AGREEMENT AND PLAN OF MERGER
by and among
THE TOPPS COMPANY, INC.,
TORNANTE-MDP XXX HOLDING LLC
and
TORNANTE-MDP XXX ACQUISITION CORP.
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER; CLOSING; EFFECTIVE TIME..........................................................2
1.1 The Merger...................................................................................2
1.2 Closing......................................................................................2
1.3 Effective Time...............................................................................3
ARTICLE II CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION.........................3
2.1 The Certificate of Incorporation.............................................................3
2.2 The Bylaws...................................................................................3
ARTICLE III OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION..........................................3
3.1 Directors....................................................................................3
3.2 Officers.....................................................................................3
ARTICLE IV EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES..............................4
4.1 Effect on Capital Stock......................................................................4
4.2 Exchange of Certificates.....................................................................5
4.3 Treatment of Stock Plans.....................................................................7
4.4 Adjustments to Prevent Dilution..............................................................8
ARTICLE V REPRESENTATIONS AND WARRANTIES...............................................................8
5.1 Representations and Warranties of the Company................................................8
5.2 Representations and Warranties of Parent and Merger Sub.....................................28
ARTICLE VI COVENANTS...................................................................................32
6.1 Interim Operations..........................................................................32
6.2 Acquisition Proposals.......................................................................35
6.3 No Change in Company Recommendation or Alternative Acquisition Agreement....................40
6.4 Proxy Statement.............................................................................41
6.5 Stockholders Meeting........................................................................42
6.6 Filings; Other Actions; Notification........................................................42
6.7 Access and Reports..........................................................................45
6.8 NASDAQ De-listing...........................................................................45
6.9 Publicity...................................................................................45
6.10 Employee Benefits...........................................................................45
6.11 Expenses....................................................................................46
6.12 Indemnification; Directors' and Officers' Insurance.........................................47
6.13 Takeover Statutes...........................................................................48
6.14 Financing...................................................................................48
6.15 Director Resignations.......................................................................50
TABLE OF CONTENTS
(continued)
PAGE
6.16 Rule 16b-3..................................................................................50
ARTICLE VII CONDITIONS..................................................................................50
7.1 Conditions to Each Party's Obligation to Effect the Merger..................................50
7.2 Conditions to Obligations of Parent and Merger Sub..........................................50
7.3 Conditions to Obligation of the Company.....................................................52
ARTICLE VIII TERMINATION.................................................................................52
8.1 Termination.................................................................................52
8.2 Effect of Termination.......................................................................54
ARTICLE IX MISCELLANEOUS AND GENERAL...................................................................56
9.1 Survival....................................................................................56
9.2 Modification or Amendment...................................................................56
9.3 Waiver of Conditions........................................................................57
9.4 Counterparts................................................................................57
9.5 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL; REMEDIES; SPECIFIC PERFORMANCE...............57
9.6 Notices.....................................................................................58
9.7 Entire Agreement............................................................................60
9.8 No Third Party Beneficiaries................................................................60
9.9 Obligations of Parent and of the Company....................................................61
9.10 Definitions.................................................................................61
9.11 Severability................................................................................61
9.12 No Personal Liability.......................................................................61
9.13 Interpretation; Construction................................................................61
9.14 Assignment..................................................................................62
Annex A Defined Terms..............................................................................A-1
Exhibit A Form of Guaranty
Exhibit B Form of Voting Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the Effective Date (this
"Agreement"), by and among The Topps Company, Inc., a Delaware corporation (the
"Company"), Tornante-MDP Xxx Holding LLC, a Delaware limited liability company
("Parent"), and Tornante-MDP Xxx Acquisition Corp, a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"). The Company and Merger Sub are
sometimes hereinafter collectively referred to as the "Constituent
Corporations". The "Effective Date" means the date last set forth on the
signature pages hereto, and references herein to the "date hereof," "date of
this Agreement" or terms of similar import shall mean the Effective Date.
R E C I T A L S:
WHEREAS, the parties to this Agreement desire to effect the
acquisition of the Company by Parent through a merger of the Company and Merger
Sub;
WHEREAS, in furtherance of the foregoing and in accordance with the
Delaware General Corporation Law (the "DGCL"), the respective boards of
directors or comparable governing bodies of each of Parent, Merger Sub and the
Company have approved, adopted and declared advisable and in the best interests
of the equityholders of Parent, Merger Sub and the Company, respectively, this
Agreement, the merger of Merger Sub with and into the Company with the Company
as the Surviving Corporation (the "Merger") and the other transactions
contemplated hereby upon the terms and subject to the conditions set forth in
this Agreement;
WHEREAS, concurrently with the execution of this Agreement, and as a
condition to the willingness of the Company to enter into this Agreement,
Madison Dearborn Capital Partners V-A, L.P. ("MDCP-VA"), Madison Dearborn
Capital Partners V-C, L.P. ("MDCP-VC"), and Madison Dearborn Capital Partners V
Executive-A, L.P. (together with MDCP-VA and MDCP-VC, the "MDCP Guarantors"), on
one hand, and The Tornante Company LLC, on the other hand (severally and not
jointly with the MDCP Guarantors, the "Guarantors") have executed and delivered
to the Company two guarantees, each in the form attached hereto as Exhibit A
(each, a "Guaranty"), pursuant to which each Guarantor is guarantying a portion
of the obligation of Parent to pay the Parent Termination Fee;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition to the willingness of Parent and Merger Sub to
enter into this Agreement, Xxxxxx X. Xxxxxx and other directors constituting a
majority of the board of directors of the Company, as holders of Shares is
entering into a voting agreement with Parent in the form attached hereto as
Exhibit B (the "Voting Agreements"), pursuant to which, among other things, such
holders will agree to vote all of their Shares in the Company in favor of
adopting and approving this Agreement; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger as provided in this Agreement;
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, each intending to be legally bound,
hereby agree as follows:
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the DGCL, Merger Sub shall be merged
with and into the Company at the Effective Time. At the Effective Time, the
separate corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation in the Merger (the "Surviving
Corporation") and shall succeed to and assume all of the rights and obligations
of Merger Sub in accordance with Section 259 of the DGCL.
1.2 Closing. Unless otherwise mutually agreed in writing by the Company
and Parent, the closing of the Merger (the "Closing") shall take place at the
offices of Xxxxxxx Xxxx & Xxxxxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
at 9:00 a.m. (New York time) on the second Business Day following the day on
which the last to be satisfied or waived of the conditions set forth in Article
VII (other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions) shall be
satisfied or waived in accordance with this Agreement; provided, however, that
notwithstanding the satisfaction or waiver of the conditions set forth in
Article VII, Parent and Merger Sub shall not be required to effect the Closing
until the earlier of (a) a date during the Marketing Period specified by Parent
on no less than three (3) Business Days' written notice to the Company and (b)
the final day of the Marketing Period, in each case subject to the satisfaction
or waiver on such date of all of the conditions set forth in Article VII. The
date of the Closing is referred to as the "Closing Date." For purposes of this
Agreement, the term "Business Day" shall mean any day ending at 5:00 p.m. (New
York time) other than a Saturday or Sunday or a day on which banks are required
or authorized to close in New York, New York. For purposes of this Agreement,
the term "Marketing Period" shall mean the first period of 15 days after the
date hereof throughout which (A) Parent shall have the Required Information that
the Company is required to provide to Parent pursuant to Section 6.14(b) and (B)
the conditions set forth in Section 7.1 shall be satisfied and nothing has
occurred and no condition exists that would cause any of the conditions set
forth in Section 7.2 to fail to be satisfied assuming the Closing were to be
scheduled for any time during such 15 day period; provided, that if the
financial statements included in the Required Information that is available to
Parent on the first day of any such 15 day period would not be sufficiently
current on any day during such 15 day period to permit (i) a registration
statement using such financial statements to be declared effective by the SEC on
the last day of the 15 day period or (ii) the Company's independent accounting
firm to issue a customary comfort letter to Parent (in accordance with its
normal practices and procedures) on the last day of the 15 day period, then a
new 15 day period shall commence upon Parent
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receiving updated Required Information that would be sufficiently current to
permit the actions described in clauses (i) and (ii) above on the last day of
such 15 day period.
1.3 Effective Time. Subject to the provisions of this Agreement, as soon
as practicable on the Closing Date, the parties shall file with the Secretary of
State of the State of Delaware a certificate of merger (the "Certificate of
Merger") executed and acknowledged in accordance with the relevant provisions of
the DGCL and, as soon as practicable on or after the Closing Date, shall make
all other filings or recordings required under the DGCL. The Merger shall become
effective upon the filing and acceptance of the Certificate of Merger with the
Secretary of State of the State of Delaware, or at such later time as Parent and
the Company shall agree and shall specify in the Certificate of Merger (the time
the Merger becomes effective being the "Effective Time").
ARTICLE II
CERTIFICATE OF INCORPORATION AND
BYLAWS OF THE SURVIVING CORPORATION
2.1 The Certificate of Incorporation. The certificate of incorporation
of the Company, as amended and in effect immediately prior to the Effective
Time, shall be the certificate of incorporation of the Surviving Corporation
(the "Charter"), until duly amended as provided therein or by applicable Law.
2.2 The Bylaws. The bylaws of the Company, as amended and in effect
immediately prior to the Effective Time, shall be the bylaws of the Surviving
Corporation (the "Bylaws"), until thereafter amended as provided therein or by
applicable Law.
ARTICLE III
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
3.1 Directors. The parties hereto shall take all actions necessary so
that the board of directors of Merger Sub at the Effective Time shall, from and
after the Effective Time, be elected or otherwise validly appointed as the
directors of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Charter and the Bylaws.
3.2 Officers. The officers of the Company at the Effective Time shall,
from and after the Effective Time, be the officers of the Surviving Corporation
until their successors shall have been duly elected or appointed and qualified
or until their earlier death, resignation or removal in accordance with the
Charter and the Bylaws.
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ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
4.1 Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any action on the part of the holder of any capital stock of
the Company:
(a) Merger Consideration. Each share of the common stock,
par value $0.01 per share, of the Company (each, a "Share") issued and
outstanding immediately prior to the Effective Time (other than Dissenting
Shares, Shares owned by Parent, Merger Sub or any other direct or indirect
wholly owned subsidiary of Parent and Shares owned or held in treasury by
the Company or any direct or indirect wholly owned subsidiary of the
Company (each, an "Excluded Share")) shall be converted into the right to
receive $9.75 per Share in cash, less any required withholding Taxes as
described in Section 4.2(f) and without interest (the "Per Share Merger
Consideration"). At the Effective Time, all of the Shares shall cease to
be outstanding, shall be cancelled and shall cease to exist, and each
certificate formerly representing any of the Shares (each, a
"Certificate") (other than Excluded Shares and Dissenting Shares) shall
thereafter represent only the right to receive the Per Share Merger
Consideration, without interest.
(b) Cancellation of Excluded Shares. Each Excluded Share
referred to in Section 4.1(a) (other than Dissenting Shares, which are
addressed in clause (d) below), by virtue of the Merger and without any
action on the part of the holder thereof, shall cease to be outstanding,
shall be cancelled without payment of any consideration therefor and shall
cease to exist.
(c) Merger Sub. At the Effective Time, each share of common
stock, par value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one share
of common stock, par value $0.01 per share, of the Surviving Corporation.
(d) Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares that are issued and outstanding
immediately prior to the Effective Time and that are held by a holder
thereof who has validly demanded payment of the fair value for such Shares
as determined in accordance with Section 262 of the DGCL (such Shares, the
"Dissenting Shares") shall not be converted into or be exchangeable for
the right to receive the Per Share Merger Consideration, but instead shall
be converted into the right to receive payment from the Surviving
Corporation with respect to such Dissenting Shares in accordance with the
DGCL, unless and until such holder shall have failed to perfect or shall
have effectively withdrawn or lost such holder's right under the DGCL. If
any such holder of Shares shall have failed to perfect or shall have
effectively withdrawn or lost such right, each Share of such holder shall
be treated, at the Company's sole discretion, as a Share that had been
converted as of the Effective Time into the right to receive the Per Share
Merger Consideration in accordance with Section 4.1(a). The Company shall
give prompt notice to Parent of any written demands (and any written
withdrawals thereof) received by the Company for appraisal of Shares
pursuant to
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Section 262 of the DGCL, and Parent shall have the right to reasonably
participate in all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or waive any rights
with respect to, any such demands. Any portion of the Per Share Merger
Consideration made available to the Paying Agent pursuant to this Section
4.1(d) to pay for Shares for which appraisal rights have been perfected
shall be returned to Parent upon demand.
4.2 Exchange of Certificates.
(a) Paying Agent. At the Effective Time, Parent shall
deposit, or shall cause to be deposited, with a paying agent selected by
Parent with the Company's prior written approval (such approval not to be
unreasonably withheld or delayed) (the "Paying Agent"), for the benefit of
the holders of Shares, a cash amount in immediately available funds
necessary for the Paying Agent to make all payments under Section 4.1(a)
(such cash being hereinafter referred to as the "Exchange Fund"). The
Paying Agent shall invest the Exchange Fund as directed by Parent;
provided that such investments shall be in obligations of or guarantied by
the United States of America, in commercial paper obligations rated A1 or
P1 or better by Xxxxx'x Investors Service, Inc. or Standard & Poor's
Corporation, respectively. Any interest and other income resulting from
such investment shall become a part of the Exchange Fund, and any amounts
in excess of the amounts payable under Section 4.1(a) shall be promptly
returned to the Surviving Corporation. To the extent that there are losses
with respect to any such investments, or the Exchange Fund diminishes for
any reason below the level required to make prompt cash payment under
Section 4.1(a), Parent shall, or shall cause the Surviving Corporation to,
promptly replace or restore the cash in the Exchange Fund so as to ensure
that the Exchange Fund is at all times maintained at a level sufficient to
make such payments required under Section 4.1(a).
(b) Exchange Procedures. Promptly after the Effective Time,
Parent shall cause the Paying Agent to mail to each holder of record of
Shares (other than holders of Dissenting Shares or Excluded Shares) (i) a
letter of transmittal in customary form specifying that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates (or affidavits of loss in lieu thereof
as provided in Section 4.2(e)) to the Paying Agent, such letter of
transmittal to be in such form and to have such other provisions as Parent
and the Company may reasonably agree, and (ii) instructions for use in
effecting the surrender of the Certificates (or affidavits of loss in lieu
thereof as provided in Section 4.2(e)) in exchange for the applicable Per
Share Merger Consideration. Upon surrender of a Certificate (or affidavit
of loss in lieu thereof as provided in Section 4.2(e)) to the Paying Agent
in accordance with the terms of such letter of transmittal, and such
letter of transmittal having been duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor a cash
amount in immediately available funds (less any required Tax withholdings
as provided in Section 4.2(f)) equal to (A) the number of Shares
represented by such
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Certificate (or affidavit of loss in lieu thereof as provided in Section
4.2(e)), multiplied by (B) the Per Share Merger Consideration, and the
Certificate so surrendered shall forthwith be cancelled and extinguished
of no further force or effect. No interest will accrue or be paid on any
amount payable upon due surrender of the Certificates. In the event of a
transfer of ownership of Shares that is not registered in the transfer
records of the Company, a check for any cash to be exchanged upon due
surrender of the Certificate may be issued to the transferee of such
Shares if the Certificate formerly representing such Shares is presented
to the Paying Agent, accompanied by all documents reasonably required to
evidence and effect such transfer and to evidence that any applicable
stock transfer taxes or other Taxes have been paid or are not applicable.
(c) Transfers. From and after the Effective Time, there
shall be no transfers on the stock transfer books of the Company of the
Shares that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, any Certificate is presented to the Surviving
Corporation, Parent or the Paying Agent for transfer, it shall be
cancelled and extinguished and exchanged for the Per Share Merger
Consideration (payable in cash in immediately available funds) to which
the holder thereof is entitled pursuant to this Article IV.
(d) Termination of Exchange Fund. Any portion of the
Exchange Fund (including the proceeds of any investments thereof) that
remains unclaimed by the stockholders of the Company for 180 days after
the Effective Time shall be delivered to the Surviving Corporation. Any
holder of Shares (other than Dissenting Shares or Excluded Shares) who has
not theretofore complied with this Article IV shall thereafter look only
to the Surviving Corporation for payment of the Per Share Merger
Consideration (less any required Tax withholdings as provided in Section
4.2(f)) upon due surrender of each of its Certificates (or affidavits of
loss in lieu thereof as provided in Section 4.2(e)), without any interest
thereon. Notwithstanding the foregoing, none of the Surviving Corporation,
Parent, the Paying Agent or any other Person shall be liable to any former
holder of Shares for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar Laws. For
the purposes of this Agreement, the term "Person" shall mean any
individual, corporation, general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization,
Governmental Entity or other entity of any kind or nature.
(e) Lost, Stolen or Destroyed Certificates. In the event 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, the posting by such
Person of a bond in customary amount and upon such terms as may be
reasonably required by Parent as indemnity against any claim that may be
made against it or the Surviving Corporation with respect to such
Certificate, the Paying Agent will issue a check in the amount (less any
required Tax withholdings as provided in Section 4.2(f)) equal to the
number of Shares represented by such lost, stolen or destroyed Certificate
multiplied by the Per Share Merger Consideration.
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(f) Withholding Rights. Each of Parent, Merger Sub, the
Surviving Corporation and the Paying Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Shares or holder of Company Options, such
amounts as it is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended
(the "Code"), or any other applicable Tax. To the extent that amounts are
so deducted or withheld, such deducted or withheld amounts (i) shall be
remitted by Parent, Merger Sub, the Surviving Corporation or the Paying
Agent, as applicable, to the applicable Governmental Entity, and (ii)
shall be treated for all purposes of this Agreement as having been paid to
the holder of Shares or holder of Company Options in respect of which such
deduction and withholding was made by the Paying Agent, Surviving
Corporation, Merger Sub or Parent, as the case may be.
4.3 Treatment of Stock Plans.
(a) Options. At the Effective Time: (i) each outstanding
Company Option under the 1996 Stock Plan and the 2001 Stock Plan shall
become fully vested and be cancelled in exchange for the right to receive,
as soon as reasonably practicable after the Effective Time (but in any
event no later than three Business Days after the Effective Time), an
amount in cash equal to the product of (A) the total number of Shares
subject to such Company Option immediately prior to the Effective Time,
multiplied by (B) the excess, if any, of the Per Share Merger
Consideration over the exercise price per Share under such Company Option,
less any applicable Taxes required to be withheld with respect to such
payment; and (ii) each outstanding Company Option under the Director Stock
Plan shall become fully vested and be automatically converted into the
right to receive, as soon as reasonably practicable after the Effective
Time, an amount in cash equal to the product of (A) the total number of
Shares subject to such Company Option immediately prior to the Effective
Time, multiplied by (B) the excess, if any, of the Per Share Merger
Consideration over the exercise price per Share under such Company Option,
less any applicable Taxes required to be withheld with respect to such
payment. As used herein, the term "Company Option" shall mean any
outstanding option to purchase Shares under any Stock Plan. As of the
Effective Time, each Company Option for which the exercise price per Share
exceeds the Per Share Merger Consideration, other than Company Options
outstanding under the Director Stock Plan (the "Director Options"), shall
be canceled and have no further effect, with no right to receive any
consideration. As of the Effective Time, all other Company Options (other
than the Director Options) shall no longer be outstanding and shall
automatically cease to exist and shall become only the right to receive
the option consideration described in this Section 4.3(a), and, without
limiting the foregoing, the board of directors of the Company or the
appropriate committee thereof shall take all action necessary to effect
such cancellation.
(b) Corporate Actions. At or prior to the Effective Time,
the Company, the board of directors of the Company and the compensation
committee of the board of
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directors of the Company, as applicable, shall (to the extent necessary)
adopt resolutions to implement the provisions of Section 4.3(a), it being
understood that the intention of the parties is that following the
Effective Time no holder of any Company Options or any participant in any
Stock Plan or other employee benefit arrangement of the Company shall have
any right thereunder to acquire any capital stock (including any phantom
stock or stock appreciation right) of the Company, any Subsidiary of
either the Company or Parent, or the Surviving Corporation. Prior to the
Closing, the Company shall deliver to the holders of the Company Options
appropriate notices setting forth such holders' rights pursuant to this
Agreement.
4.4 Adjustments to Prevent Dilution. In the event that the Company
changes the number of Shares or securities convertible or exchangeable into or
exercisable for Shares issued and outstanding prior to the Effective Time as a
result of a reclassification, stock split (including a reverse stock split),
division or subdivision of Shares, stock dividend or distribution, consolidation
of Shares, reclassification, recapitalization, merger, issuer tender or exchange
offer, or other similar transaction, the Per Share Merger Consideration shall be
equitably adjusted to reflect such change. Prior to the Effective Time, the
Company shall take all actions necessary to terminate the Stock Plans, such
termination to be effective at or before the Effective Time (it being understood
that the Company shall not be obligated hereby or otherwise to terminate or
cancel any outstanding Director Options).
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of the Company. Except as set forth
in the disclosure schedule delivered to Parent by the Company in connection with
the execution and delivery of this Agreement (the "Company Disclosure Schedule")
(it being understood that any matter disclosed in any section of the Company
Disclosure Schedule shall be deemed to be disclosed in any other section of the
Company Disclosure Schedule if (i) it is readily apparent from such disclosure
that it applies to such other section or (ii) such disclosure is
cross-referenced in such other section), the Company hereby represents and
warrants to Parent and Merger Sub that:
(a) Organization, Good Standing and Qualification. Each of
the Company and its Subsidiaries is a legal entity duly organized, validly
existing and in good standing under the Laws of its respective
jurisdiction of organization and has all requisite corporate or similar
power and authority to own, lease and operate its properties and assets
and to carry on its business as presently conducted and is qualified to do
business in each jurisdiction where the ownership, leasing or operation of
its assets or properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in good
standing, or to have such power or authority, would not, individually or
in the aggregate, reasonably be expected to have a Company Material
Adverse Effect. Section 5.1(a) of the Company Disclosure Schedule lists
each Subsidiary and every other Person in which the Company or any
Subsidiary has any ownership interest, together
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with their respective jurisdictions of incorporation or organization. As
used in this Agreement, the term (i) "Subsidiary" means, with respect to
any Person, any other Person of which an amount of the securities or
ownership interests having by their terms ordinary voting power to elect a
majority of the board of directors or other Persons performing similar
functions of such other Person is directly or indirectly owned or
controlled by such Person and/or by one or more of its Subsidiaries, (ii)
"Significant Subsidiary" shall have the meaning set forth in Rule 1.02(w)
of Regulation S-X promulgated pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act") and (iii) "Company Material Adverse
Effect" means an event, change, effect, development, condition or
occurrence (each a "Change") that, individually or in the aggregate with
any other Change, is or is reasonably expected to be materially adverse to
(x) the ability of the Company to perform its obligations under, or to
consummate the transactions contemplated by, this Agreement or (y) the
financial condition, business, assets, liabilities or results of
operations of the Company and its Subsidiaries taken as a whole; provided
that no Change, to the extent resulting from any of the following events,
changes, effects, developments, conditions or occurrences, shall
constitute or be taken into account in determining whether there has been
or would reasonably be expected to be a Company Material Adverse Effect,
except, in the cases of clauses (A), (B) and (D) below, to the extent that
any such event, change, effect, development, condition or occurrence has a
disproportionately adverse effect on the Company or any of its
Subsidiaries as compared to other comparable businesses:
(A) changes in the economy or financial markets generally in the
United States or other countries in which the Company or any of its
Subsidiaries conduct operations including, without limitation, any such
changes that are the result of non-domestic acts of war or terrorism (but
not including any changes that are the result of domestic acts of war or
terrorism);
(B) general changes or developments in any industry in which the
Company and its Subsidiaries operate;
(C) any Change caused by or resulting from the announcement of the
transactions contemplated by this Agreement (other than with respect to
the matters set forth in Section 5.1(a)(C) of the Company Disclosure
Schedule);
(D) changes in any Law or GAAP or interpretation thereof after the
date hereof;
(E) any failure by the Company to meet any estimates of revenues
or earnings for any period; or
(F) a decline in the price or trading volume of the Company's
common stock on the NASDAQ Global Select Market ("NASDAQ");
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it being understood that any Change giving rise to or contributing to such
failure by the Company to meet estimates as described in the preceding
clause (E), or such decline in the trading price of the Company's common
stock as described in the preceding clause (F), as the case may be, may be
the cause of a Company Material Adverse Effect.
(b) Capital Structure. The authorized capital stock of the
Company consists of 100,000,000 Shares, of which 38,717,765 Shares were
outstanding as of the close of business on March 2, 2007, and 10,000,000
shares of preferred stock, 500,000 of which are designated as "Series A
Junior Participating Preferred Stock" and none of which are outstanding as
of the date hereof. All of the outstanding Shares have been duly
authorized and are validly issued, fully paid and nonassessable. Since
March 2, 2007, the Company has not issued, sold, or disposed of any shares
of the Company's capital stock or equity securities, other than upon the
exercise of outstanding options under the Stock Plans. As of February 28,
2007, other than 2,970,525 Shares reserved for issuance under the
Company's 1996 Stock Option Plan, as amended and restated as of June 30,
2005 (as so amended and as further amended from time to time, the "1996
Stock Plan"), 2001 Stock Incentive Plan, as amended and restated as of
June 27, 2002 (as so amended and as further amended from time to time, the
"2001 Stock Plan"), and 1994 Non-Employee Director Stock Option Plan (the
"Director Stock Plan" and, together with the 1996 Stock Plan and the 2001
Stock Plan, the "Stock Plans"), the Company has no Shares reserved for
issuance. Since February 28, 2007, the Company has not granted any options
to acquire shares of capital stock of the Company under any of the Stock
Plans. Section 5.1(b) of the Company Disclosure Schedule contains a
correct and complete list of options, restricted stock, performance stock
units, restricted stock units and any other equity or equity-based awards
(including cash-settled awards), if any, outstanding under the Stock
Plans, including the holder, date of grant, term, number of Shares, the
Stock Plan under which such award was granted and, where applicable, the
exercise price. The outstanding shares of capital stock or other equity
securities of each of the Company's Subsidiaries are duly authorized,
validly issued, fully paid and nonassessable and owned by the Company or
by a direct or indirect wholly owned Subsidiary of the Company, free and
clear of any lien, charge, pledge, security interest or other encumbrance
(each, a "Lien"). Except as set forth above, there are no preemptive or
other outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind that obligate the
Company or any of its Subsidiaries to issue or sell any shares of capital
stock or other equity securities of the Company or any of its Subsidiaries
or any securities or obligations convertible or exchangeable into or
exercisable for, or giving any Person a right to subscribe for or acquire,
any equity securities of the Company or any of its Subsidiaries, or
obligations of the Company or any of its Subsidiaries to make any payments
directly or indirectly based (in whole or in part) on the price or value
of the Shares or preferred shares, and no securities or obligations
evidencing such rights are authorized, issued or outstanding. Upon any
issuance of any Shares in accordance with the terms of the Stock Plans,
such Shares will be duly authorized, validly issued, fully paid and
nonassessable and free and clear of any Liens. The Company does not have
- 10 -
outstanding any bonds, debentures, notes or other obligations for borrowed
money the holders of which have the right to vote (or convertible into or
exercisable for securities having the right to vote) with the stockholders
of the Company or any of its Subsidiaries on any matter. There are no
outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any capital stock
or other equity interests of the Company or any of its Subsidiaries. For
purposes of this Agreement, a wholly owned Subsidiary of the Company shall
include any Subsidiary of the Company of which all of the shares of
capital stock of such Subsidiary other than director qualifying shares are
owned by the Company (or a wholly owned Subsidiary of the Company).
(c) Corporate Authority; Approval and Fairness.
(i) The Company has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute
and deliver this Agreement and to perform its obligations under this
Agreement subject only, in the case of the consummation of the Merger, to
approval of the "agreement of merger" (as such term is used in Section 251
of the DGCL) contained in this Agreement by the holders of a majority of
the outstanding Shares entitled to vote on such matter (the "Requisite
Company Vote"). This Agreement has been duly executed and delivered by the
Company and constitutes a legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar Laws of general applicability relating to or
affecting creditors' rights and to general equitable principles
(collectively, the "Bankruptcy and Equity Exception").
(ii) The board of directors of the Company has: (A)
determined that the Merger and the Voting Agreements are fair to and in
the best interests of the Company and its stockholders, has adopted and
declared advisable this Agreement, the Voting Agreements and the Merger
and the other transactions contemplated hereby and has resolved to
recommend approval of this Agreement and the "agreement of merger" (as
such term is used in Section 251 of the DGCL) contained in this Agreement
to the holders of Shares (the "Company Recommendation"); (B) authorized
and approved the execution, delivery and performance of this Agreement,
the Voting Agreements and the transactions contemplated hereby, (C)
directed that this Agreement be submitted to the holders of Shares for
their approval of the "agreement of merger" contained in this Agreement at
a stockholders' meeting duly called and held for such purpose; (D) taken
all actions necessary to provide that restrictions applicable to business
combinations contained in Section 203 of the DGCL are not, and will not
be, applicable to the Merger; (E) irrevocably resolved to elect, to the
extent permitted by Law, for the Company not to be subject to any Takeover
Statute; and (F) received a written opinion of its financial advisor to
the effect that, as of the date of such opinion, the consideration to be
received by the holders of the Shares in the Merger is fair from a
financial point of view to such holders (it being agreed and understood
that such opinion is solely for the benefit of the
- 11 -
Company's board of directors and may not be relied upon by Parent, Merger
Sub or any of their respective, directors, officers, employees,
Affiliates, advisor or representatives). As used herein, the term
"Affiliate" means, with respect to any Person, (A) each Person that,
directly or indirectly, owns or controls such Person, and (B) each Person
that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person, provided that, for the purpose of
this definition, "control" of a Person shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting
securities, by contract or otherwise.
(d) Governmental Filings; No Violations; Certain Contracts.
(i) Other than the filings and/or notices (A) pursuant
to Section 1.3, (B) under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended (the "HSR Act") and any other applicable merger
control laws, (C) under the Exchange Act, and (D) under the rules of
NASDAQ (the "Company Approvals"), no notices, reports or other filings are
required to be made by the Company with, nor are any consents,
registrations, approvals, permits or authorizations required to be
obtained by the Company from, any domestic or foreign governmental or
regulatory authority, agency, commission, body, court or other
legislative, executive or judicial governmental entity (each, a
"Governmental Entity"), in connection with the execution, delivery and
performance of this Agreement by the Company and the consummation of the
Merger and the other transactions contemplated hereby, except those that
the failure to make or obtain would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect or to
prevent, materially delay or materially impair the consummation of the
transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this
Agreement by the Company do not, and the consummation of the Merger and
the other transactions contemplated hereby will not, directly or
indirectly (with or without the giving of notice or lapse of time, or
both) constitute or result in (A) a breach or violation of, or a default
under, or conflict with, the certificate of incorporation or bylaws of the
Company or the comparable governing instruments of any of its Subsidiaries
(B) with or without notice, lapse of time or both, a breach or violation
of, a termination (or right of termination) or a default under, the
creation or acceleration of any obligations or the creation of a Lien on
any of the assets of the Company or any of its Significant Subsidiaries
pursuant to any material agreement, lease, license, contract, note,
mortgage, indenture, arrangement or other obligation (each, a "Contract")
binding upon the Company or any of its Subsidiaries or, (C) assuming
compliance with the matters referred to in Section 5.1(d)(i), a violation
of any Law to which the Company or any of its Subsidiaries is subject,
except, in the case of clause (B) or (C) above, for any such breach,
violation, termination (or right thereof), default, creation, acceleration
or change that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect or to prevent,
- 12 -
materially delay or materially impair the consummation of the transactions
contemplated by this Agreement.
(e) Company Reports; Financial Statements.
(i) The Company has filed with or furnished to (as
applicable) the Securities and Exchange Commission (the "SEC") on a timely
basis all forms, statements, certifications, reports and documents
required to be filed with or furnished to the SEC by the Company under the
Exchange Act or the Securities Act of 1933, as amended (the "Securities
Act") since January 1, 2004 (the "Applicable Date") (such forms,
statements, certifications, reports and documents, including all exhibits,
appendices and attachments included or incorporated therein, filed or
furnished since the Applicable Date through the date hereof, including any
amendments thereto, the "Company Reports"). None of the Company's
Subsidiaries is required to file any documents with the SEC. Each of the
Company Reports, at the time of its filing or being furnished, complied in
all material respects with the applicable requirements of the Securities
Act, the Exchange Act and the Xxxxxxxx-Xxxxx Act of 2002 (the
"Xxxxxxxx-Xxxxx Act"), and any rules and regulations promulgated
thereunder applicable to the Company Reports. As of their respective dates
(or, if amended, as of the date of such amendment), the Company Reports
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were
made, not misleading.
(ii) The Company is in compliance in all material
respects with the applicable listing and corporate governance rules and
regulations of NASDAQ.
(iii) Each of the consolidated balance sheets included in
or incorporated by reference into the Company Reports (including the
related notes and schedules) fairly presents in all material respects the
consolidated financial position of the Company and its consolidated
Subsidiaries as of its date and each of the consolidated statements of
operations, stockholders' equity and cash flows included in or
incorporated by reference into the Company Reports (including any related
notes and schedules) fairly presents in all material respects the
consolidated results of operations, retained earnings and changes in
financial position, as the case may be, of the Company and its
consolidated Subsidiaries for the periods set forth therein (subject, in
the case of unaudited statements, to notes and year-end adjustments), and
in each case have been prepared in accordance with U.S. generally accepted
accounting principles ("GAAP") applied on a consistent basis, except as
may be noted otherwise therein. All of the Company's Subsidiaries are
consolidated for accounting purposes.
(iv) The Company and its Subsidiaries have implemented
and maintained a system of internal accounting controls and financial
reporting (as required by Rule 13a-15(a) under the Exchange Act) that are
designed to provide reasonable assurances regarding the reliability of
financial reporting and the preparation of financial
- 13 -
statements in accordance with GAAP. The Company maintains disclosure
controls and procedures required by Rule 13a-15 or 15d-15 under the
Exchange Act. Such disclosure controls and procedures (i) are designed to
ensure that information required to be disclosed by the Company is
recorded and reported on a timely basis to the individuals responsible for
the preparation of the Company's filings with the SEC and other public
disclosure documents, and (ii) have been evaluated for effectiveness in
accordance with the Xxxxxxxx-Xxxxx Act and the results of such evaluations
have been disclosed in the Company Reports to the extent required by the
Xxxxxxxx-Xxxxx Act. The Company has disclosed, based on its most recent
evaluation prior to the date of this Agreement, to the Company's outside
auditors and the audit committee of the board of directors of the Company
and identified in Section 5.1(e)(iv) of the Company Disclosure Schedule
any significant deficiencies and material weaknesses in the design or
operation of its internal controls over financial reporting (as defined in
Rule 13a-15(f) of the Exchange Act) that would reasonably be likely to
adversely affect the Company's ability to record, process, summarize and
report financial information. The Company has changed its internal
controls to correct such deficiencies and material weaknesses, and other
than such corrections, since the date of such evaluation, there have been
no significant changes in internal controls or in other factors that could
significantly affect the Company's internal controls. The Company has no
Knowledge of any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company's internal
controls over financial reporting.
(f) Absence of Certain Changes. Since February 25, 2006, the
Company and its Subsidiaries have conducted their respective businesses in
the ordinary and usual course of such businesses consistent with past
practice and there has not been:
(i) Changes that individually or in the aggregate
constitute or would reasonably be expected to have a Company Material
Adverse Effect;
(ii) other than any cash dividend on Shares disclosed in
the Company Reports filed with the SEC on or before the date hereof, any
declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company or
any of its Subsidiaries (except for dividends or other distributions by
any direct or indirect wholly owned Subsidiary to the Company or to any
wholly owned Subsidiary of the Company);
(iii) any material change in any method of accounting or
accounting practice by the Company or any of its Subsidiaries, except as
may be appropriate to conform to changes in statutory or regulatory
accounting rules or GAAP or regulatory requirements with respect thereto;
(iv) other than any stock repurchases or buybacks, or
pursuant to any stock repurchase or buyback program, disclosed in the
Company Reports filed with the SEC on or before the date hereof and
identified in the Company Disclosure Schedule, any reclassification,
combination, split, subdivision, redemption, repurchase or other
- 14 -
acquisition of any shares of capital stock or other securities of or other
ownership interests in the Company or of any of its Subsidiaries or any
amendment of any material terms of any outstanding equity security of the
Company or any of its Subsidiaries;
(v) except as disclosed in the Company Reports filed
with the SEC as of the date hereof, required pursuant to the Benefit Plans
or the Stock Plans in effect on the date of this Agreement and disclosed
on Section 5.1(f)(v) of the Company Disclosure Schedule, required pursuant
to any employment, separation or collective bargaining agreement disclosed
on Section 5.1(f)(v) of the Company Disclosure Schedule, or as otherwise
required by applicable Law, any (A) grant or provision for severance or
termination payments or benefits to any director or officer of the Company
or employee, independent contractor or consultant of the Company or any of
its Subsidiaries, except for grants or provisions for such payments or
benefits with respect to employees who are not also executive officers in
the ordinary course of business consistent with past practice, (B)
increase (or commitment to increase) in the compensation, perquisites or
benefits payable to any director, officer, employee, independent
contractor or consultant of the Company or any of its Subsidiaries, except
for increases with respect to employees who are not also executive
officers in the ordinary course of business consistent with past practice,
(C) grant of equity or equity-based awards that may be settled in Shares
or any other equity securities of the Company or any of its Subsidiaries
or the value of which is linked directly or indirectly, in whole or in
part, to the price or value of any Shares or other equity securities of
the Company or any of its Subsidiaries, (D) acceleration in the vesting or
payment of compensation payable or benefits provided or to become payable
or provided to any current or former director, officer, employee,
independent contractor or consultant, (E) change in the terms of any
outstanding Company Option, or (F) establishment or adoption of any new
arrangement that would be a Benefit Plan or would terminate or materially
amend any existing Benefit Plan (other than changes necessary to comply
with applicable Law or the Company's obligations under this Agreement);
(vi) any material Tax election made, altered or revoked
by the Company or any of its Subsidiaries or any settlement or compromise
of any material Tax liability made by the Company or any of its
Subsidiaries;
(vii) any action which, if it had been taken after the
date hereof, would have required Parent's consent under Section 6.1; or
(viii) any agreement (other than this Agreement) or
commitment to take any of the actions specified in this Section 5.1(f).
(g) Litigation and Liabilities.
(i) All of the actions, suits, claims, hearings,
arbitrations or proceedings pending, or, to the Knowledge of the Company,
threatened, against the Company or any of its Subsidiary or any of their
respective assets or properties before
- 15 -
any arbitrator or Governmental Entity (excluding office actions issued by
the U.S. Patent and Trademark Office or similar offices pertaining to
Owned Intellectual Property that is not material to the conduct of the
business of the Company and its Subsidiaries) are set forth in Section
5.1(g)(i) of the Company Disclosure Schedule. There are no civil, criminal
or administrative actions, suits, claims, hearings, arbitrations or other
proceedings pending or, to the Knowledge of the Company, threatened
against or directly involving the Company or any of its Subsidiaries,
which would, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is a party to or subject to the provisions of any material
judgment, order, writ, injunction, decree or award of any arbitrator or
Governmental Entity. To the Company's Knowledge, no officer, director or
other key employee of the Company or any of its Subsidiaries is (i)
subject to any order, writ, injunction, judgment or decree that prohibits
such officer, director or key employee from engaging in or continuing any
conduct, activity or practice relating to the business of the Company or
any of its Subsidiaries or (ii) a defendant in any material civil,
criminal or administrative action, suit, claim, hearing, arbitration,
investigation or other proceeding in connection with his or her status as
an officer or director of the Company or any of its Subsidiaries.
(ii) Neither the Company nor any of its Subsidiaries has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet of the Company and its Subsidiaries or in the
notes thereto, other than liabilities and obligations (A) set forth in the
Company's consolidated balance sheet as of November 25, 2006 included in
the Company Reports, (B) incurred in the ordinary course of business
consistent with past practice since November 25, 2006 and that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect or (C) incurred in connection with the Merger or
the transactions contemplated by this Agreement.
The term "Knowledge" when used in this Agreement with respect to the
Company shall mean the actual knowledge of those persons set forth in Section
5.1(g) of the Company Disclosure Schedule, and does not include information of
which they or any of them may be deemed to have constructive knowledge.
(h) Employee Benefits.
(i) All employee benefit plans covering current or
former officers, directors, employees of the Company or its Subsidiaries
(collectively, the "Employees") or current or former independent
contractors or consultants of the Company or its Subsidiaries, or under
which there is a financial obligation of the Company or any of its
Subsidiaries, including, but not limited to, "employee benefit plans"
within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), whether or not subject to
ERISA, and deferred compensation, stock option, stock purchase, stock
appreciation rights, other stock or stock based, incentive and bonus,
employment, retention, consulting, change in control, salary continuation
or disability,
- 16 -
pension, insurance, vacation, health, dental, welfare, profit-sharing,
retirement, termination or severance plan, or other benefit program,
policy, practice, arrangement or agreement (the "Benefits Plans") that are
material to the Company and its Subsidiaries, taken as whole, other than
Benefit Plans maintained outside of the United States primarily for the
benefit of Employees working outside of the United States (such plans
hereinafter being referred to as "Non-U.S. Benefit Plans"), are listed in
Section 5.1(h)(i) of the Company Disclosure Schedule. True and complete
copies of all Benefit Plans listed in Section 5.1(h)(i) of the Company
Disclosure Schedule have been made available to Parent.
(ii) The Company has furnished or made available to
Parent copies of the two most recent annual reports (Form 5500 series) for
each Benefit Plan covered by ERISA, the most recent summary plan
description for each Benefit Plan covered by ERISA; if the Benefit Plan is
funded through a trust, insurance or any funding vehicle, the trust,
insurance contract or other funding agreement; any agreement providing for
the provision of administrative or investment management services with
respect to the Benefit Plan.
(iii) Except for such matters that would not, individually
or in the aggregate, reasonably be expected to have a Company Material
Adverse Effect:
(A) (i) all Benefit Plans, other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA (each, a "Multiemployer
Plan") and Non U.S. Benefit Plans, (collectively, "U.S. Benefit Plans"),
have been established, maintained and operated in compliance with their
terms, ERISA and the Code and all other applicable Laws and each Benefit
Plan that is intended to qualify under Section 401 of the Code has
received a favorable determination letter from the Internal Revenue
Service and nothing has occurred since the date of such letter that has or
is, to the Knowledge of the Company, likely to adversely affect such
qualification, (ii) the consolidated financial statements of the Company
and its Subsidiaries fully reflect all expenses accrued under GAAP with
respect to each Benefit Plan, and all contributions required with respect
to each Benefit Plan have been made on a timely basis, and (iii) no
"prohibited transaction," within the meaning of Section 4975 of the Code
or Sections 406 and 407 of ERISA, and not otherwise exempt under Section
408 of ERISA, has occurred with respect to any Benefit Plan and, to the
Knowledge of the Company (except with respect to the Company), no
fiduciary (within the meaning of Section 3(21) of ERISA) of any Benefit
Plan subject to Part 4 of Title I of ERISA has committed a breach of
fiduciary duty that could subject the Company or any Subsidiary to any
liability;
(B) neither the Company nor any of its Subsidiaries has engaged
in a transaction that, assuming the taxable period of such transaction
expired as of the date hereof, could subject the Company or any Subsidiary
to a tax, fine, lien (against the Company, any of its Subsidiaries, or the
assets of Benefit Plan or related trusts), penalty or other liability
imposed by either Section 4975 of the Code or Section 502(i) of ERISA or
any other similar provision of non-U.S. Law, and neither the Company nor
any ERISA
- 17 -
Affiliate has ever incurred any penalty or tax with respect to any Benefit
Plan under Chapter 43 of the Code;
(C) there are no actions, suits or claims pending, or to the
Knowledge of the Company, threatened (other than routine claims for
benefits) relating to any Benefit Plan, and there are no audits,
inquiries, or proceedings pending or, to the Knowledge of the Company,
threatened by any governmental authority with respect to any Benefit Plan;
(D) neither the Company nor any of its Subsidiaries has or is
expected to incur any liability under Title IV of ERISA with respect to
any "single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, any Multiemployer Plan or any "multiple employer plan", within the
meaning of Section 4063/4064 of ERISA or section 413(c) of the Code, or
any "multiemployer welfare arrangement" within the meaning of Section
3(40)(A) of ERISA, in each case currently or formerly maintained or
contributed to by any of them or any other entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of
the Code (an "ERISA Affiliate");
(E) the Company and its Subsidiaries do not have any
unsatisfied withdrawal liability with respect to a Multiemployer Plan
under Subtitle E of Title IV of ERISA;
(F) with respect to each Benefit Plan that is a "single
employer plan" within the meaning of Section 4001(15) of ERISA, (i) no
liability to the Pension Benefit Guaranty Corporation (the "PBGC") has
been incurred (other than for premiums not yet due); (ii) no notice of
intent to terminate any such Benefit Plan has been filed with the PBGC or
distributed to participants and no amendment terminating any such Benefit
Plan has been adopted; (iii) no proceedings to terminate any such Benefit
Plan have been instituted by the PBGC and no event or condition has
occurred which might constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any
such plan; (iv) no "accumulated funding deficiency" or "liquidity
shortfall" within the meaning of Section 302 of ERISA or Section 412 of
the Code, whether or not waived, has been incurred; (v) no "reportable
event" within the meaning of Section 4043 of ERISA (for which the 30-day
notice requirement has not been waived by the PBGC) has occurred within
the last six years; (vi) no Lien has arisen under ERISA or the Code, or is
likely to arise, on the assets of the Company or any ERISA Affiliate;
(vii) there has been no cessation of operations at a facility subject to
the provisions of Section 4062(e) of ERISA within the last six years;
(viii) the value of the assets and liabilities thereof as stated in the
Company's most recent Financial Statements is accurate and correct and
nothing has occurred since the date of such most recent Financial
Statements that would adversely effect such valuation; (ix) none of the
Company or any of its ERISA Affiliates are required to provide security to
a Benefit Plan under Section 401(a)(29) of the Code, and (x) no event has
occurred that places participants on actual or constructive notice of such
a Benefit Plan's voluntary, involuntary, or distress termination;
- 18 -
(G) each Benefit Plan that is a "welfare plan" within the
meaning of Section 3(2) of ERISA may be terminated at any time
unilaterally by the Company or its Subsidiaries without any material
liability to them, and all claims incurred by the Company or any of its
Subsidiaries or ERISA Affiliates are (i) insured pursuant to a Contract of
insurance whereby the insurance company bears any risk of loss with
respect to such claims, (ii) covered under a contract with a health
maintenance organization (an "HMO") pursuant to which the HMO bears the
liability for claims or (iii) reflected as a liability or accrued for on
the consolidated financial statements for the Company and its
Subsidiaries; and
(H) all Non-U.S. Benefit Plans have been established,
maintained and operated in compliance with their terms and all applicable
Laws and each Non-U.S. Benefit Plan intended to qualify for favorable tax
treatment outside the United States is so qualified.
(iv) All Non-U.S. Benefit Plans are listed in Section
5.1(h)(iv) of the Company Disclosure Schedule. The Company has made
available true and complete copies of all material Non-U.S. Benefit Plans.
With respect to each Non-U.S. Benefit Plan that is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA, whether or not
subject to ERISA, the liabilities of such Non-U.S. Benefit Plan do not
exceed the assets of such Non-U.S. Benefit Plan by a material amount.
(v) Neither the execution or delivery of this Agreement
nor the consummation of the transactions contemplated by this Agreement
will, alone or in conjunction with any other event (whether contingent or
otherwise), (i) result in any material payment or benefit becoming due or
payable, or required to be provided, to any Employee, independent
contractor or consultant (ii) materially increase the amount or value of
any benefit or compensation otherwise payable or required to be provided
to any Employee, independent contractor or consultant (whether or not such
payment would constitute a "parachute payment" or "excess parachute
payment" within the meaning of Section 280G of the Code), (iii) result in
the acceleration of the time of payment, vesting or funding of any such
benefit or compensation or (iv) result in any amount failing to be
deductible by reason of Section 280G of the Code.
(vi) Section 5.1(h)(vi) of the Company Disclosure
Schedule sets forth a list of all (A) employment agreements, arrangements
and other such contracts with current or former officers, directors,
employees and agents, in each case providing for annual payments by the
Company, the Surviving Corporation or any of the Company's Subsidiaries
from and after the Closing of more than $200,000, and (B) all severance,
change in control or similar arrangements with any current or former
directors, officers, employees, or agents that will result in any
obligation (absolute or contingent) of the Company, the Surviving
Corporation or any of the Company's Subsidiaries to make any payment to
any current or former directors, officers, employees, or agents following
either the consummation of the transactions contemplated hereby,
termination of employment (or the relevant relationship), or both, and
true, correct and complete copies
- 19 -
of all such agreements, arrangements and contracts referred to in the
preceding clauses (A) and (B) have been delivered or made available to
Parent.
(i) Compliance with Laws; Licenses. The businesses of each of
the Company and its Subsidiaries have not been since the Applicable Date,
and are not being, conducted in violation of any federal, state, local or
foreign law, statute or ordinance, common law, or any rule or regulation
of any Governmental Entity (collectively, "Laws") or of any arbitrator,
except for violations that, individually or in the aggregate, have not had
or would not reasonably be expected to have a Company Material Adverse
Effect. To the Knowledge of the Company, no investigation or review by any
Governmental Entity with respect to the Company or any of its Subsidiaries
is pending or threatened. None of the Company, any of its Subsidiaries or,
to the Knowledge of the Company, any of their respective directors,
officers, agents or employees (on behalf of the Company or any of its
Subsidiaries) has made any payments, including without limitation, using
funds for contributions or expenses related to political activity and
making payments to foreign or domestic government officials or employees
or to foreign or domestic political parties or campaigns, in violation of
applicable Law, including the Foreign Corrupt Practices Act of 1977. The
Company and its Subsidiaries have each obtained and are in compliance with
all permits, certifications, approvals, registrations, consents,
authorizations, franchises, variances, exemptions and orders issued or
granted by a Governmental Entity ("Licenses") necessary to conduct their
respective businesses as presently conducted, except for those the absence
of which would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(j) Takeover Statutes; Absence of Rights Plan. No "fair price,"
"moratorium," "control share acquisition" or other similar anti-takeover
Law (each, a "Takeover Statute") or any anti-takeover provision in the
Company's certificate of incorporation or bylaws is applicable to the
Merger or the other transactions contemplated by this Agreement. The
adoption of this Agreement and the Merger by the Company's board of
directors represents all the actions necessary to render inapplicable to
this Agreement, the Merger and the other transactions contemplated by this
Agreement, the restrictions on "business combinations" (as used in Section
203 of the DGCL) set forth in Section 203 of the DGCL to the extent, if
any, such restrictions would otherwise be applicable to this Agreement,
the Merger, the other transactions contemplated by this Agreement or
Parent or Merger Sub or any of their Affiliates. Neither the Company nor
any of its Subsidiaries is party to any rights agreement, stockholder
rights plan (or similar plan commonly referred to as a "poison pill") or
Contract (in each case other than the Stock Plans existing on the date
hereof and Company Options issued thereunder) under which the Company or
any of its Subsidiaries is or may become obligated to sell or otherwise
issue, register, redeem, repurchase, vote, transfer or dispose of any
shares of its capital stock or any other securities.
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(k) Environmental Matters.
(i) With respect to the real property owned by the
Company that is located in Scranton, Pennsylvania ("Scranton"), as of the
Applicable Date: (A) the Company and each of its Subsidiaries has complied in
all material respects with all Environmental Laws and has not received written
notice of any pending or threatened Environmental Action relating to the Company
or any of its Subsidiaries relating to Scranton; (B) neither the Company nor any
of its Subsidiaries has received any written notice from any Governmental Entity
indicating that Scranton, or any real property adjacent thereto, has been or may
be placed on any federal, state, or local list as a result of the presence of
Hazardous Materials or violations of Environmental Law; (C) no Hazardous
Materials have spilled, discharged, released, emitted, injected or leaked from,
in, on, or migrated to or from Scranton in material violation of applicable
Environmental Law; and (D) the Company has made available to Parent copies of
all reports, audits, studies or analyses of any kind whatsoever of the Company
or any of its Subsidiaries that are in the Company's possession, custody or
control relating to Hazardous Materials at or on Scranton or any Environmental
Action directly involving Scranton.
(ii) With respect to all real property other than
Scranton that is owned, leased or controlled by the Company or any Subsidiary,
except in each case for such matters that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect: (A)
the Company and its Subsidiaries have complied at all times since the Applicable
Date with all applicable Environmental Laws; and (B) the Company and its
Subsidiaries possess all permits, licenses, registrations, identification
numbers, authorizations and approvals required under applicable Environmental
Laws for the operation of their respective businesses as presently conducted.
Neither the Company nor any Subsidiary has (i) received any written claim,
request for information, notice of violation or citation concerning any material
violation or potential or alleged material violation of any applicable
Environmental Law or concerning any potential, actual or alleged material
responsibility or liability of the Company or any of its Subsidiaries arising
under or pursuant to any Environmental Law or (ii) created or assumed any
material liabilities, guarantees or obligations under any Environmental Law,
consent decree or contract with any third party, including any Governmental
Entity, related to any property currently or formerly owned, operated or leased
by the Company or any of its Subsidiaries. There are no writs, injunctions,
decrees, orders or judgments outstanding, or any actions, suits or proceedings
pending or, to the Knowledge of the Company, threatened, concerning material
noncompliance by, or actual or potential material liability of, the Company or
any Subsidiary with any Environmental Law. The Company has made available to
Parent copies of all reports, audits, studies or analyses of any kind whatsoever
of the Company or any of its Subsidiaries that are in the Company's possession,
custody or control relating to Hazardous Materials at or on such real property
or any Environmental Action directly involving such real property.
As used herein, (A) the term "Environmental Law" means, as
currently in effect, any applicable law, regulation, code, license, permit,
order, judgment, decree or injunction from any Governmental Entity (1)
concerning the protection of the environment, (including, without limitation,
air, water, soil and natural resources) or (2) the use, storage, handling,
release or disposal of Hazardous Substances, (B) the term "Hazardous Substance"
means any substance
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presently listed, defined, designated or classified as hazardous, toxic or
radioactive under any applicable Environmental Law including, without
limitation, petroleum and any derivative or by-products thereof and (C) the term
"Environmental Action" means any action, suit, claim, hearing, arbitration or
proceeding (whether judicial or administrative) by or before any Governmental
Entity involving violations of Environmental Laws or releases, discharges, leaks
of Hazardous Materials in, on, or migrating to or from the any real property
owned, leased or controlled by the Company.
(l) Taxes.
(i) The Company and each of its Subsidiaries: (A) have
prepared in good faith and duly and timely filed (taking into account any
extension of time within which to file) all income and other material Tax
Returns required to be filed by any of them, and all such Tax Returns
were, at the time they were filed, true, correct and complete in all
material respects, (B) have timely paid all material Taxes that are
required to be paid by any of them (whether or not shown on any Tax
Return), (C) have established adequate reserves in accordance with GAAP
for all Taxes not yet due and payable, in respect of taxable periods (or
portions thereof) ending on or prior to the Closing Date, (D) have timely
withheld and paid over to the appropriate Governmental Entity all amounts
that the Company or any of its Subsidiaries is obligated to withhold from
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, affiliate or third party except where the failure to so
withhold and pay such amounts would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, and are
in compliance in all material respects with all applicable rules and
regulations regarding the solicitation, collection and maintenance of any
forms, certifications and other information required in connection
therewith, and (E) have not requested or been granted any waivers or
extensions of any statute of limitations with respect to any material
amount of Taxes or agreed to any extension of time with respect to any
material amount of Tax assessment or deficiency.
(ii) Neither the Company nor any of its Subsidiaries has
been a member of an affiliated group of corporations (within the meaning
of Section 1504 of the Code) or any similar group defined under a similar
provision of state, local or foreign Law, other than a group of which the
Company is the common parent, for any taxable period for which the statute
of limitations has not expired. Neither the Company nor any of its
Subsidiaries (A) is a party to any agreement or arrangement relating to
the indemnification, apportionment, sharing, separation, assignment or
allocation of any material Tax or material Tax asset (other than an
agreement or arrangement solely among members of a group the common parent
of which is the Company) or any closing agreement with any Tax Authority
or (B) has any material liability for Taxes of any Person (other than the
Company or any of its Subsidiaries) under Treasury Regulations section
1.1502-6 (or any predecessor or successor thereof or any analogous or
similar provision of state, local or foreign Tax Law), by contract,
agreement or otherwise. No
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power of attorney with respect to any material Taxes of the Company or any
of its Subsidiaries will be in force on the Closing Date.
(iii) To the Knowledge of the Company, as of the date
hereof, there are not pending or threatened in writing any audits,
examinations, investigations or other proceedings in respect of any
material amount of Taxes or material Tax matters of the Company or any of
its Subsidiaries. The Company has made available to Parent (A) true and
correct copies of the income and other material Tax Returns filed by the
Company and its Subsidiaries for the 2003, 2004, 2005 and 2006 fiscal
years and (B) a list of all audits, examinations, investigations or other
proceedings relating to such Tax Returns.
(iv) Neither the Company nor any of its Subsidiaries has
been a "controlled corporation" or a "distributing corporation" in any
distribution that was purported or intended to be governed by Section 355
of the Code (or any similar provision of state, local or foreign Law) (A)
occurring during the two-year period ending on the date hereof, or (B)
that otherwise constitutes part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code) that
includes the Merger.
(v) Neither the Company nor its Subsidiaries have
engaged in any "reportable transaction" (as such term is defined in
Treasury Regulations section 1.6011-4(b)(1)) or any similar provision of
state, local or foreign Tax Law.
As used in this Agreement, (A) the term "Tax" (including, with
correlative meaning, "Taxes") includes all federal, state, local and foreign
income, profits, franchise, gross receipts, gains, capital gains, customs duty,
capital stock, escheat, severances, stamp, payroll, sales, employment, social
security, unemployment, disability, use, real property, personal property,
withholding, excise, production, recording, value added, transfer, occupancy,
alternative or add-on minimum, estimated and other taxes, duties or assessments
of any nature whatsoever, together with all interest, penalties and additions ,
whether disputed or not, any liability for an amount of such Taxes as a
successor, transferee or indemnitor, and any liability pursuant to Treasury
Regulations section 1.1502-6 or any similar provision of state, local or foreign
Law, imposed with respect to such amounts and any interest in respect of such
penalties and additions, (B) the term "Tax Return" includes all returns and
reports (including forms, elections, declarations, disclosures, claims for
refunds, schedules, attachments, estimates and information returns or
statements) filed or required to be supplied to a Tax authority relating to
Taxes (including any amendments thereof), and (C) "Treasury Regulations" means
those final, temporary and proposed regulations promulgated by the United States
Department of the Treasury or any agency thereunder and any successor
regulations.
(m) Labor Matters. Neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement with a labor union or labor organization, nor are there any
employees of the Company or any of its Subsidiaries represented by a labor
union, representative body, works council, or other labor organization,
and there are, to the Knowledge of the Company, no activities or
- 23 -
proceedings of any labor union, representative body, works council, or
other organization to organize any employees of the Company or any of its
Subsidiaries or compel the Company or any of its Subsidiaries to bargain
with any such union or representative body. Since the Applicable Date,
neither the Company nor any of its Subsidiaries is the subject of any
material proceeding asserting that the Company or any of its Subsidiaries
has committed an unfair labor practice and there is no pending or, to the
Knowledge of the Company, threatened, nor has there been since the
Applicable Date, any labor strike, boycott, dispute, walk-out, work
stoppage, slow-down, lockout or any other similar event involving the
Company or any of its Subsidiaries. Set forth in Section 5.1(m) of the
Company Disclosure Schedule is a listing of all of the arbitration
decisions since the Applicable Date affecting the employees subject to the
collective bargaining agreement detailed in Section 5.1(m) of the Company
Disclosure Schedule. The Company has complied in all material respects
with all applicable laws with respect to employment and employment
practices, terms and conditions of employment, wages and hours and
occupational health and safety. Neither the Company nor any of its
Subsidiaries has any liability under the WARN Act or any other similar Law
requiring advance notification for the termination of employees. There
have been no "mass layoff(s)" or "plant closing(s)" as defined by the WARN
Act or any other similar Law requiring advance notification for the
termination of employees during the prior twenty-four (24) months. All
employees working for the Company or any of its Subsidiaries are listed in
Section 5.1(m) of the Disclosure Schedule, which includes for each
employee his or her (1) name, (2) job title, (3) salary, (4) location and
(5) union status. Neither the Company nor any of its Subsidiaries has
assigned any employment contract or other employment agreement to which
the Company and/or any of its Subsidiaries is a party.
(n) Intellectual Property.
(i) Set forth on Section 5.1(n)(i) of the Company
Disclosure Schedule is a true and complete list of all domestic and
foreign (A) issued patents and pending patent applications, (B) trademark
and service xxxx registrations and applications for registration thereof,
(C) copyright registrations and applications for registration thereof, and
(D) internet domain name registrations, in each case that are owned by the
Company or any of its Subsidiaries. With respect to each item of
Intellectual Property required to be identified in Section 5.1(n)(i) of
the Company Disclosure Schedule, (x) the Company or a Subsidiary of the
Company is the sole record owner of such item, free and clear of any Lien,
and (y) such item is subsisting and has not been adjudged invalid or
unenforceable and, to the Knowledge of the Company, such item is valid and
enforceable.
(ii) Set forth on Section 5.1(n)(ii) of the Company
Disclosure Schedule is a true and complete list of all Company IP
Agreements.
(iii) The Company and its Subsidiaries own or have
sufficient rights to use all Intellectual Property actually used in and
material to, or necessary for the operation of, their businesses as
presently conducted. Except as would not reasonably be
- 24 -
expected to have a Company Material Adverse Effect, all of such rights
shall survive unchanged by the consummation of the transactions
contemplated by this Agreement. No written claim has been asserted or, to
the Knowledge of the Company, threatened against the Company or its
Subsidiaries (A) seeking to deny or restrict the use by the Company or any
Subsidiary of the Company of any of the Intellectual Property owned by the
Company or any of its Subsidiaries (the "Owned Intellectual Property"),
(B) alleging that the Intellectual Property licensed to the Company or any
of its Subsidiaries (the "Licensed Intellectual Property") is being
licensed or sublicensed in conflict with the terms of any license or other
agreement, or (C) challenging the ownership, validity, registerability or
enforceability, of any Owned Intellectual Property or Licensed
Intellectual Property.
(iv) To the Knowledge of the Company, (A) no Person is
infringing or misappropriating in any material respect any Owned
Intellectual Property, and (B) the operation of the business of the
Company and its Subsidiaries as currently conducted and the use by the
Company and its Subsidiaries of the Owned Intellectual Property and the
Licensed Intellectual Property in connection therewith does not infringe,
misappropriate or otherwise violate the Intellectual Property of any other
Person.
For purposes of this Agreement "Company IP Agreements" means all
material agreements pertaining to Owned Intellectual Property or Licensed
Intellectual Property, excluding any agreement with respect to
commercially-available, off-the-shelf software.
For purposes of this Agreement, the term "Intellectual Property"
means all: (i) trademarks, service marks, brand names, Internet domain names,
logos, symbols, trade dress, trade names, and similar indicia of origin, all
applications and registrations for the foregoing, and all goodwill associated
therewith, including all renewals of same; (ii) all inventions (whether or not
patentable and whether or not reduced to practice), invention disclosures,
patents, and applications therefor, including provisionals, reissues, revisions,
divisions, continuations, continuations-in-part and renewal applications; (iii)
trade secrets and confidential business information; (iv) copyrightable works
(including databases and other compilations of information), and copyrights and
registrations and applications therefor, and all renewals, extensions,
restorations and reversions thereof; and (v) all rights of privacy and
publicity.
(o) Insurance. Section 5.1 (o) of the Company Disclosure
Schedule sets forth a correct and complete list of the insurance policies
(the "Insurance Policies") held by, or for the benefit of, the Company or
any of its Subsidiaries, including the underwriter of such policies and
the amount of coverage thereunder. There is no claim by the Company or any
Subsidiary pending under any such policies which (a) has been denied or
disputed by the insurer other than denials and disputes in the ordinary
course of business consistent with past practice or (b) if not paid, would
reasonably be expected to have a Company Material Adverse Effect. The
Company and each of its Subsidiaries is covered by valid and currently
effective insurance policies issued in favor of the Company or one or more
of its Subsidiaries that, in the reasonable judgment of the Company and
such Subsidiaries, are adequate (in type, scope, amounts, deductible,
- 25 -
exclusions and other terms) for companies of similar size in the industry
and locales in which the Company and its Subsidiaries operate, and all
premiums due with respect to all such insurance policies have been paid,
except for such premiums the failure of which to pay would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Neither the Company nor any Subsidiary has
received any written notice of (i) cancellation or termination, (ii)
refusal or denial of any coverage, reservation of rights or rejection of
any claim under, or (iii) adjustment in the amount of the premiums payable
with respect to any existing insurance policy set forth in Section 5.1(o)
of the Company Disclosure Schedule that is held by, or for the benefit of,
any of the Company or any of its Subsidiaries, other than as would not
reasonably be expected to have a Company Material Adverse Effect.
(p) Brokers and Finders. Neither the Company nor any of its
Affiliates has incurred any liability for any brokerage fees, commissions
or finders fees to any broker or finder employed or engaged thereby in
connection with the Merger or the other transactions contemplated in this
Agreement for which Parent or any of its Affiliates (including the
Surviving Corporation from and after the Effective Time) would be liable.
The Company has made available to Parent a true and complete copy of its
engagement letter (including all amendments thereto) with Xxxxxx Brothers,
which engagement letter (as so amended) sets forth the fees of Xxxxxx
Brothers payable by the Company and its Affiliates in connection with the
transactions contemplated by this Agreement, all of which fees shall be
borne by the Company.
(q) Material Contracts. The Company has made available to
Parent true, correct and complete copies of all contracts, agreements,
commitments, arrangements, leases (including with respect to personal
property) and other instruments (collectively, including the Company IP
Agreements, Lease Agreements and Insurance Policies, the "Material
Contracts") to which the Company or any of its Subsidiaries is a party or
by which the Company, any of its Significant Subsidiaries or any of their
respective properties or assets is bound that: (i) contain covenants that,
prior to or following the consummation of the Merger, limit or would
reasonably be expected to limit the ability of the Surviving Corporation
or any of the Company's Subsidiaries to compete or operate in any business
or with any Person or in any geographic area, or to sell, supply or
distribute any service or product or to otherwise operate or expand its
current businesses; (ii) provide for a joint venture, partnership or
similar arrangement that is material to the business of the Company and
the Subsidiaries, taken as a whole; (iii) provided for indebtedness for
borrowed money or similar obligations to or from third parties in an
amount in excess of $500,000, (iv) provide for the acquisition or
disposition, directly or indirectly (by merger or otherwise), of assets or
capital stock or other equity interests of another person for aggregate
consideration under such contract in excess of $500,000 (other than
acquisitions or dispositions of assets in the ordinary course of business,
including, without limitation, acquisitions and dispositions of
inventory); (v) is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K promulgated by the SEC) to be performed after
the date of this Agreement and has not
- 26 -
been filed and made available to Parent in true, complete and correct
form; or (vi) involves annual expenditures by or liabilities of the
Company or any of its Subsidiaries in excess of $500,000 and which are not
cancelable (without material penalty, cost or other liability to the
Company or any of its Subsidiaries) within 90 days. Each Material Contract
is in full force and effect and, subject to the Bankruptcy and Equity
Exception, is valid and binding on the Company and any of its Subsidiaries
that is a party thereto, and may not be terminated by its terms by any
party thereto (other than the Company or any of its Subsidiaries) as a
result of the consummation of the transactions contemplated hereby. The
Company and each of its Subsidiaries has performed all obligations
required to be performed by it to date under each Material Contract,
except where the failure to perform such obligations would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries
has received written notice of (i) the existence of any event or condition
which constitutes or, after notice or lapse of time or both, would
constitute a breach or default on the part of the Company or any of its
Subsidiaries under any such Material Contract, except for any such breach
or default that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect or (ii) termination or
cancellation under such Material Contract.
(r) Properties. Section 5.1(r) of the Company Disclosure Schedule
lists all real property owned by the Company or any of its Subsidiaries
and all real property lease agreements (the "Lease Agreements") by which
the Company or any of its Subsidiaries are bound (or are guarantors
under). Except as would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect, the Company or one
of its Subsidiaries: (i) has good title to all the properties and assets
reflected in the latest audited balance sheet included in the Company
Reports as being owned by the Company or one of its Subsidiaries or
acquired after the date thereof that are material to the Company's
business on a consolidated basis (except properties sold or otherwise
disposed of since the date thereof in the ordinary course of business),
free and clear of all Liens, except (A) statutory liens securing payments
not yet due, (B) such Liens as do not materially affect the use of the
properties or assets subject thereto or affected thereby or otherwise
materially impair business operations at such properties or (C) Liens
related to indebtedness reflected on the consolidated financial statements
of the Company included in the Company Reports; and (ii) is the lessee of
all leasehold estates reflected in the latest audited financial statements
included in the Company Reports or acquired after the date thereof that
are material to its business on a consolidated basis (except for leases
that have expired by their terms since the date thereof or been assigned,
terminated or otherwise disposed of in the ordinary course of business)
and is in possession of the properties purported to be leased thereunder,
and each such lease is valid without default thereunder by the lessee or,
to the Company's Knowledge, the lessor.
(s) Affiliate Transactions. No executive officer or director
of the Company or any of its Subsidiaries or any person beneficially
owning 5% or more of the outstanding Shares (or any of the immediate
family members of any of the foregoing) is a
- 27 -
party to any material Contract with or binding upon the Company or any of
its Subsidiaries or any of their respective properties or assets or has
any material interest in any material property owned by the Company or any
of its Subsidiaries or has engaged in any transaction with any of the
foregoing within the last twelve months.
(t) Suppliers and Distributors. Set forth in Section 5.1(t)
of the Company Disclosure Schedule is a list of the ten largest suppliers
and ten largest distributors of the Company based on the dollar value of
products purchased by the Company or by such distributor, as applicable,
for the fiscal year ended March 3, 2007. Since such date, there has not
been, nor, to the Knowledge of the Company, is it anticipated that, as a
result of the Merger or the other transactions contemplated by this
Agreement, there will be any material change in relations with any of the
major suppliers or distributors of the Company and its Subsidiaries.
(u) Vote Required. The affirmative vote of the holders of a
majority of the Shares outstanding on the record date for the Stockholders
Meeting and entitled to vote thereat is the only vote of the holders of
any class or series of the Company's capital stock necessary for the
adoption of this Agreement by the Company or for the Company to consummate
the Merger and the other transactions contemplated hereby.
5.2 Representations and Warranties of Parent and Merger Sub. Except as
set forth in the disclosure schedule delivered to the Company by Parent
simultaneously with the execution and delivery of this Agreement, each of Parent
and Merger Sub hereby jointly and severally represents and warrants to the
Company that:
(a) Organization, Good Standing and Qualification. Each of
Parent and Merger Sub is a legal entity duly organized, validly existing
and in good standing under the Laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and
authority to own, lease and operate its properties and assets and to carry
on its business as presently conducted and is qualified to do business in
each jurisdiction where the ownership, leasing or operation of its assets
or properties or conduct of its business requires such qualification,
except where the failure to be so qualified or in such good standing, or
to have such power or authority, would not, individually or in the
aggregate, reasonably be expected to prevent, materially delay or impair
the ability of Parent and Merger Sub to consummate the Merger and the
other transactions contemplated by this Agreement.
(b) Corporate Authority. Each of Parent and Merger Sub has
all requisite corporate power and authority and has taken all corporate
action necessary in order to execute, deliver and perform its obligations
under this Agreement, subject only to the adoption of this Agreement by
Parent as the sole stockholder of Merger Sub, which adoption by Parent
will occur upon its execution and delivery of this Agreement, and to
consummate the Merger. This Agreement has been duly executed and delivered
by each of Parent and Merger Sub and is a valid and binding agreement of
Parent and Merger
- 28 -
Sub, enforceable against each of Parent and Merger Sub in accordance with
its terms, subject to the Bankruptcy and Equity Exception.
(c) Governmental Filings; No Violations; Etc.
(i) Other than the filings and/or notices pursuant to
Section 1.3 and under the HSR Act and any other applicable merger control
laws (the "Parent Approvals"), no notices, reports or other filings are
required to be made by Parent or Merger Sub with, nor are any consents,
registrations, approvals, permits or authorizations required to be
obtained by Parent or Merger Sub from, any Governmental Entity in
connection 3with the execution, delivery and performance of this Agreement
by Parent and Merger Sub and the consummation by Parent and Merger Sub of
the Merger and the other transactions contemplated hereby, except those
that the failure to make or obtain would not, individually or in the
aggregate, reasonably be expected to prevent, materially delay or
materially impair the ability of Parent or Merger Sub to consummate the
Merger and the other transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this
Agreement by Parent and Merger Sub do not, and the consummation by Parent
and Merger Sub of the Merger and the other transactions contemplated
hereby will not, constitute or result in (A) a breach or violation of, or
a default under, or conflict with, the certificate of incorporation or
bylaws or comparable governing documents of Parent or Merger Sub, (B) with
or without notice, lapse of time or both, a breach or violation of, a
termination (or right of termination) or a default under, the creation or
acceleration of any obligations or the creation of a Lien on any of the
assets of Parent or Merger Sub pursuant to, any material contracts or
agreements binding upon Parent or Merger Sub or (C) assuming compliance
with the matters referenced in Section 5.2(c)(i), a violation of any Law
to which Parent or Merger Sub is subject, except, in the case of clause
(B) or (C) above, for any such breach, violation, termination (or right
thereof), default, creation, acceleration or change that would not,
individually or in the aggregate, reasonably be expected to prevent,
materially delay or materially impair the ability of Parent or Merger Sub
to consummate the Merger and the other transactions contemplated by this
Agreement.
(d) Litigation. As of the date hereof, there are no civil,
criminal or administrative actions, suits, claims, hearings or proceedings
pending or, to the actual knowledge of Parent (without inquiry),
threatened against Parent or Merger Sub that seek to enjoin, or would
reasonably be expected to have the effect of preventing, making illegal,
or otherwise interfering with, any of the transactions contemplated by
this Agreement, except as would not, individually or in the aggregate,
reasonably be expected to prevent, materially delay or materially impair
the ability of Parent or Merger Sub to consummate the Merger and the other
transactions contemplated by this Agreement.
(e) Financing. Parent has delivered to the Company (i) true
and complete copies of executed written commitments, except for that
certain fee letter, dated the date of this Agreement, from the lenders to
the borrower thereunder (collectively, the "Debt
- 29 -
Financing Commitments"), pursuant to which the lenders party thereto have
agreed, subject only to the terms and conditions set forth therein, to
provide or cause to be provided to Parent and/or Merger Sub debt financing
in the amounts set forth therein for the purposes of financing the
transactions contemplated by this Agreement and related fees and expenses
(the "Debt Financing") and (ii) true and complete copies of executed
written commitments (collectively, the "Equity Financing Commitments" and
together with the Debt Financing Commitments, the "Financing
Commitments"), pursuant to which the parties thereto have agreed, subject
only to the terms and conditions set forth therein, to provide or cause to
be provided to Parent and/or Merger Sub equity financing in the amounts
set forth therein for the purposes of financing the transactions
contemplated by this Agreement and related fees and expenses (the "Equity
Financing" and together with the Debt Financing, the "Financing"). As of
the date of this Agreement, none of the Financing Commitments has been
amended or modified, and the respective commitments contained in the
Financing Commitments have not been withdrawn or rescinded, in any
respect. Parent has fully paid any and all commitment fees or other fees
in connection with the Financing Commitments that are payable on or before
the date of this Agreement in connection therewith or pursuant thereto,
and the Financing Commitments are in full force and effect. There are no
conditions precedent or other contingencies related to the funding of the
full amount of the Financing, other than as set forth in the Financing
Commitments. No event has occurred which, with or without notice, lapse of
time or both, would constitute a breach or default on the part of Parent
or Merger Sub under any of the Debt Financing Commitments. Neither Parent
nor Merger Sub is aware of any reason why the conditions set forth in the
Financing Commitments would not be satisfied on or before the Closing Date
or such other earlier date as may be set forth in the Financing
Commitments. Subject to the terms and conditions of the Financing
Commitments, and subject to the terms and conditions of this Agreement,
the aggregate proceeds contemplated by the Financing Commitments, together
with the cash on hand of Parent and Merger Sub on the Closing Date, will
be sufficient to pay the aggregate Per Share Merger Consideration and any
other amounts required to be paid in connection with the consummation of
the transactions contemplated hereby, and to pay all related fees and
expenses.
(f) Brokers. Neither Parent, Merger Sub nor any of their
respective Affiliates has incurred any liability for any brokerage fees,
commissions or finders fees to any broker or finder employed or engaged
thereby in connection with the Merger or the other transactions
contemplated in this Agreement for which the Company (other than the
Surviving Corporation from and after the Effective Time) would be liable.
(g) Guaranty. Each Guaranty is in full force and effect and
is a valid and binding obligation of the respective Guarantor thereunder,
enforceable against each Guarantor in accordance with its terms, and no
event has occurred, which, with or without notice, lapse of time or both,
would constitute a default on the part of any Guarantor under the
applicable Guaranty. Neither Guaranty has been amended or modified in any
respect.
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(h) Ownership of Shares. As of the date hereof, neither
Parent, Merger Sub nor any of their respective Affiliates owns (directly
or indirectly, beneficially or of record) any Shares and neither Parent
nor Merger Sub holds any rights to acquire any Shares except pursuant to
this Agreement.
(i) Solvency. Assuming (a) that the Company is solvent
immediately prior to the Effective Time, (b) the satisfaction of the
conditions to Parent's and Merger Sub's obligation to consummate the
Merger, or waiver of such conditions, (c) the accuracy and completeness of
the representations and warranties of the Company contained herein
including those set forth in Article V, and (d) the Company Reports fairly
present the consolidated financial condition of the Company and its
Subsidiaries as of the end of the periods covered thereby and the
consolidated results of operations of the Company and its Subsidiaries for
the periods covered thereby, and after giving effect to the transactions
contemplated by this Agreement, including the Financing, any alternative
financing and the payment of the aggregate Per Share Merger Consideration,
any other repayment or refinancing of debt contemplated in the Financing
Commitments, payment of all amounts required to be paid in connection with
the consummation of the transactions contemplated hereby, and payment of
all related fees and expenses, each of Parent and the Surviving
Corporation will be Solvent as of the Effective Time and immediately after
the consummation of the transactions contemplated hereby. For the purposes
of this Agreement, the term "Solvent" when used with respect to any
Person, means that, as of any date of determination, (i) the amount of the
"fair saleable value" of the assets of such Person will, as of such date,
exceed (A) the value of all "liabilities of such Person, including
contingent and other liabilities," as of such date, as such quoted terms
are generally determined in accordance with applicable Laws governing
determinations of the insolvency of debtors, and (B) the amount that will
be required to pay the probable liabilities of such Person on its existing
debts (including contingent and other liabilities) as such debts become
absolute and mature, (ii) such Person will not have, as of such date, an
unreasonably small amount of capital for the operation of the businesses
in which it is engaged or proposed to be engaged following such date, and
(iii) such Person will be able to pay its liabilities, including
contingent and other liabilities, as they mature. For purposes of this
definition, "not have an unreasonably small amount of capital for the
operation of the businesses in which it is engaged or proposed to be
engaged" and "able to pay its liabilities, including contingent and other
liabilities, as they mature" means that such Person will be able to
generate enough cash from operations, asset dispositions or refinancing,
or a combination thereof, to meet its obligations as they become due.
(j) No Competing Businesses. Parent is not, nor does it have
any Affiliates that are, engaged in any business or businesses that
compete in any material way with the respective businesses of the Company
or its Subsidiaries.
(k) Subsidiaries. Parent has no Subsidiaries other than
Merger Sub.
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ARTICLE VI
COVENANTS
6.1 Interim Operations. The Company covenants and agrees as to itself
and its Subsidiaries that, after the date hereof and prior to the Effective Time
(unless Parent shall otherwise approve in writing, such approval not to be
unreasonably withheld, and except as otherwise expressly contemplated by this
Agreement) and except as required by applicable Law, the business of it and its
Subsidiaries shall be conducted in the ordinary and usual course consistent with
past practice and to the extent consistent therewith, the Company and its
Subsidiaries shall use their respective commercially reasonable efforts to
preserve their business organizations intact and maintain existing relations and
goodwill with Governmental Entities, customers, suppliers, landlords, licensors,
licensees, employees and business associates. Notwithstanding the foregoing and
in furtherance thereof, from the date of this Agreement until the Effective
Time, except (i) as otherwise contemplated by this Agreement, (ii) as Parent may
approve in writing (such approval not to be unreasonably withheld), (iii) as is
required by applicable Law or by any Governmental Entity or (iv) as set forth in
Section 6.1 of the Company Disclosure Schedule, the Company will not and will
not permit its Subsidiaries to:
(a) adopt or propose any change in its certificate of
incorporation (including by way of any certificates of designation) or
bylaws or other applicable governing instruments;
(b) merge or consolidate the Company or any of its
Subsidiaries with any other Person, except for any such transactions among
wholly owned Subsidiaries of the Company;
(c) acquire assets outside of the ordinary course of
business from any other Person with a value or purchase price in the
aggregate in excess of $500,000 in any transaction or series of related
transactions, other than acquisitions pursuant to Contracts in effect as
of the date of this Agreement, all of which are identified on Section
5.1(q) of the Company Disclosure Schedule;
(d) issue, sell, dispose of, grant, transfer or subject to
any Lien, or authorize the issuance, sale, disposition, grant or transfer
of or Lien on, any shares of capital stock of the Company or any of its
Subsidiaries, including, without limitation shares of Series A Junior
Participating Preferred Stock (in each case, other than (i) the issuance
or grant of Shares upon the exercise of Company Options that are
outstanding as of the date hereof, or (ii) the issuance of capital stock
or other equity interests by a wholly owned Subsidiary of the Company to
the Company or another wholly owned Subsidiary), or securities convertible
or exchangeable into or exercisable for any such capital stock or other
equity interests, or any options, warrants or other rights of any kind to
acquire any shares of such capital stock or such convertible or
exchangeable securities;
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(e) make any loans, advances or capital contributions to or
investments in any Person (other than the Company or any direct or
indirect wholly owned Subsidiary of the Company) in excess of $500,000 in
the aggregate;
(f) 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 (i) one quarterly dividend to be
issued by the Company in its fourth fiscal quarter ended March 3, 2007,
not to exceed $0.04 per Share in the aggregate, and (ii) dividends paid by
any direct or indirect wholly owned Subsidiary to the Company or to any
other direct or indirect wholly owned Subsidiary) or enter into any
agreement with respect to the voting of its capital stock;
(g) reclassify, split, combine, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital
stock or securities convertible or exchangeable into or exercisable for
any shares of its capital stock (other than the acquisition of any such
capital stock or other securities tendered by current or former employees
or directors in connection with the exercise of currently outstanding
Company Options);
(h) incur any indebtedness for borrowed money or guaranty
such indebtedness of another Person (other than a wholly owned Subsidiary
of the Company), or issue or sell any debt securities or warrants or other
rights to acquire any debt security of the Company or any of its
Subsidiaries, except in each case for indebtedness, in the ordinary course
of business and consistent with past practice, for borrowed money under
credit facilities, lines of credit and other debt or borrowing
arrangements reflected in the Financial Statements; provided, however that
neither the Company nor its Subsidiaries shall draw down on any amounts
under its existing credit facilities except to the extent necessary to
comply with letters of credit, under credit facilities, lines of credit
and other debt or borrowing arrangements reflected in the Company's most
recent financial statements included in the Company Reports issued from
time to time in the ordinary course of business in an amount not to exceed
$1,000,000 in the aggregate outstanding at any given time;
(i) make any material changes with respect to accounting
policies or procedures, except as required by changes in GAAP or Law or by
a Governmental Entity;
(j) make, alter or revoke any Tax accounting method or
material Tax election, or settle or compromise any Tax liability or
otherwise pay or consent to any assessment as the result of an audit, file
any amended Tax Return, enter into any closing agreement relating to
Taxes, or waive or extend the statute of limitations in respect of Taxes
(other than pursuant to extensions of time to file Tax Returns obtained in
the ordinary course of business);
(k) transfer, sell, lease, exclusively license, surrender,
divest, cancel, abandon or otherwise dispose of, or subject to any Lien,
any assets, product lines or
- 33 -
businesses of the Company or its Subsidiaries, other than inventory,
supplies and other assets in the ordinary course of business consistent
with past practice;
(l) except as expressly contemplated by this Agreement,
required pursuant to the Benefit Plans in effect on the date of this
Agreement disclosed in Section 5.1(h)(i) of the Company Disclosure
Schedule, pursuant to any employment or separation agreement disclosed in
Section 5.1(h)(vi) of the Company Disclosure Schedule or any collective
bargaining agreement disclosed in Section 5.1(m) of the Company Disclosure
Schedule, or as otherwise required by applicable Law, including to comply
with Section 409A of the Code, (i) grant or provide any severance or
termination payments or benefits to any officers, employee, independent
contractor or consultant of the Company or any of its Subsidiaries, (ii)
increase (or commit to increase) the compensation, perquisites or benefits
payable to any director, officer, employee, independent contractor or
consultant of the Company or any of its Subsidiaries, except for increases
with respect to non-executive employees in the ordinary course of business
consistent with past practice, (iii) enter into any new, or amend the
terms of any existing, employment agreement or Benefit Plan with any
member of management of the Company or any of its Subsidiaries, (iv) grant
any equity or equity-based awards that may be settled in Shares or any
other equity securities of the Company or any of its Subsidiaries or the
value of which is linked directly or indirectly, in whole or in part, to
the price or value of any Shares or other equity securities of the Company
or any of its Subsidiaries, (vi) accelerate the vesting or payment of
compensation payable or benefits provided or to become payable or provided
to any current or former director, officer, employee, independent
contractor or consultant, (vii) change the terms of any outstanding
Company Option, or (viii) terminate or materially amend any existing, or
adopt any new, Benefit Plan (other than changes that may be necessary to
comply with applicable Law, in each case that do not materially increase
the costs of any such Benefit Plans); provided, however, that the manner
of any change, amendment or acceleration to comply with Section 409A of
the Code must be approved by Parent, which approval shall not be
unreasonably withheld or delayed);
(m) enter into, amend or extend any collective bargaining
agreement or other labor agreement;
(n) enter into, amend or modify any agreement of the type
described in Section 5.1(s);
(o) make any capital expenditures in excess of $100,000
individually or $300,000 in the aggregate over and above those capital
expenditures identified in the capital expenditure plan set forth in
Section 6.1(o) of the Company Disclosure Schedule;
(p) enter into any rights agreement, establish any
stockholder rights plan (or similar plan commonly referred to as a "poison
pill") or enter into any Contract (in each case other than the Stock Plans
existing on the date hereof and Company Options issued thereunder) under
which the Company or any of its Subsidiaries is or may become
- 34 -
obligated to sell or otherwise issue, register, redeem, repurchase, vote,
transfer or dispose of any shares of its capital stock or any other
securities; or
(q) except as provided in Section 6.2 and Section 6.3,
agree, authorize or commit to do any of the foregoing.
Nothing contained in this Agreement (including, without limitation, this Section
6.1) is intended to give Parent, directly or indirectly, the right to control or
direct the Company's or any of its Subsidiaries' operations prior to the
Effective Time, and nothing contained in this Agreement is intended to give the
Company, directly or indirectly, the right to control or direct Parent's or any
of its Subsidiaries' operations. Prior to the Effective Time, each of Parent,
Merger Sub and the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its and its
Subsidiaries' respective operations.
Subject to the immediately preceding paragraph, in connection with the continued
operation of the Company and the Subsidiaries, the Company will reasonably
confer in good faith on a regular basis with one or more representatives of
Parent, designated by Parent to the Company in writing, regarding operational
matters, and the general status of ongoing operations of the Company and will
notify Parent promptly of any event or occurrence that has had or may reasonably
be expected to have a Company Material Adverse Effect or that, individually or
in the aggregate, has materially delayed or impaired, or would reasonably be
expected to materially delay or impair, consummation of the transactions
contemplated by this Agreement, or that, individually or in the aggregate, has
resulted, or would reasonably be expected to result, in the failure by the
Company to comply with or satisfy in any material respect any condition set
forth in Section 7.1 or 7.2; provided, however, that no such notification shall
affect the covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement. The Company acknowledges that
Parent does not and will not waive any rights it may have under this Agreement
as a result of such notice or consultations.
6.2 Acquisition Proposals.
(a) Notwithstanding any other provision of this Agreement to
the contrary, during the period beginning on the Effective Date and
continuing until 11:59 p.m. (New York time) on the 40th day thereafter
(the "Solicitation Period End-Date"), the Company and its directors (to
the extent acting in their capacity as such), officers, employees,
Affiliates, investment bankers, attorneys, accountants and other advisors
or representatives (collectively, "Representatives") shall have the right
to directly or indirectly: (i) initiate, solicit and encourage Acquisition
Proposals, including by way of providing access to non-public information
pursuant to (but only pursuant to) one or more Acceptable Confidentiality
Agreements, provided that the Company shall promptly provide to Parent any
non-public information relating to the Company or its Subsidiaries that is
provided to any Person given such access which was not previously provided
to or made available to Parent; and (ii) enter into and maintain
discussions or negotiations with respect to potential Acquisition
Proposals or otherwise cooperate with or assist or participate in, or
facilitate, any such inquiries, proposals, discussions or negotiations.
- 35 -
As used herein, the term: (A) "Acquisition Proposal" means any
inquiry, offer or proposal made by a Person or group at any time relating to any
direct or indirect acquisition of (i) more than 25% of the assets of the Company
and its Subsidiaries, taken as a whole, (ii) beneficial ownership of more than
25% of the outstanding equity securities of the Company, (iii) a tender offer or
exchange offer that, if consummated, would result in any Person beneficially
owning more than 25% of any class of outstanding equity securities of the
Company, or (iv) any merger, consolidation or other business combination,
recapitalization or similar transaction, including any single or multi-step
transaction or series of related transactions, in each case other than the
Merger; and (B) "Acceptable Confidentiality Agreement" shall mean a
confidentiality and standstill agreement that contains confidentiality and
standstill provisions that are no less favorable in the aggregate to the Company
than those contained in the Confidentiality Agreements.
(b) Subject to Section 6.2(c) and except with respect to any
Person who made an Acquisition Proposal received by the Company prior to
the Solicitation Period End-Date with respect to which the requirements of
Sections 6.2(c)(i), 6.2(c)(iii) and 6.2(c)(iv) have been satisfied as of
the Solicitation Period End-Date and thereafter continuously through the
date of determination, from the Solicitation Period End-Date until the
Effective Time or, if earlier, the termination of this Agreement in
accordance with Article VIII, the Company shall not, and shall cause its
Subsidiaries and Representatives not to, directly or indirectly: (i)
initiate, or solicit or knowingly facilitate or encourage (including by
way of providing information) the making, submission or announcement of
any inquiries, proposals or offers that constitute or may reasonably be
expected to lead to, any Acquisition Proposal or engage in any discussions
or negotiations with respect thereto or otherwise knowingly cooperate with
or knowingly assist or participate in, or knowingly facilitate or
knowingly encourage any such inquiries, proposals, discussions or
negotiations or (ii) approve, endorse or recommend, or publicly propose to
approve or recommend, an Acquisition Proposal or enter into any merger
agreement, letter of intent, agreement in principle, share purchase
agreement, asset purchase agreement or share exchange agreement, option
agreement or other similar agreement relating to an Acquisition Proposal
or enter into any agreement or agreement in principle requiring the
Company to abandon, terminate or fail to consummate the transactions
contemplated hereby or breach its obligations hereunder or propose or
agree to do any of the foregoing. Except with respect to any Acquisition
Proposal received on or prior to the Solicitation Period End-Date with
respect to which the requirements of Section 6.2(c)(i), 6.2(c)(iii) and
6.2(c)(iv) have been satisfied as of the Solicitation Period End-Date and
continuously thereafter (any Person so submitting such Acquisition
Proposal, an "Excluded Party"), as determined, with respect to any
Excluded Party, by the board of directors of the Company no later than the
later of (A) the Solicitation Period End-Date and (B) only if such
Acquisition Proposal is received less than two Business Days prior to the
Solicitation Period End-Date, the second Business Day following the date
on which the Company received such Excluded Party's Acquisition Proposal
(it being understood that following the Solicitation Period End-Date until
such time as the board of directors of the Company determines that a
Person is an Excluded Party, the
- 36 -
Company shall not be permitted to take any action with respect to such
Person that it would not be permitted to take with respect to non-Excluded
Parties pursuant to Section 6.2(c)), the Company shall immediately cease,
and shall cause its Subsidiaries and Representatives to terminate, any
solicitation, knowing encouragement, discussion or negotiation or knowing
cooperation with or knowing assistance or participation in, or knowing
facilitation or knowing encouragement of any such inquiries, proposals,
discussions or negotiations with any Persons conducted theretofore by the
Company, its Subsidiaries or any of its Representatives with respect to
any Acquisition Proposal, and shall request to be returned or destroyed
all non-public information provided by or on behalf of the Company or any
of its Subsidiaries to such Person. Notwithstanding anything contained in
Section 6.2 to the contrary, any Excluded Party shall cease to be an
Excluded Party for all purposes under this Agreement with respect to any
Acquisition Proposal immediately at such time as such Acquisition Proposal
made by such party is withdrawn, terminated or fails in the reasonable
determination of the board of directors of the Company to satisfy the
requirements of Sections 6.2(c)(i), 6.2(c)(ii), 6.2(c)(iii) and
6.2(c)(iv).
(c) Notwithstanding anything to the contrary contained in
Section 6.2(b), if at any time following the date of this Agreement and
prior to obtaining the Requisite Company Vote (i) the Company has received
a written Acquisition Proposal from a third party that the board of
directors of the Company believes in good faith to be bona fide, (ii) such
Acquisition Proposal did not occur as a result of a breach of this Section
6.2, (iii) the board of directors of the Company determines in good faith,
after consultation with its financial advisors and outside counsel, that
such Acquisition Proposal constitutes or may reasonably be expected to
result in a Superior Proposal and (iv) after consultation with its outside
counsel, the board of directors of the Company determines in good faith
that the failure to take such actions or any of the actions described in
the following clauses (A) and (B) would be inconsistent with its fiduciary
duties to the stockholders of the Company under applicable Law, then the
Company may (A) furnish information (including non-public information)
with respect to the Company and its Subsidiaries to the Person making such
Acquisition Proposal and (B) participate in discussions or negotiations
with the Person making such Acquisition Proposal regarding such
Acquisition Proposal; provided that the Company (x) gives Parent written
notice of the identity of such Person and of the Company's intention to
furnish information to, or enter into discussions with, such Person at
least one Business Day prior to furnishing any such information to, or
entering into discussions with, such Person, (y) will not, and will not
allow its Subsidiaries or Representatives to disclose any non-public
information to such Person without first entering or having entered into
an Acceptable Confidentiality Agreement and (z) contemporaneously with
making available any such information with such Person provide to Parent
any information concerning the Company or its Subsidiaries provided to
such other Person which was not previously provided to or made available
to Parent. Notwithstanding anything to the contrary contained in Section
6.2(b) or this Section 6.2(c), prior to obtaining the Requisite Company
Vote, the Company shall
- 37 -
in any event be permitted to take the actions described in clauses (A) and
(B) above with respect to any Excluded Party for so long as they are an
Excluded Party.
As used herein, the term "Superior Proposal" means any bona fide
Acquisition Proposal (with all percentages included in the definition of
"Acquisition Proposal" increased to 60% for purposes of this definition) made in
writing that (A) is on terms that the board of directors of the Company has
determined in good faith (after consultation with the Company's outside counsel
and financial advisor) are more favorable to the Company's stockholders from a
financial point of view than this Agreement, after giving effect to any
modifications (if any) proposed to be made to this Agreement or any other offer
by Parent after Parent's receipt of notice under Section 6.2(e), and (B) which
the board of directors of the Company has determined in good faith (after
consultation with the Company's outside counsel and financial advisor) is
reasonably likely to be consummated (if accepted). The foregoing determinations
shall be made after consultation with the Company's financial advisor and
outside counsel after taking into account all appropriate legal, financial
(including the financing terms of such proposal), regulatory and other aspects
of such proposal.
(d) Within 24 hours following the Solicitation Period
End-Date (or, with respect to any Excluded Party who is determined to be
an Excluded Party following the Solicitation Period End-Date in accordance
with Section 6.2(b)(B), within 24 hours of such determination), the
Company shall notify Parent in writing of the identity of each Excluded
Party and of the material terms and conditions of the Acquisition Proposal
received from such Excluded Party. From and after the Solicitation Period
End-Date, in the event that the Company or any of its Subsidiaries or
Representatives receives any of the following, the Company shall promptly
(but not more than one Business Day after such receipt) notify Parent
thereof: (i) any Acquisition Proposal or written indication by any Person
that would reasonably be expected to result in an Acquisition Proposal
(and provide the material terms and conditions thereof); (ii) any request
(other than from an Excluded Party, it being understood that the Company
shall continue to comply with its obligations under Section 6.2(a)(i) with
respect to such Excluded Party) for non-public information relating to the
Company or any of its Subsidiaries other than requests for information in
the ordinary course of business and unrelated to an Acquisition Proposal;
or (iii) any inquiry or request for (other than from or by an Excluded
Party) discussions or negotiations regarding any Acquisition Proposal.
Without limitation of Section 6.2(b), following the Solicitation Period
End-Date, the Company shall keep Parent informed on a current basis (and
in any event no later than one Business Day after the occurrence of any
significant changes, developments, discussions or negotiations) of the
status of any Acquisition Proposal, indication, inquiry or request
(including the material terms and conditions thereof and of any material
modification thereto), and any material developments, discussions and
negotiations, including furnishing copies of any material written
inquiries and correspondence, in all cases whether in connection with an
Excluded Party or third party pursuant to Section 6.2(c)(B). Without
limiting the foregoing, the Company shall promptly (within one Business
Day) notify Parent if it determines to provide non-public information or
to engage in discussions or negotiations
- 38 -
concerning an Acquisition Proposal pursuant to Section 6.2(c) other than
with an Excluded Party, in each case after the Solicitation Period
End-Date. The Company shall not, and shall cause its Subsidiaries not to,
enter into any confidentiality agreement with any Person subsequent to the
date of this Agreement that prohibits the Company from providing such
information to Parent. The Company shall not, and shall cause each of its
Subsidiaries not to, terminate, waive, amend or modify any provision of,
or grant permission or request under, any standstill or confidentiality
agreement to which it or any of its Subsidiaries is a party, and the
Company shall, and shall cause its Subsidiaries, to enforce the provisions
of any such agreement; provided, however, that the Company may permit a
proposal to be made under a standstill agreement if its board of directors
determines in good faith, after consultation with outside counsel, that
the Company's failure to do so would be inconsistent with the fiduciary
duties of the board of directors to the stockholders of the Company under
applicable Law.
(e) Notwithstanding anything in Section 6.2(b)(ii) to the
contrary, if the Company receives an Acquisition Proposal which the board
of directors of the Company concludes in good faith, after consultation
with outside counsel and its financial advisors, constitutes a Superior
Proposal after giving effect to all of the adjustments to the terms of
this Agreement which may be offered by Parent, including pursuant to
clause (ii) below, the board of directors of the Company may at any time
prior to obtaining the Requisite Company Vote, if it determines in good
faith, after consultation with outside counsel, that the failure to take
such action or any of the actions described in the following clauses (x),
(y) and (z) would be inconsistent with the fiduciary duties of the board
of directors to the stockholders of the Company under applicable Law, (x)
withdraw, modify or qualify, or propose publicly to withdraw, modify or
qualify, in a manner adverse to Parent or Merger Sub, the Company
Recommendation (a "Change of Company Recommendation"), (y) approve or
recommend such Superior Proposal, and/or (z) terminate this Agreement to
enter into a definitive agreement with respect to such Superior Proposal;
provided, however, that the board of directors of the Company may not
withdraw, modify or amend the Company Recommendation in a manner adverse
to Parent pursuant to the foregoing clause (x), approve or recommend such
Superior Proposal pursuant to the foregoing clause (y) or terminate this
Agreement pursuant to the foregoing clause (z) (it being agreed that any
such purported termination shall be null and void and of no effect) unless
(A) such Superior Proposal did not result from a breach by the Company of
this Section 6.2, (B) with respect to clause (z) above, the Company pays
the applicable Company Termination Fee pursuant to Section 8.2(c), and
(C):
(i) the Company shall have provided prior written notice
to Parent, of its intention to take any action contemplated in Section
6.2(e) with respect to a Superior Proposal at least four Business Days in
advance of taking such action (the "Notice Period"), which notice shall
set forth the material terms and conditions of any such Superior Proposal
(including the identity of the party making such Superior Proposal), and
shall have contemporaneously provided a copy of the relevant proposed
transaction agreements with the party making such Superior Proposal and
other material documents,
- 39 -
including the then-current form of each definitive agreement with respect
to such Superior Proposal (each, an "Alternative Acquisition Agreement");
and
(ii) prior to effecting such Change of Company
Recommendation, approving or recommending such Superior Proposal or
terminating this Agreement to enter into a proposed definitive agreement
with respect to such Superior Proposal, the Company shall provide Parent
the opportunity to submit an amended written proposal or to make a new
written proposal to the board of directors of the Company during the
Notice Period and shall itself and shall cause its Representatives to,
during the Notice Period, negotiate in good faith with Parent (to the
extent Parent so requests in writing) to make such adjustments to the
terms and conditions of this Agreement so that such Superior Proposal
ceases to constitute a Superior Proposal. In the event of any subsequent
material revisions to such Superior Proposal, the Company shall deliver a
new written notice to Parent and comply with the requirements of this
Section 6.2(e), and the Notice Period shall recommence.
(f) Nothing contained in this Agreement (including, without
limitation, this Section 6.2) shall prohibit the board of directors of the
Company from (i) taking and disclosing to the stockholders of the Company
a position contemplated by Rule 14e-2(a) and Rule 14d-9 promulgated under
the Exchange Act, or (ii) disclosing the fact that the board of directors
of the Company has received an Acquisition Proposal and the terms of such
proposal, if the board of directors of the Company determines, after
consultation with its outside legal counsel, that the failure to take any
such actions would be inconsistent with its fiduciary duties under
applicable Law or to comply with obligations under federal securities Laws
or NASDAQ or the rules and regulations of any U.S. securities exchange
upon which the capital stock of the Company is listed; provided, however,
that any such disclosures (other than "stop, look and listen" letters or
similar communications of the type contemplated by Rule 14d-9(f) under the
Exchange Act) shall be deemed to be a Change of Company Recommendation
(including for purposes of Section 8.1(g)) unless the board of directors
of the Company expressly publicly reaffirms its Company Recommendation not
more than five Business Days after a written request by Parent to do so
(provided that, if such written notice is delivered to the Company less
than five Business Days prior to the Stockholders Meeting, the board of
directors of the Company shall so reaffirm its Company Recommendation at
least one Business Day prior to the Stockholders Meeting).
6.3 No Change in Company Recommendation or Alternative Acquisition
Agreement. Other than in accordance with Section 6.2, and except as otherwise
provided in this Section 6.3, the board of directors of the Company shall not:
(a) withhold, withdraw, qualify, modify or amend (or
publicly propose or resolve to withhold, withdraw, qualify or modify), in
a manner adverse to Parent, the Company Recommendation with respect to the
Merger; or
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(b) approve or recommend, or publicly propose to approve or
recommend, an Acquisition Proposal or cause or permit the Company to enter
into any acquisition agreement, merger agreement, letter of intent,
agreement in principle, share purchase agreement, asset purchase agreement
or share exchange agreement, option agreement or other similar agreement
relating to an Acquisition Proposal or enter into any agreement or
agreement in principle requiring the Company to abandon, terminate or fail
to consummate the transactions contemplated hereby or breach its
obligations hereunder or resolve, propose or agree to do any of the
foregoing;
provided, however, that, notwithstanding anything to the contrary contained in
this Agreement, prior to the receipt of the Requisite Company Vote, the Company
shall have the right to withhold, withdraw, qualify, modify or amend the Company
Recommendation in a manner adverse to Parent and Merger Sub, if the board of
directors of the Company has determined in good faith, after consultation with
its outside counsel and financial advisor, that the failure to take such action
would be inconsistent with its fiduciary duties to the stockholders of the
Company under applicable Law; provided that, (i) the Company shall have provided
prior written notice to Parent of its board of directors' intention to take any
such action at least four Business Days in advance thereof, (ii) the Company
shall provide Parent the opportunity to submit an amended written proposal or to
make a new written proposal to the board of directors of the Company and shall
negotiate in good faith with Parent (to the extent Parent so requests in
writing) to make such adjustments to the terms and conditions of this Agreement
as could reasonably be expected to prevent such change in Company Recommendation
during such four Business Day period, and (iii) the board of directors of the
Company shall have determined in good faith, after considering any such amended
or new written proposal and after consultation with its outside counsel and
financial advisor, that the failure to so withhold, withdraw, qualify, modify or
amend the Company Recommendation would be inconsistent with its fiduciary duties
to the stockholders of the Company under applicable Law.
6.4 Proxy Statement.
(a) The Company shall prepare and file with the SEC, as
promptly as practicable after the date of this Agreement (but in any event
no later than 40 days following the date hereof), a proxy statement in
preliminary form relating to the Stockholders Meeting (such proxy
statement, including any amendment or supplement and any schedules and
exhibits thereto, the "Proxy Statement"). The Company will provide Parent
a reasonable opportunity to review and consult with the Company regarding
the Proxy Statement, or any amendments or supplements thereto, prior to
filing the same with the SEC, and the Company shall use its reasonable
best efforts to have the Proxy Statement cleared by the SEC.
(b) The Company shall cause the Proxy Statement, and the
letter to stockholders, the notice of meeting and the form of proxy
provided to stockholders of the Company therewith, in connection with the
Merger, at the time that the Proxy Statement is first mailed to the
stockholders of the Company and at the time of the Stockholders Meeting,
to not contain any untrue statement of a material fact or omit to state
any
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material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are
made, not misleading, and to comply, in all material respects, as to form
with the provisions of the Exchange Act and the rules and regulations of
the SEC promulgated thereunder; provided, however, that the obligations of
the Company contained in this Section 6.4(b) shall not apply to any
information supplied by Parent or Merger Sub or any of their respective
representatives to the Company for purposes of inclusion in or
incorporation by reference in the Proxy Statement.
(c) Parent shall cause any information supplied by it or
Merger Sub or any of their respective representatives for inclusion or
incorporation by reference in the Proxy Statement, at the time that the
Proxy Statement is first mailed to the stockholders of the Company and at
the time of the Stockholders Meeting, to not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading.
6.5 Stockholders Meeting. The Company acting through its board of
directors shall, in accordance with applicable Law and its certificate of
incorporation and bylaws, duly call, give notice of, convene and hold a meeting
of holders of Shares (the "Stockholders Meeting") as promptly as reasonably
practicable after the execution of this Agreement to consider and vote upon the
approval of the "agreement of merger" (as such term is used in Section 251 of
the DGCL) contained in this Agreement. Except in the event of a Change of
Company Recommendation specifically permitted by Section 6.2(e), (a) the Proxy
Statement shall include the Company Recommendation and (b) the board of
directors of the Company shall take all reasonable lawful action to solicit the
Company Requisite Vote.
6.6 Filings; Other Actions; Notification.
(a) Proxy Statement. The Company shall as soon as reasonably
practicable notify Parent of the receipt of all comments (written or oral)
of the SEC with respect to the Proxy Statement and of any request by the
SEC for any amendment or supplement thereto or for additional information
and shall as soon as reasonably practicable provide to Parent copies of
all material correspondence between the Company and/or any of its
Representatives on the one hand, and the SEC, on the other hand, with
respect to the Proxy Statement. The Company and Parent shall each use its
reasonable best efforts to promptly provide responses to the SEC with
respect to all comments received on the Proxy Statement by the SEC and the
Company shall cause the definitive Proxy Statement to be mailed promptly
after the date the SEC staff advises that it has no further comments
thereon or that the Company may commence mailing the Proxy Statement.
Subject to applicable Laws, the Company and Parent (with respect to itself
and Merger Sub) each shall, upon request by the other, furnish the other
with all information concerning itself, its Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the Proxy Statement or any other
statement, filing, notice or application made by or on behalf
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of Parent, the Company or any of their respective Subsidiaries to any
third party and/or any Governmental Entity in connection with the Merger
and the transactions contemplated by this Agreement.
(b) Cooperation. Subject to the terms and conditions set
forth in this Agreement, the Company and Parent shall cooperate with each
other and use (and shall cause their respective Subsidiaries to use) their
respective reasonable best efforts to take or cause to be taken all
actions, and do or cause to be done all things reasonably necessary,
proper or advisable on its part under this Agreement and applicable Laws
to consummate and make effective the Merger and the other transactions
contemplated by this Agreement as soon as practicable, including preparing
and filing as promptly as practicable all documentation to effect all
necessary notices, reports and other filings and to obtain as promptly as
practicable all consents, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any third party
and/or any Governmental Entity in order to consummate the Merger or any of
the other transactions contemplated by this Agreement (the "Governmental
Authorizations"). In connection with and without limiting the foregoing,
the Company and Parent shall each file or jointly file, if applicable, or
cause to be filed, promptly after the date of this Agreement, any
notifications, approval applications or the like required to be filed
under the HSR Act and all other merger control laws with respect to the
transactions contemplated hereby and Parent and the Company shall each pay
one-half of the filing and similar fees payable in connection therewith.
The Company and Parent will each request early termination of the waiting
period with respect to the Merger under the HSR Act. Subject to applicable
Laws relating to the exchange of information, Parent and the Company shall
have the right to review in advance, and to the extent practicable each
will consult with the other on and consider in good faith the views of the
other in connection with, all of the information relating to Parent or the
Company, as the case may be, and any of their respective Subsidiaries,
that appears in any filing made with, or written materials submitted to,
any third party and/or any Governmental Entity in connection with the
Merger and the other transactions contemplated by this Agreement
(including the Proxy Statement and information provided to unions, works
councils or other representative bodies or labor organizations). To the
extent practicable, none of the parties will file any documents or have
any communication with any Governmental Entity without prior consultation
with the other parties. Each party shall keep the others reasonably
apprised of the content and status of any material communications with,
and material communications from any Governmental Entity with respect to
the Merger. To the extent practicable, and permitted by a Governmental
Entity, each party hereto shall permit representatives of the other party
to participate in meeting (whether by telephone or in person) with such
Governmental Entity. In exercising the foregoing rights, each of the
Company and Parent shall act reasonably and as promptly as practicable.
(c) Status. Subject to applicable Laws, the Company and
Parent each shall keep the other reasonably apprised of the status of
matters relating to completion of the transactions contemplated hereby,
including (to the extent not prohibited by
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applicable Law) promptly furnishing the other with copies of any material
correspondence received by Parent or the Company, as the case may be, or
any of its Subsidiaries, from any third party and/or any Governmental
Entity with respect to the Merger and the other transactions contemplated
by this Agreement.
(d) Merger Clearance. Subject to the terms and conditions
set forth in this Agreement, without limiting the generality of the
undertakings pursuant to this Section 6.6, Parent and the Company agree to
take or cause to be taken the following actions:
(i) the prompt use of their respective commercially
reasonable best efforts to avoid the entry of any permanent, preliminary
or temporary injunction or other order, decree, decision, determination or
judgment that would restrain, prevent, enjoin or otherwise prohibit
consummation of the transactions contemplated by this Agreement, including
the proffer (and agreement) by Parent of its willingness to sell or
otherwise dispose of, or hold separate pending such disposition, and
promptly to effect the sale, disposal and holding separate or, such
assets, categories of assets or business or other segments of the Company
and/or Parent or either's respective Subsidiaries (and the entry into
agreements with, and submission to orders of, the relevant federal, state,
local or foreign court or Governmental Entity with jurisdiction over
enforcement of any applicable antitrust or competition Laws ("Government
Antitrust Entity") giving effect thereto), if such action should be
necessary to avoid, prevent, eliminate or remove the actual, anticipated
or threatened (A) commencement of any administrative, judicial or other
proceeding in any forum by any Government Antitrust Entity or (B) issuance
of any order, decree, decision, determination or judgment that would
restrain, prevent, enjoin or otherwise prohibit consummation of the Merger
by any Government Antitrust Entity; and
(ii) the prompt use of their respective commercially
reasonable best efforts, in the event that any permanent, preliminary or
temporary injunction, decision, order, judgment, determination or decree
is entered or issued, or becomes reasonably foreseeable or threatened to
be entered or issued, in any proceeding, review or inquiry of any kind
that would make consummation of the Merger in accordance with the terms of
this Agreement unlawful or that would delay, restrain, prevent, enjoin or
otherwise prohibit consummation of the Merger or the other transactions
contemplated by this Agreement, to resist, vacate, modify, reverse,
suspend, prevent, eliminate, avoid or remove such actual, anticipated or
threatened injunction, decision, order, judgment, determination or decree
so as to permit such consummation on the schedule contemplated by this
Agreement.
(e) FIRPTA Affidavit. Prior to the Closing on the Closing
Date, the Company shall cause to be delivered to Parent an executed
affidavit, in accordance with Treasury Regulations section 1.897-2(h)(2),
certifying that an interest in the Company is not a U.S. real property
interest within the meaning of Section 897(c) of the Code and setting
forth the Company's name, address and taxpayer identification number.
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6.7 Access and Reports. Subject to applicable Law, upon reasonable
notice, the Company shall (and shall cause its Subsidiaries to) afford Parent's
officers and other authorized Representatives reasonable access, during normal
business hours throughout the period prior to the Effective Time, to its
officers and other senior employees, properties, books, contracts and records
and, during such period, the Company shall (and shall cause its Subsidiaries to)
furnish promptly to Parent all information concerning its business, properties
and personnel as may reasonably be requested; provided that no investigation
pursuant to this Section 6.7 shall affect or be deemed to modify any
representation or warranty made by the Company herein; provided further that the
foregoing shall not require the Company (a) to permit any inspection, or to
disclose any information, that in the reasonable judgment of the Company would
result in the disclosure of any trade secrets of third parties or violate any of
its obligations with respect to confidentiality (it being understood that the
Company shall use its commercially reasonable efforts to obtain the consent of
such third party to such inspection or disclosure) or (b) to disclose any
information of the Company or any of its Subsidiaries that is subject to
attorney-client privilege. Notwithstanding the foregoing, any such investigation
or consultation shall be conducted in such a manner as not to interfere
unreasonably with the business or operations of the Company or its Subsidiaries
or otherwise result in any significant interference with the prompt and timely
discharge by such employees of their normal duties. All requests for information
made pursuant to this Section 6.7 shall be directed to the individual or other
Person designated by the Company. All such information shall be governed by the
terms of the Confidentiality Agreements.
6.8 NASDAQ De-listing. Prior to the Closing Date, the Company shall
cooperate with Parent and use reasonable best efforts to take, or cause to be
taken, all actions, and do or cause to be done all things, reasonably necessary,
proper or advisable on its part under applicable Laws and rules and policies of
NASDAQ and the other exchanges on which the common stock of the Company is
listed to enable the delisting by the Surviving Corporation of the Shares from
NASDAQ and the other exchanges on which the common stock of the Company is
listed and the deregistration of the Shares under the Exchange Act as promptly
as practicable after the Effective Time.
6.9 Publicity. The initial press release regarding the Merger shall be a
joint press release agreed upon by Parent and the Company and thereafter the
Company, Parent and Merger Sub each shall use reasonable efforts under the
circumstances to cooperate with each other prior to issuing any press releases
or otherwise making public announcements with respect to the Merger and the
other transactions contemplated by this Agreement and prior to making any
filings with any third party and/or any Governmental Entity (including any
national securities exchange or interdealer quotation service) with respect
thereto, except as may be required by Law or by obligations pursuant to any
listing agreement with or rules of any national securities exchange or
interdealer quotation service or by the request of any Governmental Entity.
6.10 Employee Benefits.
(a) Parent agrees that, during the period commencing at the
Effective Time and ending on the first anniversary of the Effective Time,
the Employees of the
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Company and its Subsidiaries as of the Effective Time who remain Employees
of the Surviving Corporation or any of its Subsidiaries (the "Current
Employees") will be provided with (i) base salary and bonus opportunities
(including annual and quarterly bonus opportunities and long-term
incentive opportunities) which are no less favorable in the aggregate than
the aggregate base salary and bonus opportunities provided by the Company
and its Subsidiaries immediately prior to the Effective Time, (ii) pension
and welfare benefits and perquisites (excluding equity and equity-based
benefits) that are no less favorable in the aggregate than those provided
by the Company and its Subsidiaries immediately prior to the Effective
Time and (iii) severance benefits that are no less favorable than those
set forth in the Company's Executive Severance Plan or any employment or
severance agreement between the Company and any such Current Employee or
any severance policy of the Company or its Subsidiaries (as applicable)
with respect to the Current Employees in effect on the date hereof listed
on Section 5.1(m) of the Company Disclosure Schedule and made available to
Parent.
(b) Parent will cause any employee benefit plans of Parent
or the Surviving Corporation which the Current Employees are entitled to
participate in from and after the Effective Time to take into account for
purposes of eligibility and vesting (but not benefit accrual) thereunder
service by the Current Employees with the Company or any of its
Subsidiaries prior to the Effective Time as if such service were with
Parent, to the same extent such service was credited under a comparable
plan of the Company or any of its Subsidiaries prior to the Effective Time
(except to the extent it would result in a duplication of benefits).
(c) This Section 6.10 shall be binding upon and inure solely
to the benefit of each of the parties to this Agreement, and nothing in
this Section 6.10, expressed or implied, is intended to confer upon any
other Person (including but not limited to any Employee or beneficiary of
such Employee under any Benefit Plan) any rights or remedies of any nature
whatsoever under or by reason of this Section 6.10, and no Person shall be
deemed a third party beneficiary to this Section 6.10. Nothing in this
Section 6.10 is intended to amend any Benefit Plan, or interfere with
Parent's or the Surviving Corporation's right from and after the Effective
Time to amend or terminate any Benefit Plan or the employment or provision
of services by any director, employee, independent contractor or
consultant.
(d) Parent hereby acknowledges that a "change in control" or
"change of control" within the meaning of each Benefit Plan listed on
Section 6.10 of the Company Disclosure Schedule will occur upon the
Effective Time.
6.11 Expenses. Parent shall, or shall cause either Merger Sub or the
Surviving Corporation to, pay the fees of the Paying Agent in connection with
the transactions contemplated in Article IV. Whether or not the Merger is
consummated, except as expressly contemplated by this Agreement (including,
without limitation, Article VIII), all costs and expenses incurred in connection
with this Agreement and the Merger and the other transactions contemplated by
this Agreement shall be paid by the party incurring such expense.
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6.12 Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, Parent shall, and
shall cause the Surviving Corporation to, indemnify and hold harmless, to
the fullest extent permitted under applicable Law and the applicable
certificate of incorporation or bylaws (or similar governing documents) of
the Company and its Subsidiaries (and the Surviving Corporation shall also
advance expenses as incurred to the fullest extent permitted under
applicable Law and the applicable certificate of incorporation or bylaws
(or similar governing documents) of the Company and its Subsidiaries,
provided that the Person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined by a
court of competent jurisdiction that such Person is not entitled to such
indemnification), each present and former director (or Person in a similar
position) and officer of the Company and its Subsidiaries (collectively,
the "Indemnified Parties") against costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative
or investigative, arising out of or related to such Indemnified Parties'
service as a director or officer of the Company or its Subsidiaries or
services performed by such persons at the request of the Company or its
Subsidiaries at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, including the
transactions contemplated by this Agreement.
(b) Prior to the Effective Time, the Company shall and if
the Company is unable to, Parent shall cause the Surviving Corporation to
obtain and maintain an extension of (i) the Side A coverage part
(directors' and officers' liability) of the Company's existing directors'
and officers' insurance policies, and (ii) the Company's existing
fiduciary liability insurance policies, in each case for a claims
reporting or discovery period of at least six years from and after the
Effective Time from an insurance carrier with the same or better credit
rating as the Company's current insurance carrier with respect to
directors' and officers' liability insurance and fiduciary liability
insurance (collectively, "D&O Insurance") with terms, conditions,
retentions and limits of liability that are at least as favorable as the
Company's existing policies with respect to any actual or alleged error,
misstatement, misleading statement, act, omission, neglect, breach of duty
or any matter claimed against a director or officer of the Company or any
of its Subsidiaries by reason of him or her serving in such capacity that
existed or occurred at or prior to the Effective Time (including in
connection with this Agreement or the transactions or actions contemplated
hereby). If the Company and the Surviving Corporation for any reason fail
to obtain such "tail" insurance policies as of the Effective Time, the
Surviving Corporation shall, and Parent shall cause the Surviving
Corporation to, continue to maintain in effect for a period of at least
six years from and after the Effective Time the D&O Insurance in place as
of the date hereof with terms, conditions, retentions and limits of
liability that are at least as favorable to the Company's directors and
officers as provided in the Company's existing policies as of the date
hereof, or the Surviving Corporation shall, and Parent shall cause the
Surviving Corporation to, use
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reasonable best efforts to purchase comparable D&O Insurance for such
six-year period with terms, conditions, retentions and limits of liability
that are at least as favorable to the Company's directors and officers as
provided in the Company's existing policies as of the date hereof;
provided that in no event shall the Surviving Corporation be required to
expend for such policies an annual premium amount in excess of 200% of the
annual premiums currently paid by the Company for such insurance; provided
further that if the annual premiums of such insurance coverage exceed such
amount, the Surviving Corporation shall obtain a policy with the greatest
coverage available for a cost not exceeding such amount.
(c) If the Surviving Corporation or any of its respective
successors or assigns (i) shall consolidate with or merge into any other
corporation or entity and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) shall
transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then, and in each such case,
proper provisions shall be made so that the successors and assigns of the
Surviving Corporation shall assume all of the obligations set forth in
this Section 6.12.
(d) The provisions of this Section 6.12 shall survive the
Closing, and are intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties and its successors and
representatives.
(e) The rights of the Indemnified Parties under this Section
6.12 shall be in addition to any rights such Indemnified Parties may have
under the certificate of incorporation or bylaws of the Company or any of
its Subsidiaries, or under any applicable Contracts or Laws.
6.13 Takeover Statutes. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, the Company and its board of directors shall grant such approvals and
take such actions as are necessary so that such transactions may be consummated
as promptly as practicable on the terms contemplated by this Agreement and
otherwise act to eliminate or minimize the effects of such statute or regulation
on such transactions.
6.14 Financing.
(a) Parent shall use its reasonable best efforts to take, or
cause Merger Sub to take, all actions and to do, or cause Merger Sub to
do, all things reasonably necessary, proper or advisable to arrange, and
consummate as soon as practicable after the date hereof, the Financing on
the terms and conditions described in the Financing Commitments (provided
that, subject to the provisions of this Section 6.14(a), Parent and Merger
Sub may replace or amend the Debt Financing Commitments to add lenders,
lead arrangers, bookrunners, syndication agents or similar entities which
had not executed the Debt Financing Commitments as of the date hereof, or
otherwise amend the Financing Commitments so long as such replacement or
amendment would not adversely impact in
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any material respect the ability of Parent or Merger Sub to consummate the
transactions contemplated hereby), including using reasonable best efforts
to (i) maintain in effect the Financing Commitments, subject to the
foregoing replacement and amendment rights, (ii) satisfy on a timely basis
all conditions applicable to Parent and Merger Sub to obtaining the
Financing set forth in the Financing Commitments that are within their
control (including by consummating the Equity Financing pursuant to the
terms of the Equity Financing Commitments and by assisting in the
syndication or marketing of the Debt Financing contemplated by the Debt
Financing Commitments) and (iii) enter into definitive agreements with
respect thereto on the terms and conditions contemplated by the Financing
Commitments or on other terms acceptable to the Parent that would not
adversely impact in any material respect the ability of Parent or Merger
Sub to consummate the transactions contemplated hereby. Subject to the
terms and conditions contained herein, at the Closing Parent shall draw
down on the Debt Financing if the conditions to the Debt Financing
Commitments are then satisfied. If any portion of the Financing becomes
unavailable on the terms and conditions contemplated in the Financing
Commitments, Parent shall use its reasonable best efforts to arrange to
obtain alternative financing from alternative sources on terms not
materially less beneficial to Parent and Merger Sub (as determined in the
reasonable judgment of Parent) in an amount sufficient to consummate the
transactions contemplated by this Agreement. Parent shall keep the Company
reasonably apprised of material developments related to the Financing, and
shall provide a copy of each document related to the Financing to the
Company promptly after such document becomes available.
(b) Prior to the Closing, the Company shall provide to
Parent and Merger Sub, and shall cause its Subsidiaries to, and shall use
its commercially reasonable efforts to cause the respective officers,
employees and advisors, including legal and accounting, of the Company and
its Subsidiaries to, provide to Parent and Merger Sub all cooperation
reasonably requested in writing by Parent that is reasonably necessary,
proper or advisable in connection with the Financing, including (i)
participating in meetings, presentations, road shows, due diligence
sessions and sessions with rating agencies, (ii) assisting with the
preparation of materials for rating agency presentations, offering
documents, private placement memoranda, bank information memoranda,
prospectuses, business projections and similar documents necessary, proper
or advisable in connection with the Financing, (iii) furnishing Parent and
Merger Sub with financial and other pertinent information regarding the
Company and its Subsidiaries as may be reasonably required under the Debt
Commitments (all such information in this clause (iii), the "Required
Information"), (iv) taking all actions reasonably necessary to permit the
lenders involved in the Financing to evaluate the Company's current
assets, cash management and accounting systems, policies and procedures
relating thereto for the purposes of establishing collateral arrangements,
and (v) taking all corporate actions reasonably necessary to permit the
consummation of the Debt Financing and to permit the proceeds thereof,
together with the cash at the Company and its Subsidiaries, to be made
available to the Company on the Closing Date to consummate the Merger.
Parent shall, promptly upon request by the Company, reimburse the Company
for all out-of-
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pocket costs incurred by the Company or its Subsidiaries in connection
with the performance of the provisions of this Section 6.14(b).
6.15 Director Resignations. The Company shall cause to be delivered to
Parent resignations of all the directors of the Company and its Subsidiaries to
be effective upon the consummation of the Merger.
6.16 Rule 16b-3. Prior to the Effective Time, the Company may take such
actions as may be necessary to cause dispositions of equity securities of the
Company (including derivative securities) pursuant to the transactions
contemplated by this Agreement by any officer or director of the Company who is
subject to Section 16 of the Exchange Act to be exempt under Rule 16b-3
promulgated under the Exchanges Act in accordance with the procedures set forth
in such Rule 16b-3 and the Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP SEC
No-Action Letter (January 12, 1999).
ARTICLE VII
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver in writing at or prior to the Effective Time of each of
the following conditions:
(a) Stockholder Approval. This Agreement shall have been
duly approved by holders of Shares constituting the Requisite Company Vote
in accordance with applicable Law and the certificate of incorporation and
bylaws of the Company.
(b) Regulatory Consents. The waiting period applicable to
the consummation of the Merger under the HSR Act shall have expired or
been earlier terminated.
(c) Injunction. No temporary restraining order, preliminary
or permanent injunction or other judgment or order issued by any court or
agency of competent jurisdiction or other Law, rule, legal restraint or
prohibition (collectively, "Restraints") shall be in effect preventing,
restraining or rendering illegal the consummation of the Merger or the
transactions contemplated by the Voting Agreements.
7.2 Conditions to Obligations of Parent and Merger Sub. The obligations
of Parent and Merger Sub to effect the Merger are also subject to the
satisfaction or waiver in writing by Parent at or prior to the Effective Time of
the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in Section 5.1 shall be true and
correct (without giving effect to any materiality or Company Material
Adverse Effect qualifiers) as of the date of this Agreement and, except
for representations and warranties that speak as of a specific date
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other than the Closing Date, which need only be true and correct (without
giving effect to any materiality or Company Material Adverse Effect
qualifiers) as of such specific date, as of the Closing Date, with the
same force and effect as though such representations and warranties had
been made on and as of the Closing Date, except where the failure of such
representations or warranties to be true and correct, in the aggregate,
would not reasonably be expected to have a Company Material Adverse
Effect. In addition, the representations and warranties of the Company set
forth in Sections 5.1(b), 5.1(c) and 5.1(p) shall be true and correct in
all respects (other than inaccuracies that are de minimis in the
aggregate), in each case, as of the Closing as though made at and as of
the Closing.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the Closing Date.
(c) Compliance Certificate. Parent shall have received a
certificate signed on behalf of the Company by a senior executive officer
of the Company to the effect that the conditions set forth in Sections
7.2(a) and 7.2(b) have been satisfied.
(d) Absence of Material Adverse Change. On the Closing Date,
there shall not exist an event, change or occurrence that, individually or
in the aggregate, has had or would reasonably be expected to have a
Company Material Adverse Effect.
(e) Dissenter Rights. The aggregate number of Shares at the
Effective Time, the holders of which have demanded appraisal of their
shares from the Company in accordance with the provisions of Section 262
of the Delaware Corporate Law, shall not equal 15% or more of the Common
Stock outstanding as of the record date for the Stockholder Meeting.
(f) Consents. (i) The Company shall have obtained written
consent to the consummation of the transactions contemplated by this
Agreement and waivers of all rights to terminate and impose other
conditions, in each case in connection with the consummation of the
transactions contemplated by this Agreement, with respect to the following
agreements: (A) the agreement set forth in Section 7.2(f)(i)(A) of the
Company Disclosure Schedule, which consent shall be without any change in
any term of the underlying agreement; (B) the agreement set forth in
Section 7.2(f)(i)(B) of the Company Disclosure Schedule, which consent
shall be without any material change to the underlying agreement; (C) any
agreement that the Company executes and delivers following the date hereof
and that satisfies the conditions set forth in the following clause
(ii)(X) of this Section 7.2(f), which consent shall be without any
material change to the respective underlying agreement; and (D) any
agreement that the Company executes and delivers following the date hereof
and that satisfies the condition set forth in the following clause
(ii)(Y) of this Section 7.2(f), which consent shall be without any
material change to the respective underlying agreement; (ii) Parent shall
be reasonably satisfied that: (X) the Person listed in Section 7.2(f)
(ii)(X) of the Company Disclosure Schedule is willing to execute and
deliver a definitive agreement with the Company that does not differ in
any material respect from the terms set forth in the respective agreement
with such Person identified in Section 7.2(f)(ii)(X) of the Company
Disclosure Schedule, except for the changes expressly identified in such
Section 7.2(f)(ii)(X) of the Company Disclosure Schedule; and (Y) each of
the Persons listed in Section 7.2(f)(ii)(Y) of the Company Disclosure
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Schedule are willing to execute and deliver definitive agreements with the
Company that do not differ in any material respect from the terms set
forth in the respective agreements with such Persons identified in Section
7.2(f)(ii)(X) of the Company Disclosure Schedule; and (iii) the Company
shall have obtained all Governmental Authorizations set forth in Section
7.2(f)(iii) of the Company Disclosure Schedule and such Governmental
Authorizations shall remain in full force and effect. For purposes of this
clause (f), "material" changes or differences to an agreement shall be
deemed to be any adverse change to any of the material terms of such
agreement, including, without limitation, the number of product releases
(except where de minimus to such agreement in Parent's reasonable
judgment), territory (except where de minimus to such agreement in
Parent's reasonable judgment), royalty rates, guaranteed minimum payments,
distribution channels (except where de minimus to such agreement in
Parent's reasonable judgment), license scope (except where de minimus to
such agreement in Parent's reasonable judgment), and minimum
advertising/marketing requirements. With respect to changes to
non-material terms of an agreement, whether such changes are deemed to be
"material" shall be measured with respect to that agreement alone, and not
with respect to the Company or any business unit taken as a whole.
7.3 Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver in
writing by the Company at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained in Section 5.2 shall be true
and correct (without giving effect to any materiality qualifiers) as of
the date of this Agreement and, except for representations and warranties
that speak as of a specific date other than the Closing Date, which need
only be true and correct (without giving effect to any materiality
qualifiers) as of such specific date, as of the Closing Date, with the
same force and effect as though such representations and warranties had
been made on and as of the Closing Date, except where the failure of such
representations or warranties to be true and correct, in the aggregate,
would not reasonably be expected to prevent Parent or Merger Sub from
consummating the Merger and performing its respective obligations under
this Agreement.
(b) Performance of Obligations of Parent and Merger Sub.
Each of Parent and Merger Sub shall have performed in all material
respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
(c) Compliance Certificate. The Company shall have received
a certificate signed on behalf of Parent by a senior executive officer of
Parent to the effect that the conditions set forth in Sections 7.3(a) and
7.3(b) have been satisfied.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time (notwithstanding approval thereof by the Requisite Company
Vote) prior to the Effective Time (with any termination by Parent also being an
effective termination by Merger Sub) by:
(a) mutual written consent of the Company and Parent;
(b) either the Company or Parent upon any Restraint
permanently restraining, enjoining or otherwise prohibiting consummation
of the Merger becoming final and non-appealable; provided, however, that
no party hereto shall have such right to
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terminate pursuant to this Section 8.1(b) unless, prior to such
termination, such party shall have used its reasonable best efforts to
oppose any such Restraint or to have such Restraint vacated or made
inapplicable to the Merger;
(c) Parent or the Company if the Merger shall have not been
consummated by the date that is 9 months after the Effective Date (the
"Outside Date"), whether such date is before or after the date of approval
by the stockholders of the Company referred to in Section 7.1(a), provided
that neither Parent nor the Company may exercise such right to terminate
this Agreement if such party is in material breach of the provisions
hereof at such time;
(d) either the Company or Parent, if the Stockholders
Meeting (including any adjournments or postponements thereof) shall have
been convened and a vote to approve this Agreement shall have been taken
thereat and the adoption of this Agreement by the Requisite Company Vote
shall not have been obtained (and shall not have been obtained at any
adjournments or postponements thereof);
(e) the Company, if there shall have been a breach of any of
the covenants or agreements or any of the representations or warranties
set forth in this Agreement on the part of Parent or Merger Sub which
breach, either individually or in the aggregate, would reasonably be
expected to result in the failure of the conditions set forth in Section
7.3 to be satisfied and which is not cured within the earlier of (i) the
Outside Date and (ii) 30 days following written notice to Parent from the
Company, or which by its nature or timing cannot be cured within such time
period; provided that the Company shall not have the right to terminate
this Agreement pursuant to this Section 8.1(e) if it is then in material
breach of any of its covenants or agreements or representations and
warranties contained in this Agreement;
(f) Parent, if there shall have been a breach of any of the
covenants or agreements or any of the representations or warranties set
forth in this Agreement on the part of the Company, which breach, either
individually or in the aggregate, would reasonably be expected to result
in the failure of the conditions set forth in Section 7.2 to be satisfied
and which is not cured within the earlier of (i) the Outside Date and (ii)
30 days following written notice to the Company from Parent, or which by
its nature or timing cannot be cured within such time period; provided
that Parent shall not have the right to terminate this Agreement pursuant
to this Section 8.1(f) if Parent or Merger Sub is then in material breach
of any of its covenants or agreements or representations and warranties
contained in this Agreement;
(g) Parent, if (i) a Change of Company Recommendation shall
have occurred; (ii) the board of directors of the Company withholds,
withdraws, qualifies, modifies or amends the Company Recommendation in a
manner adverse to Parent or Merger Sub in accordance with, and subject to
the terms and conditions of, Section 6.3 or fails to reaffirm the Company
Recommendation in accordance with Section 6.2(f); (iii) the board of
directors of the Company or any committee thereof shall approve, adopt
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or recommend any Superior Proposal or Acquisition Proposal; (iv) the
Company shall have executed any letter of intent, memorandum of
understanding or similar Contract relating to any Superior Proposal or
Acquisition Proposal; (v) the Company approves or recommends that the
Company Stockholders tender their Shares in any tender or exchange offer
or the Company fails to send the Company Stockholders, within ten Business
Days after the commencement of such tender or exchange offer, a statement
that the Company recommends rejection of such tender or exchange offer;
(vi) the Company publicly announces its intention to take any of the
actions in the foregoing clauses (i), (ii), (iii), (iv) or (v); (vi) with
the prior consent of the board of directors of the Company, any Person or
"group" (within the meaning of Section 13(d) of the Exchange Act) acquires
beneficial ownership of more than 25% of the outstanding Company Shares;
or (vii) the Company breaches its obligation to hold a Stockholders
Meeting set forth in Section 6.5 other than solely as a result of actions
taken or omitted by the SEC;
(h) the Company, at any time prior to receipt of the
Requisite Company Vote, in accordance with, and subject to the terms and
conditions of, Section 6.2(e);
(i) the Company, if all of the conditions set forth in
Sections 7.1 and 7.2 shall have been satisfied or waived and Parent or
Merger Sub shall have failed for any reason to consummate the Closing no
later than 3 Business Days after the final day of the Marketing Period as
provided in Section 1.2; or
(j) Parent, if prior to the Outside Date, the Company
engages in actions that make the conditions set forth in Sections
7.2(f)(i) or 7.2(f)(ii) incapable of being satisfied (as of the date of
such actions).
The party desiring to terminate this Agreement pursuant to clause
(b), (c), (d), (e), (f), (g) or (h) of this Section 8.1 shall give written
notice of such termination to each other party in accordance with Section 9.6,
specifying the provision or provisions hereof pursuant to which such termination
is effected.
8.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 8.1, this Agreement shall, to the fullest extent permitted by applicable
Law, become void and of no force or effect without liability of any party (or
any stockholder, director, officer, employee, agent, consultant or
representative of such party) to the other party hereto; provided, however, that
if such termination shall result from (i) the willful failure of any party
hereto to fulfill a condition to the performance of the material obligations of
the other parties hereto or (ii) the willful failure of any party hereto to
perform a material covenant applicable to it, such party shall be fully liable
for any and all liabilities and damages incurred or suffered by the other party
as a result of such failure; provided, further, that:
(a) if (i) either Parent or the Company terminates this
Agreement pursuant to Section 8.1(c), 8.1(d) or 8.1(f) and (ii) within 12
months after the date of such termination, the Company enters into or
consummates a definitive agreement with respect to an Acquisition Proposal
that is publicly disclosed or announced and not withdrawn
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prior to the Stockholders Meeting, within one Business Day after entering
into such definitive agreement, the Company shall pay the applicable
Company Termination Fee to, or as directed by, Parent by wire transfer of
immediately available funds to one or more account(s) specified by Parent
in writing, provided that, with respect to termination pursuant to Section
8.1(c), the Merger shall not have failed to have been consummated by the
Outside Date as a result of any action taken by Parent, or Parent's
failure to take any action;
(b) if Parent terminates this Agreement pursuant to Section
8.1(g), within two Business Days after the date of such termination, the
Company shall pay the applicable Company Termination Fee to, or as
directed by, Parent by wire transfer of immediately available funds to one
or more account(s) specified by Parent in writing;
(c) if the Company terminates this Agreement pursuant to
Section 8.1(h), at or prior to the time of such termination, the Company
shall pay the applicable Company Termination Fee to, or as directed by,
Parent by wire transfer of immediately available funds to one or more
account(s) specified by Parent in writing;
(d) if the Company terminates this Agreement pursuant to
Section 8.1(e) or 8.1(i), within two Business Days after the date of such
termination, Parent shall pay 12,000,000 (the "Parent Termination Fee") in
cash to, or as directed by, the Company by wire transfer of immediately
available funds to one or more account(s) specified by the Company in
writing, and, for the avoidance of doubt, the Parent Termination Fee shall
be the exclusive remedy of the Company for breach of this Agreement by
Parent;
(e) if this Agreement is terminated by Parent or the Company
pursuant to Section 8.1(c), 8.1(d), 8.1(f), 8.1(g) or 8.1(h), as the case
may be, the Company shall pay to, or as directed by, Parent by wire
transfer of immediately available funds to one or more account(s)
specified by Parent in writing, within three Business Days after the date
of termination, all reasonable and documented out-of-pocket costs and
expenses (including, the reasonable and documented fees and expenses of
lawyers, accountants, consultants, financial advisors, and investment
bankers), not to exceed $3,500,000 (which, such number shall be increased
to $4,500,000 if this Agreement is not terminated pursuant to Section 8.1
prior to the date that is 60 days after the Effective Date) in the
aggregate and incurred by Parent in connection with the entering into of
this Agreement and the performance of its obligations hereunder
(collectively, the "Parent Expenses"). If this Agreement is terminated by
Parent pursuant to Section 8.1(j), the Company shall pay to, or as
directed by, Parent by wire transfer of immediately available funds to one
or more account(s) specified by Parent in writing Parent, within three
Business Days after the date of termination, an amount equal to 50% of the
Parent Expenses (the "Consent Termination Expenses"). The payment of
expenses set forth in this Section 8.1(e) is not an exclusive remedy, but
is in addition to any other rights or remedies available to the parties
hereto (whether at law or in equity), and in no respect is intended by the
parties hereto to constitute liquidated damages, or be viewed as an
indicator of the damages
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payable, or in any other respect limit or restrict damages available in
case of any breach of this Agreement; and
(f) each of the Company and Parent acknowledges that the
agreements contained in this Section 8.2 are an integral part of the
transactions contemplated by this Agreement. In the event that the Company
shall fail to pay the Company Termination Fee, Parent Expenses or the
Consent Termination Expenses when due, Company shall reimburse Parent for
all reasonable and document costs and expenses actually incurred or
accrued by or on behalf of Parent (including reasonable fees and expenses
of counsel) in connection with the collection under and enforcement of
this Section 8.2(f).
For purposes of Section 8.1 and this Section 8.2, the term
"Acquisition Proposal" shall have the meaning assigned to such term in Section
6.2(a), except that the phrase "at least 25%" set forth in clauses (ii) and
(iii) of the definition of "Acquisition Proposal" shall be deemed to state "more
than 50%".
For purposes of this Agreement, the term "Company Termination Fee"
means: (i) (A) in the event that this Agreement shall have been terminated by
Parent pursuant to Section 8.1(g)(i) or by the Company pursuant to Section
8.1(h) in order to enter into an Alternative Acquisition Agreement and (B) such
termination shall have occurred on or before the Solicitation Period End-Date,
an amount in cash equal to $8,000,000; and (ii) in the event that this Agreement
shall have been terminated pursuant to Section 8.1(c), Section 8.1(d), Section
8.1(f), Section 8.1(g) or Section 8.1(h) (in the case of any termination
pursuant to Section 8.1(g)(i) or Section 8.1(h), other than as described in the
immediately preceding clause (i)), an amount in cash equal to $12,000,000.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Survival. This Article IX and the agreements of the Company, Parent
and Merger Sub contained in Article IV and Sections 6.10 (Employee Benefits),
6.11 (Expenses) and 6.12 (Indemnification; Directors' and Officers' Insurance)
shall survive the consummation of the Merger for so long as they are operative.
This Article IX and the agreements of the Company, Parent and Merger Sub
contained in Section 6.11 (Expenses) and Section 8.2 (Effect of Termination)
shall survive any termination of this Agreement. All other representations,
warranties, covenants and agreements in this Agreement shall not survive the
consummation of the Merger or the termination of this Agreement. No remedy
available to any party hereunder shall be affected by any investigation
conducted by such party with respect to, or any knowledge acquired (or capable
of being acquired) at any time by such party, whether before or after the
execution and delivery of this Agreement with respect to the accuracy or
inaccuracy of or compliance with any representation, warranty, covenant or
obligation set forth herein.
9.2 Modification or Amendment. Subject to applicable Law, at any time
prior to the Effective Time, this Agreement may be amended or modified only by a
written agreement duly
- 56 -
executed and delivered by Parent and the Company; provided, however, that, after
approval of this Agreement and the Merger by the stockholders of the Company
pursuant to the DGCL, no amendment may be made hereto which would have the
effect of reducing the amount or changing the type of consideration into which
the Shares are converted into the right to receive upon consummation of the
Merger.
9.3 Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable Laws.
9.4 Counterparts. This Agreement may be executed in any number of
counterparts (including by facsimile), each such counterpart being deemed to be
an original instrument, and all such counterparts shall together constitute the
same agreement.
9.5 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL; REMEDIES; SPECIFIC
PERFORMANCE.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF
LAW PRINCIPLES THEREOF. The parties hereby irrevocably submit to the
personal jurisdiction of the courts of the State of New York located in
the Borough of Manhattan, and the Federal courts of the United States of
America located in the State of New York, Borough of Manhattan, solely in
respect of the interpretation and enforcement of the provisions of this
Agreement and of the documents referred to in this Agreement, and in
respect of the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for
the interpretation or enforcement hereof or of any such document, that it
is not subject thereto or that such action, suit or proceeding may not be
brought or is not maintainable in said courts or that the venue thereof
may not be appropriate or that this Agreement or any such document may not
be enforced in or by such courts, and the parties hereto irrevocably agree
that all claims with respect to such action or proceeding shall be heard
and determined in such an New York State or Federal court. The parties
hereby consent to and grant any such court jurisdiction over the person of
such parties and, to the extent permitted by law, over the subject matter
of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in
Section 9.6 or in such other manner as may be permitted by law shall be
valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
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RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) 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 THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 9.5.
(c) The parties hereto agree that irreparable damage would
occur in the event any provision of this Agreement were not performed by
any party in accordance with the terms hereof and that, prior to the
termination of this Agreement pursuant to Section 8.1, Parent shall be
entitled to seek an injunction or injunctions to prevent breaches of this
Agreement by the Company and to enforce specifically the terms and
provisions of this Agreement in any court described in Section 9.5, this
being in addition to any other remedy to which they are entitled at law or
in equity. The parties acknowledge that none of the Company or its
Subsidiaries shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement or to enforce specifically the terms and
provisions of this Agreement and that the Company's and its Subsidiaries'
sole and exclusive remedy with respect to any such breach shall be the
remedy set forth in each Guaranty.
9.6 Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:
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--------------------------------------------------------------------------------
If to Parent or Merger Sub:
Tornante-MDP Xxx Holding LLC
c/o The Tornante Company
000 Xxxxx Xxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
and
Tornante-MDP Xxx Holding LLC
c/o Madison Dearborn Partners, L.L.C.
Three First National Plaza
Suite 3800
00 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
With a copy (which will not constitute notice) to:
Xxxxxx, Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxx Xxx. #0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
and
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 X. Xxxxxx Xxxxx, Xxxxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: 000-000-0000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
If to the Company:
The Topps Company, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx, 00000
Attention: General Counsel
Facsimile: (000) 000-0000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx and
Xxxxxxx X. Xxxx
Facsimile: (000) 000-0000
--------------------------------------------------------------------------------
or to such other persons or addresses as may be designated in writing by
the party to receive such notice as provided above. Any notice, request,
instruction or other document given as provided above shall be deemed
given to the receiving party upon actual receipt, if delivered personally;
three Business Days after deposit in the mail, if sent by registered or
certified mail (return receipt requested); upon confirmation of successful
transmission if sent by facsimile (provided that if given by facsimile
such notice, request, instruction or other document shall be followed up
within one Business Day by dispatch pursuant to one of the other methods
described herein); or on the next Business Day after deposit with an
overnight courier, if sent by an overnight courier.
9.7 Entire Agreement. This Agreement (including any schedules and
exhibits hereto), the Company Disclosure Schedule, that certain letter
agreement, dated July 17, 2006 (as amended from time to time, the "MDP Letter"),
between the Company and Madison Dearborn Partners, LLC and that certain letter
agreement, dated July 24, 2006 (as amended from time to time and, together with
the MDP Letter, the "Confidentiality Agreements"), between the Company and The
Tornante Company LLC constitute the entire agreement, and supersede all other
prior agreements, understandings, representations and warranties (written and
oral), among the parties hereto with respect to the subject matter hereof. EACH
PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS AGREEMENT, NEITHER PARENT, MERGER SUB NOR THE COMPANY MAKES
ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OR AS TO THE ACCURACY OR
COMPLETENESS OF ANY OTHER INFORMATION, MADE BY, OR MADE AVAILABLE BY, ITSELF OR
ANY OF ITS REPRESENTATIVES, WITH RESPECT TO, OR IN CONNECTION WITH, THE
NEGOTIATION, EXECUTION OR DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR
THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH
RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
9.8 No Third Party Beneficiaries. Except as provided in Section 6.12
(Indemnification; Directors' and Officers' Insurance) only, each party hereto
hereby agrees that its respective representations, warranties and covenants set
forth herein are solely for the benefit of the other parties hereto in
accordance with and subject to the terms of this Agreement, and this Agreement
is not intended to, and does not, confer upon any Person other than the parties
hereto
- 60 -
any rights or remedies hereunder, including, without limitation, the right to
rely upon the representations and warranties set forth herein. The parties
hereto further agree that the rights of third party beneficiaries under Section
6.12 shall not arise unless and until the Effective Time occurs. The
representations and warranties in this Agreement are the product of negotiations
among the parties hereto and are for the sole benefit of the parties hereto. Any
inaccuracies in such representations and warranties are subject to waiver by the
parties hereto in accordance with Section 9.3 without notice or liability to any
other Person. In some instances, the representations and warranties in this
Agreement may represent an allocation among the parties hereto of risks
associated with particular matters regardless of the knowledge of any of the
parties hereto. Consequently, Persons other than the parties hereto may not rely
upon the representations and warranties in this Agreement as characterizations
of actual facts or circumstances as of the date of this Agreement or as of any
other date.
9.9 Obligations of Parent and of the Company. Whenever this Agreement
requires a Subsidiary of Parent (including, without limitation, the Surviving
Corporation from and after the Effective Time) to take any action, such
requirement shall be deemed to include an undertaking on the part of Parent to
cause such Subsidiary to take such action. Whenever this Agreement requires a
Subsidiary of the Company to take any action, such requirement shall be deemed
to include an undertaking on the part of the Company to cause such Subsidiary to
take such action.
9.10 Definitions. Each of the terms set forth in Annex A is defined in
the Section of this Agreement set forth opposite such term.
9.11 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is held by a court of competent jurisdiction to be invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
Persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.
9.12 No Personal Liability. Notwithstanding anything appearing to the
contrary in this Agreement, no direct or indirect partner, member or shareholder
of the Company, Parent, or (other than Parent) Merger Sub (or any officer,
director, agent, member, manager, personal representative, trustee or employee
of any such direct or indirect partner, member or shareholder) shall be liable
in his, her or its capacity as such for the performance of such party's
obligations under this Agreement.
9.13 Interpretation; Construction.
(a) The table of contents and headings herein are for
convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit
- 61 -
or otherwise affect any of the provisions hereof. Where a reference in
this Agreement is made to a Section or Exhibit, such reference shall be to
a Section of or Exhibit to this Agreement unless otherwise indicated.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
(b) The parties have participated jointly in negotiating and
drafting this Agreement. In the event that an ambiguity or a question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship
of any provision of this Agreement.
9.14 Assignment. This Agreement shall not be assignable by any party
(by operation of law or otherwise) without the prior written consent of the
other parties hereto; provided that prior to the mailing of the Proxy Statement
to the Company's stockholders, Parent may designate, by written notice to the
Company, another wholly owned direct or indirect subsidiary to be a Constituent
Corporation in lieu of Merger Sub, in which event all references herein to
Merger Sub shall be deemed references to such other subsidiary, except that all
representations and warranties made herein with respect to Merger Sub as of the
date of this Agreement shall be deemed representations and warranties made with
respect to such other subsidiary as of the date of such designation, provided
further that any such designation shall not impede or delay the consummation of
the transactions contemplated by this Agreement or otherwise impede or adversely
affect the rights of the stockholders of the Company under this Agreement. Any
purported assignment in violation of this Section 9.14 Agreement shall be void
ab initio.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement and Plan of Merger has been duly
executed and delivered by the duly authorized officers of the parties hereto as
of the date first written above.
THE TOPPS COMPANY, INC.,
A Delaware corporation
March 5, 2007 By: /s/ Xxxxx Xxxxxxxxxxx
------------------ -----------------------------------------
"Effective Date" Name: Xxxxx Xxxxxxxxxxx
Title: President
TORNANTE-MDP XXX HOLDING LLC
A Delaware limited liability company
By: The Tornante Company LLC.
A Delaware limited liability company
Its Operating Member
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Sole Member
TORNANTE-MDP XXX ACQUISITION CORP.
A Delaware corporation
By:/s/ Xxxxx Xxxxx
------------------------------------------
Name: Xxxxx Xxxxx
Title: Secretary
ANNEX A
DEFINED TERMS
Terms Section
----- -------
1996 Stock Plan...........................................................5.1(b)
2001 Stock Plan...........................................................5.1(b)
Acceptable Confidentiality Agreement......................................6.2(a)
Acquisition Proposal.........................................................6.3
Affiliate.............................................................5.1(c)(ii)
Agreement...............................................................Preamble
Alternative Acquisition Agreement......................................6.2(e)(i)
Applicable Date........................................................5.1(e)(i)
Bankruptcy and Equity Exception........................................5.1(c)(i)
Benefits Plans.........................................................5.1(h)(i)
Business Day.................................................................1.2
Bylaws.......................................................................2.2
Certificate...............................................................4.1(a)
Certificate of Merger........................................................1.3
Change....................................................................5.1(a)
Change of Company Recommendation.............................................6.3
Charter......................................................................2.1
Closing......................................................................1.2
Closing Date.................................................................1.2
Code......................................................................4.2(f)
Company.................................................................Preamble
Company Approvals......................................................5.1(d)(i)
Company Disclosure Schedule..................................................5.1
Company IP Agreements.....................................................5.1(n)
Company Material Adverse Effect...........................................5.1(a)
Company Option............................................................4.3(a)
Company Recommendation................................................5.1(c)(ii)
Company Reports........................................................5.1(e)(i)
Company Termination Fee......................................................8.2
Confidentiality Agreements...................................................9.7
Consent Termination Expenses..............................................8.2(e)
Constituent Corporations................................................Preamble
Contract .............................................................5.1(d)(ii)
Costs....................................................................6.12(a)
Current Employees........................................................6.10(a)
D&O Insurance............................................................6.12(b)
Debt Financing............................................................5.2(e)
Debt Financing Commitments................................................5.2(e)
DGCL....................................................................Recitals
Director Options..........................................................4.3(a)
Director Stock Plan.......................................................5.1(b)
Dissenting Shares.........................................................4.1(d)
Effective Date..........................................................Preamble
Effective Time...............................................................1.3
Employees..............................................................5.1(h)(i)
Environmental Law.........................................................5.1(k)
Equity Financing..........................................................5.2(e)
Equity Financing Commitments..............................................5.2(e)
ERISA..................................................................5.1(h)(i)
ERISA Affiliate...................................................5.1(h)(iii)(D)
Exchange Act..............................................................5.1(a)
Exchange Fund.............................................................4.2(a)
Excluded Party............................................................6.2(b)
Excluded Shares...........................................................4.1(a)
Financing.................................................................5.2(e)
Financing Commitments.....................................................5.2(e)
GAAP.................................................................5.1(e)(iii)
Governmental Authorization................................................6.6(b)
Governmental Entity....................................................5.1(d)(i)
Guarantee...............................................................Recitals
Guarantors..............................................................Recitals
Hazardous Substance.......................................................5.1(k)
HSR Act................................................................5.1(d)(i)
Indemnified Parties......................................................6.12(a)
Intellectual Property.....................................................5.1(n)
Knowledge.................................................................5.1(g)
Laws......................................................................5.1(i)
Licensed Intellectual Property.......................................5.1(n)(iii)
Licenses..................................................................5.1(i)
Lien......................................................................5.1(b)
Material Contracts........................................................5.1(q)
Merger..................................................................Recitals
Merger Sub..............................................................Preamble
MDP Letter...................................................................9.7
MDCP-VA.................................................................Recitals
MDCP-VC.................................................................Recitals
MDCP Guarantors.........................................................Recitals
Multiemployer Plan................................................5.1(h)(iii)(A)
NASDAQ....................................................................5.1(a)
Non-U.S. Benefits Plan.................................................5.1(h)(i)
Notice Period..........................................................6.2(e)(i)
Outside Date..............................................................8.1(c)
Owned Intellectual Property..........................................5.1(n)(iii)
Parent..................................................................Preamble
Parent Approvals.......................................................5.2(c)(i)
Parent Disclosure Schedule...................................................5.2
Parent Termination Fee....................................................8.2(d)
Paying Agent..............................................................4.2(a)
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XXXX..............................................................0.0(x)(xxx)(X)
Per Share Merger Consideration............................................4.1(a)
Person....................................................................4.2(d)
Proxy Statement...........................................................6.4(a)
Representatives...........................................................6.2(a)
Required Information.....................................................6.14(b)
Requisite Company Vote.................................................5.1(c)(i)
Restraints................................................................7.1(c)
Xxxxxxxx-Xxxxx Act.....................................................5.1(e)(i)
SEC....................................................................5.1(e)(i)
Securities Act.........................................................5.1(e)(i)
Share.....................................................................4.1(a)
Significant Subsidiary....................................................5.1(a)
Solicitation Period End-Date..............................................6.2(a)
Solvent...................................................................5.2(i)
Stockholders Meeting.........................................................6.5
Stock Plans...............................................................5.1(b)
Subsidiary................................................................5.1(a)
Superior Proposal ...........................................................6.3
Surviving Corporation........................................................1.1
Takeover Statute..........................................................5.1(j)
Tax.......................................................................5.1(l)
Taxes.....................................................................5.1(l)
Tax Return................................................................5.1(l)
Treasury Regulations......................................................5.1(l)
U.S. Benefits Plans...............................................5.1(h)(iii)(A)
X- 0
