There are no actions, claims or investigations pending or, to the
knowledge of the Company or any of its subsidiaries, threatened between the
Company or any of its subsidiaries and any of their respective employees, which
have had or could have, individually or in the aggregate, a Material Adverse
Effect on the Company. Neither the Company nor any of its subsidiaries is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or any of its subsidiaries, nor
does the Company have any knowledge of any activities or proceedings of any
labor union to organize any such employees. The Company has no knowledge of any
strikes, slowdowns, work stoppages, lockouts or threats thereof by or with
respect to any employees of the Company or any of its subsidiaries. The Company
and its subsidiaries have complied in all material respects with the provisions
of the Worker Adjustment and Retraining Notification Act ("WARN") and do not
reasonably expect to incur any material liabilities under WARN prior to the
completion of the transactions contemplated by this Agreement. The Company and
its subsidiaries have complied in all material respects with all applicable laws
respecting independent contractor status, employment and employment practices,
labor relations, occupational safety and health, plant closings, mass layoffs,
non-discrimination obligations, and terms and conditions of employment and
wages.
(i) To the knowledge of the Company, no employee, consultant or agent of
the Company or any of its subsidiaries is in violation of any term of any
employment contract, confidentiality or non-disclosure agreement or any other
contract, agreement, commitment or understanding relating to the relationship of
such person with the Company, any of its subsidiaries or affiliates or any other
party. To the knowledge of the Company, no stockholder, director, officer,
employee or consultant of the Company or any of its subsidiaries is obligated
under any contract or agreement, subject to any judgment, decree, or order of
any court or administrative agency that would interfere with such person's
efforts to promote the interests of the Company or any of its subsidiaries or
that would interfere with the business of the Company or any of its
subsidiaries. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business as presently conducted or currently
proposed to be conducted will, to the knowledge of Company, conflict with or
result in a breach of the terms, conditions, or provisions of, or constitute a
default under, any contract or agreement under which any such person is now
bound. Each person permitted access to confidential or proprietary information
of the Company or any of its subsidiaries has executed a legally binding
agreement obligating such person to hold confidential such proprietary
information.
17
Section 3.12. Environmental Laws and Regulations. For the purposes of this
Section 3.12, all references to the "Company" shall be deemed to include each of
the Company's current and former subsidiaries. Except as set forth in Section
3.12 of the Company Disclosure Schedule:
(a) All current and prior uses of Company property, or properties formerly
owned or operated by the Company, and all operations, activities and conduct of
the Company related thereto, fully comply and have at all times fully complied
with Environmental Laws (as defined below).
(b) There has been no disposal, release, or threatened release of Hazardous
Materials (as defined below) (whether legal or illegal, accidental or
intentional) on, under, in, from or about the Company property, or properties
formerly owned or operated by the Company, or otherwise related to the
operations, activities, or conduct of the Company, that has subjected or may
subject the Company to liability under any Environmental Law.
(c) No Hazardous Materials have migrated or threatened to migrate from the
Company property, or properties formerly owned or operated by the Company, onto,
about or beneath any other property, nor have any Hazardous Materials migrated
or threatened to migrate from other properties onto, about or beneath the
Company property, or properties formerly owned or operated by the Company.
(d) The Company has not disposed of or arranged for disposal of Hazardous
Materials on any third party property that has subjected or may subject the
Company to liability under any Environmental Law.
(e) The Company has not received any notice, demand, letter, claim, request
for information, or other communication relating to the Company property or
properties formerly owned or operated by the Company, or to the operations,
activities, or conduct of the Company, alleging violation of or liability under
any Environmental Law and there are no proceedings, actions, orders, decrees,
injunctions or other claims, or to the knowledge of the Company, any threatened
actions or claims, relating to or otherwise alleging liability under any
Environmental Law.
(f) The Company has not exposed any employee or third party to any
Hazardous Material or condition which has subjected or may subject the Company
to liability under any Environmental Law.
(g) No underground storage tanks, asbestos-containing material, or
polychlorinated biphenyls have ever been located on the Company property or
properties formerly owned or operated by the Company;
(h) The Company has not assumed by agreement any liability of any person
for investigation or remediation of Hazardous Materials, compliance with
Environmental Law, release or disposal of Hazardous Materials, or any claim for
personal injury or property damage related to or arising under Environmental
Law.
18
(i) The Company is not required to make any capital or other expenditures
to comply with any Environmental Law nor is there any reasonable basis on which
any Governmental Entity could take action that would require such capital or
other expenditure.
(j) The Company has made available to Parent copies of all environmental
assessments, audits, studies, and other environmental reports in its possession
or reasonably available to it relating to the Company or any of its current or
former properties or operations.
(k) "ENVIRONMENTAL LAW" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, or treaty; all judicial, administrative,
and regulatory orders, judgments, decrees, permits, and authorizations; and
common law relating to: (i) the protection, investigation, remediation, or
restoration of the environment or natural resources; (ii) the handling, use,
storage, treatment, disposal, release or threatened release of any Hazardous
Material; (iii) noise, odor, pollution, contamination, land use, any injury or
threat of injury to persons or property; or (iv) the protection of the health
and safety of employees or the public.
(l) "HAZARDOUS MATERIAL" means any substance, material, or waste that is:
(i) listed, classified or regulated in any concentration pursuant to any
Environmental Law; (ii) any petroleum hydrocarbon, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, toxic mold,
radioactive materials or radon; or (iii) any other substance, material, or waste
which may be the subject of regulatory action by any Governmental Entity
pursuant to any Environmental Law.
Section 3.13. Taxes.
(a) The Company and each of its subsidiaries have accurately prepared in
all material respects and timely filed all Tax Returns (as defined below) they
are required to have filed. All Tax Returns are true and complete in all
material respects.
(b) All Taxes (as defined below) owed by the Company and its subsidiaries
(whether or not shown on any Tax Return) have been paid and the unpaid Taxes of
the Company and its subsidiaries do not exceed the reserve for Taxes (other than
any reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth in the consolidated financial statements of the
Company.
(c) No claim has been made in writing by any taxing authority in any
jurisdiction where the Company and its subsidiaries do not file Tax Returns that
any of them is or may be subject to Tax by that jurisdiction. No current
extensions or waivers of statutes of limitations with respect to any Tax Returns
have been given by or requested in writing from the Company or any of its
subsidiaries.
(d) Neither the Company nor any of its subsidiaries is a party to or bound
by any tax indemnity, tax sharing or tax allocation agreement with any party
that is not a member of the Company's affiliated group, within the meaning of
Section 1504(a) of the Code, on the date hereof.
(e) Neither the Company nor any of its subsidiaries has been a member of an
affiliated group of corporations, within the meaning of Section 1504 of the
Code, or a member of
19
a combined, consolidated or unitary group for state, local or foreign Tax
purposes (other than the group the common parent of which is the Company).
(f) Except as disclosed in Section 3.13(f) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has made any payments,
is obligated to make any payments or is a party to any agreement that under
certain circumstances could obligate it to make any payments that would not be
deductible under Section 280G of the Code.
(g) "TAX" (including "Taxes") means (i) all federal, state, local, foreign
and other net income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, license, lease, service, service use, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
windfall profits, customs, duties or other taxes, fees, assessments or charges
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts with respect thereto; (ii) any liability for
payment of amounts described in clause (i) whether as a result of transferee
liability, of being a member of an affiliated, consolidated, combined or unitary
group for any period, or otherwise through operation of law; and (iii) any
liability for the payment of amounts described in clauses (i) or (ii) as a
result of any tax sharing, tax indemnity or tax allocation agreement or any
other express or implied agreement to indemnify any other person.
(h) "TAX RETURN" means any return, declaration, report, statement,
information statement and other document required to be filed with respect to
Taxes.
Section 3.14. Leased and Owned Property.
(a) Section 3.14(a) of the Company Disclosure Schedule sets forth a
complete and correct list of all real property owned by the Company or any of
its subsidiaries, including the address of the property (the "OWNED REAL
PROPERTY"). Except as set forth in Section 3.14 of the Company Disclosure
Schedule, the Company or one of its subsidiaries holds good and marketable title
to each such parcel of Owned Real Property, free and clear of any Liens.
(b) Section 3.14(b) of the Company Disclosure Schedule sets forth a
complete and correct list of all real property leases to which the Company or
any of its subsidiaries is a party, including the address of the property, the
name and address of the parties, the expiration date of the lease, the monthly
rent as of the date hereof, and any additional rent currently payable under each
such lease (the "REAL PROPERTY LEASES").
(c) There is no breach or event of default on the part of the Company or
any of its subsidiaries, or to the knowledge of the Company, the landlord with
respect to any of the Real Property Leases, and, to the knowledge of the
Company, there has been no event that, with the giving of notice or lapse of
time, or both, would constitute a breach or event of default by the Company, any
of its subsidiaries or landlord under any of the Real Property Leases, except
for such breaches and defaults which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. Subject to the
foregoing, all the Real Property Leases are in full force and effect and are
valid and enforceable against the parties thereto in accordance with their terms
in all respects. The Company does not have any knowledge of any expenditures
which are required or are reasonably likely to be required under the provisions
of any Real
20
Property Lease for any purpose other than payment of rent or other charges due
under such leases as provided therein.
(d) There are no pending or, to the knowledge of the Company, threatened
condemnation, eminent domain or similar proceedings with respect to any of the
Owned Real Property or any of the premises leased under any of the Real Property
Leases.
(e) Except as set forth in Section 3.14(e) of the Company Disclosure
Schedule, the Company and each of its subsidiaries have good and marketable
title to all of their personal properties and assets, free and clear of all
Liens except Liens for Taxes not yet due and payable and such Liens, if any, as
do not detract from the value of or interfere with the present use of the
personal property affected thereby. To the Company's knowledge, all leases
pursuant to which the Company or any of its subsidiaries lease from others
personal property are in good standing, valid and enforceable in accordance with
their respective terms. There is not, under any of such leases, any existing
default or event of default by any party thereto (or event which with notice or
lapse of time, or both, would constitute a default or event of default), except
for such defaults which would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
Section 3.15. Intellectual Property; Software.
(a) Section 3.15(a) of the Company Disclosure Schedule sets forth a
complete and correct list of all Intellectual Property Rights (as defined below)
owned, licensed or used by the Company or any of its subsidiaries in the conduct
of their businesses, together with a listing of all licenses, franchises,
licensing agreements (whether as licensor or licensee) to which the Company or
any of its subsidiaries is a party, and any other arrangement with respect to
such Intellectual Property Rights. All Intellectual Property Rights owned,
licensed or used by the Company or any of its subsidiaries or used or exercised
in or necessary to the conduct of the Company's and its subsidiaries' business,
are referred to herein, collectively, as the "INTELLECTUAL PROPERTY ASSETS."
(b) Neither the Company nor any of its subsidiaries has, during the three
(3) years preceding the date of this Agreement, been a party to any Proceeding,
nor, to the knowledge of the Company and its subsidiaries, is any Proceeding
threatened, that involved or is likely to involve a claim of infringement or
misappropriation by any person (including any Governmental Entity) of any
Intellectual Property Right of such person. No Intellectual Property Asset owned
by the Company is subject to any outstanding order, judgment, decree, or
stipulation restricting in any material respect the use thereof by the Company
or any of its subsidiaries, or restricting in any material respect the licensing
thereof by the Company or any person. To the Company's knowledge, the current
use and exploitation of the Intellectual Property Assets by the Company and its
subsidiaries (including without limitation the licensing or other distribution
of Software (as defined below) to third parties by the Company or any of its
subsidiaries) does not infringe upon, violate or result in the misappropriation
of any Intellectual Property Right of any person.
(c) (i) The Company or one of its subsidiaries owns all right, title and
interest in each of the Marks (as defined below) listed in Section 3.15(a) of
the Company
21
Disclosure Schedule (collectively, the "Company Marks"), and the Company and its
subsidiaries have not received any notice or claim (whether written or oral)
challenging the Company's or the relevant subsidiary's exclusive and complete
ownership of any Company Marks or suggesting that any other person has any claim
of legal or beneficial ownership or other claim or interest with respect
thereto;
(ii) To the knowledge of the Company and its subsidiaries, the Company
Marks are legally valid and enforceable and the Company and its subsidiaries
have not received any notice or claim (whether written or oral) challenging the
validity or enforceability of any Company Marks;
(iii) To the knowledge of the Company and its subsidiaries, the Company has
not taken any action (or failed to take any action), or used or enforced (or
failed to use or enforce) any of the material Company Marks in a manner that
would result in the abandonment, cancellation, forfeiture, relinquishment, or
unenforceability of any of the material Company Marks or any of the Company's
rights therein;
(iv) The Company has taken reasonable steps to protect the Company's rights
in and to each of the Company Marks and to prevent the unauthorized use thereof
by any other person, in each case in accordance with standard industry practice,
and has adequately policed (as determined by the Company in its reasonable
discretion) the Company Marks against third party infringement;
(v) Except as set forth in Section 3.15(c)(v) of the Company Disclosure
Schedule, the Company has not granted to any person any right, license or
permission to use any of the Company Marks;
(vi) All maintenance fees, annuities, and the like due on the Company Marks
have been timely paid, except as would not, individually or in the aggregate,
have a Material Adverse Effect on the Company;
(vii) No Company Xxxx has been or is now involved in any opposition or
cancellation proceeding and, to the Company's knowledge, no such action is
threatened with the respect to any of the Company Marks, except as would not,
individually or in the aggregate, have a Material Adverse Effect on the Company;
and
(viii) Neither the Company nor any of its subsidiaries has any Patents.
(d) The Company has taken all necessary precautions to protect the secrecy
of any of its Trade Secrets (as defined below) that derive commercial value from
not being generally known to the public. The Company and each of its
subsidiaries has the absolute and unrestricted right to use all of its Trade
Secrets. Neither the Company nor any of its subsidiaries has received any notice
or claim challenging the Company's absolute and unrestricted right to use any of
its Trade Secrets or suggesting that any other person has any claim with respect
thereto. To the knowledge of the Company and its subsidiaries, none of its Trade
Secrets has been, or is alleged to have been, misappropriated from any other
person. Except under appropriate confidentiality obligations, there has been no
disclosure by the Company of material
22
confidential information or other Trade Secrets that derive commercial value
from not being generally known to the public.
(e) The Company or one of its subsidiaries either owns the entire right,
title and interest in, to and under, or has acquired a license to use, any and
all Intellectual Property Assets relating to the conduct of their businesses in
the manner that such businesses have heretofore been or are presently being
conducted or as contemplated to be conducted pursuant to the Company's current
business plan, and no other Intellectual Property Rights are necessary for the
unimpaired continued operation of such businesses after the Effective Time in
all respects in the manner that such businesses have heretofore been or are
presently being conducted.
(f) Section 3.15(f) of the Company Disclosure Schedule sets forth a
complete and accurate list of all of the Software (excluding Software that is
publicly available in consumer retail stores and subject to "shrink-wrap"
agreements). Section 3.15(f) of the Company Disclosure Schedule specifically
identifies all Software that is owned exclusively by the Company or any of its
subsidiaries (the "OWNED SOFTWARE") and all Software that is used by the Company
or any of its subsidiaries in the conduct of their business that is not
exclusively owned by the Company or any of its subsidiaries (excluding Software
that is available in consumer retail stores and subject to "shrink-wrap"
agreements) (the "LICENSED SOFTWARE"). The Company or a subsidiary thereof is
the owner of all right, title and interest in and to all Owned Software,
including without limitation, all Copyrights (as defined below), Trade Secrets
and other Intellectual Property Rights relating thereto, and neither the Company
nor any of its subsidiaries has received any notice or claim (whether written,
oral or otherwise) challenging the Company's complete and exclusive ownership of
all Owned Software and all such Intellectual Property Rights relating thereto or
claiming that any other person has any claim of legal or beneficial ownership
with respect thereto. The Company has not assigned, licensed, transferred or
encumbered any of its rights in or to any Owned Software, including without
limitation any Copyrights, Trade Secrets or other Intellectual Property Rights
with respect thereto, to any person, excluding any non-exclusive licenses
granted to distributors or customers in the ordinary course of business. The
Company and its subsidiaries have lawfully acquired the right to use the
Licensed Software, as it is used in the conduct of their business as presently
conducted, and have not exercised any rights in respect of any Licensed
Software, including without limitation any reproduction, distribution or
derivative work rights, outside the scope of any license expressly granted by
the person from which the right to use such Licensed Software was obtained.
(g) Section 3.15(g) of the Company Disclosure Schedule contains a complete
and accurate specific list of all agreements and arrangements pertaining to the
Licensed Software (excluding software that is available in consumer retail
stores and subject to "shrink-wrap" agreements) (collectively, "LICENSED
SOFTWARE AGREEMENTS") and a complete and accurate list of all agreements and
arrangements pertaining to any other technology used or practiced by the Company
as to which a person other than the Company or any of its subsidiaries owns the
applicable Intellectual Property Rights (collectively, "OTHER LICENSED
TECHNOLOGY AGREEMENTS" and, together with Licensed Software Agreements, the
"LICENSED TECHNOLOGY AGREEMENTS"). Section 3.15(g) of the Company Disclosure
Schedule sets forth a complete and accurate list of all royalty obligations of
the Company and its subsidiaries under any Licensed Technology Agreements. All
Licensed Technology Agreements are in full force and effect, and neither the
Company nor any of its subsidiaries is in breach thereof, nor do they have any
23
knowledge of any claim or information to the contrary. All Licensed Technology
Agreements will be maintained by the Company and its subsidiaries in full force
and effect through the Effective Time. There are no outstanding, and, to the
Company's knowledge, no threatened disputes with respect to any Licensed
Technology Agreement. Neither the execution and delivery of this Agreement nor
the completion of the transactions contemplated hereby will result in the
impairment of any rights under any Licensed Technology Agreement.
(h) Section 3.15(h) of the Company Disclosure Schedule contains a complete
and accurate list of all agreements and arrangements involving the grant by the
Company or any subsidiary to any person of any right to distribute, prepare
derivative works based on, support or maintain or otherwise commercially exploit
any Software, including without limitation any value-added reseller agreements,
joint development or marketing agreements or strategic alliance agreements
involving any Software (collectively, "DESIGNATED SOFTWARE AGREEMENTS"). All
Designated Software Agreements are in full force and effect, and neither the
Company nor any of its subsidiaries is in material breach thereof, nor do they
have any knowledge of any claim or basis for a claim to the contrary. All
Designated Software Agreements will be maintained by the Company and its
subsidiaries in full force and effect through the Effective Time. There are no
outstanding and, to the Company's knowledge, no threatened disputes or
disagreements with respect to any Designated Software Agreement. Neither the
execution and delivery of this Agreement nor the completion of the transactions
contemplated hereby will result in any impairment of rights under any Designated
Software Agreement.
(i) The Company has taken all commercially reasonable action in accordance
with industry practice to protect its Intellectual Property Rights in relation
to employees, independent contractors and consultants including entering into
agreements with such persons that assign to the Company or such subsidiary all
of the employee's, contractor's or consultant's rights, including all
Intellectual Property Rights, in any Intellectual Property created or developed
thereby that is used in connection with, or that relates to, the business of the
Company and its subsidiaries. To the knowledge of the Company, no employee of
the Company or any subsidiary has entered into any contract or other agreement
with any person (other than the Company or the applicable subsidiary) that
restricts or limits in any way the scope or type of work in which the employee
may be engaged for the Company or such subsidiary or requires the employee to
transfer, assign, or disclose information concerning the employee's work with
the Company or such subsidiary to any other person.
(j) "INTELLECTUAL PROPERTY RIGHTS" means intellectual property rights
arising from or in respect of the following, whether protected, created or
arising under the laws of the United States or any other jurisdiction: (i)
fictional business names, trade names, service names, registered and
unregistered trademarks and service marks and logos (including any Internet
domain names), and applications therefor (collectively, "MARKS"); (ii) patents,
patent rights and all applications therefor, including any and all continuation,
divisional, continuation-in-part, or reissue patent applications or patents
issuing thereon (collectively, "PATENTS"); (iii) copyrights and all
registrations and applications therefor (collectively, "COPYRIGHTS"); and (iv)
know-how, trade secrets, inventions, discoveries, concepts, ideas, methods,
processes, designs, formulae, technical data, drawings, specifications, data
bases and other proprietary and confidential information, including customer
lists, in each case to the extent not included in the foregoing
24
clauses (i), (ii) or (iii) ("TRADE SECRETS," and, collectively with Marks,
Patents and Copyrights, "INTELLECTUAL PROPERTY").
(k) "SOFTWARE" means any and all (i) computer programs,
including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code; (ii) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise; (iii) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the foregoing; and
(iv) all documentation, including user manuals and training materials, relating
to any of the foregoing, in each case developed or licensed by the Company or
any of its subsidiaries, or used in or necessary for the conduct of their
business, specifically excluding those items prepared for customers in the
operation of the Company's and its subsidiaries' business for which the customer
contractually has vested title.
Section 3.16. Licenses and Governmental Authorizations. Section 3.16 of the
Company Disclosure Schedule contains a true and complete list of all material
permits, licenses, variances, exemptions, orders and approvals (the "COMPANY
PERMITS") of all Governmental Entities necessary for the lawful conduct of the
businesses of the Company and its subsidiaries. The Company has provided Parent
with true and complete copies of each Company Permit. The Company and its
subsidiaries hold all the Company Permits and are in compliance with the terms
of the Company Permits in all material respects. None of the Company or its
subsidiaries have been notified by any Governmental Entity that such
Governmental Entity intends to cancel, terminate or modify any of such Company
Permits. All of such Company Permits are, and as of the Effective Time will be,
valid and in full force and effect and the continuing validity and effectiveness
of such Company Permits will not be affected by either the completion of the
Offer or the Merger.
Section 3.17. Insurance. The Company and its subsidiaries maintain general
liability and other business insurance that the Company believes to be prudent
for its business. Section 3.17 of the Company Disclosure Schedule lists all
insurance policies covering the Company or any of its subsidiaries or employees
where the annual premiums are in excess of $50,000.
Section 3.18. Certain Business Practices. None of the Company, any of its
subsidiaries or, to the Company's knowledge, any directors, officers, employees
or agents of the Company or any of its subsidiaries has (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; or (iii) made any other unlawful payment.
Section 3.19. Insider Interests. No stockholder, director or officer of the
Company has any fiduciary or other ownership interest in any property, real or
personal, tangible or intangible, including without limitation, any Software,
Trade Secret or other Intellectual Property Right, used in or pertaining to the
business of the Company or any subsidiary.
25
Section 3.20. Opinion of Financial Advisor. PricewaterhouseCoopers
Securities L.L.C. (the "FINANCIAL ADVISOR") has delivered to the Company's Board
of Directors its written opinion (the "FAIRNESS OPINION") to the effect that, as
of such date, the Merger Consideration is fair to the holders of Shares from a
financial point of view, and such Fairness Opinion has been (or promptly will
be) delivered by the Financial Advisor to Parent for inclusion and/or summary in
the Offer Documents.
Section 3.21. Brokers. No broker, finder or investment banker (other than
the Financial Advisor, a true and correct copy of whose engagement agreement has
been provided to Parent) 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.
Section 3.22. No Existing Discussions. As of the date hereof, the Company
is not engaged, directly or indirectly, in any discussions or negotiations with
any other party with respect to any Third Party Acquisition (as defined below).
Section 3.23. Vote Required. The affirmative vote of the holders of a
majority of the Shares will be the only vote of the holders of any class or
series of the Company's capital stock necessary to approve the Merger, as such
Merger is to be effected under this Agreement.
Section 3.24. Section 203 of the DGCL; Other Takeover Laws. The Company's
Board of Directors has taken all actions required to be taken by it so that the
restrictions contained in Section 203 of the DGCL applicable to an "interested
stockholder" or a "business combination" (as defined in Section 203) and the
restrictions contained in any "fair price," "business combination" or "control
share acquisition" statute or other similar statute or regulation of any other
jurisdiction applicable to the transactions contemplated hereby, will not apply
to the execution, delivery or performance of this Agreement or the completion of
the Offer, the Merger or the other transactions contemplated by this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as follows:
Section 4.1. Organization. Each of Parent and Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own or
lease and operate its properties and assets and to carry on its business as it
is now being conducted.
Section 4.2. Authority Relative to this Agreement. Each of Parent and
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement and to complete the transactions contemplated hereby. The
execution and delivery of this Agreement and the completion of the transactions
contemplated hereby have been duly and validly authorized by each of Parent's
and Purchaser's Board of Directors and no other corporate proceedings on the
part of Parent or Purchaser are necessary to authorize this Agreement or to
complete the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Parent and Purchaser and, assuming this
Agreement constitutes the
26
valid and binding agreement of the Company, constitutes a valid, legal and
binding agreement of each of Parent and Purchaser, enforceable against each of
Parent and Purchaser in accordance with its terms, subject to the Enforceability
Exceptions.
Section 4.3. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, and the HSR Act, and except for certain foreign
governmental approvals and the filing and recordation of the Merger Certificate
as required by the DGCL, no filing with or notice to, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary for
the execution and delivery by Parent or Purchaser of this Agreement or the
completion by Parent or Purchaser of the transactions contemplated hereby,
except where the failure to obtain such permits, authorizations, consents or
approvals or to make such filings or give such notices would not, individually
or in the aggregate, have a Material Adverse Effect on Parent. Neither the
execution, delivery and performance of this Agreement by Parent or Purchaser nor
the completion by Parent or Purchaser of the transactions contemplated hereby
will (i) conflict with or result in any breach of any provision of the
respective Certificate of Incorporation or Bylaws of Parent or Purchaser; (ii)
result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration or any Lien) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Parent or
Purchaser is a party or by which either of them or any of their respective
properties or assets may be bound; or (iii) violate any order, writ, injunction,
decree, or any law, statute, rule or regulation applicable to Parent or
Purchaser or any of their respective properties or assets, except for
violations, breaches or defaults that will not materially delay or prevent the
completion of the transactions contemplated hereby.
Section 4.4. Information Supplied. None of the information supplied or to
be supplied by Parent for inclusion or incorporation by reference in the
Schedule 14D-9 will, at the time the Schedule 14D-9 is filed with the SEC or
disseminated to the holders of Shares, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. Each of the Offer
Documents and the other documents required to be filed by Parent with the SEC in
connection with the Offer, the Merger and the other transactions contemplated
hereby, will comply as to form, in all material respects, with the requirements
of the Securities Act and the Exchange Act and will not, at the time such
document is filed with the SEC or disseminated to the holders of Shares, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
Section 4.5. Interim Operations of Purchaser. Purchaser was formed solely
for the purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted its operations only as
contemplated hereby.
Section 4.6. Funds. Parent has, or will have, sufficient funds available
(through existing credit arrangements or otherwise) to purchase, or to cause
Purchaser to purchase, all the
27
Shares pursuant to the Offer and the Merger and to pay all fees, expenses and
payments related to the transactions contemplated hereby.
Section 4.7. Litigation. There is no Proceeding pending or, to the
knowledge of Parent, threatened against Parent or any of its subsidiaries or any
of their respective properties or assets which would reasonably be expected to
prevent or materially delay the completion of the transactions contemplated by
this Agreement.
ARTICLE 5
COVENANTS
Section 5.1. Conduct of the Company's Business. The Company covenants that,
prior to the Effective Time, unless Parent otherwise consents in writing or as
otherwise expressly contemplated by this Agreement or as set forth in Schedule
5.1, neither the Company nor any of its subsidiaries will:
(a) amend its Certificate of Incorporation or Bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
shares of any class of capital stock or any other securities or equity
equivalents (including, without limitation, any stock options, restricted stock,
stock appreciation rights, deferred stock awards, warrants or other rights to
acquire Shares or any other interest in the capital stock or any other equity
security of the Company), except for (i) the issuance and sale of Shares
pursuant to Stock Options previously granted or (ii) the issuance and sale of
securities by a subsidiary of the Company to any entity which is wholly owned by
the Company;
(c) take any action to accelerate the exercisability or vesting of Stock
Options (except to the extent that such Stock Options automatically accelerate
under their existing terms), permit cash payments to holders of Stock Options
with respect to such Stock Options (except as contemplated hereunder), and/or
otherwise modify or amend the existing terms of such Stock Options;
(d) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock, make any
other actual, constructive or deemed distribution in respect of its capital
stock or otherwise make any payments to stockholders in their capacity as such,
or redeem or otherwise acquire any of its securities or any securities of any of
its subsidiaries, except for the payment of dividends or distributions by a
wholly-owned subsidiary of the Company to the Company or another wholly-owned
subsidiary of the Company;
(e) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its subsidiaries (other than the Merger);
28
(f) alter through merger, liquidation, reorganization, restructuring or any
other fashion the corporate structure or ownership of any subsidiary;
(g) (i) incur or assume any long-term or short-term debt for money borrowed
(including without limitation debt contemplated by the Commitment Letter dated
March 14, 2001 from Bank of America Commercial Finance to the Company) or issue
any debt securities except for borrowings under existing lines of credit or in
connection with existing commercial paper programs in the ordinary course of
business; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person except in the ordinary course of business consistent with past
practice and except for obligations of subsidiaries of the Company incurred in
the ordinary course of business; (iii) make any loans, advances or capital
contributions to or investments in any other person (other than to subsidiaries
of the Company or customary loans or advances to employees, in each case in the
ordinary course of business consistent with past practice); (iv) pledge or
otherwise encumber shares of capital stock of the Company or its subsidiaries;
or (v) mortgage or pledge any of its material assets, tangible or intangible, or
create or suffer to exist any material Lien thereupon (other than currently
existing Liens and Liens for Taxes not yet due);
(h) enter into, adopt, amend or terminate any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent, stock purchase agreement,
pension, retirement, deferred compensation, employment, severance or other
employee benefit agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any director, officer or employee in any manner or
increase in any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not contemplated by any plan and
arrangement as in effect as of the date hereof (including, without limitation,
the granting of stock appreciation rights or performance units), except as may
be contemplated by this Agreement, a contract or written plan now in effect or
by applicable law and except, with respect to non-executive officers of the
Company earning less than $100,000 per annum, in the ordinary course of business
and consistent with past practice;
(i) other than the sale of inventory in the ordinary course of business,
acquire, sell, lease or dispose of any assets in any single transaction or
series of related transactions having a fair market value in excess of $100,000
in the aggregate;
(j) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it (other than immaterial changes);
(k) revalue in any respect any of its assets including without limitation
writing down the value of inventory or writing-off notes or accounts receivable
other than in the ordinary course of business consistent with past practice or
as required by generally accepted accounting principles;
(l) (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; (ii) enter into any contract or
agreement that would be material to the Company and its
29
subsidiaries, taken as a whole; (iii) authorize any new (not within the
Company's existing capital expenditure budget) capital expenditure or
expenditures which individually is in excess of $50,000; provided that none of
the foregoing shall limit any capital expenditure required pursuant to existing
customer contracts or pursuant to the Company's existing capital expenditures
budget, a copy of which has been provided by the Company to Parent;
(m) make any Tax election or settle or compromise any income Tax liability,
in each case, other than in the ordinary course of business consistent with past
practice;
(n) settle or compromise any pending or threatened suit, action or claim;
(o) commence any research and/or development project or terminate any
research and/or development project that is currently ongoing, in either case
except pursuant to the terms of existing contracts or except as contemplated by
the Company's project development budget previously provided to Parent;
(p) subject to Section 5.5 hereof, sell to any person other than Parent,
Purchaser or their affiliates more than fifteen percent (15%) of the Shares;
(q) take any action outside of its ordinary course of business, consistent
with past practices; or
(r) take or agree in writing or otherwise to take any of the actions
described in this Section 5.1.
For purposes of giving its consent pursuant to this Section 5.1, Parent hereby
designates the two individuals identified on Schedule 5.1 hereto, or such other
individuals as Parent may designate in writing from time to time ("Parent's
Representatives"). Any requests for consent to any prohibited action under this
Section 5.1 shall be made in writing to one or both of Parent's Representatives
(with a copies thereof concurrently furnished in accordance with Section 8.7
hereof), who shall respond promptly in writing. If Parent's Representatives do
not respond to any such request within five (5) Business Days after their
receipt of such request, consent by Parent shall be deemed to have been given.
Section 5.2. Stockholder Approval; Preparation of Proxy Statement.
(a) If required by applicable law in order to complete the Merger, the
Company (acting through its Board of Directors) shall, as promptly as
practicable following the expiration of the Offer and in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special meeting of its
stockholders (the "Special Meeting") for the purpose of obtaining approval of
the Merger and the adoption of this Agreement;
(ii) (v) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and this Agreement; (w) obtain and furnish the
information required to be included by the SEC in the Proxy Statement (as
defined below); (x) promptly notify Parent of the receipt of any comments from
the SEC or its staff and of any
30
request by the SEC or its staff for amendments or supplements to the preliminary
proxy or information statement or for additional information and furnish Parent
with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the preliminary proxy or information statement or the Merger;
(y) after consultation with Parent, respond promptly to any comments and
requests from the SEC or its staff with respect to the preliminary proxy or
information statement and cause a definitive proxy or information statement (the
"PROXY STATEMENT") to be prepared and disseminated to its stockholders; and (z)
seek to obtain the necessary approvals of the Merger and this Agreement by its
stockholders; and
(iii) subject to Section 5.5 hereof, include in the Proxy Statement the
recommendation of the Company's Board of Directors that the stockholders of the
Company vote in favor of the approval of the Merger and the adoption of this
Agreement.
(b) Parent shall provide the Company with the information concerning Parent
and Purchaser required to be included in the Proxy Statement and will vote, or
cause to be voted, all Shares then owned by Parent, Purchaser or any subsidiary
of Parent in favor of the approval of the Merger and the adoption of this
Agreement. The Company shall give Parent an opportunity to comment on any
correspondence with the SEC or its staff or any proposed material to be included
in the Proxy Statement prior to transmission to the SEC or its staff and shall
not transmit any such material to which Parent reasonably objects. Parent shall
ensure that no material relating to Parent or Purchaser contained in the Proxy
Statement, will, at the time the Proxy Statement is filed with the SEC or
disseminated to the stockholders of the Company, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(c) If at any time prior to the Effective Time any event with respect to
the Company or any of its subsidiaries should occur which is required to be
described in an amendment or supplement to the Proxy Statement, such event shall
be so described and the Company shall promptly prepare and file such amendment
or supplement with the SEC and, as required by law, disseminate the same to the
stockholders of the Company.
(d) Notwithstanding the foregoing, in the event that Parent, Purchaser or
any other subsidiary of Parent acquires at least ninety percent (90%) of the
outstanding Shares, pursuant to the Offer or otherwise, the parties hereto shall
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer, without a
Special Meeting, in accordance with Section 253 of the DGCL.
(e) The Company shall ensure that any Proxy Statement will comply as to
form, in all material respects, with the requirements of the Securities Act and
the Exchange Act and that no material relating to the Company contained in the
Proxy Statement will, at the time the Proxy Statement is filed with the SEC or
disseminated to its stockholders, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
31
Section 5.3. Access to Information; Confidentiality.
(a) The Company shall, and shall cause its subsidiaries and its and their
respective directors, officers, employees, representatives and agents to,
afford, from the date hereof to the Effective Time, the officers, employees,
representatives and agents of Parent and Purchaser reasonable access during
regular business hours to its officers, employees, agents, properties, books,
records and workpapers, and shall promptly furnish Parent all financial,
operating and other information and data as Parent, through its officers,
employees, representatives or agents, may reasonably request upon reasonable
notice thereof.
(b) Except as required by law, each of Parent, Purchaser and the Company
shall hold, and shall cause its respective officers, employees, representatives
and agents to hold, for a period of five (5) years from the date hereof, in
confidence any confidential information and documents furnished to the other
party in connection with the transactions contemplated by this Agreement
("CONFIDENTIAL INFORMATION"). Parent, Purchaser and the Company shall use the
Confidential Information solely for the purpose of the transactions contemplated
by this Agreement and shall not use the Confidential Information in any way
detrimental to any other party. In the event that either party is requested in
any Proceeding to disclose any Confidential Information, such party shall give
the other party prompt written notice of such request so that the other party
may seek an appropriate protective order. If, in the absence of a protective
order, a party is nonetheless compelled to disclose Confidential Information,
such party may disclose such Confidential Information; provided, however, that
such party shall provide the other party written notice of the information to be
disclosed as far in advance of its disclosure as practicable and, upon the
request of and at the expense of such other party, such party shall use all
commercially reasonable efforts to obtain assurances that confidential treatment
will be accorded to such Confidential Information. "CONFIDENTIAL INFORMATION"
does not include information which was or becomes generally available on a
non-confidential basis.
(c) No investigation pursuant to this Section 5.3 or belief contemplated by
Section 5.6(c) will affect, add to, subtract from or otherwise alter any
representations or warranties of the parties hereto or the conditions to the
obligations of the parties hereto to effect the Merger.
Section 5.4. Best Efforts. Subject to the terms and conditions of this
Agreement, including, without limitation, Section 5.5 hereof, each of the
parties hereto shall use all of their respective best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things reasonably
necessary, proper or advisable under applicable laws and regulations to complete
and make effective the transactions contemplated by this Agreement as promptly
as practicable, including, without limitation, (a) cooperating in the
preparation and filing of the Offer Documents, any filings that may be required
under the HSR Act or similar governmental legal requirements, and any amendments
to any thereof; (b) obtaining consents of all third parties and Governmental
Entities necessary, proper or advisable for the completion of the transactions
contemplated by this Agreement; (c) contesting any legal proceeding, whether
judicial or administrative, relating to the Merger, including, without
limitation, seeking to have any stay imposed or temporary restraining order
entered by any Governmental Entity vacated or reversed; and (d) executing any
additional instruments necessary to complete the transactions
32
contemplated hereby, subject in all instances to any required Stockholder
Approval. Subject to the terms and conditions of this Agreement, Parent and the
Company shall use all of their respective best efforts to cause the Effective
Time to occur as soon as practicable after the completion of the Offer. In case
at any time after the Effective Time any further action is necessary to carry
out the purposes of this Agreement, the proper directors and officers of each
party hereto shall take all such necessary action. Parent shall cause Purchaser
to comply with its obligations under this Agreement.
Section 5.5. Inquiries and Negotiations.
(a) The Company, its subsidiaries and their respective directors, officers,
employees, representatives and agents shall immediately cease any discussions or
negotiations with any parties with respect to any Third Party Acquisition (as
defined below). Neither the Company nor any of its subsidiaries shall, nor shall
the Company authorize or permit any of its or their respective directors,
officers, employees, representatives or agents to, directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations with
or provide any non-public information to any person or group (other than Parent
and Purchaser or any designees of Parent and Purchaser) concerning any Third
Party Acquisition; provided, however, that (i) nothing herein shall prevent the
Company's Board of Directors from taking and disclosing to the Company's
stockholders a position contemplated by Rules 14d-9 and 14e-2 promulgated under
the Exchange Act with regard to any tender offer; (ii) if the Company receives
an unsolicited proposal for a Third Party Acquisition from a Third Party,
nothing herein shall prevent the Company or its representatives from making such
inquiries or conducting such discussions as the Company's Board of Directors,
after consultation with legal counsel, may deem necessary to inform itself for
the purpose of exercising its fiduciary duties, and (iii) if the Company
receives an unsolicited proposal for a Third Party Acquisition from a Third
Party that the Company's Board of Directors by a majority vote determines in its
good faith judgment (after consultation with, and duly considering the advice
of, a financial advisor of nationally recognized reputation) is reasonably
likely to result in a Superior Proposal, the Company and its representatives may
conduct such additional discussions or provide such information as the Company's
Board of Directors shall determine, but only if, prior to such provision of
information or additional discussion, (A) such Third Party has entered into a
confidentiality and standstill agreement substantially similar to Section 5.3
hereof and Section 7 of the Stock Purchase Agreement which agreement contains
provisions that expressly permit the Company to comply with the provisions of
this Section 5.5; provided, that if the Company enters into a confidentiality
agreement without standstill provisions substantially similar to those contained
in the Stock Purchase Agreement, then Parent will, to the extent of the
difference, be relieved of compliance with the Stock Purchase Agreement's
standstill provisions and (B) the Company's Board of Directors determines in its
good faith judgment, after consultation with legal counsel, that it is required
to do so in order to comply with its fiduciary duties. The Company shall
promptly notify the Parent in the event it receives any proposal or inquiry
concerning a Third Party Acquisition including the terms and conditions thereof
and the identity of the party submitting such proposal. The Company shall advise
the Parent from time to time of the status and any material developments
concerning the same.
(b) Except as set forth in this Section 5.5(b), the Company's Board of
Directors shall not withdraw, change or modify its recommendation of the
transactions
33
contemplated hereby or approve or recommend, or cause the Company to enter into
any agreement with respect to, any Third Party Acquisition. Notwithstanding the
foregoing or anything in this Agreement to the contrary, if the Company's Board
of Directors determines in its good faith judgment, after consultation with
legal counsel, that it is required to do so in order to comply with its
fiduciary duties, the Company's Board of Directors may withdraw its
recommendation of the transactions contemplated hereby or approve or recommend a
Superior Proposal (as defined below), but in each case only (i) after providing
written notice to Parent (a "Notice of Superior Proposal") advising Parent that
the Company's Board of Directors has received a Superior Proposal, specifying
the material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal and (ii) if Parent does not, within five
(5) Business Days after Parent's receipt of the Notice of Superior Proposal,
make an offer which the Company's Board of Directors determines in its good
faith judgment (after consultation with, and duly considering the advice of, a
financial advisor of nationally recognized reputation) to be as favorable to the
Company's stockholders as such Superior Proposal; provided, however, the Company
shall not be entitled to enter into any agreement with respect to a Superior
Proposal (excluding a confidentiality and standstill agreement pursuant to
Section 5.5(a)) unless and until this Agreement is terminated by its terms
pursuant to Article 7 and the Company has paid all amounts due to Parent and
Purchaser thereunder.
(c) "THIRD PARTY ACQUISITION" means the occurrence of any of the following
events: (i) the acquisition of the Company by merger, reorganization,
consolidation, share exchange, business combination, purchase of stock or assets
or otherwise by any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Parent, Purchaser or any
affiliate thereof (a "THIRD PARTY"); (ii) the acquisition by a Third Party of
all, or a material portion of all, the Company's assets; (iii) the acquisition
by a Third Party of fifteen percent (15%) or more of the outstanding Shares;
(iv) the adoption by the Company of a plan of liquidation or the declaration or
payment of an extraordinary dividend; (v) the repurchase by the Company or any
of its subsidiaries of more than fifteen percent (15%) of the outstanding
Shares; or (vi) the acquisition by the Company or any subsidiary by merger,
purchase of stock or assets, joint venture or otherwise of a direct or indirect
ownership interest or investment in any business whose annual revenues, annual
net income or total assets is equal or greater than fifteen percent (15%) of the
annual revenues, annual net income or total assets of the Company.
(d) "SUPERIOR PROPOSAL" means any bona fide Third Party Acquisition
proposal which the Company's Board of Directors by a majority vote determines in
its good faith judgment (after consultation with, and duly considering the
advice of, a financial advisor of nationally recognized reputation) to be more
favorable to the Company's stockholders than the Offer and the Merger.
Section 5.6. Notification of Certain Matters, Etc. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence, or failure to occur, of any event that such party believes
would be likely to cause any of its representations or warranties contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date hereof to the Effective Time and (ii) any material failure of the
Company or Parent, as the case may be, or any director, officer, employee or
agent thereof, to comply with or
34
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that failure to give such notice shall not
constitute a waiver of any defense that may be validly asserted.
Section 5.7. Indemnification.
(a) Parent shall provide, until the sixth (6th) anniversary of the Closing
Date, the directors and officers of the Company who are currently covered by the
Company's existing insurance and indemnification policy an insurance and
indemnification policy that provides coverage for events occurring prior to the
Effective Time (the "D&O INSURANCE"), including, without limitation, the
transactions contemplated by this Agreement, that is no less favorable than the
Company's existing policy or, if substantially equivalent coverage is
unavailable, the best available coverage; provided, that Parent shall not be
required to pay an annual premium for the D&O Insurance in excess of one hundred
fifty percent (150%) of the last annual premium paid by the Company prior to the
date hereof, but in such case shall purchase as much coverage as possible for
such amount.
(b) After the Effective Time, Parent shall, and Parent shall cause the
Surviving Corporation to, indemnify and hold harmless each person who is now, or
has been prior to the date hereof or who becomes prior to the Effective Time, a
director, officer, employee or agent of the Company or any of its subsidiaries
(the "INDEMNIFIED PERSONS") against (i) all losses, claims, damages, costs,
expenses (including without limitation reasonable counsel fees and expenses),
settlement, payments or liabilities arising out of or in connection with any
claim, demand, action suit, proceeding or investigation based in whole or in
part on, or arising in whole or in part out of, the fact that such person is or
was a director or officer of the Company or any of its subsidiaries, whether or
not pertaining to any matter existing or occurring at or prior to the Effective
Time and whether or not asserted or claimed prior to or at or after the
Effective Time (the "INDEMNIFIED LIABILITIES") and (ii) all Indemnified
Liabilities based in whole or in part on, or arising in whole or in part out of,
or pertaining to, this Agreement or the transactions contemplated hereby, in
each case to the fullest extent required or permitted under applicable law or
under the Surviving Corporation's certificate of incorporation, bylaws,
indemnification agreements in effect at the date hereof (as disclosed to Parent
in the Company Disclosure Schedule), or otherwise as permitted by contracts
identified on Schedule 5.7 hereto, including provisions relating to the
advancement of expenses incurred in the defense of any action or suit. In the
event of any claim (a "CLAIM") for indemnification by an Indemnified Person
hereunder, the Surviving Corporation shall control the defense of such Claim
with counsel selected by the Surviving Corporation; provided, however, that the
Indemnified Person shall be permitted to participate in the defense of such
Claim through counsel reasonably acceptable to the Surviving Corporation and
selected by the Indemnified Person, at the Indemnified Person's expense.
Notwithstanding the foregoing, if there is any conflict between the Surviving
Corporation and any Indemnified Person or there are additional defenses
available to any Indemnified Person, the Indemnified Person shall be permitted
to participate in the defense of such Claim with counsel reasonably acceptable
to the Surviving Corporation selected by the Indemnified Person, and Parent
shall cause the Surviving Corporation to pay the reasonable fees and expenses of
such counsel to the fullest extent permitted by law; provided, however, that the
Surviving Corporation shall not be obligated to pay the reasonable fees and
expenses of more than one (1) counsel for all Indemnified Persons in any single
Claim. It is acknowledged that the SEC investigation and related actions against
the Company and certain of its current and former directors, officers and
35
employees, as disclosed in the section captioned "Legal Proceedings" in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999
(the "INVESTIGATION"), will continue to be treated as separate Claims hereunder
and, accordingly, each such person who has been entitled to separate counsel in
connection with the Investigation immediately prior to the Effective Time will
continue to be entitled to separate counsel in connection with the Investigation
after the Effective Time; the Surviving Corporation shall continue to be
obligated to pay the reasonable fees and expenses of each such counsel. Without
limiting the foregoing, in the event any Indemnified Person participates in the
defense of any Claim and the Surviving Corporation is required to pay the
reasonable fees and expenses of such Indemnified Party's legal counsel pursuant
to the two immediately preceding sentences, then Parent shall cause the
Surviving Corporation to periodically advance to such Indemnified Person its
reasonable legal and other expenses (including the reasonable costs of any
investigation and preparation incurred in connection therewith), subject to the
provision by such Indemnified Person of an undertaking to reimburse the amounts
so advanced in the event of a final, nonappealable determination by a court of
competent jurisdiction that such Indemnified Person is not entitled to be
indemnified for such expenses. The Surviving Corporation shall not be liable for
any settlement effected without its written consent (including, without
limitation, any settlement effected without its written consent in connection
with the Investigation), which consent shall not be unreasonably withheld. Each
Indemnified Person is intended to be a third party beneficiary of this Section
5.7 and may specifically enforce its terms. This Section 5.7 shall not limit or
otherwise adversely affect any rights any Indemnified Person may have under any
agreement with the Company or under the Company's Certificate of Incorporation,
Bylaws, indemnification agreements in effect at the date hereof (as disclosed to
Parent in the Company Disclosure Schedule), or otherwise as permitted by
contracts identified on Schedule 5.7 hereto, including provisions relating to
the advancement of expenses incurred in the defense of any action or suit.
(c) In the event that Parent or Purchaser or any of their successors or
assigns (i) consolidates with or merges into any other person or entity and is
not the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person or entity, then, and in each such case, to the extent
necessary to effectuate the purposes of this Section 5.7, proper provision shall
be made so that the successors and assigns of Parent and Purchaser assume the
obligations of Parent and Purchaser set forth in this Section 5.7.
Section 5.8. Section 16 Matters. Prior to the Effective Time, the Company
shall take all such steps as may be required to cause any dispositions of Shares
(including derivative securities with respect to the Shares) resulting from the
transactions contemplated by this Agreement by each individual who is subject to
the reporting requirements of Section 16(a) of the Exchange Act with respect to
the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act,
such steps to be taken in accordance with the No-Action Letter, dated January
12, 1999, issued by the SEC to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP.
Section 5.9. Resignation of Directors and Officers. After the completion of
the Offer and to the extent requested by Parent, the Company shall cause each of
the directors and officers of the Company and its subsidiaries to tender their
resignations effective on or before the Effective Time.
36
Section 5.10. Public Announcements. Parent, Purchaser and the Company, as
the case may be, shall consult with, and obtain the approval of, one another
before issuing any press release or otherwise making any public statements with
respect to the transactions contemplated by this Agreement, including, without
limitation, the Offer and the Merger, and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable law or by obligations pursuant to any listing agreement
with The Nasdaq Stock Market or as reasonably determined to be prudent upon the
good faith exercise of the fiduciary duties of the board of directors of any
party hereunder; provided, however, that in any event, the announcing party
shall notify the other parties hereto of the material details of any such
release or statement at least one (1) Business Day prior to the public
announcement thereof.
Section 5.11. ISRA Procedures.
(a) At is own cost and expense, the Company shall comply with all
obligations pursuant to ISRA (as defined below) resulting from the transactions
contemplated by this Agreement. At the Company's option, the Company may seek a
determination from NJDEP that compliance with ISRA is not required by reason of
the transactions contemplated by this Agreement in the form of an application
for a letter of ISRA nonapplicability (an "LNA") for each facility or place of
business in New Jersey owned or operated by the Company. If NJDEP approves an
LNA for any site, the LNA shall fulfill the Company's obligations under this
Section 5.11 for such site (each, a "SITE"). The Company shall (i) provide
Parent and Purchaser with drafts of all submissions to NJDEP regarding ISRA
exemption or compliance, at least three (3) Business Days in advance of
submission to NJDEP, for review and approval by Parent and Purchaser (which
approval will not be unreasonably withheld); (ii) provide notice to Parent and
Purchaser of any meetings with NJDEP concerning ISRA compliance at least three
(3) Business Days in advance of such meetings; and (iii) permit Parent and
Purchaser to attend any such meetings. Except to the extent already in place
prior to the date hereof or required of the Company under its settlement
agreement, dated February 21, 2001, with the Okonite Company (as disclosed to
Parent in the Company Disclosure Schedule), the Company shall not request any
NJDEP ISRA approvals based upon the use of Engineering Controls, Deed Notices,
Classification Exception Areas (as such terms are defined under ISRA), or other
non-residential remediation standards without the prior written approval of
Parent and Purchaser (which approval will not be unreasonably withheld).
(b) "ISRA" means, collectively, New Jersey's Industrial Site Recovery Act
(N.J.S.A. ss.13:1K-6, et seq.) and the Xxxxxxxxxx and Contaminated Site
Remediation Act (formerly known as the Hazardous Discharge Site Remediation Act,
N.J.S.A. ss.58:10B-1, et seq.), both as amended, and all applicable regulations,
orders or directives adopted thereunder or pertaining thereto.
(c) "NJDEP" means the New Jersey Department of Environmental Protection and
its successors.
Section 5.12. Employee Benefits. For a period of not less than two (2)
years following the Effective Time, the Surviving Corporation shall provide to
current and former employees of the Company employee benefits that are, in the
aggregate, not less favorable than those provided to such employees immediately
before the Effective Time. The foregoing will not be interpreted
37
to prevent (i) the amendment or termination of any particular Employee Plan or
employment agreement to the extent permitted by, and in accordance with, its
terms, as in effect immediately before the Effective Time and as described in
the Company Disclosure Schedule or the SEC Reports or (ii) the termination of
employment or the reduction of, or other change in, the compensation or employee
benefits of any individual employee of the Company.
ARTICLE 6
CONDITIONS TO THE MERGER
Section 6.1. Conditions to the Obligations of the Parties. The respective
obligations of each party to complete the Merger are subject to the fulfillment
at or prior to the Effective Time of the following conditions:
(a) this Agreement has been duly approved and adopted by the holders of the
outstanding Shares, if required, in accordance with applicable law and the
Certificate of Incorporation and Bylaws of the Company; provided, that Parent
and Purchaser shall vote, or cause to be voted, all Shares then owned or
controlled by them in favor of the Merger;
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction has been enacted, entered, promulgated or enforced by any United
States court or United States governmental authority which prohibits, restrains
or enjoins the completion of the Merger; provided that the party invoking this
condition has complied with its obligations under Section 5.4 hereof;
(c) any waiting period applicable to the Merger under the HSR Act has
terminated or expired and, to the extent required, the Commission of the
European Union has approved the Merger under Regulation (EEC) No. 4064/89 of the
Council of the European Union, or such approval shall have been deemed granted;
(d) any applicable approval under ISRA has been obtained by the Company
from NJDEP in accordance with Section 5.11; and
(e) Purchaser has accepted for payment and paid for all Shares validly
tendered and not withdrawn pursuant to the Offer.
ARTICLE 7
TERMINATION AND ABANDONMENT
Section 7.1. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the purchase of Shares pursuant to the
Offer:
(a) by mutual written consent of Parent, Purchaser and the Company;
(b) by Parent and Purchaser or by the Company, if
(i) any court of competent jurisdiction in the United States or other
Governmental Entity in the United States or other jurisdiction where the Company
has material assets or operations has issued a final order, decree or ruling or
taken any other final action
38
restraining, enjoining or otherwise prohibiting the Offer or the Merger and such
order, decree, ruling or other action is or shall have become final and
nonappealable; or
(ii) the purchase of Shares pursuant to the Offer has not been completed on
or prior to the date three (3) months from the date hereof; provided, however,
that the passage of the period referred to in this clause (ii) shall be tolled
during (A) the period during which any party shall be subject to a non-final
order, decree, ruling or action restraining, enjoining or otherwise prohibiting
the Offer or the Merger, but not more than an additional three (3) months or (B)
any additional waiting period under the HSR Act resulting from a second request;
provided, further, that no party may terminate this Agreement pursuant to this
clause (ii) if such party's failure to fulfill any of its obligations under this
Agreement has been the reason that the purchase of Shares pursuant to the Offer
has not occurred on or before said date;
(c) by the Company's Board of Directors, if:
(i) (A) the Company's Board of Directors has entered into or publicly
announced its intention to enter into an agreement or an agreement in principle
with respect to a Superior Proposal, in strict compliance with Section 5.5
hereof; provided, however, that the right to terminate this Agreement pursuant
to this Section 7.1(c)(i)(A) shall not be available if (1) the Company has
breached any obligation under Section 5.5 hereof; (2) prior to or concurrently
with any purported termination under this Section 7.1(c), the Company has failed
to pay any fee that it is required to pay pursuant to Section 7.3; or (3) the
Company has failed to provide Parent and Purchaser with at least five (5)
Business Days' prior written notice of its intention to terminate this
Agreement; or
(B) any representation or warranty made by Parent or Purchaser in this
Agreement is not true and correct in all material respects when made and has
resulted in, or is reasonably likely to result in, the failure to satisfy any of
the conditions to the Offer set forth in Annex I hereto, or Parent or Purchaser
has failed to observe or perform in any material respect any of its material
obligations under this Agreement; provided, that prior to exercising such right
of termination pursuant to this Section 7.1(c)(i)(B), the Company has provided
prompt written notice to Parent of such misrepresentation, breach of warranty or
failure to observe or perform; provided, further, that the Company shall not
have the right to terminate this Agreement pursuant to this Section 7.1(c)(i)(B)
if the condition resulting in such misrepresentation, breach of warranty or
failure to observe or perform is cured (1) in the event such notice is delivered
on or prior to the fourth (4th) Business Day prior to the then-scheduled
Expiration Date, not later than the earlier of (y) such Expiration Date and (z)
ten (10) Business Days following delivery of such notice and (2) in the event
such notice is delivered on or after the third (3rd) Business Day prior to the
then-scheduled Expiration Date, not later than three (3) Business Days following
such delivery (it being agreed that, in such event, the Offer shall be extended
as necessary at least until the end of such cure period); provided, however,
that the right to terminate this Agreement pursuant to this Section 7.1(c)(i)(B)
shall not be available if the Company is in material breach of any of its
obligations hereunder; or
(ii) if Parent or Purchaser has terminated the Offer, or the Offer has
expired without Parent or Purchaser, as the case may be, purchasing any Shares
pursuant thereto;
39
provided, however, that the right to terminate this Agreement pursuant to this
Section 7.1(c)(ii) shall not be available if the Company is in material breach
of any of its obligations hereunder; or
(iii) if Parent or Purchaser has failed to commence the Offer on or prior
to ten (10) Business Days following the date of the initial public announcement
of the Offer or has failed to pay for the Shares in accordance with the terms of
the Offer; provided, however, that the right to terminate this Agreement
pursuant to this Section 7.1(c)(iii) shall not be available if the Company is in
material breach of any of its obligations hereunder.
(d) by Parent and Purchaser, if neither Parent nor Purchaser is in material
breach of any of their respective obligations hereunder and:
(i) an event has occurred or failed to occur, which event if occurring or
failing to occur after the commencement of the Offer would result in a failure
to satisfy any of the conditions to the Offer set forth in Annex I hereto, and
Parent or Purchaser fails to commence the Offer on or prior to ten (10) Business
Days following the date of the initial public announcement of the Offer;
(ii) (A) (1) the Company's Board of Directors has withdrawn, modified or
changed in any manner adverse to Parent or Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger, or (2) has
recommended any proposal for a Third Party Acquisition or has executed, or has
announced its intention to enter into, an agreement in principle or definitive
agreement relating to any Third Party Acquisition with any Third Party (or the
Company's Board of Directors resolves to do any of the foregoing);
(B) any Third Party has become, after the date hereof, the beneficial owner
(as defined in Rule 13d-3 promulgated under the Exchange Act) of fifty percent
(50%) or more of the outstanding Shares; or
(C) any representation or warranty made by the Company in this Agreement is
not true and correct when made and has resulted in, or is reasonably likely to
result in, a Material Adverse Effect on the Company or the failure to satisfy
any of the conditions to the Offer set forth in Annex I hereto, or the Company
has failed to observe or perform in any material respect any of its material
obligations under this Agreement; provided, that prior to exercising such right
of termination pursuant to this Section 7.1(d)(ii)(C), Parent and Purchaser have
provided prompt written notice to the Company of such misrepresentation, breach
of warranty or failure to observe or perform; provided, further, that neither
Parent nor Purchaser shall have the right to terminate this Agreement pursuant
to this Section 7.1(d)(ii)(C) if the condition resulting in such
misrepresentation, breach of warranty or failure to observe or perform is cured
(1) in the event such notice is delivered on or prior to the fourth (4th)
Business Day prior to the then-scheduled Expiration Date, not later than the
earlier of (y) such Expiration Date and (z) ten (10) Business Days following
delivery of such notice and (2) in the event such notice is delivered on or
after the third (3rd) Business Day prior to the then-scheduled Expiration Date,
not later than three (3) Business Days following such delivery (it being agreed
that, in such event, the Offer shall be extended as necessary at least until the
end of such cure period).
40
Section 7.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void and have no effect without any liability on the part of
any party hereto or its affiliates, directors, officers or stockholders other
than the provisions of Sections 5.3(b), 7.2 and 7.3 hereof. Nothing contained in
this Section 7.2 will relieve any party from liability for any breach of its
covenants, agreements or obligations set forth in this Agreement.
Section 7.3. Fees and Expenses.
(a) In the event that this Agreement is terminated pursuant to:
(i) Sections 7.1(c)(i)(A), (d)(ii)(A) or (d)(ii)(B);
(ii) Section 7.1(d)(ii)(C) and within twelve (12) months thereafter
the Company enters into an agreement with respect to a Third Party
Acquisition or a Third Party Acquisition occurs involving any party (or any
affiliate thereof) (A) with whom the Company (or its agents) had
negotiations with a view to a Third Party Acquisition; (B) to whom the
Company (or its agents) furnished information with a view to a Third Party
Acquisition; or (C) who had submitted a proposal for a Third Party
Acquisition, in the case of each of clauses (A), (B) and (C), after the
date hereof and prior to such termination; or
(iii) Section 7.1(b)(ii) at a time when (A) the Minimum Condition is
not satisfied; (B) there shall be outstanding a publicly announced offer by
a Third Party to complete a Third Party Acquisition; and (C) no other
condition to the Offer is unsatisfied, and within twelve (12) months
thereafter the Company enters into an agreement with respect to a Third
Party Acquisition or a Third Party Acquisition occurs, in either case
involving the Third Party referred to above;
then Parent and Purchaser would suffer direct and substantial damages, which
damages cannot be determined with reasonable certainty. To compensate Parent and
Purchaser for such damages the Company shall pay to Parent the amount of
$4,000,000.00 as liquidated damages within five (5) Business Days (or such
lesser time as may be specified herein) following (x) such termination referred
to in Section 7.3(a)(i) or (y) the entering into of the agreement for a Third
Party Acquisition or the occurrence of the Third Party Acquisition which
triggers the obligation to make the payment pursuant to Section 7.3(a)(ii) or
(iii). Each of the parties hereto acknowledges that the amount to be paid
pursuant to this Section 7.3(a) represents liquidated damages and not a penalty.
(b) In addition, if the Company terminates this Agreement pursuant to
Section 7.1(c)(i)(A) or if Parent terminates this Agreement pursuant to Section
7.1(d)(ii), the Company shall reimburse Parent, Purchaser and their affiliates
(not later than five (5) Business Days after submission to the Company of
written statements therefor) for all out-of-pocket fees and expenses actually
incurred by any of them in connection with the Offer and the Merger and the
completion of the transactions contemplated hereby (including, without
limitation, fees and costs payable to investment bankers and their legal counsel
and to legal counsel, accountants and financial printers engaged by Parent,
Purchaser or their affiliates); provided, however, that the Company will not be
liable hereunder for any fees and expenses in excess of $2,000,000.00;
41
provided further that in no event shall the amounts paid pursuant to this
Section 7.3(b) and the amounts paid pursuant to Section 7.3(a) exceed an
aggregate of $5,000,000.00.
(c) Except as specifically provided in this Section 7.3, each party shall
bear its own expenses in connection with this Agreement and the transactions
contemplated hereby.
ARTICLE 8
MISCELLANEOUS
Section 8.1. Amendment. This Agreement may be amended by action taken by
the Company, Parent and Purchaser at any time before or after approval of the
Merger by the stockholders of the Company but, after any such approval, no
amendment shall be made which requires the approval of such stockholders under
applicable law without such approval. This Agreement, including the Company
Disclosure Schedule and the other attachments hereto, may be amended only by an
instrument in writing signed on behalf of each of the parties hereto.
Section 8.2. Extension; Waiver. At any time prior to the Effective Time,
each party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party; (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document, certificate or writing delivered pursuant hereto; or (c) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument, in writing, signed on
behalf of such party. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
Section 8.3. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the earlier
of the Effective Time or a termination of this Agreement. This Section 8.3 shall
not limit any covenant or agreement of the parties hereto that by its terms
requires performance after the Effective Time.
Section 8.4. Entire Agreement. This Agreement, including the Company
Disclosure Schedule and the other attachments hereto, and the Confidentiality
Agreement referred to in Section 5.3(b) constitute the entire agreement between
the parties hereto with respect to the subject matter hereof and supersede all
other prior and contemporaneous agreements and understandings both written and
oral between the parties with respect to the subject matter hereof.
Section 8.5. Binding Effect; Assignability. This Agreement and all of the
provisions hereof will be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests, or obligations hereunder may be
assigned by any of the parties hereto without the prior written consent of the
other parties, nor is this Agreement intended to confer upon any other person
except the parties hereto any rights or remedies hereunder; provided, however,
that Purchaser may assign any or all of its rights and obligations under this
Agreement to any subsidiary of Parent, but no such assignment will relieve
Purchaser of its obligations hereunder if such assignee does not perform such
obligations.
42
Section 8.6. Validity. This Agreement will be severable, and the invalidity
or unenforceability of any term or provision hereof will not affect the validity
or enforceability of this Agreement or of any other term or provision hereof, so
long as the economic or legal substance of the transactions contemplated hereby
are not affected in any manner materially adverse to any party. Furthermore, in
lieu of any invalid or unenforceable term or provision, the parties hereto
intend that there be added as a part of this Agreement a valid and enforceable
provision as similar in terms to such invalid or unenforceable provision as may
be possible.
Section 8.7. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
or by delivery via a nationally-recognized overnight delivery service to each
other party as follows:
if to Parent or Purchaser: Church & Xxxxxx Co., Inc.
000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxx III
Facsimile: (000) 000-0000
with a copy to: Xxxxxx Xxxx & Xxxxxxxx LLP
0 Xxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
if to the Company to: USA Detergents, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Uri Evan
Facsimile: (000) 000-0000
with a copy to: Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address or facsimile as the person to whom notice is given may
hereinafter furnish to the others in writing in the manner set forth above.
Section 8.8. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
giving effect to the principles of conflicts of law thereof.
Section 8.9. Construction. The captions and titles of the articles,
sections and subsections of this Agreement are for convenience of reference only
and are not to be considered in construing this Agreement. This Agreement shall
be construed without regard to any presumption or other rule requiring the
resolution of any ambiguity regarding the interpretation
43
or construction hereof against the party causing this Agreement to be drafted.
The phrase "made available" in this Agreement means that the information
referred to has been made available if requested by the party to whom such
information is to be made available. No disclosure made on any schedule hereto
will be deemed to be an admission or representation as to the relative
materiality of the item so disclosed.
Section 8.10. Certain Definitions.
(a) "Affiliate" 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 the New York
Stock Exchange is closed.
(c) "Capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof.
(d) "Knowledge" or "known" means, with respect to any matter in question,
the knowledge that is actually, or should reasonably be, known by an executive
officer of the Company, Parent or their respective subsidiaries, as the case may
be.
(e) "Material Adverse Effect" means, with respect to any party, any change,
effect, event, occurrence or state of facts (or any development that has had or
is reasonably likely to have any change or effect) that (i) is materially
adverse to the business, results of operations, condition (financial or
otherwise) or prospects of such party and its subsidiaries, taken as whole or
(ii) impairs the ability of such party to complete the transactions contemplated
hereby; provided, however, that none of the following shall be deemed, in of
themselves, to constitute a Material Adverse Effect: (v) any change in the
market price or trading volume of the capital stock of such party after the date
hereof; (w) changes, events or occurrences in the United States securities
markets which are not specific to such party or its subsidiaries; (x) any
adverse changes, events, developments or effects arising from or relating to
general business or economic conditions which are not specific to such party or
its subsidiaries; (y) any failure by such party or its subsidiaries to meet
internal forecasts or projections or published revenue or earnings predictions
for any period ending (or for which revenue or earnings are released) on or
after the date hereof; or (z) any adverse change, event, development or effect
arising from or relating to any change in United States generally accepted
accounting principles.
(f) "Subsidiary" or "subsidiaries" of the Company, Parent, the Surviving
Corporation or any other person means any corporation, partnership, limited
liability company, association, trust, unincorporated association or other legal
entity of which the Company, Parent, the Surviving Corporation or any such other
person, as the case may be, (either alone or through or together with any other
subsidiary) owns, directly or indirectly, fifty percent (50%) or more of the
capital stock, 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.
44
Section 8.11. Obligation of Parent. Whenever this Agreement requires
Purchaser to take any action, such requirement shall be deemed to include an
undertaking on the part of Parent to cause Purchaser to take such action.
Section 8.12. Specific Performance. The parties hereto acknowledge that
money damages would not be a sufficient remedy for any breach of this Agreement
by either party or its directors, officers, employees, agents or affiliated
companies, and that, in addition to all other remedies, any non-breaching party
hereunder will be entitled to specific performance and injunctive or other
equitable relief as a remedy for any breach. The parties hereto shall waive, and
cause its directors, officers, employees, agents and affiliated companies to
waive, any requirements for the securing or posting of bond in connection with
such remedy.
Section 8.13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one instrument. Signatures transmitted electronically
or by facsimile will be deemed original signatures; provided that the party
delivering such electronic or facsimile signature shall deliver to the other an
original signature page as soon thereafter as practicable.
[The remainder of this page has been intentionally left blank; signature
page follows.]
45
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
PARENT:
Church & Xxxxxx Co., Inc.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx, III
--------------------------------
Name: Xxxxxx X. Xxxxxx, III
------------------------------
Title: Chairman and Chief
Executive Officer
-----------------------------
PURCHASER:
US Acquisition Corp.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx, III
--------------------------------
Name: Xxxxxx X. Xxxxxx, III
------------------------------
Title: Chairman and Chief
Executive Officer
-----------------------------
THE COMPANY:
USA Detergents, Inc.,
a Delaware corporation
By: /s/ Uri Evan
--------------------------------
Name: Uri Evan
------------------------------
Title: Chairman and Chief
Executive Officer
-----------------------------
S-1
ANNEX I
CONDITIONS OF THE OFFER
The capitalized terms used in this Annex I but not otherwise defined
herein have the meanings ascribed to them in the Agreement and Plan of Merger
(the "AGREEMENT") to which this Annex I is attached.
Notwithstanding any other provision of the Offer or the Agreement, and
in addition to (and not in limitation of) Purchaser's rights to extend and amend
the Offer (subject to the provisions of this Agreement), and subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) relating to
Purchaser's obligation to pay for or return tendered shares after termination of
the Offer, Purchaser shall not be required to accept for payment or pay for any
Shares tendered pursuant to the Offer, if (i) the Minimum Condition has not been
satisfied; (ii) any applicable waiting period under the HSR Act or similar
statutes or regulations of foreign jurisdictions has not expired or terminated;
(iii) any applicable approval under ISRA has not been obtained by the Company
from NJDEP in accordance with Section 5.11 of the Agreement; or (iv) at any time
after the date of this Agreement and before the Expiration Date, any of the
following events have occurred and are continuing:
(a) There has been instituted or pending any action, suit or proceeding, or
any statute, rule, regulation, judgment, order or injunction promulgated,
entered, enforced, enacted, issued or deemed applicable to the Offer or the
Merger by any domestic or foreign court or other Governmental Entity which
directly or indirectly (i) prohibits, or makes illegal, the acceptance for
payment, payment for or purchase of Shares or the completion of the Offer, the
Merger or the other transactions contemplated by the Agreement, (ii) renders
Purchaser unable to accept for payment, pay for or purchase some or all of the
Shares or (iii) imposes material limitations on the ability of Parent
effectively to exercise full rights of ownership of the Shares, including the
right to vote the Shares purchased by it on all matters properly presented to
the Company's stockholders; or
(b) (i) The representations and warranties of the Company contained in the
Agreement are not true and correct (except to the extent that the aggregate of
all breaches thereof would not have a Material Adverse Effect on the Company) at
the date hereof and as of the completion of the Offer with the same effect as if
made at and as of the completion of the Offer (except to the extent such
representations specifically relate to an earlier date, in which case such
representations shall be true and correct as of such earlier date, and in any
event, subject to the foregoing Material Adverse Effect qualification); or
(ii) The Company has failed to perform, in any material respect, its
covenants and obligations contained in the Agreement, which failure to perform
has not been cured within the earlier of (A) ten (10) Business Days after Parent
or Purchaser gives written notice thereof to the Company or (B) the Expiration
Date (or such later date upon which the Offer shall expire in accordance with
Section 1.1(b) of the Agreement); or
(iii) There has occurred since the date of the Agreement any events or
changes which constitute a Material Adverse Effect on the Company; or
(c) All other necessary consents and approvals from Governmental Entities
have not been obtained on terms and conditions reasonably satisfactory to
Parent;
which, with respect to any of the foregoing clauses (a), (b) or (c), in the good
faith judgment of Parent or Purchaser, and regardless of the circumstances
giving rise to such conditions, and provided that Parent and Purchaser have
performed all of their respective obligations, if any, under the Agreement which
relate to such condition, makes it inadvisable to proceed with the Offer or the
acceptance for payment of or payment for the Shares; or
(d) (i) A tender offer or exchange offer for fifteen percent (15%) or more
of the outstanding Shares is commenced, and the Company's Board of Directors,
within ten (10) Business Days after such tender offer or exchange offer is so
commenced, either fails to recommend against acceptance of such tender offer or
exchange offer by its stockholders or takes no position with respect to the
acceptance of such tender offer or exchange offer by its stockholders; or
(ii) Any Third Party has entered into a definitive agreement or agreement
in principle with the Company with respect to a Third Party Acquisition; or
(e) The Company's Board of Directors has withdrawn, or modified or changed
in a manner adverse to Parent and Purchaser (including by amendment of the
Schedule 14D-9), its recommendation of this Agreement, the Offer or the Merger,
or recommended another proposal or offer, or the Company's Board of Directors
has resolved to do any of the foregoing; or
(f) This Agreement has been terminated in accordance with its terms.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be waived by Parent and Purchaser, in whole or in part at any time and
from time to time, in the sole discretion of Parent and Purchaser. The failure
by Parent and Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
If the Offer is terminated pursuant to any of the foregoing provisions,
Parent and Purchaser shall cause all tendered Shares shall be returned by the
Exchange Agent to the tendering stockholders.
2
