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AGREEMENT AND PLAN OF MERGER
Among
DYCOM INDUSTRIES, INC.,
XXXX ACQUISITION CORP.
and
ARGUSS COMMUNICATIONS, INC.
Dated as of January 7, 2002
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions.......................................................2
ARTICLE II
THE OFFER
SECTION 2.01 The Offer.........................................................6
SECTION 2.02 Company Action....................................................8
SECTION 2.03 Directors.........................................................9
ARTICLE III
THE MERGER
SECTION 3.01 The Merger.......................................................10
SECTION 3.02 Effective Time; Closing..........................................10
SECTION 3.03 Effect of the Merger.............................................11
SECTION 3.04 Certificate of Incorporation; By-Laws............................11
SECTION 3.05 Directors and Officers...........................................11
ARTICLE IV
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 4.01 Conversion of Securities.........................................11
SECTION 4.02 Exchange of Certificates.........................................12
SECTION 4.03 Stock Transfer Books.............................................15
SECTION 4.04 Company Stock Options............................................15
SECTION 4.05 No Appraisal Rights..............................................16
SECTION 4.06 Parent Rights Plan...............................................16
SECTION 4.07 Affiliates.......................................................16
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 5.01 Organization and Qualification; Subsidiaries.....................16
SECTION 5.02 Certificate of Incorporation and By-Laws.........................17
SECTION 5.03 Capitalization...................................................17
SECTION 5.04 Authority Relative to This Agreement
and the Stockholders' Agreement..................................18
SECTION 5.05 No Conflict; Required Filings and Consents.......................19
SECTION 5.06 Permits; Compliance..............................................19
i
SECTION 5.07 SEC Filings; Financial Statements................................20
SECTION 5.08 Information to Be Supplied.......................................21
SECTION 5.09 Absence of Certain Changes or Events.............................22
SECTION 5.10 Absence of Litigation............................................22
SECTION 5.11 Employee Benefit Plans...........................................22
SECTION 5.12 Labor and Employment Matters.....................................24
SECTION 5.13 Property and Leases..............................................25
SECTION 5.14 Intellectual Property............................................26
SECTION 5.15 Taxes............................................................27
SECTION 5.16 Environmental Matters............................................28
SECTION 5.17 Amendment to Company Rights Agreement............................28
SECTION 5.18 Material Contracts...............................................29
SECTION 5.19 Insurance........................................................30
SECTION 5.20 Board Approval; Vote Required....................................30
SECTION 5.21 Opinion of Advisor...............................................31
SECTION 5.22 Brokers..........................................................31
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 6.01 Corporate Organization...........................................31
SECTION 6.02 Certificate of Incorporation and By-Laws.........................31
SECTION 6.03 Capitalization...................................................31
SECTION 6.04 Authority Relative to This Agreement and
the Stockholders' Agreement......................................32
SECTION 6.05 No Conflict; Required Filings and Consents.......................33
SECTION 6.06 SEC Filings; Financial Statements................................33
SECTION 6.07 Information to Be Supplied.......................................34
SECTION 6.08 Absence of Litigation............................................35
SECTION 6.09 Absence of Certain Changes or Events.............................35
SECTION 6.10 No Vote Required.................................................35
SECTION 6.11 Operations of Merger Sub.........................................35
SECTION 6.12 Tax Matters......................................................35
SECTION 6.13 Brokers..........................................................35
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 7.01 Conduct of Business by the Company Pending the Merger............35
SECTION 7.02 Conduct of Business by Parent Pending the Merger.................38
ARTICLE VIII
ADDITIONAL AGREEMENTS
SECTION 8.01 Company Stockholder Meeting......................................38
SECTION 8.02 Preparation of Merger Registration Statement
and Proxy Statement/Prospectus...................................39
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SECTION 8.03 Access to Information; Confidentiality...........................40
SECTION 8.04 No Solicitation of Transactions..................................41
SECTION 8.05 Employee Benefits Matters........................................43
SECTION 8.06 Directors' and Officers' Indemnification and Insurance...........43
SECTION 8.07 Notification of Certain Matters..................................44
SECTION 8.08 Company Affiliates...............................................44
SECTION 8.09 Further Action; Reasonable Best Efforts..........................44
SECTION 8.10 Plan of Reorganization...........................................45
SECTION 8.11 Merger Sub.......................................................45
SECTION 8.12 Letters of Accountants...........................................45
SECTION 8.13 NYSE Listing.....................................................46
SECTION 8.14 Public Announcements.............................................46
SECTION 8.15 Transfer Tax.....................................................46
SECTION 8.16 The Company Rights Agreement.....................................46
SECTION 8.17 Employment Agreements............................................46
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01 Conditions to the Obligations of Each Party......................47
SECTION 9.02 Conditions to the Obligations of Parent and Merger Sub...........47
SECTION 9.03 Conditions to the Obligations of the Company.....................48
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01 Termination.....................................................49
SECTION 10.02 Effect of Termination...........................................52
SECTION 10.03 Payment of Certain Fees.........................................52
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01 Non-Survival of Representations and Warranties..................54
SECTION 11.02 Notices 54
SECTION 11.03 Severability....................................................55
SECTION 11.04 Entire Agreement; Assignment....................................55
SECTION 11.05 Parties in Interest.............................................55
SECTION 11.06 Specific Performance............................................55
SECTION 11.07 Governing Law...................................................55
SECTION 11.08 Waiver of Jury Trial............................................56
SECTION 11.09 Headings........................................................56
SECTION 11.10 Counterparts....................................................56
Annex I - Conditions of the Offer
Exhibit A - Form of Affiliate Letter
iii
AGREEMENT AND PLAN OF MERGER, dated as of January 7, 2002 (this
"Agreement"), among DYCOM INDUSTRIES, INC., a Florida corporation ("Parent"),
XXXX ACQUISITION CORP., a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), and ARGUSS COMMUNICATIONS, INC., a Delaware corporation
(the "Company").
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), Parent and the Company will enter into a business
combination transaction pursuant to which Merger Sub will merge with and into
the Company (the "Merger");
WHEREAS, in furtherance of such transaction and as part of an
integrated plan it is proposed that Merger Sub shall make an offer (the "Offer")
to exchange shares of Parent Common Stock (as defined below) for all issued and
outstanding shares of Company Common Stock (as defined below), including the
associated Company Rights (as defined below), in accordance with the terms and
conditions set forth in this Agreement;
WHEREAS, the Board of Directors of the Company (the "Company Board")
has (i) determined that the Merger is consistent with and in furtherance of the
long-term business strategy of the Company and fair to, and in the best
interests of, the Company and its stockholders and has approved and adopted this
Agreement and declared its advisability and approved the Merger and the other
transactions contemplated by this Agreement and (ii) has recommended the
approval and adoption of this Agreement by the stockholders of the Company;
WHEREAS, the Board of Directors of Parent (the "Parent Board") has
determined that the Merger is consistent with and in furtherance of the
long-term business strategy of Parent and fair to, and in the best interests of,
Parent and its stockholders and has approved and adopted this Agreement and
approved the Merger and the other transactions contemplated by this Agreement;
WHEREAS, as a condition and as an inducement to Parent's willingness
to enter into this Agreement, Parent, Merger Sub, the Company and certain
stockholders of the Company (the "Stockholders") have entered into a
Stockholders' Agreement, dated as of the date hereof (the "Stockholders'
Agreement"), that sets forth certain obligations of the Stockholders;
WHEREAS, for federal income tax purposes, the Merger is intended to
qualify as a reorganization under the provisions of Section 368(a) of the United
States Internal Revenue Code of 1986, as amended (the "Code"), and that this
Agreement shall constitute a plan of reorganization;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows.
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. (a) For purposes of this Agreement:
"Acceptance Date" means the date on which Merger Sub accepts for
exchange all shares of Company Common Stock validly tendered and not withdrawn
pursuant to the Offer.
"affiliate" of a specified person means a person who, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified person.
"beneficial owner", with respect to any Company Common Stock, has the
meaning ascribed to such term under Rule 13d-3(a) of the Exchange Act.
"business day" means any day on which the principal offices of the SEC
in Washington, D.C. are open to accept filings, or, in the case of determining a
date when any payment is due, any day on which banks are not required or
authorized to close in The City of New York.
"Company Common Stock" means the Company's common stock, par value
$.01 per share, including the Company Rights associated therewith.
"Company Material Adverse Effect" means any event, circumstance,
change, occurrence, fact or effect that, individually or in the aggregate with
all other events, circumstances, changes, occurrences, facts and effects, is or
is reasonably likely to be materially adverse to (i) the business, condition
(financial or otherwise), assets, liabilities or results of operations of the
Company and the Subsidiaries taken as a whole or (ii) the ability of the Company
to consummate the transactions contemplated by this Agreement; provided,
however, that the foregoing clause (i) shall not include any event,
circumstance, occurrence, fact, change or effect resulting from (x) changes in
general economic conditions or changes in securities markets in general, (y)
general changes in the industries in which the Company and the Subsidiaries
operate, except those events, circumstances, changes, occurrences, facts or
effects that adversely affect the Company and its subsidiaries to a greater
extent than they affect other entities operating in such industries or (z) the
public announcement or pendency of the transactions contemplated hereby.
"Company Rights" means the right associated with each share of Company
Common Stock to purchase one one-hundredth of a share of the Company's
Cumulative Participating Preferred Stock, par value $.01 per share.
"Company Stockholder Approval" means the approval of this Agreement at
the Company Stockholder Meeting by a majority of all votes entitled to be cast
at the Company Stockholder Meeting in accordance with the DGCL and Company's
Certificate of Incorporation.
2
"Company Stock Options" means the options, whether or not exercisable
and whether or not vested, outstanding at the Effective Time under the Company
Stock Option Plan.
"Company Stock Option Plan" means the Company's 1991 Stock Option
Plan, as amended.
"control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise.
"Environmental Laws" means any United States federal, state, local or
non-United States law, regulation, ordinance, rule, code, order or other
requirement or rule of law now in effect, relating to (i) releases or threatened
releases of Hazardous Substances or materials containing Hazardous Substances;
(ii) the manufacture, handling, transport, use, treatment, storage or disposal
of Hazardous Substances or materials containing Hazardous Substances; or (iii)
pollution or protection of the environment or natural resources.
"Fully Diluted Basis" means after taking into account all currently
outstanding shares of Company Common Stock and assuming the exercise of all
options, warrants, convertible securities and similar rights (other than, unless
exercisable, the Company Rights) and the issuance of all shares of Company
Common Stock that the Company is obligated to issue thereunder.
"Hazardous Substances" means (i) those substances defined in or
regulated under the following United States federal statutes and their state
counterparts and all regulations thereunder: the Hazardous Materials
Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the Clean
Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal
Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (ii)
petroleum and petroleum products, including crude oil and any fractions thereof;
(iii) polychlorinated biphenyls, asbestos and radon; and (iv) any substance,
material or waste defined or regulated as toxic or hazardous or as a pollutant,
contaminant or waste pursuant to any Environmental Law.
"Intellectual Property" means (i) United States, non-United States,
and international patents, patent applications and statutory invention
registrations, (ii) trademarks, service marks, trade dress, logos, trade names,
corporate names and other source identifiers, and registrations and applications
for registration thereof, (iii) copyrightable works, copyrights, and
registrations and applications for registration thereof, and (iv) confidential
and proprietary information, including trade secrets and know-how.
3
"Parent Common Stock" means Parent's common stock, par value $.331/3
per share, including Parent Rights associated therewith.
"Parent Material Adverse Effect" means any event, circumstance,
change, occurrence, fact or effect that, individually or in the aggregate with
all other events, circumstances, changes, occurrences, facts and effects, is or
is reasonably likely to be materially adverse to (i) the business, condition
(financial or otherwise), assets, liabilities or results of operations of Parent
and its subsidiaries taken as a whole or (ii) the ability of Parent to
consummate the transactions contemplated by this Agreement; provided, however,
that the foregoing clause (i) shall not include any event, circumstance, change,
occurrence, fact or effect resulting from (x) changes in general economic
conditions or changes in securities markets in general, (y) general changes in
the industries in which Parent and its subsidiaries operate, except those
events, circumstances, changes, occurrences, facts or effects that adversely
affect Parent and its subsidiaries to a materially greater extent than they
affect other entities operating in such industries or (z) the public
announcement or pendency of the transactions contemplated hereby.
"Parent Rights" means the right associated with each share of Parent
Common Stock to purchase one ten-thousandth of a share of Parent's Series A
Preferred Stock, par value $1.00 per share.
"person" means an individual, corporation, partnership, limited
partnership, limited liability company, syndicate, person (including, without
limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act),
trust, association or entity or government, political subdivision, agency or
instrumentality of a government.
"Proxy Statement/Prospectus" means the proxy statement/prospectus
included in the Merger Registration Statement relating to the Company
Stockholder Meeting.
"Significant Employee" means Xxxxxx X. Xxxxxxxxxx, H. Xxxxxxx Xxxxxx,
III, Xxxxxx X. Xxxxxx, Xx., Xxx Xxxx, Xxxx Xxxxxxxxxxx, Xxxx Xxxxxx, Xxxxx
Xxxxxx, Xxxx Xxxx, Xxxxx Xxxxxxxxxx, Xxxx Xxxxxxxxx, Xxxxx Xxxxxxx, Xxxxx
Xxxxxxx, Xxxxx Xxxxx, Xxxx Xxxxx, Xxx Xxxxxxxxxx and Xxxxxxx Xxxxxx.
"subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled by such
person, directly or indirectly, through one or more intermediaries.
"Taxes" means any and all taxes, fees, levies, duties, tariffs,
imposts and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any Governmental Authority or taxing authority, including, without
limitation: taxes or other charges on or with respect to income, franchise,
windfall or other profits, gross receipts, property, sales, use, capital stock,
payroll, employment, social security, workers' compensation, unemployment
compensation or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value-added or gains taxes; license,
registration and documentation fees; and customers' duties, tariffs and similar
charges.
4
"Trading Day" means any day on which securities are traded on the
NYSE.
(b) The following terms have the meanings set forth in the Sections
set forth below:
Defined Term Location of Definition
------------ ----------------------
Action.............................................. ss. 5.10
Advisor............................................. ss. 2.02(a)
Agreement........................................... Preamble
Blue Sky Laws....................................... ss. 5.05(b)
Certificate of Merger............................... ss. 3.02
Certificates........................................ ss. 4.01(a)
Closing............................................. ss. 3.02
Code................................................ Recitals
Company............................................. Preamble
Company Affiliate................................... ss. 8.08
Company Balance Sheet............................... ss. 5.07(c)
Company Board....................................... Recitals
Company Disclosure Schedule......................... Article V
Company Licensed Intellectual Property.............. ss. 5.14(c)
Company Owned Intellectual Property................. ss. 5.14(b)
Company Permits..................................... ss. 5.06
Company Preferred Stock............................. ss. 5.03
Company Recommendation.............................. ss. 8.01
Company Rights Agreement............................ ss. 5.03
Company SEC Reports................................. ss. 5.07(a)
Company Stockholder Meeting......................... ss. 8.01
Competing Transaction............................... ss. 8.04(c)
Confidentiality Agreement........................... ss. 8.03(b)
Continuing Directors................................ ss. 2.03(a)
DGCL................................................ Recitals
Effective Time...................................... ss. 3.02
Environmental Permits............................... ss. 5.16
ERISA............................................... ss. 5.11(a)
Exchange Act........................................ ss. 5.07(a)
Exchange Agent...................................... ss. 4.02(a)
Exchange Fund....................................... ss. 4.02(a)
Exchange Ratio...................................... ss. 2.01(a)
Expenses............................................ ss. 10.03(e)
GAAP................................................ ss. 5.07(b)
Governmental Authority.............................. ss. 5.05(b)
HSR Act............................................. ss. 5.05(b)
Initial Expiration Date............................. ss. 2.01(a)
IRS................................................. ss. 5.11(a)
Law................................................. ss. 5.05(a)
Liens............................................... ss. 5.13(b)
5
Defined Term Location of Definition
------------ ----------------------
Material Contracts.................................. ss. 5.18(a)
Material Subsidiary................................. ss. 5.01(c)
Merger.............................................. Recitals
Merger Registration Statement....................... ss. 6.07(a)
Merger Sub.......................................... Preamble
Merger Sub Common Stock............................. ss. 4.01(c)
Minimum Condition................................... ss. 2.01(a)
Multiemployer Plan.................................. ss. 5.11(b)
Multiple Employer Plan.............................. ss. 5.11(b)
NYSE................................................ ss. 4.02(e)
Offer............................................... Recitals
Offer Documents..................................... ss. 2.01(b)
Offer Registration Statement........................ ss. 2.01(b)
Order............................................... ss. 9.01(c)
Parent.............................................. Preamble
Parent Balance Sheet................................ ss. 6.06(c)
Parent Board........................................ Recitals
Parent Disclosure Schedule.......................... Article VI
Parent Preferred Stock.............................. ss. 6.03(a)
Parent SEC Reports.................................. ss. 6.06(a)
Parent Stock Option Plans........................... ss. 6.03(a)
Permitted Liens..................................... ss. 5.13(b)
Representatives..................................... ss. 8.03(a)
Schedule 14D-9...................................... ss. 2.02(b)
Schedule TO......................................... ss. 2.01(b)
SEC................................................. ss. 5.07(a)
Securities Act...................................... ss. 5.07(a)
Stockholders........................................ Recitals
Stockholders' Agreement............................. Recitals
Subsidiary.......................................... ss. 5.01(a)
Superior Proposal................................... ss. 8.04(d)
Surviving Corporation............................... ss. 3.01
Termination Date.................................... ss. 10.01(d)
Termination Fee..................................... ss. 10.03(a)
Third Party Acquisition Event....................... ss. 10.03(c)
Transactions........................................ ss. 5.01(a)
Transfer Taxes ..................................... ss. 8.15
ARTICLE II
THE OFFER
SECTION 2.01 The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Article IX and provided that none of the
events set forth in Annex I hereto shall have occurred or be continuing, unless
otherwise agreed by Parent and the
6
Company, as soon as practicable after the public announcement of the execution
of this Agreement, Parent shall cause Merger Sub to commence the Offer to
exchange all of the outstanding shares of Company Common Stock for the right to
receive from Merger Sub pursuant to the Offer 0.3333 fully paid and
nonassessable shares of Parent Common Stock for each share of Company Common
Stock (the "Exchange Ratio"). The Offer shall be subject only to (1) the
condition that there shall be validly tendered in accordance with the terms of
the Offer, prior to the expiration of the Offer, and not withdrawn, at least a
number of shares of Company Common Stock that represents a majority of the
shares of Company Common Stock outstanding on a Fully Diluted Basis (the
"Minimum Condition") and (2) the other conditions set forth in Annex I hereto.
Merger Sub expressly reserves the right to waive any of the conditions to the
Offer and to make any change in the terms of or conditions to the Offer;
provided that no change may be made that changes the form of consideration
payable in the Offer, decreases the consideration payable in the Offer, reduces
the maximum number of shares of Company Common Stock to be purchased in the
Offer, imposes conditions to the Offer in addition to those set forth in Annex I
or makes any other change which is adverse to the holders of Company Common
Stock. Notwithstanding the foregoing, and subject to Section 10.01(d), without
the consent of the Company, Merger Sub shall have the right to extend the Offer
(i) beyond the scheduled expiration date, which shall initially be 20 business
days following the commencement of the Offer (the "Initial Expiration Date"),
if, at the Initial Expiration Date or any extension thereof, any of the
conditions to the Offer shall not have been satisfied or waived, until such
conditions are satisfied or waived, (ii) for any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer or any period required by applicable law or (iii) for an
aggregate period of not more than 10 business days beyond the latest applicable
date that would otherwise be permitted under clause (i) or (ii) of this
sentence, if, as of such date, all of the conditions to the Offer have been
satisfied or waived, but the number of shares of Company Common Stock validly
tendered and not withdrawn pursuant to the Offer equals more than 50%, but less
than 90%, of the outstanding shares of Company Common Stock on a Fully Diluted
Basis. In the event that Merger Sub is unable to consummate the Offer on the
Initial Expiration Date due to the failure of the Minimum Condition to be
satisfied, Parent shall cause Merger Sub to, unless this Agreement is terminated
pursuant to Article X, extend the Offer on one or more occasions and set
subsequent scheduled expiration dates until the Minimum Condition has been
satisfied; provided, however, that nothing contained herein shall require Parent
to cause Merger Sub to extend the Offer for more than, in the aggregate, 15
business days after the Initial Expiration Date. Subject to the foregoing and
upon the terms and subject to the conditions of the Offer, Parent shall cause
Merger Sub to accept for payment and pay for, as promptly as practicable after
the expiration of the Offer, all shares of Company Common Stock validly tendered
and not withdrawn pursuant to the Offer.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Parent shall, and Parent shall cause Merger Sub to, file with the SEC
(i) a Tender Offer Statement on Schedule TO (together with any amendments or
supplements thereto, the "Schedule TO") relating to the Offer and (ii) a
registration statement on Form S-4 to register the offer and sale of Parent
Common Stock pursuant to the Offer (the "Offer Registration Statement"). The
Offer Registration Statement will include a prospectus containing the
information required under Rule 14d-4(b) under the Exchange Act (together, the
Schedule TO, the Offer Registration Statement and such documents included
therein pursuant to which the Offer will be made, together with any amendments
and supplements thereto, the "Offer
7
Documents"). Each of the Company and Parent shall use their reasonable efforts
to have the Offer Registration Statement declared effective under the Securities
Act as promptly as practicable after the filing thereof with the SEC and to
keep the Offer Registration Statement effective as long as necessary to
complete the Offer. Each of Parent, Merger Sub and the Company agree promptly
to correct any information provided by it for use in the Offer Documents if and
to the extent that such information shall have become false or misleading in
any material respect and to supplement the Offer Documents to include any
information that shall become necessary to include in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Parent shall, and Parent shall cause Merger Sub to, take all
steps necessary to cause the Schedule TO and the Offer Registration Statement
as so corrected to be filed with the SEC and the other Offer Documents as so
corrected to be, at such time as reasonably agreed by Parent and the Company,
disseminated to holders of shares of Company Common Stock, in each case as and
to the extent required by applicable federal securities laws. The Company and
its counsel shall be given an opportunity to review and comment on the Offer
Documents prior to their being filed with the SEC or disseminated to the holders
of shares of Company Common Stock. Parent shall, and Parent shall cause Merger
Sub to, provide the Company and its counsel with any comments Parent and Merger
Sub or their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments and shall provide
the Company and its counsel an opportunity to participate in the response of
Parent or Merger Sub to such comments.
SECTION 2.02 Company Action. (a) The Company hereby approves of and
consents to the Offer and represents that the Company Board, at a meeting duly
called and held, has (i) determined that this Agreement, the Stockholders'
Agreement and the transactions contemplated hereby and thereby, including the
Offer and the Merger, are fair to and in the best interests of the Company and
its stockholders, (ii) approved, adopted and declared advisable this Agreement,
the Stockholders' Agreement and the transactions contemplated hereby and
thereby, including the Offer and the Merger, in accordance with the DGCL,
including, without limitation, Section 203 thereof, and (iii) resolved to
recommend acceptance of the Offer and approval and adoption of this Agreement by
the Company's stockholders. The Company further represents that Xxxxx & Company
Incorporated ("Advisor") has delivered to the Company Board its written opinion
as of the date hereof that the consideration to be received by the holders of
shares of Company Common Stock pursuant to the terms of the Offer and the Merger
is fair from a financial point of view to such holders. The Company hereby
consents to the inclusion in the Offer Documents of the recommendation of the
Company Board and the Company shall not withdraw or modify such recommendation
in any manner adverse to the Parent or Merger Sub, unless the Company Board
otherwise determines (based on a majority vote of the Company Board in its good
faith judgment) that such withdrawal or modification is necessary to comply with
its fiduciary duties to stockholders under applicable law after receiving advice
from outside counsel (who may be the Company's regularly engaged independent
legal counsel).
(b) The Company hereby agrees to file with the SEC as soon as
practicable on the day that the Offer is commenced and disseminate to holders of
shares of Company Common Stock, 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, subject to Section 8.04, shall reflect the
recommendations of the Company Board referred to in Section 2.02(a) above.
Parent and its
8
counsel shall be given an opportunity to review and comment on the Schedule
14D-9 prior to its being filed with the SEC or disseminated to holders of
shares of Company Common Stock. The Company agrees to provide Parent and its
counsel with any comments that the Company or its counsel may receive from the
SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments and shall provide Parent and its counsel with an
opportunity to participate in the response of the Company to such comments. Each
of the Company and Parent agrees promptly to correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect and to supplement the Schedule 14D-9
to include any information that shall become necessary to include in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Company agrees to take all steps necessary to cause
the Schedule 14D-9 as so corrected to be filed with the SEC and to be, at such
time as reasonably agreed by Parent and the Company, disseminated to holders of
shares of Company Common Stock, in each case as and to the extent required by
applicable federal securities laws.
(c) The Company shall promptly furnish Parent with mailing labels
containing the names and addresses of all record holders of shares of Company
Common Stock and with security position listings of shares of Company Common
Stock held in stock depositories, each as of a recent date, together with all
other available listings and computer files containing names, addresses and
security position listings of record holders and beneficial owners of shares of
Company Common Stock as Parent may reasonably request. The Company shall
promptly furnish Parent with such additional information, including, without
limitation, updated listings and computer files of stockholders, mailing labels
and security position listings, and such other assistance in disseminating the
Offer Documents to holders of shares of Company Common Stock as Parent may
reasonably request. Subject to the requirements of applicable law, and except
for such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent shall hold in
confidence the information contained in such labels, listings and files, shall
use such information only in connection with the Transactions, and, if this
Agreement shall be terminated in accordance with Section 10.01, shall deliver to
the Company all copies of such information then in their possession.
SECTION 2.03 Directors. (a) Effective upon the acceptance for payment
of any shares of Company Common Stock pursuant to the Offer, Parent shall be
entitled to designate the number of directors, rounded up to the next whole
number, on the Company Board that equals the product of (i) the total number of
directors on the Company Board (giving effect to the election of any additional
directors pursuant to this Section 2.03) and (ii) the percentage that the number
of shares of Company Common Stock beneficially owned by Parent and/or Merger Sub
(including shares of Company Common Stock accepted for payment) bears to the
total number of shares of Company Common Stock outstanding, and the Company
shall take all action necessary to cause Parent's designees to be elected or
appointed to the Company Board, including increasing the number of directors,
and seeking and accepting resignations of incumbent directors. At such time, the
Company will 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 (i)
each committee of the Company Board and (ii) each board of directors of each
Subsidiary of the Company identified by Parent (and each committee thereof) that
represents the same percentage as such individuals represent on the Company
Board, in each
9
case only to the extent permitted by applicable law. Notwithstanding the
provisions of this Section 2.03, the parties hereto shall use their respective
best efforts to ensure that at least two of the members of the Company Board
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"); provided that if there shall be in office fewer than two
Continuing Directors for any reason, the Company Board 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 persons to fill such vacancies who will not be
officers or employees or affiliates of the Company, Parent or Merger Sub or any
of their respective Subsidiaries and such persons shall be deemed to be
Continuing Directors for all purposes of this Agreement.
(b) The Company's obligations to appoint Parent's designees to the
Company Board 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 officers and directors, as Section 14(f) and Rule 14f-1 require in order
to fulfill its obligations under this Section, so long as Parent shall have
provided to the Company on a timely basis in writing and be solely responsible
for any information with respect to itself, Merger Sub and their respective
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1.
(c) Following the election or appointment of Parent's designees
pursuant to Section 2.03(a) and until the Effective Time, the approval of a
majority of the Continuing Directors shall be required to authorize any
termination of this Agreement by the Company, any amendment of this Agreement
requiring action by the Company Board, any extension of time for performance of
any obligation or action hereunder by Parent or Merger Sub, any waiver of
compliance with any of the agreements or conditions contained herein for the
benefit of the Company and any other action of the Company hereunder which
adversely affects the holders of shares of Company Common Stock (other than
Parent or Merger Sub) in any respect.
ARTICLE III
THE MERGER
SECTION 3.01 The Merger. At the Effective Time, upon the terms and
subject to the conditions of this Agreement and in accordance with the DGCL,
Merger Sub shall be merged with and into the Company. As a result of the Merger,
the separate corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation").
SECTION 3.02 Effective Time; Closing. As promptly as practicable after
the satisfaction or, if permissible, waiver of the conditions set forth in
Article IX, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger or certificate of ownership and merger (the
"Certificate of Merger"), with the Secretary of State of the State of Delaware,
in such form as is required by, and executed in accordance with, the relevant
provisions of the DGCL (the date and time of such filing of the Certificate of
Merger (or such
10
later time as may be agreed by each of the parties hereto and specified in the
Certificate of Merger) being the "Effective Time"). Immediately prior to such
filing of the Certificate of Merger, a closing of the Merger (the "Closing")
shall be held at the offices of Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or such other place as the parties shall agree, for the
purpose of confirming the satisfaction or waiver, as the case may be, of the
conditions set forth in Article IX.
SECTION 3.03 Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all of the property, rights, privileges, powers and franchises
of the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of each
of the Company and Merger Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 3.04 Certificate of Incorporation; By-Laws. (a) At the
Effective Time and subject to Section 8.06(a) hereof, the Certificate of
Incorporation of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by law and such Certificate of
Incorporation; provided, however, that, at the Effective Time, Article I of the
Certificate of Incorporation of the Surviving Corporation shall be amended to
read as follows: "The name of the corporation is Arguss Communications, Inc.".
(b) Unless otherwise determined by Parent prior to the Effective Time,
and subject to Section 8.06(a) hereof, at the Effective Time, the By-Laws of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
By-Laws of the Surviving Corporation until thereafter amended as provided by
law, the Certificate of Incorporation of the Surviving Corporation and such
By-Laws.
SECTION 3.05 Directors and Officers. At the Effective Time, the
directors of Merger Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each such director to hold
office in accordance with the DGCL, the Certificate of Incorporation and By-Laws
of the Surviving Corporation, and the officers of the Company immediately prior
to the Effective Time shall, subject to the applicable provisions of the
Certificate of Incorporation and By-Laws of the Surviving Corporation, be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified or until their
earlier death, resignation or approval.
ARTICLE IV
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 4.01 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger Sub,
the Company or the holders of any of the following securities:
11
(a) Conversion of Company Common Stock. Except as provided in clause
(b) of this Section 4.01, each share of Company Common Stock outstanding
immediately prior to the Effective Time shall be converted into and shall be
canceled in exchange for the right to receive from Parent the same number of
shares of Parent Common Stock as exchanged for each share of Company Common
Stock in the Offer. At the Effective Time, all Company Common Stock shall no
longer be outstanding, shall be canceled and retired and shall cease to exist,
and each certificate (a "Certificate") that formerly represented such shares of
Company Common Stock shall thereafter represent only the right to receive the
number of whole shares of Parent Common Stock into which the Company Common
Stock represented by such Certificate is converted pursuant to this Section
4.01(a) and the right, if any, to receive pursuant to Section 4.02(e) cash in
lieu of a fractional share of Parent Common Stock and any dividend or
distribution pursuant to Section 4.02(c), in each case without interest.
(b) Cancellation of Treasury Stock and Stock Owned by Parent and
Merger Sub. All shares of Company Common Stock owned by the Company as treasury
stock and any shares of Company Common Stock owned by Parent, Merger Sub or any
direct or indirect wholly owned subsidiary of Parent or Merger Sub immediately
prior to the Effective Time shall, by virtue of the Merger, and without any
action on the part of the holder thereof, no longer be outstanding, shall be
canceled and retired without payment of any consideration therefor and shall
cease to exist.
(c) Capital Stock of Merger Sub. Each share of common stock, par value
$.01 per share, of Merger Sub ("Merger Sub Common Stock") outstanding
immediately prior to the Effective Time shall be converted into and become one
validly issued, fully paid and nonassessable share of common stock, par value
$.01 per share, of the Surviving Corporation.
SECTION 4.02 Exchange of Certificates. (a) Exchange Agent. Parent
shall deposit, or shall cause to be deposited, with a bank or trust company that
may be designated by Parent and is reasonably satisfactory to the Company (the
"Exchange Agent"), for the benefit of the holders of Company Common Stock, for
exchange in accordance with this Article IV through the Exchange Agent,
certificates representing the shares of Parent Common Stock issuable pursuant to
Section 4.01 as of the Effective Time, and cash, from time to time as required
to make payments in lieu of any fractional shares pursuant to Section 4.02(e)
(such cash and certificates for shares of Parent Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the shares of Parent Common Stock contemplated to be
issued pursuant to Section 4.01 out of the Exchange Fund. Except as contemplated
by Section 4.02(g) hereof, the Exchange Fund shall not be used for any other
purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Parent shall instruct the Exchange Agent to mail to each person
who was, at the Effective Time, a holder of record of Company Common Stock
entitled to receive Parent Common Stock pursuant to Section 4.01(a): (i) a
letter of transmittal (which shall be in customary form and shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only
12
upon proper delivery of the Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Certificates pursuant to
such letter of transmittal. Upon surrender to the Exchange Agent of a
Certificate for cancellation, together with such letter of transmittal, duly
completed and validly executed in accordance with the instructions thereto, and
such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock
which such holder has the right to receive in respect of the Company Common
Stock formerly represented by such Certificate (after taking into account all
Company Common Stock then held by such holder), cash in lieu of any fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 4.02(e) and any dividends or other distributions to which such holder is
entitled pursuant to Section 4.02(c), and the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership of Company
Common Stock that is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common Stock,
cash in lieu of any fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 4.02(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 4.02(c) may
be issued to a transferee if the Certificate representing such Company Common
Stock 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
4.02, each Certificate shall be deemed at all times after the Effective Time to
represent only the right to receive upon such surrender the certificate
representing shares of Parent Common Stock, cash in lieu of any fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 4.02(e) and any dividends or other distributions to which such holder is
entitled pursuant to Section 4.02(c).
(c) Distributions with Respect to Unexchanged Shares of Parent Common
Stock. No dividends or other distributions declared or made after the Effective
Time with respect to the Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby, and no cash
payment in lieu of any fractional shares shall be paid to any such holder
pursuant to Section 4.02(e), until the holder of such Certificate shall
surrender such Certificate. Subject to the effect of escheat, tax or other
applicable Laws, following surrender of any such Certificate, there shall be
paid to the holder of the Certificates representing whole shares of Parent
Common Stock issued in exchange therefor, without interest, (i) promptly, the
amount of any cash payable with respect to a fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 4.02(e) and the
amount of dividends or other distributions with a record date after the
Effective Time and theretofore paid with respect to such whole shares of Parent
Common Stock, and (ii) at the appropriate payment date, the amount of dividends
or other distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such whole shares of Parent Common Stock.
(d) No Further Rights in Company Common Stock. All shares of Parent
Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms hereof (including any cash paid pursuant to Section
4.02(c) or (e)) shall be deemed to have
13
been issued at the Effective Time in full satisfaction of all rights pertaining
to such Company Common Stock.
(e) No Fractional Shares. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any other rights of a stockholder of Parent.
Each holder of a fractional share interest shall be paid an amount in cash
(without interest) equal to the product obtained by multiplying (i) such
fractional share interest to which such holder (after taking into account all
fractional share interests then held by such holder) would otherwise be entitled
by (ii) the average of the per share closing prices on the New York Stock
Exchange ("NYSE") of shares of Parent Common Stock during the ten consecutive
trading days ending on (and including) the third trading day immediately
preceding the date of the Effective Time. As promptly as practicable after the
determination of the amount of cash, if any, to be paid to holders of fractional
share interests, the Exchange Agent shall so notify Parent, and Parent shall
deposit such amount with the Exchange Agent and shall cause the Exchange Agent
to forward payments to such holders of fractional share interests subject to and
in accordance with the terms of Sections 4.02(b) and (c).
(f) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Common Stock), extraordinary
cash dividends, reorganization, recapitalization, reclassification, combination,
exchange of shares or other like change with respect to Parent Common Stock or
Company Common Stock occurring on or after the date hereof and prior to the
Effective Time.
(g) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of the Company Common Stock for six
months after the Effective Time shall be delivered to Parent, upon demand, and
any holders of the Company Common Stock who have not theretofore complied with
this Article IV shall thereafter look only to Parent for the shares of Parent
Common Stock, any cash in lieu of fractional shares of Parent Common Stock to
which they are entitled pursuant to Section 4.02(e) and any dividends or other
distributions with respect to the Parent Common Stock to which they are entitled
pursuant to Section 4.02(c). Any portion of the Exchange Fund remaining
unclaimed by holders of Company Common Stock five years after the Effective Time
(or such earlier date which is immediately prior to such time as such amounts
would otherwise escheat to or become property of any government entity) shall,
to the extent permitted by applicable law, become the property of Parent free
and clear of any claims or interest of any person previously entitled thereto.
(h) No Liability. Neither Parent nor the Surviving Corporation shall
be liable to any holder of Company Common Stock for any such Company Common
Stock (or dividends or distributions with respect thereto), or cash delivered to
a public official pursuant to any abandoned property, escheat or similar Law.
(i) Withholding Rights. Each of the Surviving Corporation and Parent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Company Common Stock such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of
14
state, local or foreign tax law. To the extent that amounts are so withheld by
the Surviving Corporation or Parent, as the case may be, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Company Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or Parent, as the case may be.
(j) Lost, Stolen or Destroyed Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent or the Surviving Corporation, the posting by such
person of a bond, in such reasonable amount as Parent or the Surviving
Corporation may direct, as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the whole number of shares of
Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock to which the holders thereof are entitled pursuant to Section 4.02(e) and
any dividends or other distributions to which the holders thereof are entitled
pursuant to Section 4.02(c).
SECTION 4.03 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. From and after the Effective Time, the holders of
Certificates representing Company Common Stock outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Company
Common Stock, except as otherwise provided in this Agreement or by Law. On or
after the Effective Time, any Certificates properly presented to the Exchange
Agent or Parent for any reason shall be converted into shares of Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock to which the
holders thereof are entitled pursuant to Section 4.02(e) and any dividends or
other distributions to which the holders thereof are entitled pursuant to
Section 4.02(c).
SECTION 4.04 Company Stock Options(a) At or immediately prior to the
Effective Time, each Company Stock Option, whether or not vested or exercisable,
that is not exercised prior to the Effective Time shall, by virtue of the Merger
and without any further action on the part of any holder thereof, be assumed by
Parent and deemed to constitute an option (each, a "Parent Option") to acquire,
on the same terms and conditions as were applicable under such Company Stock
Option (subject to Section 3.04(b)), the same number of shares of Parent Common
Stock as the holder of such Company Stock Option would have been entitled to
receive pursuant to Section 4.01 of this Agreement had such holder exercised
such Company Stock Option in full immediately prior to the Effective Time
(rounded to the nearest whole number), at a price per share (rounded down to the
nearest whole cent) equal to (x) the aggregate exercise price for the shares of
Company Common Stock otherwise purchasable pursuant to such Company Stock Option
divided by (y) the number of whole shares of Parent Common Stock purchasable
pursuant to the Parent Option in accordance with the foregoing. The other terms
of each such Company Stock Option, and the Company Stock Option Plan, shall
continue to apply in accordance with their terms.
(b) At or prior to the Effective Time, Parent shall take all corporate
action necessary to reserve for issuance a sufficient number of shares of Parent
Common Stock for
15
delivery upon exercise of the Parent Options. As soon as practicable after the
Effective Time, Parent shall file a registration statement on Form S-8, with
respect to the shares of Parent Common Stock subject to such Parent Options and
shall use commercially reasonable efforts to maintain the effectiveness of such
registration statement (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such Parent Options remaining
outstanding. With respect to those individuals who subsequent to the Merger will
be subject to the reporting requirements under Section 16(a) of the Exchange
Act, Parent shall administer the Company Stock Option Plan in a manner
consistent with the exemptions provided by Rule 16(b)(3) promulgated under the
Exchange Act.
SECTION 4.05 No Appraisal Rights. In accordance with Section 262 of
the DGCL, no appraisal rights shall be available to holders of shares of Company
Common Stock in connection with the Offer or, other than pursuant to Section
262(b)(3) of the DGCL, the Merger.
SECTION 4.06 Parent Rights Plan. Each person entitled to receive
shares of Parent Common Stock pursuant to this Article shall receive together
with such shares of Parent Common Stock the number of Parent Rights per share of
Parent Common Stock equal to the number of Parent Rights associated with one
share of Parent Common Stock at the Effective Time.
SECTION 4.07 Affiliates. Notwithstanding anything to the contrary
herein, no Parent Common Stock shall be delivered to a person who may be deemed
an "affiliate" of the Company in accordance with Section 8.08 hereof for
purposes of Rule 145 under the Securities Act until such person has executed and
delivered to Parent an executed copy of the affiliate letter contemplated in
Section 8.08 hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Parent and Merger Sub to enter into this
Agreement, the Company, except as disclosed in the Company's disclosure schedule
delivered concurrently with the delivery of this Agreement (the "Company
Disclosure Schedule"), hereby represents and warrants to Parent and Merger Sub
as follows:
SECTION 5.01 Organization and Qualification; Subsidiaries. (a) Each of
the Company and each subsidiary of the Company (each a "Subsidiary") is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals are not reasonably likely to
prevent or materially delay consummation of the Merger or any of the
transactions contemplated by this Agreement or the Stockholders' Agreement
(collectively, the "Transactions") or otherwise prevent or materially delay the
Company from performing its material obligations under this Agreement or the
Stockholders' Agreement and are not reasonably likely to have, individually or
in the aggregate, a Company Material Adverse Effect. The Company and each
Subsidiary is
16
duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing as are not reasonably likely to prevent or materially delay
consummation of the Merger or otherwise prevent or materially delay the Company
from performing its material obligations under this Agreement or the
Stockholders' Agreement and are not reasonably likely to have, individually or
in the aggregate, a Company Material Adverse Effect.
(b) A true and complete list of all the Subsidiaries, together with
the jurisdiction of organization of each Subsidiary and the percentage of the
outstanding capital stock or other equity interests of each Subsidiary owned by
the Company and each other Subsidiary, is set forth in Section 5.01(b) of the
Company Disclosure Schedule. The Company does not directly or indirectly own any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity, other than
the equity interest that it owns in each Subsidiary.
(c) Each Subsidiary that is material to the business, financial
condition or results of operations of the Company and the Subsidiaries taken as
a whole is so identified in Section 5.01(c) of the Company Disclosure Schedule
and is referred to herein as a "Material Subsidiary".
SECTION 5.02 Certificate of Incorporation and By-Laws. The Company has
heretofore furnished or made available to Parent a complete and correct copy of
the Certificate of Incorporation and the By-Laws or equivalent organizational
documents, each as amended to date, of the Company and each Material Subsidiary.
Such Certificates of Incorporation, By-Laws or equivalent organizational
documents are in full force and effect. Neither the Company nor any Subsidiary
is in violation of any of the provisions of its Certificate of Incorporation,
By-Laws or equivalent organizational documents.
SECTION 5.03 Capitalization. (a) The authorized capital stock of the
Company consists of (i) 30,000,000 shares of Company Common Stock and (ii)
1,000,000 shares of preferred stock, par value $.01 per share ("Company
Preferred Stock"). As of December 21, 2001, (i) 14,519,944 shares of Company
Common Stock are issued and outstanding, all of which are validly issued, fully
paid and nonassessable, (ii) no shares of Company Common Stock are held in the
treasury of the Company, (iii) no shares of Company Common Stock are held by the
Subsidiaries and (iv) 3,426,767 shares of Company Common Stock are reserved for
future issuance pursuant to outstanding employee stock options granted pursuant
to the Company Stock Option Plan. As of December 21, 2001, no shares of Company
Preferred Stock are issued and outstanding. Except as set forth in this Section
5.03 or the Stockholders' Agreement, and except for the Company Rights issued
pursuant to the rights agreement, dated as of November 7, 2001 (the "Company
Rights Agreement"), between the Company and Continental Stock Transfer and Trust
Company, as rights agent, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or any Subsidiary or obligating the
Company or any Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, the Company or any Subsidiary. Section 5.03(a) of the
Company Disclosure Schedule sets forth the following information with
17
respect to each Company Stock Option outstanding as of the date of this
Agreement: (i) the name and employment division of the optionee; (ii) the number
of shares of Company Common Stock subject to such Company Stock Option; (iii)
the exercise price of such Company Stock Option; (iv) the date on which such
Company Stock Option was granted; (v) the applicable vesting schedule; (vi) the
date on which such Company Stock Option expires; and (vii) whether the
exercisability of such option will be accelerated in any way by the transactions
contemplated by this Agreement, and indicates the extent of acceleration. All
shares of Company Common Stock subject to issuance as aforesaid, upon issuance
on the terms and conditions specified in the instruments pursuant to which they
are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding contractual obligations of the Company
or any Subsidiary to repurchase, redeem or otherwise acquire any shares of
Company Common Stock or any capital stock of any Subsidiary or to provide funds
to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Subsidiary or any other person. There are no commitments or
agreements of any character to which the Company is bound obligating the Company
to accelerate the vesting of any Company Stock Option as a result of the Merger.
All outstanding shares of Company Common Stock, all outstanding Company Stock
Options, and all outstanding shares of capital stock of each subsidiary of the
Company have been issued and granted in compliance with (i) all applicable
securities laws and other applicable Laws (as defined below) and (ii) all
requirements set forth in applicable contracts.
(b) Each outstanding share of capital stock of each Subsidiary is
duly authorized, validly issued, fully paid and nonassessable, and, except as
set forth in Section 5.03(b) of the Company Disclosure Schedule, each such share
is owned by the Company or another Subsidiary free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Company's or any Subsidiary's voting rights, charges and
other encumbrances of any nature whatsoever.
SECTION 5.04 Authority Relative to This Agreement and the
Stockholders' Agreement. The Company has all necessary corporate power and
authority to execute and deliver this Agreement and the Stockholders' Agreement,
subject to any required approval and adoption of this Agreement by a majority of
the outstanding shares of Company Common Stock, to perform its obligations
hereunder and thereunder and to consummate the Transactions. The execution and
delivery of this Agreement and the Stockholders' Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement and the
Stockholders' Agreement or to consummate the Transactions (other than, with
respect to the Merger, the approval and adoption of this Agreement by the
holders of a majority of the then-outstanding shares of Company Common Stock, if
and to the extent required by applicable law, and the filing and recordation of
appropriate merger documents as required by the DGCL). Each of this Agreement
and the Stockholders' Agreement has been duly and validly executed and delivered
by the Company and, assuming the due authorization, execution and delivery by
Parent and Merger Sub, constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except to
the extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
The Company Board has approved this Agreement, the Stockholders' Agreement and
the Transactions and such approvals
18
are sufficient so that the restrictions on business combinations set forth in
Section 203(a) of the DGCL shall not apply to the Merger or any of the
Transactions. To the knowledge of the Company, no other state takeover statute
is applicable to the Merger or the other transactions contemplated by this
Agreement.
SECTION 5.05 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement and the Stockholders' Agreement by the Company
will not, (i) conflict with or violate the Certificate of Incorporation or
By-Laws or any equivalent organizational documents of the Company or any
Subsidiary, (ii) assuming that all consents, approvals, authorizations and other
actions described in Section 5.05(b) have been obtained and all filings and
obligations described in Section 5.05(b) have been made, conflict with or
violate any United States or non-United States statute, law, ordinance,
regulation, rule, code, executive order, injunction, judgment, decree or other
order ("Law") applicable to the Company or any Subsidiary or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) except as set forth in Section 5.05(a) of the Company Disclosure Schedule,
result in any breach of or constitute a default (or an event which, with notice
or lapse of time or both, would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or other encumbrance on any property or asset of the
Company or any Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation, except, with respect to clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which are not
reasonably likely to prevent or materially delay consummation of the Merger or
otherwise prevent or materially delay the Company from performing its material
obligations under this Agreement and the Stockholders' Agreement and are not
reasonably likely, individually or in the aggregate, to have a Company Material
Adverse Effect.
(b) Except as set forth in Section 5.05(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement and the Stockholders'
Agreement by the Company do not, and the performance of this Agreement and the
Stockholders' Agreement by the Company will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any United States
federal, state, county, local or non-United States government, governmental,
regulatory or administrative authority, agency, instrumentality or commission or
any court, tribunal, judicial or arbitral body or supranational authority (a
"Governmental Authority"), except (i) for applicable requirements, if any, of
the Exchange Act, state securities or "blue sky" laws ("Blue Sky Laws") and
state takeover laws, the pre-merger notification requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and filing and recordation of appropriate merger documents as required by
the DGCL, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, are not
reasonably likely to prevent or materially delay consummation of the Merger, or
otherwise prevent or materially delay the Company from performing its material
obligations under this Agreement and the Stockholders' Agreement, and are not
reasonably likely, individually or in the aggregate, to have a Company Material
Adverse Effect.
SECTION 5.06 Permits; Compliance. Each of the Company and the
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances,
19
exceptions, consents, certificates, approvals and orders of any Governmental
Authority necessary for each of the Company or the Subsidiaries to own, lease
and operate its properties or to carry on its business as it is now being
conducted, except franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Authority the failure of which to have, or the suspension or
cancellation of which are not reasonably likely to prevent or materially delay
consummation of the Merger or otherwise prevent or materially delay the Company
from performing its material obligations under this Agreement and the
Stockholders' Agreement and are not reasonably likely, individually or in the
aggregate, to have a Company Material Adverse Effect (the "Company Permits"). As
of the date of this Agreement, no suspension or cancellation of any of the
Company Permits is pending or, to the knowledge of the Company, threatened.
Except as set forth in Section 5.06 of the Company Disclosure Schedule, neither
the Company nor any Subsidiary is in conflict with, or in default, breach or
violation of, (a) any Law applicable to the Company or any Subsidiary or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (b) any note, bond, mortgage, indenture, contract, agreement,
lease, license, Company Permit, franchise or other instrument or obligation to
which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any property or asset of the Company or any Subsidiary is bound,
except for any such conflicts, defaults, breaches or violations that are not
reasonably likely to prevent or materially delay consummation of the Merger or
otherwise prevent or materially delay the Company from performing its material
obligations under this Agreement and the Stockholders' Agreement and are not
reasonably likely, individually or in the aggregate, to have a Company Material
Adverse Effect.
SECTION 5.07 SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports and documents required to be filed by it with the
Securities and Exchange Commission (the "SEC") since December 31, 1998, and has
heretofore delivered or made available to Parent, in the form filed with the
SEC, (i) its Annual Reports on Form 10-K for the fiscal years ended December 31,
1998, 1999 and 2000, respectively, (ii) its Quarterly Reports on Form 10-Q for
the periods ended March 31, 2001, June, 30, 2001 and September 30, 2001, (iii)
all proxy statements relating to the Company's meetings of stockholders (whether
annual or special) held since December 31, 1997 and (iv) all other forms,
reports and other registration statements (other than Quarterly Reports on Form
10-Q not referred to in clause (ii) above filed by the Company with the SEC
since September 30, 2001 (the forms, reports and other documents referred to in
clauses (i), (ii), (iii) and (iv) above being, collectively, the "Company SEC
Reports"). The Company SEC Reports (i) complied in all material respects as to
form with either the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as the case may be, and the rules and regulations promulgated
thereunder, and (ii) did not, at the time they were filed, or, if amended, as of
the date of such amendment, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. No Subsidiary is required to file
any periodic reports with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Company SEC Reports was prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis
20
throughout the periods indicated (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC) and each fairly presents, in all material respects, the consolidated
financial position, results of operations and cash flows of the Company and its
consolidated Subsidiaries as at the respective dates thereof and for the
respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments which have not had, and are not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect).
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Subsidiaries as at December 31, 2000,
including the notes thereto (the "Company Balance Sheet") and the Company SEC
Reports filed prior to the date hereof and except as set forth in Section
5.07(c) of the Company Disclosure Schedule, neither the Company nor any
Subsidiary has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except for liabilities and obligations,
incurred in the ordinary course of business consistent with past practice since
December 31, 2000, which are not reasonably likely to prevent or materially
delay consummation of the Transactions or otherwise prevent or materially delay
the Company from performing its material obligations under this Agreement or the
Stockholders' Agreement and are not reasonably likely, individually or in the
aggregate, to have a Company Material Adverse Effect.
(d) The Company has heretofore furnished or made available to Parent
complete and correct copies of all amendments and modifications that have not
been filed by the Company with the SEC to all agreements, documents and other
instruments that previously had been filed by the Company with the SEC and are
currently in effect.
SECTION 5.08 Information to Be Supplied. (a) Each of the Schedule
14D-9 and the Proxy Statement/Prospectus 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 Exchange Act and the Securities
Act, as the case may be. Each of the Schedule 14D-9 and the Proxy
Statement/Prospectus 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 and any of the information supplied or to be supplied by the
Company or its Subsidiaries or their representatives for inclusion or
incorporation by reference in the Merger Registration Statement and the Offer
Documents, will not, on the date of its filing or mailing or, in the case of the
Proxy Statement/Prospectus, at the time of the Company Stockholder Meeting or,
in the case of the Offer Documents, at the time the Offer is commenced or at the
Acceptance Date, 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.
(b) Notwithstanding the foregoing provisions of this Section 5.08, no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference in the Offer Documents, Merger Registration
Statement, the Proxy Statement/Prospectus or the Schedule 14D-9 based on
information supplied by or on behalf of Parent or Merger Sub for inclusion or
incorporation by reference therein or based on information
21
which is not made in or incorporated by reference in such documents but which
should have been disclosed pursuant to Section 6.07.
SECTION 5.09 Absence of Certain Changes or Events. Since December 31,
2000, except as set forth in Section 5.09 of the Company Disclosure Schedule or
the Company SEC Reports filed prior to the date hereof, or as expressly
contemplated by this Agreement (a) the Company and the Subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice, (b) there has not been any Company Material
Adverse Effect, and (c) none of the Company or any Subsidiary has taken any
action that, if taken after the date of this Agreement, would constitute a
breach of any of the covenants set forth in Section 7.01.
SECTION 5.10 Absence of Litigation. Except as set forth in Section
5.10 of the Company Disclosure Schedule, there is no litigation, suit, claim,
action, proceeding or investigation (an "Action") pending or, to the knowledge
of the Company, threatened against the Company or any Subsidiary, or any
property or asset of the Company or any Subsidiary, before any Governmental
Authority that (a) individually or in the aggregate, has had or is reasonably
likely to have a Company Material Adverse Effect or (b) seeks to materially
delay or prevent the consummation of the Merger. Neither the Company nor any
Subsidiary nor any material property or asset of the Company or any Subsidiary
is subject to any continuing order of, consent decree, settlement agreement or
other similar written agreement with, or, to the knowledge of the Company,
continuing investigation by, any Governmental Authority, or any order, writ,
judgment, injunction, decree, determination or award of any Governmental
Authority that would prevent or materially delay consummation of the Merger or
otherwise prevent or materially delay the Company from performing its material
obligations under this Agreement or the Stockholders' Agreement or is reasonably
likely, individually or in the aggregate, to have a Company Material Adverse
Effect.
SECTION 5.11 Employee Benefit Plans. (a) Section 5.11(a) of the
Company Disclosure Schedule lists (i) 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, restricted stock,
incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts or
agreements to which the Company or any Subsidiary is a party, with respect to
which the Company or any Subsidiary has any obligation or which are maintained,
contributed to or sponsored by the Company or any Subsidiary for the benefit of
any current or former employee, officer or director of the Company or any
Subsidiary, (ii) each employee benefit plan for which the Company or any
Subsidiary could incur liability under Section 4069 of ERISA in the event such
plan has been or were to be terminated, (iii) any plan in respect of which the
Company or any Subsidiary could incur liability under Section 4212(c) of ERISA,
and (iv) any contracts, arrangements or understandings between the Company or
any Subsidiary and any employee of the Company or any Subsidiary including,
without limitation, any contracts, arrangements or understandings relating in
any way to a sale of the Company or any Subsidiary (collectively, the "Plans").
Each Plan is in writing and the Company has furnished or made available to
Parent a true and complete copy of each Plan and has delivered to Parent a true
and complete copy of each material document, if any, prepared in connection with
each such Plan, including, without
22
limitation, (i) a copy of each trust or other funding arrangement, (ii) each
summary plan description and summary of material modifications, (iii) the most
recently filed Internal Revenue Service ("IRS") Form 5500, (iv) the most
recently received IRS determination letter for each such Plan, and (v) the most
recently prepared actuarial report and financial statement in connection with
each such Plan. Neither the Company nor any Subsidiary has any express or
implied commitment (i) to create, incur liability with respect to or cause to
exist any other employee benefit plan, program or arrangement, (ii) to enter
into any contract or agreement to provide compensation or benefits to any
individual, or (iii) to modify, change or terminate any Plan, other than with
respect to a modification, change or termination required by ERISA or the Code.
(b) Except as provided in Section 5.11(b) of the Company Disclosure
Schedule, none of the Plans is a multiemployer plan (within the meaning of
Section 3(37) or 4001(a)(3) of ERISA) (a "Multiemployer Plan") or a single
employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) for
which the Company or any Subsidiary could incur liability under Section 4063 or
4064 of ERISA (a "Multiple Employer Plan"). Except as otherwise set forth in
Section 5.11(b) of the Company Disclosure Schedule, none of the Plans (i)
provides for the payment of separation, severance, termination or similar-type
benefits to any person, (ii) obligates the Company or any Subsidiary to pay
separation, severance, termination or similar-type benefits solely or partially
as a result of any transaction contemplated by this Agreement, or (iii)
obligates the Company or any Subsidiary to make any payment or provide any
benefit as a result of a "change in control", within the meaning of such term
under Section 280G of the Code. None of the Plans provides for or promises
retiree medical, disability or life insurance benefits to any current or former
employee, officer or director of the Company or any Subsidiary.
(c) Each Plan is now and always has been operated in all material
respects in accordance with its terms and the requirements of all applicable
Laws including, without limitation, ERISA and the Code. The Company and the
Subsidiaries have performed all obligations required to be performed by them
under, are not in any respect in default under or in violation of, and have no
knowledge of any default or violation by any party to, any Plan. No Action is
pending or, to the knowledge of the Company, threatened with respect to any Plan
(other than claims for benefits in the ordinary course) and no fact or event
exists that could reasonably be expected to give rise to any such Action.
(d) Each Plan that is intended to be qualified under Section 401(a) of
the Code or Section 401(k) of the Code has timely received a favorable
determination letter from the IRS covering all of the provisions applicable to
the Plan for which determination letters are currently available that the Plan
is so qualified and each trust established in connection with any Plan which is
intended to be exempt from federal income taxation under Section 501(a) of the
Code has received a determination letter from the IRS that it is so exempt, and,
to the Company's knowledge, no fact or event has occurred since the date of such
determination letter or letters from the IRS to adversely affect the qualified
status of any such Plan or the exempt status of any such trust.
(e) There has not been any prohibited transaction (within the meaning
of Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan
that could subject the
23
Company or a Subsidiary to any material liability. Neither the Company nor any
Subsidiary has incurred any liability under, arising out of or by operation of
Title IV of ERISA (other than liability for premiums to the Pension Benefit
Guaranty Corporation arising in the ordinary course), including, without
limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA, or
(ii) the withdrawal from any Multiemployer Plan or Multiple Employer Plan, and,
to the Company's knowledge, no fact or event exists which could reasonably be
expected to give rise to any such liability.
(f) All contributions, premiums or payments required to be made with
respect to any Plan have been made on or before their due dates. All such
contributions have been fully deducted for income tax purposes and no such
deduction has been challenged or disallowed by any Governmental Authority and no
fact or event exists which could reasonably be expected to give rise to any such
challenge or disallowance.
SECTION 5.12 Labor and Employment Matters. (a) Except as set forth in
Section 5.12(a) of the Company Disclosure Schedule, (i) there are no
controversies pending or, to the knowledge of the Company, threatened between
the Company or any Subsidiary and any of their respective employees, which
controversies are reasonably likely to prevent or materially delay consummation
of the Merger or otherwise prevent or materially delay the Company from
performing its material obligations under this Agreement or are reasonably
likely, individually or in the aggregate, to have a Company Material Adverse
Effect; (ii) neither the Company nor any Subsidiary is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or any Subsidiary, nor, to the knowledge of the Company,
are there any activities or proceedings of any labor union to organize any such
employees; (iii) neither the Company nor any Subsidiary has materially breached
or otherwise materially failed to comply with any provision of any such
agreement or contract, and, to the knowledge of the Company, there are no
material grievances outstanding against the Company or any Subsidiary under any
such agreement or contract; (iv) to the knowledge of the Company, there are no
unfair labor practice complaints pending against the Company or any Subsidiary
before the National Labor Relations Board or any current union representation
questions involving employees of the Company or any Subsidiary; and (v) there is
no strike, slowdown, work stoppage or lockout, or, to the knowledge of the
Company, threat thereof, by or with respect to any employees of the Company or
any Subsidiary. The consent of the labor unions which are a party to the
collective bargaining agreements listed in Section 5.12 of the Company
Disclosure Schedule is not required to consummate the Transactions.
(b) The Company and the Subsidiaries are in compliance in all material
respects with all applicable laws relating to the employment of labor, including
those related to wages, hours, collective bargaining and the payment and
withholding of taxes and other sums as required by the appropriate Governmental
Authority and have withheld and paid to the appropriate Governmental Authority
or are holding for payment not yet due to such Governmental Authority all
material amounts required to be withheld from employees of the Company or any
Subsidiary and are not liable for any material arrears of wages, taxes,
penalties or other sums for failure to comply with any of the foregoing. Except
as set forth in Section 5.12(b) of the Company Disclosure Schedule, the Company
and the Subsidiaries have paid in full to all employees or adequately accrued
for in accordance with GAAP consistently applied all material wages, salaries,
commissions, bonuses, benefits and other compensation due to or on
24
behalf of such employees and there is no material claim with respect to payment
of wages, salary or overtime pay that has been asserted or is now pending or
threatened before any Governmental Authority with respect to any persons
currently or formerly employed by the Company or any Subsidiary. Neither the
Company nor any Subsidiary is a party to, or, to its knowledge, otherwise bound
by, any material consent decree with, or citation by, any Governmental Authority
relating to employees or employment practices. Except as set forth in Section
5.12(b) of the Company Disclosure Schedule, there is no material charge or
proceeding with respect to a violation of any occupational safety or health
standards that has been asserted or is now pending or threatened with respect to
the Company. Except as set forth in Section 5.12(b) of the Company Disclosure
Schedule, there is no material charge of discrimination in employment or
employment practices, for any reason, including, without limitation, age,
gender, race, religion or other legally protected category, which has been
asserted or is now pending or threatened before the United States Equal
Employment Opportunity Commission, or any other Governmental Authority in any
jurisdiction in which the Company or any Subsidiary has employed or employ any
person.
(c) All individuals who are performing or have performed consulting or
other services for the Company or any Subsidiary, whether as consultants,
independent contractors, agents or otherwise, are or were correctly classified
by the Company and each Subsidiary as either "independent contractors" or
"employees" as the case may be, and, at the Closing, will qualify for such
classification under all applicable laws; there are no pending or, to the
Company's knowledge, threatened material claims against the Company or any
Subsidiary by or on behalf of any such individual related to the classification
of such individual, or investigation, audit or other proceeding relating to such
an individual or individuals, by any Governmental Authority with respect to the
classification of such individuals; and there is no labor union representing any
such individuals or, to the Company's knowledge, any organizational effort
currently being made by or on behalf of any labor organization to organize any
such individuals. The Company is not aware that any Significant Employee of the
Company or Subsidiary is obligated under any contract or other agreement, or
subject to any judgment, decree, or order of any court or administrative agency,
that would materially conflict with the obligation of such employee to use best
efforts to promote the interests of the Company or the Subsidiary, and to the
Company's knowledge, no Significant Employee has: (i) violated or is violating
any of the material terms or conditions of any employment, non-competition, or
non-disclosure agreement between such employee and any former employee or other
third party, (ii) disclosed or may be disclosing, or utilized or may be
utilizing, any material trade secret or proprietary information or documentation
of such third party in material violation of any nondisclosure obligations
applicable to such employee, or (iii) materially interfered or may be
interfering in the employment relationship between such third party and any
employee or any former employee, and no third party has notified the Company in
writing that any claim set forth in any of the foregoing might be contemplated.
SECTION 5.13 Property and Leases. (a) Except as set forth in Section
5.13(a) of the Company Disclosure Schedule, the Company and the Subsidiaries
have good, valid and marketable title to or, in the case of leased properties
and assets, valid leasehold interest in, all their properties and assets that
are necessary to conduct their respective businesses as currently conducted,
with only such exceptions as are not reasonably likely, individually or in the
aggregate, to have a Company Material Adverse Effect .
25
(b) Except as set forth in Section 5.13(b) of the Company Disclosure
Schedule, each parcel of the real property owned or leased by the Company or any
Subsidiary (i) is owned or leased free and clear of all mortgages, pledges,
liens, security interests, conditional and installment sale agreements,
encumbrances, charges or other claims of third parties of any kind, including,
without limitation, any easement, right of way or other encumbrance to title, or
any option, right of first refusal, or right of first offer (collectively,
"Liens"), other than (A) Liens for current taxes and assessments not yet due,
(B) inchoate mechanics' and materialmen's Liens for construction in progress,
(C) workmen's, repairmen's, warehousemen's and carriers' Liens arising in the
ordinary course of business of the Company or such Subsidiary consistent with
past practice and (D) all Liens and other imperfections of title and
encumbrances that, individually or in the aggregate, are not reasonably likely
to have a Company Material Adverse Effect (collectively, "Permitted Liens"), and
(ii) is neither subject to any governmental decree or order to be sold nor is
being condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor, to the knowledge of the Company,
has any such condemnation, expropriation or taking been proposed.
(c) All leases of the real property leased for the use or benefit of
the Company or any Subsidiary to which the Company or any Subsidiary is a party,
and all amendments and modifications thereto, are in full force and effect and
have not been modified or amended, and there exists no default under any such
lease by the Company or any Subsidiary, nor any event which, with notice or
lapse of time or both, would constitute a default thereunder by the Company or
any Subsidiary, except as are not reasonably likely to prevent or materially
delay consummation of the Merger or otherwise prevent or materially delay the
Company from performing its material obligations under this Agreement and are
not reasonably likely, individually or in the aggregate, to have a Company
Material Adverse Effect.
SECTION 5.14 Intellectual Property. Except as are not reasonably
likely, individually or in the aggregate, to have a Company Material Adverse
Effect or as listed in Section 5.14 of the Company Disclosure Schedule, (a) the
conduct of the business of the Company and the Subsidiaries as currently
conducted does not infringe upon or misappropriate the Intellectual Property
Rights of any third party, and, to the Company's knowledge, no claim has been
asserted to the Company that the conduct of the business of the Company and the
Subsidiaries as currently conducted infringes upon or may infringe upon or
misappropriates the Intellectual Property Rights of any third party; (b) with
respect to each item of Intellectual Property owned by the Company or a
Subsidiary and material to the business, financial condition or results of
operations of the Company and the Subsidiaries taken as a whole ("Company Owned
Intellectual Property"), the Company or a Subsidiary is the owner of the entire
right, title and interest in and to such Company Owned Intellectual Property and
is entitled to use such Company Owned Intellectual Property in the continued
operation of its respective business; (c) with respect to each item of
Intellectual Property licensed to the Company or a Subsidiary that is material
to the business of the Company and the Subsidiaries as currently conducted
("Company Licensed Intellectual Property"), the Company or a Subsidiary has the
right to use such Company Licensed Intellectual Property in the continued
operation of its respective business in accordance with the terms of the license
agreement governing such Company Licensed Intellectual Property; (d) to the
knowledge of the Company, the Company Owned Intellectual Property is valid and
enforceable, and has not been adjudged invalid or unenforceable in whole or in
part; (e) to the knowledge of the Company, no person is engaging in any activity
that
26
infringes upon the Company Owned Intellectual Property; (f) to the knowledge of
the Company, each license of the Company Licensed Intellectual Property is valid
and enforceable, is binding on all parties to such license, and is in full force
and effect; (g) to the knowledge of the Company, no party to any license of the
Company Licensed Intellectual Property is in breach thereof or default
thereunder; and (h) neither the execution of this Agreement nor the consummation
of any Transaction shall adversely affect any of the Company's rights with
respect to the Company Owned Intellectual Property or the Company Licensed
Intellectual Property.
SECTION 5.15 Taxes. The Company and each of its Subsidiaries have
timely filed (or have had filed on their behalf) all United States federal,
state, local and non-United States Tax returns and reports required to be filed
by each of them and each has, within the time and in the manner prescribed by
law, paid and discharged all Taxes that have become due and payable, other than
(a) such payments as are being contested in good faith by appropriate
proceedings and for which adequate reserves have been taken and (b) such
filings, payments or other occurrences that are not reasonably likely,
individually or in the aggregate, to have a Company Material Adverse Effect. All
such Tax returns and reports are true, accurate and complete in all material
respects. Neither the IRS nor any other United States or non-United States
taxing authority or agency is now asserting or, to the knowledge of the Company,
threatening to assert against the Company or any Subsidiary any deficiency or
claim for any Taxes or interest thereon or penalties in connection therewith.
Neither the Company nor any Subsidiary has granted any waiver of any statute of
limitations that is currently in effect with respect to, or any extension of a
period for the assessment of, any Tax. The accruals and reserves for Taxes
reflected in the Company Balance Sheet are adequate to cover all Taxes accruable
through such date in accordance with GAAP. Neither the Company nor any
Subsidiary has made an election under Section 341(f) of the Code. There are no
Tax liens upon any property or assets of the Company or any of the Subsidiaries
except liens for current Taxes not yet due. Neither the Company nor any of the
Subsidiaries is a party to any agreement, understanding, or arrangement (with
any person other than the Company and/or any of the Subsidiaries) relating to
allocating or sharing of any amount of Taxes that would have a Company Material
Adverse Effect. Neither the Company nor any of the Subsidiaries has any
liability for any amount of Taxes of any person other than the Company and its
Subsidiaries under Treasury Regulation section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, or by
contract that would have a Company Material Adverse Effect. Neither the Company
nor any of the Subsidiaries has been required to include in income any
adjustment pursuant to Section 481 of the Code by reason of a voluntary change
in accounting method initiated by the Company or any of the Subsidiaries, and
the IRS has not initiated or proposed any such adjustment or change in
accounting method, in either case which adjustment or change would have a
Company Material Adverse Effect. Neither the Company nor any Subsidiary has been
a "distributing corporation" or a "controlled corporation" in a distribution
intended to qualify under Section 355(e) of the Code within the past five years.
To the knowledge of the Company, neither the Company nor any of its affiliates
has taken or agreed to take any action that would prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
The Company is not aware of any agreement, plan or other circumstance that would
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code. This Section 5.15 is subject in its entirety to the
exceptions set forth in Section 5.15 of the Company Disclosure Schedule.
27
SECTION 5.16 Environmental Matters. Except as described in Section
5.16 of the Company Disclosure Schedule or as are not reasonably likely to
prevent or materially delay consummation of the Merger or otherwise prevent or
materially delay the Company from performing its material obligations under this
Agreement and are not reasonably likely, individually or in the aggregate, to
have a Company Material Adverse Effect, (a) the Company is not in violation of
any Environmental Law and has not received any written notice, demand, letter,
claim, request for information or other written communication alleging that the
Company may be in violation of, or liable under, any Environmental Law; (b) none
of the properties currently or formerly owned, leased or operated by the Company
(including, without limitation, soils and surface and ground waters) are
contaminated with any Hazardous Substance at concentrations requiring
remediation under any Environmental Law and the Company is not aware of any
facts or circumstances that could reasonably be expected to result in the
contamination by Hazardous Substances of Company properties, including, but not
limited to, migration of contaminants; (c) to the knowledge of the Company, the
Company is not liable for any off-site contamination by Hazardous Substances at
concentrations requiring remediation under any Environmental Law including,
without limitation, the offsite migration of any Hazardous Substances and the
disposal of Hazardous Substances at third-party disposal sites; (d) to the
knowledge of the Company, the Company is not actually, potentially or allegedly
liable under any Environmental Law (including, without limitation, pending or
threatened liens) and to the Company's knowledge, there are no facts or
circumstances that would reasonably be expected to give rise to any liability
under any Environmental Law; (e) the Company has all permits, licenses and other
authorizations required under any Environmental Law ("Environmental Permits")
and the Company is in compliance with its Environmental Permits; (f) none of the
properties owned or leased by the Company is listed, or to the knowledge of the
Company, proposed for listing on the "National Priorities List" or the
Comprehensive Environmental Response, Compensation and Liability Information
System under the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, or any similar state or foreign list of sites
requiring investigation or cleanup; (g) during the past three years, the Company
has not entered into or agreed to any consent decree or order and the Company is
not subject to any judgment, decree or judicial order relating to compliance
with Environmental Laws or the investigation, sampling, monitoring, treatment,
remediation, removal or cleanup of Hazardous Substances and, to the knowledge of
the Company, no investigation, litigation or other proceeding is pending or
threatened with respect thereto; (h) the Company is not an indemnitor in
connection with any claim asserted in writing to the Company by any third-party
indemnitee for any liability under any Environmental Law or relating to any
Hazardous Substances; (i) neither the execution of this Agreement nor the
consummation of the Transactions will require any investigation, remediation or
other action with respect to Hazardous Substances, or any notice to or consent
of Governmental Authorities or third parties, pursuant to any applicable
Environmental Law or Environmental Permit.
SECTION 5.17 Company Rights Agreement. The copy of the Company Rights
Agreement, including all amendments and exhibits thereto, that is set forth as
an exhibit to the Company's Form 8-K, dated as of November 7, 2001, is a
complete and correct copy thereof. The Company Board has approved an amendment
to the Company Rights Agreement, a copy of such amendment will be promptly
provided to Parent, so that neither the execution of this Agreement nor the
consummation or announcement of the Offer or the Merger will (a) cause the
Company Rights issued pursuant to the Company Rights Agreement to become
exercisable,
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(b) cause Parent or Merger Sub to become an Acquiring Person (as such term is
defined in the Company Rights Agreement) or (c) give rise to a Distribution Date
(as such term is defined in the Rights Agreement).
SECTION 5.18 Material Contracts. (a) Subsections (i) through (ix) of
Section 5.18 of the Company Disclosure Schedule contain a list of the following
contracts and agreements to which the Company or any Subsidiary is a party (such
contracts, agreements and arrangements as are required to be set forth in
Section 5.18(a) of the Company Disclosure Schedule being the "Material
Contracts"):
(i) each contract and agreement which is likely to involve
consideration of more than $2,000,000, in the aggregate, over the remaining
term of such contract or agreement;
(ii) all broker, distributor, dealer, manufacturer's representative,
franchise, agency, sales promotion, market research, marketing consulting
and advertising contracts and agreements to which the Company or any
Subsidiary is a party, other than sales representation agreements to which
Conceptronic, Inc. is a party that are in accordance with standard industry
practice and not material to the Company and Subsidiaries, taken as a
whole;
(iii) all management contracts (excluding contracts for employment)
and contracts with other consultants, including any contracts involving the
payment of royalties or other amounts calculated based upon the revenues or
income of the Company or any Subsidiary or income or revenues related to
any product of the Company or any Subsidiary to which the Company or any
Subsidiary is a party;
(iv) all contracts and agreements evidencing indebtedness in excess of
$1,000,000;
(v) all contracts and agreements with any Governmental Authority to
which the Company or any Subsidiary is a party and which is likely to
involve consideration of more than $500,000, in the aggregate, over the
remaining term of such contract or agreement;
(vi) all contracts and agreements that limit, or purport to limit, the
ability of the Company or any Subsidiary to compete in any line of business
or with any person or entity or in any geographic area or during any period
of time;
(vii) all contracts and agreements providing for benefits under any
Plan;
(viii) all contracts for employment required to be listed in Section
5.11 of the Company Disclosure Schedule; and
(ix) all other contracts and agreements, whether or not made in the
ordinary course of business, which are material to the Company or any
Subsidiary, the conduct of their respective businesses, or the absence of
which would prevent or materially delay consummation of the Merger or
otherwise prevent or materially delay the Company from
29
performing its material obligations under this Agreement or would,
individually or in the aggregate, have a Company Material Adverse Effect.
(b) Except as disclosed in Section 5.18(b) of the Company Disclosure
Schedule, or except as is not reasonably likely to prevent or materially delay
consummation of the Merger or otherwise prevent or materially delay the Company
from performing its material obligations under this Agreement or the
Stockholders' Agreement and is not reasonably likely, individually or in the
aggregate, to have a Company Material Adverse Effect, (i) each Material Contract
is a legal, valid and binding agreement, and none of the Material Contracts is
in default by its terms or has been canceled by the other party; (ii) to the
Company's knowledge, no other party is in breach or violation of, or default
under, any Material Contract; (iii) the Company and the Subsidiaries are not in
receipt of any claim of default under any such agreement; and (iv) neither the
execution of this Agreement nor the consummation of any Transaction shall
constitute a default, give rise to cancellation rights, or otherwise adversely
affect any of the Company's rights under any Material Contract. The Company has
furnished or made available to Parent true and complete copies of all Material
Contracts, including any amendments thereto.
SECTION 5.19 Insurance. (a) All material insurable risks of the
Company and the Subsidiaries in respect of the businesses of each are covered by
insurance policies to the extent set forth in Section 5.19(a) of the Company
Disclosure Schedule.
(b) Except as set forth in Section 5.19(b) of the Company Disclosure
Schedules, at no time subsequent to December 31, 1998 has the Company or any
Subsidiary (i) been denied any material insurance or indemnity bond coverage
which it has requested, (ii) made any material reduction in the scope or amount
of its insurance coverage, or (iii) received notice from any of its insurance
carriers that any material current insurance coverage will not be available in
the future substantially on the same terms as are now in effect.
SECTION 5.20 Board Approval; Vote Required. (a) The Company Board, by
resolutions duly adopted by majority vote of those voting at a meeting duly
called and held, has duly (i) determined that this Agreement, the Stockholders'
Agreement and the transactions contemplated hereby and thereby, including the
Offer and the Merger, are fair to and in the best interests of the Company and
its stockholders, (ii) approved, adopted and declared advisable this Agreement,
the Stockholders' Agreement and the transactions contemplated hereby and
thereby, including the Offer and the Merger and in accordance with the DGCL,
including without limitation, Section 203 thereof, (iii) resolved to recommend
acceptance of the Offer and the approval and adoption of this Agreement by the
Company's stockholders at the Company Stockholder Meeting (as defined below) and
(iv) confirmed that, except for as set forth in Section 5.03(a) of the Company
Disclosure Schedule, the vesting of the incentive stock options granted by the
Company under the 1991 Stock Option Plan will not accelerate as a result of the
Merger.
(b) The only vote of the holders of any class or series of
capital stock of the Company necessary to approve this Agreement, the Merger and
the other Transactions is the affirmative vote of the holders of a majority of
the outstanding shares of Company Common Stock in favor of the approval and
adoption of this Agreement.
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SECTION 5.21 Opinion of Advisor. The Company has received the written
opinion of Advisor, dated the date of this Agreement, to the effect that, as of
the date of this Agreement, the consideration to be received by holders of
shares of Company Common Stock in the Offer and the Merger is fair, from a
financial point of view, to the Company's stockholders, a copy of which opinion
will be delivered to Parent promptly after the date of this Agreement.
SECTION 5.22 Brokers. No broker, finder or investment banker (other
than Advisor) is entitled to any brokerage, finder's or other fee or commission
in connection with the Transactions based upon arrangements made by or on behalf
of the Company. The Company has heretofore furnished or made available to Parent
a complete and correct copy of all agreements between the Company and Advisor
pursuant to which such firm would be entitled to any payment relating to the
Transactions.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
As an inducement to the Company to enter into this Agreement, Parent
and Merger Sub, except as disclosed in the Parent's disclosure schedule
delivered concurrently with the delivery of this Agreement (the "Parent
Disclosure Schedule"), hereby, jointly and severally, represent and warrant to
the Company as follows:
SECTION 6.01 Corporate Organization. Each of Parent and Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals are not
reasonably likely to prevent or materially delay consummation of the Merger, or
otherwise prevent or materially delay Parent or Merger Sub from performing their
material obligations under this Agreement or the Stockholders' Agreement and are
not reasonably likely, individually or in the aggregate, to have a Parent
Material Adverse Effect.
SECTION 6.02 Certificate of Incorporation and By-Laws. Parent has
heretofore furnished to the Company a complete and correct copy of the
Certificate of Incorporation and the By-Laws of Parent and the Certificate of
Incorporation and By-Laws of Merger Sub, each as amended to date. Such
Certificates of Incorporation and By-Laws are in full force and effect. Neither
Parent nor Merger Sub is in violation of any of the provisions of its
Certificate of Incorporation or By-Laws.
SECTION 6.03 Capitalization. (a) The authorized capital stock of
Parent consists of (i) 150,000,000 shares of Parent Common Stock and (ii)
1,000,000 shares of preferred stock, par value $1.00 per share ("Parent
Preferred Stock"). As of December 21, 2001, 42,926,137 shares of Parent Common
Stock are issued and outstanding, all of which are validly issued, fully paid
and non-assessable and 2,427,982 shares of Parent Common Stock are reserved for
future issuance pursuant to stock options. As of the date of this Agreement, no
shares of Parent Preferred Stock are issued and outstanding. Except as set forth
in this Section 6.03, the
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Parent Rights and stock options granted pursuant to the stock option plans of
Parent (the "Parent Stock Option Plans"), there are no options, warrants or
other rights, agreements, arrangements or commitments of any character relating
to the issued or unissued capital stock of Parent or Merger Sub or obligating
Parent or Merger Sub to issue or sell any shares of capital stock of, or other
equity interests in, Parent or Merger Sub. As of the date of this Agreement,
there are 2,427,982 shares of Parent Common Stock subject to options granted
pursuant to the Parent Stock Option Plans. All shares of Parent Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and non-assessable. There are no
outstanding contractual obligations of Parent or Merger Sub to repurchase,
redeem or otherwise acquire any shares of Parent Common Stock or any capital
stock of Merger Sub.
(b) The authorized capital stock of Merger Sub consists of 100 shares
of Merger Sub Common Stock, all of which are duly authorized, validly issued,
fully paid and non-assessable and free of any preemptive rights in respect
thereof and all of which are owned by Parent. Each outstanding share of capital
stock of Merger Sub is duly authorized, validly issued, fully paid and
non-assessable and each such share is owned by Parent or Merger Sub free and
clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on Parent's or Merger Sub's voting
rights, charges and other encumbrances of any nature whatsoever, except where
failure to own such shares free and clear would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
(c) The shares of Parent Common Stock to be issued pursuant to the
Merger in accordance with Section 2.01 will, when issued, (i) be duly
authorized, validly issued, fully paid and non-assessable and not subject to
preemptive rights created by statute, the Parent's Certificate of Incorporation
or By-Laws or any agreement to which the Parent is a party or is bound and (ii)
be registered under the Securities Act and the Exchange Act and registered or
exempt from registration under applicable Blue Sky Laws.
SECTION 6.04 Authority Relative to This Agreement and the
Stockholders' Agreement. Each of Parent and Merger Sub has all necessary
corporate power and authority to execute and deliver this Agreement and the
Stockholders' Agreement, to perform its obligations hereunder and thereunder and
to consummate the Transactions. The execution and delivery of this Agreement and
the Stockholders' Agreement by Parent and Merger Sub and the consummation by
Parent and Merger Sub of the Transactions have been duly and validly authorized
by all necessary corporate action, and no other corporate proceedings on the
part of Parent or Merger Sub are necessary to authorize this Agreement and the
Stockholders' Agreement or to consummate the Transactions (other than, with
respect to the Merger, the filing and recordation of appropriate merger
documents as required by the DGCL). Each of this Agreement and the Stockholders'
Agreement has been duly and validly executed and delivered by Parent and Merger
Sub and, assuming due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each of Parent and Merger
Sub, enforceable against each of Parent and Merger Sub in accordance with its
terms, except to the extent that its enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles.
32
SECTION 6.05 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement and the Stockholders' Agreement by
Parent and Merger Sub do not, and the performance of this Agreement and the
Stockholders' Agreement by Parent and Merger Sub will not, (i) conflict with or
violate the Certificate of Incorporation or By-Laws of either Parent or Merger
Sub, (ii) assuming that all consents, approvals, authorizations and other
actions described in Section 6.05(b) have been obtained and all filings and
obligations described in Section 6.05(b) have been made, conflict with or
violate any Law applicable to Parent or Merger Sub or by which any property or
asset of either of them is bound or affected, or (iii) except as set forth in
Section 6.05(a) of the Parent Disclosure Schedule, result in any breach of, or
constitute a default (or an event which, with notice or lapse of time or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of Parent or Merger Sub pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or Merger
Sub is a party or by which Parent or Merger Sub or any property or asset of
either of them is bound or affected, except, with respect to clauses (ii) and
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which are not reasonably likely to prevent or materially delay
consummation of the Transactions or otherwise prevent or materially delay Parent
and Merger Sub from performing their material obligations under this Agreement
and the Stockholders' Agreement and are not reasonably likely, individually or
in the aggregate, to have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement and the Stockholders'
Agreement by Parent and Merger Sub do not, and the performance of this Agreement
and the Stockholders' Agreement by Parent and Merger Sub will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Authority, except (i) for applicable requirements, if any,
of the Securities Act, the Exchange Act, Blue Sky Laws and state takeover laws,
the HSR Act, and filing and recordation of appropriate merger documents as
required by the DGCL, and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
are not reasonably likely to prevent or materially delay consummation of the
Transactions, or otherwise prevent Parent or Merger Sub from performing their
material obligations under this Agreement and the Stockholders' Agreement and
are not reasonably likely, individually or in the aggregate, to have a Parent
Material Adverse Effect.
SECTION 6.06 SEC Filings; Financial Statements. (a) Parent has filed
all forms, reports and documents required to be filed by it with the SEC since
July 28, 1999 (the "Parent SEC Reports"). The Parent SEC Reports (i) complied in
all material respects as to form with either the requirements of the Securities
Act or the Exchange Act, as the case may be, and the rules and regulations
promulgated thereunder, and (ii) did not, at the time they were filed, or, if
amended, as of the date of such amendment, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Parent SEC Reports was prepared in
accordance with GAAP
33
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) and each fairly presents, in all material
respects, the consolidated financial position, results of operations and cash
flows of Parent and its consolidated subsidiaries as at the respective dates
thereof and for the respective periods indicated therein, except as otherwise
noted therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which have not had, and are not reasonably likely
to have, individually or in the aggregate, a Parent Material Adverse Effect).
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Parent and its consolidated subsidiaries as at July 28, 2001,
including the notes thereto (the "Parent Balance Sheet") and the Parent SEC
Reports filed prior to the date hereof and except as set forth in Section
6.06(c) of the Parent Disclosure Schedule, neither Parent nor any of its
subsidiaries has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except for liabilities and obligations,
incurred in the ordinary course of business consistent with past practice since
July 28, 2001, which are not reasonably likely to prevent or materially delay
consummation of the Transactions or otherwise prevent or materially delay Parent
or the Merger Sub from performing their respective material obligations under
this Agreement or the Stockholders' Agreement and are not reasonably likely,
individually or in the aggregate, to have a Parent Material Adverse Effect.
SECTION 6.07 Information to Be Supplied. (a) Each of the registration
statement on Form S-4 to be filed with the SEC by Parent in connection with the
issuance of Parent Common Stock in the Merger, as amended or supplemented from
time to time (as so amended and supplemented, the "Merger Registration
Statement"), the Offer Documents and the other documents required to be filed by
Parent with the SEC in connection with the Offer, the Merger and the other
transactions contemplated hereby will comply as to form, in all material
respects, with the requirements of the Exchange Act and the Securities Act, as
the case may be. Each of the Merger Registration Statement, the Offer Documents
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 and any information supplied or to be supplied by Parent or its
subsidiaries or representations for inclusion or incorporation by reference in
the Schedule 14D-9 or the Proxy Statement/Prospectus will not, on the date of
its filing or mailing or at the time they become effective under the Securities
Act or, in the case of the Offer Registration Statement, on the dates the Offer
Registration Statement is mailed to stockholders of the Company and on the
Acceptance Date and, in the case of the Merger Registration Statement, at the
time of the Company Stockholder Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section 6.07, no
representation or warranty is made by Parent with respect to statements made or
incorporated by reference in the Merger Registration Statement or the Offer
Documents based on information supplied by or on behalf of the Company and its
Subsidiaries for inclusion or incorporation by reference therein or based on
information which is not made in or incorporated by reference in such documents
but which should have been disclosed pursuant to Section 5.08.
34
SECTION 6.08 Absence of Litigation. Except as specifically disclosed
in any Parent SEC Report filed prior to the date of this Agreement or set forth
in Section 6.10 of the Parent Disclosure Schedule, there is no Action pending
or, to the knowledge of Parent, threatened against Parent or Merger Sub, or any
property or asset of Parent or Merger Sub, before any Governmental Authority
that (a) individually or in the aggregate, has had or is reasonably likely to
have a Parent Material Adverse Effect or (b) seeks to materially delay or
prevent the consummation of the Merger. Neither Parent nor Merger Sub nor any
material property or asset of Parent or Merger Sub is subject to any continuing
order of, consent decree, settlement agreement or other similar written
agreement with, or, to the knowledge of Parent, continuing investigation by any
Governmental Authority, or any order, writ, judgment, injunction, decree,
determination or award of, any Governmental Authority that would prevent or
materially delay consummation of the Merger or otherwise prevent or materially
delay Parent from performing its material obligations under this Agreement or
the Stockholders' Agreement or is reasonably likely, individually or in the
aggregate, to have a Parent Material Adverse Effect.
SECTION 6.09 Absence of Certain Changes or Events(a) . Since July 28,
2001, except as set forth in Section 6.09 of the Parent Disclosure Schedule or
the Parent SEC Documents filed prior to the date hereof, or as expressly
contemplated by this Agreement, Parent and its subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice, (b) there has not been any Parent Material Adverse Effect.
SECTION 6.10 No Vote Required. No vote of the stockholders of Parent
is required by Law, Parent's Certificate of Incorporation or By-Laws or
otherwise in order for Parent and Merger Sub to consummate the Transactions.
SECTION 6.11 Operations of Merger Sub. Merger Sub is a direct, wholly
owned subsidiary of Parent, was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated by this
Agreement.
SECTION 6.12 Tax Matters. To the knowledge of Parent, neither Parent
nor any of its affiliates has taken or agreed to take any action that would
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code. Parent is not aware of any agreement, plan or other
circumstance that would prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
SECTION 6.13 Brokers. No broker, finder or investment banker (other
xxxx Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and Banc of America
Securities LLC) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of Parent or Merger Sub.
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 7.01 Conduct of Business by the Company Pending the Merger.
(a) The Company agrees that, between the date of this Agreement and the
Effective Time, except
35
as expressly contemplated by any other provision of this Agreement or the
Stockholders' Agreement or as set forth in Section 7.01 of the Company
Disclosure Schedule, unless Parent shall otherwise consent in writing:
(i) the businesses of the Company and the Subsidiaries shall be
conducted only in, and the Company and the Subsidiaries shall not take any
action except in, the ordinary course of business and in a manner
consistent with past practice; and
(ii) the Company shall use its reasonable best efforts to preserve
substantially intact the business organization of the Company and the
Subsidiaries, to keep available the services of the current officers,
employees and consultants of the Company and the Subsidiaries and to
preserve the current relationships of the Company and the Subsidiaries with
customers, suppliers and other persons with which the Company or any
Subsidiary has significant business relations.
(b) By way of amplification and not limitation, except as expressly
contemplated by any other provision of this Agreement or the Stockholders'
Agreement or as set forth in Section 7.01 of the Company Disclosure Schedule,
neither the Company nor any Subsidiary shall, between the date of this Agreement
and the Effective Time, directly or indirectly, do, or propose to do, any of the
following without the prior written consent of Parent:
(i) amend or otherwise change its Certificate of Incorporation or
By-Laws or equivalent organizational documents;
(ii) issue, sell, pledge, dispose of, grant or encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (A) any
assets of the Company or any Subsidiary, except in the ordinary course of
business and in a manner consistent with past practice or (B) any shares of
any class of capital stock of the Company or any Subsidiary, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of the Company or
any Subsidiary (except for the issuance of up to a maximum of 3,426,767
shares of Company Common Stock issuable pursuant to employee stock options
outstanding on the date hereof);
(iii) waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of options or restricted stock, reprice
options granted under any stock option plan or authorize cash payments in
exchange for any options granted under any of such plans;
(iv) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock, except for dividends payable by a Subsidiary
of the Company to the Company or any other Subsidiary;
(v) reclassify, combine, split, subdivide or redeem, or purchase or
otherwise acquire, directly or indirectly, any of its capital stock or
other securities;
36
(vi) (A) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization or
any division thereof or any material amount of assets; (B) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise become responsible for, the obligations
of any person, or make any loans or advances, or grant any security
interest in any of its assets except in the ordinary course of business and
consistent with past practice; (C) enter into any contract or agreement
other than in the ordinary course of business and consistent with past
practice; (D) authorize, or make any commitment with respect to, any single
capital expenditure which is in excess of $1,000,000 or capital
expenditures which are, in the aggregate, in excess of $5,000,000 for the
Company and the Subsidiaries taken as a whole; or (E) enter into or amend
any contract, agreement, commitment or arrangement with respect to any
matter set forth in this Section 7.01(e);
(vii) sell, lease, license, mortgage, pledge, encumber or dispose of
in any manner of any properties or assets which are material, individually
or in the aggregate, to the Company, other than in the ordinary course of
the Company's business;
(viii) increase the compensation payable or to become payable or the
benefits provided to its directors, officers or employees, except for
increases in the ordinary course of business and consistent with past
practice in salaries or wages of employees of the Company or any Subsidiary
who are not directors or officers of the Company or any Material
Subsidiary, or grant any severance or termination pay to, or enter into any
employment or severance agreement with, any director, officer or other
employee of the Company or of any Subsidiary, or establish, adopt, enter
into or amend any collective bargaining, bonus, profit-sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer
or employee;
(ix) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with respect
to accounting policies or procedures;
(x) make or rescind any material Tax election, settle or compromise
any liability for Taxes or change or revoke any of its methods of Tax
accounting;
(xi) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise) in
excess of $2,000,000 in the aggregate, other than in the ordinary course of
business and consistent with past practice;
(xii) amend or modify in any material respect or consent to the
termination of any Material Contract, or amend, waive or modify in any
material respect or consent to the termination of the Company's or any
Subsidiary's rights thereunder;
(xiii) commence or settle any material Action;
37
(xiv) amend or modify, or propose to amend or modify, the Company
Rights Agreement, except as contemplated by this Agreement; or
(xv) announce an intention, enter into any formal or informal
agreement or otherwise make a commitment, to do any of the foregoing or
take any action that would materially delay the consummation of the
transactions contemplated hereby.
SECTION 7.02 Conduct of Business by Parent Pending the Merger. Except
as expressly contemplated by any other provision of this Agreement or the
Stockholders' Agreement, Parent agrees that from the date of this Agreement
until the earlier of the termination of this Agreement and the Effective Time,
Parent shall not, directly or indirectly, do, or propose to do, any of the
following without the prior written consent of the Company:
(a) take any action to cause Parent's representations and warranties
set forth in Article VI to be untrue in any material respect; or
(b) take any action that would reasonably be likely to materially
delay the consummation of the Offer or the Merger.
ARTICLE VIII
ADDITIONAL AGREEMENTS
SECTION 8.01 Company Stockholder Meeting. If required by applicable
law, the Company, acting through the Company Board, shall, in accordance with
applicable law, duly call, convene and hold a special meeting of the holders of
the Company Common Stock (the "Company Stockholder Meeting"), as soon as
reasonably practicable after the acceptance for payment of shares of Company
Common Stock pursuant to the Offer, for the purpose of voting upon this
Agreement and the Merger and the Company agrees that this Agreement shall be
submitted at such meeting; provided, however, that the Company Board shall not
be obligated to call, convene and hold the Company Stockholder Meeting if (i)
the Company has received a Superior Proposal, (ii) Merger Sub has not acquired
at least a majority of the outstanding shares of Company Common Stock pursuant
to the Offer or otherwise, (iii) the Company Board has withdrawn the Company
Recommendation pursuant to the third sentence of this Section 8.01 and (iv)
Parent has received all amounts due under Section 10.03. The Company shall take
all action necessary to secure the vote at any Company Stockholder Meeting of
holders of Company Common Stock required by applicable law and the Company's
Certificate of Incorporation or By-Laws to obtain the approval for this
Agreement. Unless the Company Board otherwise determines (based upon a majority
vote of the Company Board in its good faith judgment that such other action is
necessary to comply with its fiduciary duty to stockholders under applicable law
after receiving advice from outside legal counsel, who may be the Company's
regularly engaged independent legal counsel) prior to the approval by the
stockholders of the Company, (i) the Company Board shall recommend approval by
its stockholders of this Agreement (the "Company Recommendation"), (ii) neither
the Company Board nor any committee thereof shall amend, modify, withdraw,
condition or qualify the Company Recommendation in a manner
38
adverse to Parent or take any action or make any statement inconsistent with the
Company Recommendation and (iii) the Company shall take all lawful action
reasonably necessary to secure the Company Stockholder Approval. In the event
the Company Board has recommended approval by its stockholders of this Agreement
but subsequently determines (based upon a majority vote of the Company Board) in
its good faith judgment that some other action is necessary to comply with its
fiduciary duty to stockholders under applicable law after receiving advice from
outside legal counsel (who may be the Company's regularly engaged independent
legal counsel) prior to the approval by the stockholders of the Company, Parent
and Merger Sub agree to cooperate with the Company in making modifications to
the disclosure regarding the Company Board's recommendation in the Proxy
Statement/Prospectus to accurately reflect such determination.
SECTION 8.02 Preparation of Merger Registration Statement and Proxy
Statement/Prospectus. (a) If required by applicable law, promptly after the
acceptance for payment of shares of Company Common Stock pursuant to the Offer,
Parent and the Company shall prepare, and Parent shall file with the SEC, the
Merger Registration Statement, in which the Proxy Statement/Prospectus will be
included as Parent's prospectus. Each of the Company and Parent shall use all
reasonable efforts to have the Merger Registration Statement declared effective
under the Securities Act as promptly as practicable after the acceptance for
exchange of shares of Company Common Stock pursuant to the Offer and to keep the
Merger Registration Statement effective as long as is necessary to consummate
the Merger. The Company shall furnish all information concerning the Company as
Parent may reasonably request in connection with such action and preparation of
the Merger Registration Statement and Proxy Statement/Prospectus. The Company
shall mail the Proxy Statement/Prospectus to its stockholders as promptly as
practicable after the Merger Registration Statement is declared effective under
the Securities Act and, if necessary, after the Proxy Statement/Prospectus shall
have been so mailed, promptly circulate amended, supplemental or supplemented
proxy material, and, if required in connection therewith, resolicit proxies.
Parent shall take any action required to be taken under any applicable state
securities or blue sky laws in connection with the issuance of Parent Common
Stock in the Merger. No amendment or supplement to the Proxy
Statement/Prospectus will be made by the Company or Parent without the approval
of the other party, which will not be unreasonably withheld or delayed,
provided, however, that amendments or supplements to the Proxy
Statement/Prospectus reflecting actions taken by the Company Board to comply
with its fiduciary duties shall not require the approval of Parent. Each party
will advise the other party, promptly after it receives notice thereof, of the
time when the Merger Registration Statement has become effective or any
supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of Parent Common Stock issuable in connection
with the Merger for offering or sale in any jurisdiction, or any request by the
SEC for amendment of the Proxy Statement/Prospectus or comments thereon and
responses thereto or requests by the SEC for additional information. If, at any
time prior to the Effective Time, the Company or Parent discovers any
information relating to either party, or any of their respective Affiliates,
officers or directors, that should be set forth in an amendment or supplement to
the Proxy Statement/Prospectus, so that such document would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, the party that discovers such information shall promptly
notify the other party and an appropriate amendment or supplement
39
describing such information shall be promptly filed with the SEC and, to the
extent required by law or regulation, disseminated to the stockholders of the
Company.
(b) The information supplied by Parent for inclusion in the Merger
Registration Statement and the Proxy Statement/Prospectus shall not, at (i) the
time the Merger Registration Statement is declared effective, (ii) the time the
Proxy Statement/Prospectus (or any amendment thereof or supplement thereto) is
first mailed to the stockholders of the Company, (iii) the time of the Company
Stockholders Meeting and (iv) the Effective Time, contain any untrue statement
of a material fact or fail to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If, at any time prior
to the Effective Time, any event or circumstance relating to Parent or Merger
Sub, or their respective officers or directors, should be discovered by Parent
which should be set forth in an amendment or a supplement to the Merger
Registration Statement or Proxy Statement/Prospectus, Parent shall promptly
inform the Company. All documents that Parent is responsible for filing with the
SEC in connection with the Merger or the other transactions contemplated by this
Agreement will comply as to form and substance in all material respects with the
applicable requirements of the Securities Act and the rules and regulations
thereunder and the Exchange Act and the rules and regulations thereunder.
(c) The information supplied by the Company for inclusion in the
Merger Registration Statement and the Proxy Statement/Prospectus shall not, at
(i) the time the Merger Registration Statement is declared effective, (ii) the
time the Proxy Statement/Prospectus (or any amendment thereof or supplement
thereto) is first mailed to the stockholders of the Company, (iii) the time of
the Company Stockholders Meeting and (iv) the Effective Time, contain any untrue
statement of a material fact or fail to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. If, at any time
prior to the Effective Time, any event or circumstance relating to the Company
or any Subsidiary, or their respective officers or directors, should be
discovered by the Company which should be set forth in an amendment or a
supplement to the Merger Registration Statement or Proxy Statement/Prospectus,
the Company shall promptly inform Parent. All documents that the Company is
responsible for filing with the SEC in connection with the Merger or the other
transactions contemplated by this Agreement will comply as to form and substance
in all material respects with the applicable requirements of the Securities Act
and the rules and regulations thereunder and the Exchange Act and the rules and
regulations thereunder.
(d) Notwithstanding the foregoing, if Parent or Merger Sub shall
acquire at least 90% of the outstanding shares of Company Common Stock pursuant
to the Offer or otherwise, the parties hereto agree, subject to the satisfaction
or (to the extent permitted hereunder) waiver of all conditions to the Merger,
to take, or cause to be taken, all necessary and appropriate action to cause the
Merger to be effective as soon as practicable after the acceptance for payment
and purchase of shares of Company Common Stock pursuant to the Offer without the
Company Stockholder Meeting.
SECTION 8.03 Access to Information; Confidentiality. (a) From the date
of this Agreement until the Effective Time, the Company and Parent shall and
each shall cause their respective subsidiaries to): (i) provide to the other
party and the other party's officers, directors,
40
employees, accountants, consultants, legal counsel, agents and other
representatives (collectively, "Representatives") access at reasonable times
upon prior notice to the officers, employees, agents, properties, offices and
other facilities of such party and its subsidiaries and to the books and records
thereof; and (ii) furnish promptly to the other party such information
concerning the business, properties, contracts, assets, liabilities, personnel
and other aspects of such party and its subsidiaries as the other party or its
Representatives may reasonably request.
(b) All information obtained by the parties pursuant to this Section
8.03 shall be kept confidential in accordance with the confidentiality
agreement, dated December 11, 2001 (the "Confidentiality Agreement"), between
Parent and the Company.
(c) No investigation pursuant to this Section 8.03 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
(d) The Company hereby waives the provisions of the Confidentiality
Agreement as and to the extent necessary to permit the consummation of each
Transaction.
SECTION 8.04 No Solicitation of Transactions. (a) Subject to Section
8.04(b), the Company will not, directly or indirectly, and will instruct its
officers, directors, employees, subsidiaries, agents or advisors or other
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it), not to, directly or indirectly, solicit, initiate
or encourage (including by way of furnishing nonpublic information), or take any
other action to facilitate, any inquiries or the making of any proposal or offer
(including, without limitation, any proposal or offer to its stockholders) that
constitutes, or may reasonably be expected to lead to, any Competing Transaction
(as defined below), or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of the officers, directors or employees
of such party or any of its subsidiaries, or any investment banker, financial
advisor, attorney, accountant or other representative retained by the Company or
any of its Subsidiaries, to take any such action. The Company shall notify
Parent promptly if any proposal or offer, or any inquiry or contact with any
person with respect thereto, regarding a Competing Transaction is made. The
Company immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to a Competing Transaction. The Company shall not release any third party from,
or waive any provision of, any confidentiality or standstill agreement to which
it is a party.
(b) Notwithstanding anything to the contrary in this Section 8.04, the
Company Board may furnish information to, enter into discussions or negotiations
with, and maintain or continue such discussions or negotiations with, a person
who has made an unsolicited, written, bona fide proposal or offer regarding a
Competing Transaction, and the Company Board has (i) determined, in its good
faith judgment (after having received the advice of a financial advisor of
internationally recognized reputation (which may be Advisor)), that such
proposal or offer is reasonably likely to constitute a Superior Proposal (as
defined below), (ii) determined, in its good faith judgment after consultation
with independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), that, in light of such proposal or offer,
41
the furnishing of such information or the holding of discussions or negotiations
is required to comply with its fiduciary obligations to the Company and its
stockholders under applicable Law, and (iii) provided written notice to Parent
of its intent to furnish information or to hold discussions or negotiations with
such person at least two business days prior to taking any such action.
(c) A "Competing Transaction" means any of the following (other than
the Transactions or any sale, lease, exchange, transfer or other disposition of
(including by way of merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or other similar
transaction involving) Conceptronic, Inc.): (i) any merger, consolidation, share
exchange, business combination, recapitalization, liquidation, dissolution or
other similar transaction involving the Company (or any Subsidiaries which are
material, individually or in the aggregate, to the Company), (ii) any sale,
lease, exchange, transfer or other disposition (including by way of merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or other similar transaction involving) of all or
substantially all of the assets of the Company (or any Subsidiaries which are
material, individually or in the aggregate, to the Company), (iii) any sale,
exchange, transfer or other disposition of 20% or more of any class of equity
securities of the Company (or any Subsidiaries which are material, individually
or in the aggregate, to the Company), (iv) any tender offer or exchange offer
that, if consummated, would result in any person beneficially owning 20% or more
of any class of equity securities of the Company (or any Subsidiaries which are
material, individually or in the aggregate, to the Company), (v) any
solicitation in opposition to approval and adoption of this Agreement by the
Company's stockholders, or (vi) any other transaction the consummation of which
would reasonably be expected to impede, interfere with, prevent or materially
delay any of the Transactions.
(d) A "Superior Proposal" means an unsolicited written bona fide offer
made by a third party to consummate any of the following transactions: (i) a
merger, consolidation, share exchange, business combination or other similar
transaction involving the Company pursuant to which the stockholders of the
Company immediately preceding such transaction would hold less than 50% of the
equity interest in the surviving or resulting entity of such transaction, (ii)
any sale, lease, exchange, transfer or other disposition of all or a substantial
part of the assets of the Company (iii) the acquisition by any person or group
(including by means of a tender offer or an exchange offer or a two-step
transaction involving a tender offer followed with reasonable promptness by a
cash-out merger involving the Company), directly or indirectly, of ownership of
100% of the then outstanding shares of stock of the Company or (iv) any
substantially equivalent transaction, on terms (including conditions to
consummation of the contemplated transaction) that the Company Board determines,
in its good faith judgment (after having received the advice of a financial
advisor of internationally recognized reputation (which may be Advisor)), to be
more favorable to the Company stockholders than the Merger, is reasonably
capable of being consummated and for which financing, to the extent required, is
then committed; provided, however, that any such offer shall not be deemed to be
a "Superior Proposal" if any financing required to consummate the transaction
contemplated by such offer is not likely in the good faith judgment of the
Company Board (after having received the advice of a financial advisor of
internationally recognized reputation (which may be Advisor)) to be obtained by
such third party on a timely basis.
42
SECTION 8.05 Employee Benefits Matters. From and after the Effective
Time, Parent shall cause the Surviving Corporation and its subsidiaries to honor
in accordance with their terms, all contracts, agreements, arrangements,
policies, plans and commitments of the Company and the Subsidiaries as in effect
immediately prior to the Effective Time that are applicable to any current or
former employees or directors of the Company or any Subsidiary. Employees of the
Company or any Subsidiary shall receive credit for purposes of eligibility to
participate and vesting (but not for benefit accruals) under any employee
benefit plan, program or arrangement established or maintained by the Surviving
Corporation or any of its subsidiaries for service accrued or deemed accrued
prior to the Effective Time with the Company or any Subsidiary; provided,
however, that such crediting of service shall not operate to duplicate any
benefit or the funding of any such benefit. In addition, Parent shall waive, or
cause to be waived, any limitations on benefits relating to any pre-existing
conditions to the same extent such limitations are waived under any comparable
plan of Parent or its subsidiaries and recognize, for purposes of annual
deductible and out-of-pocket limits under its medical and dental plans,
deductible and out-of-pocket expenses paid by employees of the Company and its
subsidiaries in the calendar year in which the Effective Time occurs.
SECTION 8.06 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification than are set forth
in the Certificate of Incorporation and By-Laws of the Company, as of the date
hereof, which provisions shall not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
affect adversely the rights thereunder of individuals who, at or prior to the
Effective Time, were directors, officers, employees, fiduciaries or agents of
the Company, unless such modification shall be required by law. From and after
the Effective Time, Parent shall, and shall cause the Surviving Corporation to,
fulfill and honor in all respects the obligations of the Company pursuant to any
indemnification agreement between the Company and its directors and officers as
of the Effective Time and any indemnification provisions under the Certificate
of Incorporation or By-Laws of the Company as in effect on the date hereof.
(b) The Surviving Corporation shall use its reasonable best efforts to
maintain in effect for six years from the Effective Time, if available, the
current directors' and officers' liability insurance policies maintained by the
Company (unless Parent, in its sole discretion, includes the current directors
and officers of the Company under its existing directors' and officers'
liability policies for not less than six years from the Effective Time or causes
the Surviving Corporation to substitute policies of at least the same coverage
and containing terms and conditions that are not materially less favorable than
the current directors' and officers' liability insurance policies maintained by
the Company) with respect to matters occurring prior to the Effective Time;
provided, however, that in no event shall the Surviving Corporation be required
to expend pursuant to this Section 8.06(b) more than an amount per year equal to
225% of current annual premiums paid by the Company for such insurance (which
the Company represents to be approximately $113,166).
(c) In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any person, then, and in each
43
such case, proper provision shall be made so that the successors and assigns of
the Company or the Surviving Corporation, as the case may be, or at Parent's
option, Parent, shall assume the obligations set forth in this Section 8.06.
SECTION 8.07 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(a) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which could reasonably be expected to cause any
representation or warranty contained in this Agreement or the Stockholders'
Agreement to be untrue or inaccurate in any material respect and (b) any failure
of the Company, Parent or Merger Sub, as the case may be, to comply with or
satisfy any covenant or agreement to be complied with or satisfied by it
hereunder in any material respect; provided, however, that the delivery of any
notice pursuant to this Section 8.07 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
SECTION 8.08 Company Affiliates. No later than five business days
after the date of this Agreement, the Company shall deliver to Parent a list of
names and addresses of those persons who were, in the Company's reasonable
judgment, on such date, affiliates (within the meaning of Rule 145 of the rules
and regulations promulgated under the Securities Act (each such person being a
"Company Affiliate" )) of the Company. The Company shall provide Parent with
such information and documents as Parent shall reasonably request for purposes
of reviewing such list. The Company shall use its reasonable best efforts to
deliver or cause to be delivered to Parent, prior to the initial expiration of
the Offer, an affiliate letter in the form attached hereto as Exhibit A,
executed by each of the Company Affiliates identified in the foregoing list and
any person who shall, to the knowledge of the Company, have become a Company
Affiliate subsequent to the delivery of such list.
SECTION 8.09 Further Action; Reasonable Best Efforts. Upon the terms
and subject to the conditions of this Agreement, each of the parties hereto
shall promptly after the date of this Agreement (i) make its respective filings,
and thereafter make any other required submissions, under the HSR Act with
respect to the Transactions and (ii) use its reasonable best efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws or otherwise to
consummate and make effective the Transactions, including, without limitation,
using its reasonable best efforts to obtain all permits, consents, approvals,
authorizations, qualifications and orders of Governmental Authorities and
parties to contracts with the Company and the Subsidiaries as are necessary for
the consummation of the Transactions and to fulfill the conditions to the
Merger; provided that neither Merger Sub nor Parent will be required by this
Section 8.09 to take any action, including entering into any consent decree,
hold separate orders or other arrangements, that (A) requires the divestiture of
any assets of any of Merger Sub, Parent, the Company or any of their respective
subsidiaries or (B) limits Parent's freedom of action with respect to, or its
ability to retain, the Company and the Subsidiaries or any portion thereof or
any of Parent's or its affiliates' other assets or businesses. In case, at any
time after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors of
each party to this Agreement shall use their reasonable best efforts to take all
such action.
44
SECTION 8.10 Plan of Reorganization. (a) This Agreement is intended to
constitute a "plan of reorganization" within the meaning of section 1.368-2(g)
of the income tax regulations promulgated under the Code. From and after the
date of this Agreement and until the Effective Time, each party hereto shall use
its reasonable best efforts to cause the Merger to qualify, and will not
knowingly take any action, cause any action to be taken, fail to take any action
or cause any action to fail to be taken which action or failure to act could
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code. Following the Effective Time, neither the Surviving
Corporation, Parent nor any of their affiliates knowingly shall take any action,
cause any action to be taken, fail to take any action or cause any action to
fail to be taken, which action or failure to act could cause the Merger to fail
to qualify as a reorganization within the meaning of Section 368(a) of the Code.
(b) As of the date hereof, the Company does not know of any
reason (i) why it would not be able to deliver to counsel to the Company and
Parent, at the date of the legal opinions referred to below, certificates
substantially in compliance with IRS published advance ruling guidelines, with
reasonable or customary exceptions and modifications thereto, to enable such
firms to deliver the legal opinions contemplated by Section 9.02(f) and Section
9.03(d), and the Company hereby agrees to deliver such certificates effective as
of the date of such opinions or (ii) why counsel to the Company and Parent would
not be able to deliver the opinions required by Section 9.02(f) and Section
9.03(d). The Company will deliver such certificates to counsel to the Company
and Parent.
(c) As of the date hereof, Parent does not know of any reason (i)
why it would not be able to deliver to counsel to the Company and Parent, at the
date of the legal opinions referred to below, certificates substantially in
compliance with IRS published advance ruling guidelines, with reasonable or
customary exceptions and modifications thereto, to enable such firms to deliver
the legal opinions contemplated by Section 9.02(f) and Section 9.03(d), and
Parent hereby agrees to deliver such certificates effective as of the date of
such opinions or (ii) why counsel to the Company and Parent would not be able to
deliver the opinions required by Section 9.02(f) and Section 9.03(d). Parent
will deliver such certificates to counsel to the Company and Parent.
SECTION 8.11 Merger Sub. Parent shall take all action necessary to
cause Merger Sub to perform its material obligations under this Agreement and to
consummate the Merger on the terms and subject to the conditions set forth in
this Agreement.
SECTION 8.12 Letters of Accountants. (a) Parent shall use its
reasonable best efforts to cause to be delivered to the Company "comfort"
letters of Deloitte & Touche LLP, Parent's independent public accountants, dated
and delivered the date on which the Offer Registration Statement shall become
effective, the Acceptance Date, the date the Merger Registration Statement shall
become effective and as of the Effective Time, and addressed to the Company, in
form and substance reasonably satisfactory to the Company and reasonably
customary in scope and substance for letters delivered by independent public
accountants in connection with transactions such as those contemplated by this
Agreement.
(b) The Company shall use its reasonable best efforts to cause to be
delivered to Parent "comfort" letters of KPMG LLP, the Company's independent
public accountants, dated
45
and delivered the date on which the Offer Registration Statement shall become
effective, the Acceptance Date, the date the Merger Registration Statement shall
become effective and as of the Effective Time, and addressed to Parent, in form
and substance reasonably satisfactory to Parent and reasonably customary in
scope and substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement.
SECTION 8.13 NYSE Listing. Parent shall promptly prepare and submit to
the NYSE a listing application covering the shares of Parent Common Stock to be
issued in the Merger and pursuant to Substitute Options, and shall use its
reasonable best efforts to obtain, prior to the Effective Time, approval for the
listing of such Parent Common Stock, subject to official notice of issuance to
the NYSE, and the Company shall cooperate with Parent with respect to such
listing.
SECTION 8.14 Public Announcements. The initial press release relating
to this Agreement shall be a joint press release the text of which has been
agreed to by each of Parent and the Company. Thereafter, unless otherwise
required by applicable Law or the requirements of the NYSE, each of Parent and
the Company shall each use its reasonable best efforts to consult with each
other before issuing any press release or otherwise making any public statements
with respect to this Agreement, the Merger or any of the other Transactions;
provided, however, that this Section 8.14 shall terminate in the event the
Company Board withdraws the Company Recommendation.
SECTION 8.15 Transfer Tax. The Company and Parent shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees and any similar taxes which become
payable in connection with the transactions contemplated by this Agreement
(together with any related interest, penalties or additions to tax, "Transfer
Taxes"). All Transfer Taxes shall be paid by the Company and expressly shall not
be a liability of any holder of the Company Common Stock.
SECTION 8.16 The Company Rights Agreement. Prior to the Effective
Time, the Company shall take all necessary action to amend the Company Rights
Agreement so that (a) neither the execution of this Agreement nor the
announcement or consummation of the Offer or the Merger will cause a
Distribution Date (as such term is defined in the Company Rights Agreement) or
cause the Company Rights to become exercisable, (b) neither Parent nor Merger
Sub will become an Acquiring Person (as such term is defined in the Company
Rights Agreement) and (c) neither Parent nor Merger Sub shall have any
obligations under the Company Rights or Company Rights Agreement.
SECTION 8.17 Employment Agreements. The Company agrees to cooperate
with Parent in any reasonable efforts initiated by Parent to negotiate
employment agreements with key employees identified by Parent between the date
hereof and the Effective Time.
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ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01 Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or waiver (where permissible) of the following
conditions:
(a) Merger Registration Statement. If required, the Merger
Registration Statement shall have been declared effective by the SEC under
the Securities Act and no stop order suspending the effectiveness of the
Merger Registration Statement shall have been issued by the SEC and no
proceeding for that purpose shall have been initiated by the SEC and not
concluded or withdrawn.
(b) Company Stockholder Approval. If required under the DGCL, this
Agreement shall have received Company Stockholder Approval.
(c) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any law, rule, regulation, judgment,
decree, executive order or award (an "Order") which is then in effect and
has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(d) U.S. Antitrust Approvals and Waiting Periods. Any waiting period
(and any extension thereof) applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
(e) NYSE Listing. The shares of Parent Common Stock to be issued in
the Merger shall have been authorized for listing on the NYSE, subject to
official notice of issuance.
(f) Offer. Merger Sub shall have purchased shares of Company Common
Stock pursuant to the Offer.
SECTION 9.02 Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate the Merger are subject to
the satisfaction or waiver (where permissible) of the following additional
conditions:
(a) Representations and Warranties. (i) The representations and
warranties of the Company contained in this Agreement that are qualified by
reference to materiality or a Company Material Adverse Effect shall be true
and correct in all respects as of the Effective Time as though made on and
as of the Effective Time (other than representations and warranties which
by their terms address matters only as of another specified date, which
shall be true and correct in all respects only as of such date), and (ii)
the representations and warranties of the Company contained in the
Agreement that are not so qualified shall be true and correct as of the
Effective Time, as though made on and as of the Effective Time (other than
representations and warranties which by their terms address matters only as
of another specified date, which shall be true and correct only as of such
date), except, in the case of clause (ii) only, for such failures to be
true
47
and correct as are not reasonably likely to, individually or in the
aggregate, result in a Company Material Adverse Effect
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time.
(c) Officer Certificate. The Company shall have delivered to Parent a
certificate, dated the date of the Closing, signed by the President or
Chairman of the Board the Company, certifying as to the satisfaction of the
conditions specified in Sections 9.02(a) and 9.02(b).
(d) Consents. All consents, approvals and authorizations legally
required to be obtained to consummate the Merger shall have been obtained
from and made with all Governmental Authorities, and all consents from
third parties under any Material Contract or other material agreement,
contract, license, lease or other instrument to which the Company or any
Subsidiary is a party or by which it is bound required as a result of the
transactions contemplated by this Agreement shall have been obtained.
(e) Material Adverse Effect. No Company Material Adverse Effect shall
have occurred since the date of this Agreement.
(f) Tax Opinion. Parent shall have received the opinion of Shearman &
Sterling, counsel to Parent, based upon representations of Parent, Merger
Sub and the Company, and normal assumptions, to the effect that, for
federal income tax purposes, the Merger will qualify as a reorganization
within the meaning of Section 368(a) of the Code and that each of Parent,
Merger Sub and the Company will be a party to the reorganization within the
meaning of Section 368(b) of the Code, which opinion shall not have been
withdrawn or modified in any material respect. The issuance of such opinion
shall be conditioned on receipt by Shearman & Sterling of representation
letters from each of Parent and Company as contemplated in Section 8.10 of
this Agreement. Each such representation letter shall be dated on or before
the date of such opinion and shall not have been withdrawn or modified in
any material respect as of the Effective Time.
SECTION 9.03 Conditions to the Obligations of the Company. The obligations
of the Company to consummate the Merger are subject to the satisfaction or
waiver (where permissible) of the following additional conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Parent and Merger Sub contained in this Agreement that are
qualified by reference to materiality or a Parent Material Adverse Effect
shall be true and correct in all respects as of the Effective Time as
though made on and as of the Effective Time (other than representations and
warranties which by their terms address matters only as of another
specified date, which shall be true and correct only as of such date), and
(ii) the representations and warranties of Parent and Merger Sub contained
in the Agreement that are not so qualified shall be true and correct in all
respects as of the Effective Time, as though made on and as of the
Effective Time (other than representations and warranties
48
which by their terms address matters only as of another specified date,
which shall be true and correct only as of such date), except, in the case
of clause (ii) only, for such failures to be true and correct as are not
reasonably likely to, individually or in the aggregate, result in a Parent
Material Adverse Effect
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by it
on or prior to the Effective Time.
(c) Officer Certificate. Parent shall have delivered to the Company a
certificate, dated the date of the Closing, signed by the President or
Chairman of the Board of Parent, certifying as to the satisfaction of the
conditions specified in Sections 9.03(a) and 9.03(b).
(d) Material Adverse Effect. No Parent Material Adverse Effect shall
have occurred since the date of this Agreement.
(e) Tax Opinion. The Company shall have received the opinion of
Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel to the Company, based upon
representations of Parent, Merger Sub and the Company, and normal
assumptions, to the effect that, for federal income tax purposes, the
Merger will qualify as a reorganization within the meaning of Section
368(a) of the Code and that each of Parent, Merger Sub and the Company will
be a party to the reorganization within the meaning of section 368(b) of
the Code, which opinion shall not have been withdrawn or modified in any
material respect. The issuance of such opinion shall be conditioned on
receipt by Xxxxxx, Xxxx & Xxxxxxxx LLP of representation letters from each
of Parent and Company as contemplated in Section 8.10 of this Agreement.
Each such representation letter shall be dated on or before the date of
such opinion and shall not have been withdrawn or modified in any material
respect as of the Effective Time.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Company
Stockholder Approval:
(a) by mutual written consent of Parent and the Company; or
(b) by Parent:
(i) if at any time prior to the Acceptance Date, (A) the Company
has breached or failed to perform in any material respect its
obligations, covenants or agreements under this Agreement, (B) the
representations and warranties of the Company contained in this
Agreement that are qualified by reference to materiality or a Company
Material Adverse Effect shall not have been true and correct in all
respects when made or at any time prior to the Acceptance Date as if
made at or at and as of such time (other than representations and
warranties which by their terms address matters only as of another
specified date, which shall be
49
true and correct in all respects only as of such date), or (C) the
representations and warranties of the Company contained in the
Agreement that are not so qualified shall not have been true and
correct when made or at any time prior to the Acceptance Date as if
made at and as of such time (other than representations and warranties
which by their terms address matters only as of another specified
date, which shall be true and correct only as of such date), except,
in the case of clause (C) only, for such failures to be true and
correct as are not reasonably likely to, individually or in the
aggregate, result in a Company Material Adverse Effect, and such
breach or misrepresentation (1) cannot be or has not been cured prior
to the earlier of (x) 30 days following receipt by the Company of
written notice from Parent of such breach or misrepresentation and (y)
the Termination Date and (2) has not been waived by Parent pursuant to
the provisions hereof;
(ii) if at any time prior to the Acceptance Date, (A) the
Company, or its Board of Directors, as the case may be, shall have (1)
entered into any agreement with respect to any Competing Transaction
other than the Offer or the Merger and other than a confidentiality
agreement contemplated by Section 8.04(b), (2) failed to make,
withdrawn or modified, in a manner adverse to Parent or Merger Sub,
its approval and recommendation of the Offer, the Merger and this
Agreement, or (3) approved or recommended any Competing Transaction
other than the Offer or the Merger, or (B) the Company or the
Company's Board of Directors or any committee thereof shall have
resolved to do any of the foregoing;
(iii) if at any time prior to the Acceptance Date the Company
breaches in any material respect any of its obligations under Section
8.04 or Section 10.01(c)(ii) hereof; or
(iv) if (A) the Offer shall have been extended on at least three
occasions for an aggregate period of at least 15 business days beyond
the Initial Expiration Date, and (B) on such extended date of
expiration, the Minimum Condition shall not have been satisfied;
(c) by the Company:
(i) if at any time prior to the Acceptance Date, (A) Parent has
breached or failed to perform in any material respect its obligations,
covenants or agreements under this Agreement, (B) the representations
and warranties of Parent or the Merger Sub contained in this Agreement
that are qualified by reference to materiality or a Parent Material
Adverse Effect shall not have been true and correct in all respects
when made or at any time prior to the Acceptance Date as if made at or
at and as of such time (other than representations and warranties
which by their terms address matters only as of another specified
date, which shall be true and correct in all respects only as of such
date), or (C) the representations and warranties of Parent and the
Merger Sub contained in the Agreement that are not so qualified shall
not have been true and correct when made or at any time prior to the
Acceptance Date as if made at and as of such time
50
(other than representations and warranties which by their terms
address matters only as of another specified date, which shall be true
and correct only as of such date), except, in the case of clause (C)
only, for such failures to be true and correct as are not reasonably
likely to, individually or in the aggregate, result in a Parent
Material Adverse Effect, and such breach or misrepresentation (1)
cannot be or has not been cured prior to the earlier of (x) 30 days
following receipt by Parent of written notice from the Company of such
breach or failure to perform and (y) the Termination Date and (2) has
not been waived by the Company pursuant to the provisions hereof;
(ii) if at any time prior to the Effective Time Parent has not
acquired at least a majority of the outstanding shares of Company
Common Stock pursuant to the Offer or otherwise, a Superior Proposal
is received by the Company and the Board of Directors of the Company
reasonably determines in good faith (after receiving the advice of
outside legal counsel) that it is necessary to terminate this
Agreement and enter into an agreement to effect the Superior Proposal
to comply with its fiduciary duties under applicable law; provided
that the Company may not terminate this Agreement pursuant to
this Section 10.01(c)(ii) unless and until (A) two business days have
elapsed following delivery to Parent of a written notice of such
determination by the Company Board and during such two business day
period the Company has fully cooperated with Parent, including,
without limitation, informing Parent of the terms and conditions of
such Superior Proposal, and the identity of the Person making such
Superior Proposal, with the intent of enabling the parties hereto to
agree to a modification of the terms and conditions of this Agreement
so that the transactions contemplated hereby may be effected; (B) at
the end of such two business day period the Competing Transaction
continues in the judgment of the Company Board to constitute a
Superior Proposal and the Company Board confirms its determination
(after receiving the advice of outside legal counsel) that it is
necessary to terminate this Agreement and enter into an agreement to
effect the Superior Proposal to comply with its fiduciary duties under
applicable law; and (C) (x) at or prior to such termination, Parent
has received all amounts due under Section 10.03 hereof by wire
transfer in same day funds and (y) promptly following such termination
the Company enters into a definitive acquisition, merger or similar
agreement to effect the Superior Proposal;
(d) by either Parent or the Company:
(i) if the Offer has not been consummated on or before July 31,
2002 (the "Termination Date"); provided that the right to terminate
this Agreement pursuant to this clause shall not be available to any
party whose failure to fulfill any material obligation of this
Agreement or whose material breach of this Agreement has been the
cause of, or resulted in, the failure of the Offer to have been
consummated on or prior to the aforesaid date; or
(ii) if any court of competent jurisdiction or any Governmental
Authority shall have issued an Order or taken any other action
permanently
51
restricting, enjoining, restraining or otherwise prohibiting
acceptance for payment of, and exchange of, shares of Company Common
Stock pursuant to the Offer or consummation of the Merger and such
Order or other action shall have become final and nonappealable.
SECTION 10.02 Effect of Termination. In the event of termination of
this Agreement by Parent or the Company, as provided in Section 10.01, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent or Merger Sub or their respective officers or
directors (except that Section 8.03 (access to information; Confidentiality),
this Section 10.02 and Sections 10.03 (Payment of Certain Fees), 11.02
(Notices), 11.04 (Entire Agreement; Assignment), 11.05 (Parties in Interest),
11.07 (Governing Law) and 11.08 (Waiver of Jury Trial) shall survive the
termination); provided, however, that nothing contained in this Section 10.02 or
in Section 10.03 shall relieve any party hereto from any liability for any
breach of this Agreement.
SECTION 10.03 Payment of Certain Fees. (a) If this Agreement is
terminated by Parent in accordance with Section 10.01(b)(ii), or by the Company
in accordance with Section 10.01(c)(ii), then the Company shall pay to Parent in
immediately available funds all of Parent's Expenses, up to a maximum of
$1,500,000, plus a termination fee in an amount equal to $2,500,000 (the
"Termination Fee").
(b) If this Agreement is terminated by Parent pursuant to Section
10.01(b)(i) or Section 10.01(b)(iii), then the Company shall pay to Parent,
within five business days after submission of statements therefor, all of
Parent's Expenses, up to a maximum of $1,500,000.
(c) If this Agreement is terminated by Parent or the Company pursuant
to Section 10.01(b)(i), 10.01(b)(iii) or 10.01(d)(i) (unless the failure of the
Offer to have been consummated on or prior to the Termination Date is the result
of a material breach of this Agreement by Parent or Merger Sub) and a proposal
or offer for a Competing Transaction has been made and publicly announced or
communicated to the Company's stockholders after the date of this Agreement and
prior to the termination date, and concurrently with or within twelve months of
the date of such termination a Third Party Acquisition Event occurs, then the
Company shall within five business days of the occurrence of such Third Party
Acquisition Event pay to Parent the Termination Fee, and, in the case of a
termination pursuant to this Section 10.03(c) arising under Section 10.01(d)(i),
all of Parent's Expenses, up to a maximum of $1,500,000.
"Third Party Acquisition Event" shall mean the earlier of (i) the
consummation of a Competing Transaction involving the purchase of a majority of
either the equity securities of the Company or of the consolidated assets of the
Company and its Subsidiaries, taken as a whole, or any such transaction
involving the purchase of a majority of either the equity securities of the
Company or of the consolidated assets of the Company and its Subsidiaries, taken
as a whole that, if it had been proposed prior to the termination of this
Agreement would have constituted a Competing Transaction or (ii) the entering
into by the Company or any of its Subsidiaries of a definitive agreement with
respect to any such transaction.
(d) If this Agreement is terminated by Parent pursuant to Section
10.01(b)(iv) and a proposal or offer for a Competing Transaction has been made
and publicly announced or
52
communicated to the Company's stockholders after the date of this Agreement and
prior to the date of such termination, and concurrently with or within twelve
months of the date of such termination a Third Party Acquisition Event occurs,
then the Company shall within five business days of the occurrence of such Third
Party Acquisition Event pay to Parent all of Parent's Expenses, up to a maximum
of $1,500,000 and the Termination Fee.
(e) If this Agreement is terminated by the Company pursuant to Section
10.01(c)(i), then Parent shall pay to the Company, within five business days
after submission of statements therefor, all of the Company's Expenses, up to a
maximum of $1,000,000.
(f) Except as set forth in this Section 10.03, all Expenses (as
defined below) incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses, whether or not the Merger or any other transaction is consummated,
except that the Company and Parent shall each pay one-half of all Expenses
relating to (i) printing, filing and mailing of the Offer Documents, the
Schedule 14D-9 and the Proxy Statement/Prospectus and all SEC and other
regulatory filing fees incurred in connection therewith and (ii) the filing fee
for the Notification and Report Forms filed under the HSR Act. "Expenses", as
used in this Agreement, shall include all reasonable out-of-pocket expenses
(including, without limitation, all reasonable fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and
its affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of this Agreement, the preparation, printing, filing and mailing of
the Offer Documents and the Merger Registration Statement, the solicitation of
stockholder approvals, the filing of any required notices under the HSR Act or
other similar regulations and all other matters related to the closing of the
Merger and the other transactions contemplated by this Agreement.
(g) Each party acknowledges that the agreements contained in this
Section 10.03 are an integral part of the transactions contemplated by this
Agreement and without these agreements the other party would not enter into this
Agreement. In the event that the Company shall fail to pay any Termination Fee
or Expenses when due, such Termination Fee or Expenses shall be deemed to
include the costs and expenses actually incurred or accrued by Parent
(including, without limitation, reasonable fees and expenses of counsel) in
connection with the collection under and enforcement of this Section 10.03,
together with interest on such unpaid Termination Fee or Expenses, commencing on
the date that such Termination Fee or Expenses became due, at a rate equal to
the rate of interest publicly announced by Citibank, N.A., from time to time, in
The City of New York, as such bank's prime rate plus 3.00%. In the event that
Parent shall fail to pay any Expenses when due, such Expenses shall be deemed to
include the costs and expenses actually incurred or accrued by the Company
(including, without limitation, reasonable fees and expenses of counsel) in
connection with the collection under and enforcement of this Section 10.03,
together with interest on such unpaid Expenses, commencing on the date that such
Expenses became due, at a rate equal to the rate of interest publicly announced
by Citibank, N.A., from time to time, in The City of New York, as such bank's
prime rate plus 3.00%. Payment of the fees and expenses described in this
Section 10.03 shall not be in lieu of any damages incurred in the event of
willful or intentional breach of this Agreement.
53
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01 Non-Survival of Representations and Warranties . The
representations and warranties in this Agreement and in any certificate or
instrument delivered pursuant hereto shall terminate at the Effective Time or
upon the termination of this Agreement pursuant to Section 10.01. This Section
shall not limit any covenant or other obligation of the parties hereto which
shall survive in accordance with their terms.
SECTION 11.02 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
telecopy or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 11.02):
if to Parent or Merger Sub:
Dycom Industries, Inc.
0000 XXX Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000
Facsimile No: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
if to the Company:
Arguss Communications, Inc.
Xxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx X.X.
Xxxxxxxxxx, X.X. 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third business
54
day after the mailing thereof except for a notice of a change of address, which
shall be effective only upon receipt thereof.
SECTION 11.03 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 11.04 Entire Agreement; Assignment. This Agreement, the
Stockholders' Agreement and the Confidentiality Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof. This
Agreement shall not be assigned (whether pursuant to a merger, by operation of
law or otherwise), except that Parent and Merger Sub may assign all or any of
their rights and obligations hereunder to any affiliate of Parent, provided that
no such assignment shall relieve the assigning party of its obligations
hereunder if such assignee does not perform such obligations.
SECTION 11.05 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 8.06 (which is intended to be for the
benefit of the persons covered thereby and may be enforced by such persons).
SECTION 11.06 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement were
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 11.07 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State (other than those
provisions set forth herein that are required to be governed by the DGCL). All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined exclusively in any New York state or federal court sitting
in the Borough of Manhattan of The City of New York. The parties hereto hereby
(a) submit to the exclusive jurisdiction of any state or federal court sitting
in the Borough of Manhattan of The City of New York for the purpose of any
Action arising out of or relating to this Agreement brought by any party hereto,
and (b) irrevocably waive, and agree not to assert by way of motion, defense, or
otherwise, in any such Action, any claim that it is not subject personally to
the jurisdiction of the above-named courts, that its property is exempt or
immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue
55
of the Action is improper, or that this Agreement or the Transactions may not be
enforced in or by any of the above-named courts.
SECTION 11.08 Waiver of Jury Trial. Each of the parties hereto hereby
waives to the fullest extent permitted by applicable law any right it may have
to a trial by jury with respect to any litigation directly or indirectly arising
out of, under or in connection with this Agreement or the Transactions. Each of
the parties hereto (a) certifies that no representative, agent or attorney of
any other party has represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce that foregoing waiver and
(b) acknowledges that it and the other hereto have been induced to enter into
this Agreement and the Transactions, as applicable, by, among other things, the
mutual waivers and certifications in this Section 11.08.
SECTION 11.09 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 11.10 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
56
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
DYCOM INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
XXXX ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
ARGUSS COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: President and Chief Executive Officer
57
ANNEX I
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, but subject to
compliance with the terms of the Agreement and any applicable rules and
regulations of the SEC, including Rule 14e-1(c) relating to Merger Sub's
obligation to exchange or return tendered shares after the termination of the
Offer, Merger Sub shall not be required to accept for exchange or exchange any
shares of Company Common Stock tendered pursuant to the Offer, and may
terminate, extend or amend the Offer in accordance with the Agreement, if (i)
the Minimum Condition shall not have been satisfied; (ii) the applicable waiting
period under the HSR Act shall not have expired or been terminated; (iii) the
Offer Registration Statement shall not have become effective under the
Securities Act or shall be the subject of any stop order or proceedings seeking
a stop order; (iv) the Parent Common Stock to be issued in the Offer and the
Merger shall not have been approved for listing on the NYSE, subject to official
notice of issuance; or (v) on or after the date of the Agreement and at or prior
to the Acceptance Date, any of the following events or circumstances occurs or
exists and is continuing:
(a) there shall have been instituted or pending any litigation, suit,
claim, action or proceeding before any federal or state court of the United
States of America (other than (i) any such action in which a motion for a
temporary restraining order, a preliminary injunction or a permanent injunction
shall have been denied or shall have expired, or a judicial order granting any
such temporary restraining order, preliminary injunction or permanent injunction
shall have been reversed on appeal and not reinstated, (ii) any such action or
proceeding in which the United States Department of Justice, or the Federal
Trade Commission or any applicable state authority does not file within 10
business days after commencement of such action a motion seeking injunctive
relief of the type referred to in clauses (1) through (3) of this paragraph (a),
or (iii) an action filed with consent of Merger Sub) by any United States
federal government or governmental authority or agency or any of the several
states of the United States or any attorney general thereof (1) challenging or
seeking to make illegal, materially delay, or otherwise, directly or indirectly,
restrain or prohibit or make materially more costly, the making of the Offer,
the acceptance for exchange of any shares of Company Common Stock by Parent,
Merger Sub or any other affiliate of Parent, or the consummation of any other
transaction contemplated by the Agreement; (2) seeking an order of divestiture
that, if complied with, would, in Parent's reasonable judgment, be expected to
have a material adverse effect on the business, results of operations or
financial condition of Parent, the Company and their Subsidiaries, taken as a
whole, after giving effect to the Offer and the Merger; or (3) seeking to impose
or confirm any limitation on the ability of Parent, Merger Sub or any other
Subsidiary of Parent to exercise effectively full rights of ownership of any
shares of Company Common Stock on all matters properly presented to the
Company's stockholders, including, without limitation, the approval and adoption
of the Agreement and the transactions contemplated by the Agreement;
(b) there shall have been (i) any Law enacted, promulgated, amended,
issued or deemed applicable to (1) Parent, the Company or any of their
respective subsidiaries or (2) any transaction contemplated by the Agreement or
(ii) entered, promulgated or enforced by any court or Governmental Authority,
any Order of any kind which prohibits, restrains, restricts or enjoins the
consummation of the Offer or has the effect of making the Offer illegal, in each
Annex I-1
case, by any legislative body or Governmental Authority that would result,
directly or indirectly, in any of the consequences referred to in clauses (1)
through (3) of paragraph (a) above;
(c) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on the NYSE
(other than a shortening of trading hours or any coordinated trading halt
triggered solely as a result of a specified increase or decrease in a market
index), (ii) a decline, measured from the date hereof, in the Standard & Poor's
500 Index in excess of 25%, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iv) any new
and material limitation (whether or not mandatory) by any United States
government or Governmental Authority, on the extension of credit by United
States banks or other lending institutions, (v) a commencement of a war or armed
hostilities or other national or international calamity directly or indirectly
involving the United States not existing on the date hereof (the announced "War
on Terrorism" resulting from the September 11, 2001 terrorist attacks shall be
deemed existing on the date hereof) or (vi) in the case of any of the foregoing
existing on the date hereof, including, without limitation, the announced War on
Terrorism, a material acceleration or worsening thereof, it being understood
that any air strike against, or special operations involving a limited number of
ground troops in, the countries of Somalia or Yemen shall not be considered a
material acceleration or worsening of the War on Terrorism;
(d) other than with respect to any Order that is the subject of
paragraph (a) or (b) above, there shall have been enacted, entered, promulgated
or enforced by any court or Governmental Authority any Order which prohibits,
restrains, restricts or enjoins the consummation of the Offer or has the effect
of making the Offer illegal;
(e) the Company shall have breached or failed to perform in any
material respect (i) its obligations, covenants or agreements under the
Agreement, (ii) the representations and warranties of the Company contained in
the Agreement that are qualified by reference to materiality or a Company
Material Adverse Effect shall not have been true and correct in all respects
when made or at any time prior to the consummation of the Offer as if made at or
at and as of such time (other than representations and warranties which by their
terms address matters only as of another specified date, which shall be true and
correct in all respects only as of such date), or (iii) the representations and
warranties of the Company contained in the Agreement that are not so qualified
shall not have been true and correct when made or at any time prior to the
consummation of the Offer as if made at and as of such time (other than
representations and warranties which by their terms address matters only as of
another specified date, which shall be true and correct only as of such date),
except, in the case of clause (iii) only, for such failures to be true and
correct as are not reasonably likely to, individually or in the aggregate,
result in a Company Material Adverse Effect;
(f) (i) it shall have been publicly disclosed, or Parent shall have
otherwise learned, that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange Act) of
20% or more of the then-outstanding shares of Company Common Stock have been
acquired by any person, other than Parent or any of its affiliates, or (ii) (A)
the Company Board, or any committee thereof, shall have withdrawn or modified,
in a manner adverse to Parent or Merger Sub including by amending the Schedule
14D-9, the approval or recommendation of the Offer, the Merger, the Agreement,
or approved or
Annex I-2
recommended any Superior Proposal or any other acquisition of Company Common
Stock other than the Offer and the Merger or (B) the Company Board, or any
committee thereof, shall have resolved to do any of the foregoing;
(g) the Agreement shall have been terminated in accordance with its
terms;
(h) any agreement set forth on Section A-1 of the Company Disclosure
Schedule, concerning the registration rights of certain holders of Company
Common Stock that are the signatories to each such agreement, shall be, in the
reasonable judgment of Parent, different in a manner that is materially more
burdensome to the Company than the Registration Rights Agreement contained in
Section A-2 of the Company Disclosure Schedule; and
(i) the Amendment to Forbearance and Modification Agreement and
Waiver, dated as of December 26, 2001, among the Company, certain guarantors set
forth on the signature pages thereof and certain lenders set forth on the
signature pages thereof (the "Amended Forbearance Agreement"), shall not have
been amended to extend the Forbearance Period (as defined in the Amended
Forbearance Agreement) until the earlier of the Effective Time or the
termination of the Agreement pursuant to its terms;
which, in the reasonable judgment of Parent in any such case, and regardless of
the circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment.
The foregoing conditions are for the sole benefit of Merger Sub and
Parent and may be asserted by Merger Sub or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Merger Sub
or Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Merger Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
Annex I-3
EXHIBIT A
FORM OF AFFILIATE LETTER FOR
AFFILIATES OF THE COMPANY
[ ], 2002
Dycom Industries, Inc.
-and-
Xxxx Acquisition Corp.
0000 XXX Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of ARGUSS COMMUNICATIONS, INC. (the "Company"), as the term
"affiliate" is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"). Pursuant to the terms of the Agreement and Plan of Merger,
dated as of January 7, 2002 (the "Merger Agreement"), among DYCOM INDUSTRIES,
INC., a Florida corporation ("Parent"), XXXX ACQUISITION CORP., a wholly owned
subsidiary of Parent and a Delaware corporation ("Merger Sub"), and the Company,
Merger Sub will be merged with and into the Company (the "Merger"). Capitalized
terms used in this letter agreement without definition shall have the meanings
assigned to them in the Merger Agreement.
As a result of the Offer and Merger, I may receive shares of common
stock, par value $.01 per share, of Parent (the "Parent Shares"). I would
receive such Parent Shares in exchange for shares (or upon exercise of options
for shares) owned by me of common stock, par value $.01 per share, of the
Company (the "Company Shares").
1. I represent, warrant and covenant to Parent that in the event I
receive any Parent Shares as a result of the Offer or Merger:
A. I shall not make any sale, transfer or other disposition of
the Parent Shares in violation of the Act or the Rules and
Regulations.
B. I have carefully read this letter and the Merger Agreement and
discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of
the Parent Shares, to the extent I felt necessary, with my counsel or
counsel for the Company.
C. I have been advised that the issuance of the Parent Shares to
me pursuant to the Offer or Merger has been registered with the
Commission under the Act on a
Registration Statement on Form S-4. However, I have also been advised
that, because at the time of the Offer or at the time the Merger is
submitted for a vote of the stockholders of the Company, (a) I may be
deemed to be an affiliate of the Company and (b) the distribution by
me of the Parent Shares has not been registered under the Act, I may
not sell, transfer or otherwise dispose of the Parent Shares issued to
me in the Merger unless (i) such sale, transfer or other disposition
is made in conformity with the volume and other limitations of Rule
145 promulgated by the Commission under the Act, (ii) such sale,
transfer or other disposition has been registered under the Act or
(iii) I deliver an opinion of counsel reasonably acceptable to Parent,
or a "no action" or interpretive letter of the Commission is furnished
to Parent, stating that such sale, transfer or other disposition is
otherwise exempt from registration under the Act.
D. I understand that Parent is under no obligation to register
the sale, transfer or other disposition of the Parent Shares by me or
on my behalf under the Act or, except as provided in paragraph 2(A)
below, to take any other action necessary in order to make compliance
with an exemption from such registration available.
E. I understand that Parent may give stop-transfer instructions
to its transfer agent with respect to the Parent Shares to enforce the
restrictions set forth herein and that there will be placed on the
certificates for the Parent Shares issued to me, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED [?], 2002 BETWEEN THE REGISTERED HOLDER HEREOF
AND DYCOM INDUSTRIES, INC., A COPY OF WHICH AGREEMENT IS ON FILE
AT THE PRINCIPAL OFFICES OF DYCOM INDUSTRIES, INC."
F. I understand that unless a sale or transfer is made in
conformity with the provisions of Rule 145, or pursuant to a
registration statement, Parent reserves the right to put the following
legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED
FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH
RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES.
THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO,
OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN
THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT OF 1933."
Exhibit A-1
G. Execution of this letter should not be considered an
admission on my part that I am an "affiliate" of the Company as
described in the first paragraph of this letter, nor as a waiver
of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter.
2. By Parent's acceptance of this letter, Parent hereby agrees with me
as follows:
A. For so long as and to the extent necessary to permit me
to sell the Parent Shares pursuant to Rule 145 and, to the extent
applicable, Rule 144 under the Act, Parent shall (a) use its
reasonable efforts to (i) file, on a timely basis, all reports
and data required to be filed with the Commission by it pursuant
to Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and (ii) furnish to me upon request a
written statement as to whether Parent has complied with such
reporting requirements during the 12 months preceding any
proposed sale of the Parent Shares by me under Rule 145, and (b)
otherwise use its reasonable efforts to permit such sales
pursuant to Rule 145 and Rule 144. Parent hereby represents to me
that it has filed all reports that are required to be filed with
the Commission under Section 13 of the Exchange Act during the
preceding 12 months.
B. It is understood and agreed that certificates with the
legends set forth in paragraphs 1(E) and l(F) above will be
substituted by delivery of certificates without such legends if
(i) one year shall have elapsed from the date the undersigned
acquired the Parent Shares received in the Offer or Merger, as
applicable, and the provisions of Rule 145(d)(2) are then
available to the undersigned, (ii) two years shall have elapsed
from the date the undersigned acquired the Parent Shares received
in the Offer or Merger, as applicable, and the provisions of Rule
145(d)(3) are then applicable to the undersigned, or (iii) Parent
has received either an opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to Parent, or a "no
action" letter obtained by the undersigned from the staff of the
Commission, to the effect that the restrictions imposed by Rule
145 under the Act no longer apply to the undersigned.
Very truly yours,
___________________________________
Name:
Agreed and accepted this [ ] day
of [ ], 2002, by
DYCOM INDUSTRIES, INC.
By:_______________________
Name:
Title:
Exhibit A-2
