Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 12, 2003,
among NCO Group, Inc., a Pennsylvania corporation (the "Parent"), NCPM
Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of
the Parent (the "Purchaser"), and NCO Portfolio Management, Inc., a Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of the Parent, the Purchaser
and the Company have approved the merger of the Company with and into the
Purchaser (the "Merger"), upon the terms and subject to the conditions set forth
herein; and
WHEREAS, this Agreement is intended to be and is adopted as a
plan of reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated
thereby.
NOW, THEREFORE, in consideration of the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. (a) Upon the terms and subject to the satisfaction or
waiver, if permissible, of the conditions set forth in Article VII hereof, and
in accordance with the provisions of this Agreement and the Delaware General
Corporation Law (the "DGCL"), the parties hereto shall cause the Company to be
merged with and into the Purchaser, and the Purchaser shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of Delaware. At the
Effective Time, the separate existence of the Company shall cease.
(b) The Surviving Corporation, by virtue of the Merger, shall change
its name to that of the Purchaser and shall possess all the property, rights,
privileges, immunities, powers and franchises of the Purchaser and the Company
and shall by operation of law become liable for all the debts, liabilities and
duties of the Company and the Purchaser.
1.2. Certificate of Incorporation. Subject to Section 6.9(a) hereof,
the Certificate of Incorporation of the Purchaser in effect immediately prior to
the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation, except that the name of the Surviving Corporation shall be changed
to NCO Portfolio Management, Inc., until thereafter amended in accordance with
provisions thereof and as provided by law.
1
1.3. By-Laws. Subject to Section 6.9(a) hereof, the By-Laws of the
Purchaser in effect immediately prior to the Effective Time shall be the By-Laws
of the Surviving Corporation, except that the name of the Surviving Corporation
shall be changed to NCO Portfolio Management, Inc., until thereafter amended,
altered or repealed as provided therein and by law.
1.4. Directors and Officers. The directors of the Purchaser immediately
prior to the Effective Time shall be the directors, of the Surviving Corporation
after the Effective Time, each to hold office in accordance with the Certificate
of Incorporation and By-Laws of the Surviving Corporation. The officers of the
Company immediately prior to the Effective Time shall be the officers of the
Surviving Corporation after the Effective Time, each to hold office in
accordance with the Certificate of Incorporation and By-Laws of the Surviving
Corporation.
1.5. Effective Time. The Merger shall become effective at the time when
a properly executed certificate of merger (the "Certificate of Merger"),
together with any other documents required by law to effectuate the Merger,
shall be filed and recorded with the Secretary of State of the State of Delaware
in accordance with Sections 103 and 251 of the DGCL. The Certificate of Merger
shall be filed in accordance with Section 103 of the DGCL as soon as practicable
after the Closing. The date and time when the Merger shall become effective is
herein referred to as the "Effective Time."
ARTICLE II
CONVERSION OF SHARES
2.1. Company Common Stock. (a) Each share (a "Share") of common stock,
par value $0.01 per share (the "Common Stock"), of the Company issued and
outstanding immediately prior to the Effective Time (except for Shares then
owned beneficially or of record by the Company, the Parent, the Purchaser or any
of the other Parent Subsidiaries or the Company Subsidiaries), shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into the right to receive that number of fully paid and non-assessable
shares of the common stock, no par value per share, of the Parent ("Parent
Common Stock"), as follows (hereinafter the "Exchange Ratio"): (i) except as
provided in clause (ii), the Exchange Ratio shall be 0.36187; and (ii) if the
Parent Common Stock Value is less than $21.50, Parent may elect, at its sole
option, to adjust the Exchange Ratio to an amount equal to $7.78021 divided by
the Parent Common Stock Value, rounded to five decimal places (together with any
cash in lieu of such fractional shares of Parent Common Stock to be paid
pursuant to Section 2.2, the "Merger Consideration").
(b) Each Share issued and outstanding immediately prior to the
Effective Time which is then owned beneficially or of record by the Company, the
Parent, the Purchaser or any of the other Parent Subsidiaries or the Company
Subsidiaries, shall, by virtue of the Merger and without any action on the part
of the holder thereof, be canceled and retired and cease to exist, without any
conversion thereof.
2
(c) Each Share issued and held in the Company's treasury immediately
prior to the Effective Time shall, by virtue of the Merger, be canceled and
retired and cease to exist, without any conversion thereof.
(d) At the Effective Time the holders of certificates representing
Shares shall cease to have any rights as stockholders of the Company, except for
the right to receive the Merger Consideration and for such rights, if any, as
they may have pursuant to the DGCL.
2.2. Fractional Interests. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued in connection with the
Merger, and such fractional interests will not entitle the owner thereof to any
rights as a shareholder of the Parent. In lieu of a fractional interest in a
share of Parent Common Stock, each holder of Shares exchanged pursuant to
Section 2.1 who would otherwise have been entitled to receive a fraction of a
share of Parent Common Stock shall receive cash (without interest) in an amount
equal to the product of such fractional interest multiplied by the Parent Common
Stock Value.
2.3. Anti-Dilution Provisions. The Exchange Ratio shall be adjusted
appropriately to reflect any stock dividends, splits, recapitalizations or other
similar transactions with respect to the Shares and the shares of Parent Common
Stock where the record date occurs prior to the Effective Time; provided that
the Exchange Ratio shall not be adjusted as a result of Parent Common Stock
issued in connection with the acquisition of RMH Teleservices, Inc. or any other
Person.
2.4. Purchaser Common Stock. Each share of common stock, par value
$0.01 per share ("Purchaser Common Stock"), of the Purchaser issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and exchangeable for one fully paid and non-assessable share of common
stock, par value $0.01 per share ("Surviving Corporation Common Stock"), of the
Surviving Corporation. From and after the Effective Time, each outstanding
certificate theretofore representing shares of Purchaser Common Stock shall be
deemed for all purposes to evidence ownership of and to represent the same
number of shares of Surviving Corporation Common Stock.
2.5. Exchange of Shares. (a) Prior to the Effective Time, the Parent
shall deposit in trust with an exchange agent designated by the Purchaser and
reasonably satisfactory to the Company (the "Exchange Agent"), shares of Parent
Common Stock in an amount sufficient for the purpose of exchanging Parent Common
Stock for Common Stock pursuant to Section 2.1(a) plus sufficient cash to make
the payments required under Section 2.2 (such amount being hereinafter referred
to as the "Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, issue the shares of Parent Common Stock out of the stock portion
of the Exchange Fund and make the payments provided for in Section 2.2 of this
Agreement out of the cash portion of the Exchange Fund. The Exchange Agent shall
invest the cash portion of the Exchange Fund as the Parent directs, in direct
obligations of the United States of America, obligations for which the full
faith and credit of the United States of America is pledged to provide for the
payment of all principal and interest, commercial paper obligations receiving
the highest rating from either Xxxxx'x Investors Services, Inc. or Standard &
Poor's Corporation, or certificates of deposit, bank repurchase agreements or
banker's acceptances of commercial banks with capital exceeding $5,000,000,000.
The Exchange Fund shall not be used for any other purpose except as provided in
this Agreement.
3
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause the Exchange Agent to mail to each record holder (other than the Company,
the Parent, the Purchaser or any of the other Parent Subsidiaries or the Company
Subsidiaries) as of the Effective Time of an outstanding certificate or
certificates which immediately prior to the Effective Time represented Shares
(the "Certificates") a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of the Certificates for payment
therefor. Upon surrender to the Exchange Agent of a Certificate, together with
such letter of transmittal duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor the number of shares of Parent
Common Stock equal to the product of the number of Shares represented by such
Certificate and the Exchange Ratio plus cash in lieu of fractional shares, less
any applicable withholding tax, and such Certificate shall forthwith be
canceled. No interest shall be paid or accrued on the shares of Parent Common
Stock or the cash payable upon the surrender of the Certificates. If payment is
to be made to a Person other than the Person in whose name the Certificate
surrendered is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the Person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a Person other than
the registered holder of the Certificate surrendered or establish to the
satisfaction of the Exchange Agent and the Surviving Corporation that such tax
has been paid or is not applicable. Until surrendered in accordance with the
provisions of this Section 2.5, each Certificate (other than Certificates
representing Shares owned beneficially or of record by the Company, the Parent,
the Purchaser or any of the other Parent Subsidiaries or Company Subsidiaries)
shall represent for all purposes the right to receive the number of shares of
Parent Common Stock equal to the product of the number of Shares evidenced by
such Certificate and the Exchange Ratio plus cash in lieu of fractional shares,
without any interest thereon.
(c) If any Certificate is 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 the Exchange Agent, the Surviving
Corporation or the Parent, the posting by such person of a bond in such
reasonable amount as such entity may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent
shall issue, in exchange for such lost, stolen or destroyed Certificate, the
applicable portion of the Merger Consideration pursuant to this Agreement.
(d) After the Effective Time there shall be no transfers on the stock
transfer books of the Surviving Corporation of the Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged for the applicable portion of the Merger Consideration pursuant to
this Agreement.
(e) Any portion of the Exchange Fund which remains unclaimed by the
stockholders of the Company for one year after the Effective Time (including any
interest received with respect thereto) shall be repaid to the Surviving
Corporation, upon demand. Any stockholders of the Company who have not
theretofore complied with Section 2.5(b) and/or this Section 2.5(e) shall
thereafter look only to the Surviving Corporation (subject to abandoned
property, escheat or other similar laws) for payment of their proportionate
claim for the Merger Consideration plus cash in lieu of fractional shares,
without any interest thereon, but shall have no greater rights against the
Surviving Corporation than may be accorded to general creditors of the Surviving
Corporation under Delaware law.
4
2.6. Employee Stock Options. The Company's 2000 Stock Option Plan (the
"Company Option Plan") and all options to acquire Shares granted pursuant to the
Company Option Plan that are issued and outstanding immediately before the
Effective Time (collectively, the "Plan Options"), and options to acquire shares
that are issued to directors of the Company and outstanding immediately before
the Effective Time (the "Director Options" and together with the Plan Options,
the "Options") shall be assumed by the Parent at the Effective Time and shall
continue in effect, as an option plan of Parent and as options issued by Parent,
respectively, in accordance with the terms and conditions by which they are
governed immediately before the Effective Time (and each Option that prior to
the Effective Time, is or as a result of the Merger becomes fully vested and
exercisable as a result of the Merger shall continue as a fully vested and
exercisable option of Parent), subject to the adjustments set forth in this
Section 2.6. At the Effective Time, each Option shall, by virtue of the Merger
and without any action on the part of the holder thereof, be automatically
adjusted to provide that (a) the number and type of shares issuable upon
exercise of such Option shall be that number of shares of Parent Common Stock
(rounded off to the nearest whole number of shares) equal to the number of
Shares issuable upon exercise of such Option immediately before the Effective
Time, multiplied by the Exchange Ratio, and (b) the exercise price per share of
Parent Common Stock under such Option shall be that amount (rounded up to the
nearest whole cent) equal to the exercise price per Share under such Option
immediately before the Effective Time, divided by the Exchange Ratio.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company SEC Filings, the Company
represents and warrants to the Parent and the Purchaser as follows:
3.1. Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each of
the Company Subsidiaries which is a corporation is duly organized, and each of
the Company Subsidiaries which is a limited partnership is duly formed, and each
of the Company Subsidiaries is validly existing and in good standing, in each
case under the laws of the jurisdictions of its incorporation or formation, as
the case may be, except where the failure of any Company Subsidiary to be duly
organized or duly formed or validly existing and in good standing, when combined
with all other such failures, would not have a Company Material Adverse Effect.
Each of the Company and the Company Subsidiaries has all requisite power and
authority to own, lease and operate its properties and to conduct its business
as now being conducted. Each of the Company and the Company Subsidiaries is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so qualified or licensed and in good standing would not have a
Company Material Adverse Effect.
5
3.2. Capitalization. (a) The authorized capital stock of the Company
consists of (a) 35,000,000 shares of Common Stock, par value $0.01 per share, of
which, as of the date hereof, there are 13,576,519 shares issued and
outstanding, 3,000,000 shares reserved for issuance under the Company Option
Plan, and no shares held in the Company's treasury, and (b) 5,000,000 shares of
Preferred Stock, par value $0.01 per share ("Company Preferred Stock"), of which
as of the date hereof, none were issued or outstanding. No other capital stock
or other security of the Company is authorized, issued or outstanding. All
issued and outstanding Shares and capital stock of the Company Subsidiaries are
duly authorized, validly issued, fully paid and nonassessable. Except for
outstanding options to acquire not more than 715,500 shares issued pursuant to
the Company Option Plan and, there are not now, and at the Effective Time there
will not be, any securities, options, warrants, calls, subscriptions, preemptive
rights, earn-outs or other rights or other agreements or commitments whatsoever
obligating the Company or any of the Company Subsidiaries to issue, transfer,
deliver or sell or cause to be issued, transferred, delivered or sold any
additional shares of capital stock or other securities of the Company or any of
the Company Subsidiaries, or obligating the Company or any of the Company
Subsidiaries to grant, extend or enter into any such agreement or commitment.
(b) There is no shareholder rights plan (or similar plan commonly
referred to as a "poison pill") or similar existing agreement or plan under
which the Company or any of the Company Subsidiaries is or may become obligated
to sell or otherwise issue any shares of its capital stock or any other
securities.
3.3. Authorization of this Agreement. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and all
agreements and documents contemplated hereby and, subject to approval by the
stockholders of the Company, to perform its obligations hereunder and thereunder
and consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized and approved by the
Company's Board of Directors, the Board of Directors has declared the
advisability of this Agreement and the consummation of the transactions
contemplated hereby and thereby, and, except for the adoption of this Agreement
by the stockholders of the Company and the filing and recordation of the
appropriate merger documents required by the DGCL, no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Company, and (assuming this Agreement
constitutes a valid and binding obligation of Parent and Purchaser) this
Agreement constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting the rights and remedies of creditors, and the application of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Section 203 of the DGCL does
not apply to this Agreement, the Merger or the transactions contemplated hereby
and thereby.
6
3.4. Consents and Approvals; No Violation. Except for (i) filings
required under the Securities Act of 1933, as amended (the "Securities Act"),
and the Securities and Exchange Act of 1934, as amended (the "Exchange Act"),
(ii) the filing and recordation of appropriate merger documents as required by
the DGCL and, if applicable, the laws of other states in which the Company is
qualified to do business, and (iii) filings under securities or blue sky laws or
takeover statutes of the various states, no filing with, and no permit,
authorization, consent or approval of, any public body or authority is necessary
for the consummation by the Company of the transactions contemplated by this
Agreement, the failure to make or obtain which is reasonably likely to have a
material adverse effect on the ability of the Company to consummate the
transactions contemplated hereby or on the business or financial condition of
the Company and the Company Subsidiaries taken as a whole. Neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby nor compliance by the Company with any of the provisions
hereof will conflict with or result in any violation of any provision of the
Certificate of Incorporation or By-Laws of the Company.
3.5. Information in Proxy Statement/Prospectus, Registration Statement.
None of the information supplied by the Company for inclusion in the S-4
Registration Statement and the Proxy Statement/Prospectus (or any amendment
thereof or supplement thereto), at the time the S-4 Registration Statement
becomes effective, at the date of mailing of the Proxy Statement/Prospectus to
Company stockholders and Parent shareholders and at the time of the Company
Stockholder Meeting and Parent Shareholder Meeting, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. No representation
is made by the Company with respect to portions of the S-4 Registration
Statement or the Proxy Statement/Prospectus prepared by or on behalf of Parent
or Purchaser or statements made therein based on information supplied by Parent
or Purchaser for inclusion in the Proxy Statement/Prospectus.
3.6. Opinion of Financial Advisor. The Board of Directors of the
Company has received an opinion of JMP Securities LLC dated as of the date
hereof, that the Exchange Ratio is fair, from a financial point of view, to the
holders of the Shares, other than the Parent.
3.7. Finders and Brokers. Except for fees payable to JMP Securities LLC
for services as are set forth in the engagement letter previously provided to
Parent, no agent, investment banker, broker, finder, intermediary or other
Person acting on behalf of the Company or any of the Company Subsidiaries, is or
shall be entitled to any financial advisory, brokerage, or finder's or other
similar fee or commission in connection with the Merger and the other
transactions contemplated by this Agreement. The Company has made available to
Parent a copy of all commitments, agreements or other documentation in respect
of which fees, commissions or other amounts may become payable to, and all
indemnification and other contracts related to the engagement of, JMP Securities
LLC.
3.8. Disclosure. No representation or warranty by the Company in this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, to make the statements herein or therein
not misleading. There is no fact known to the Company which would reasonably be
expected to have a Company Material Adverse Effect which has not been set forth
in the Company SEC Filings or in this Agreement.
7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND THE PURCHASER
Except as set forth in the Parent SEC Filings, the Parent and
the Purchaser jointly and severally represent and warrant to the Company as
follows:
4.1. Organization. The Parent is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania. The Purchaser and each of the other Parent Subsidiaries is a
corporation, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. Each of the Parent, the Purchaser
and the other Parent Subsidiaries has all requisite power and authority to own,
lease and operate its properties and to conduct its business as now being
conducted. Each of the Parent, the Purchaser and the other Parent Subsidiaries
is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary, except where
the failure to be so qualified or licensed and in good standing would not have a
Parent Material Adverse Effect. Except as and to the extent set forth in the
Parent SEC Filings, the Parent owns beneficially and of record directly or
indirectly all of the issued and outstanding capital stock of each of the Parent
Subsidiaries, free and clear of any liens, claims, charges, mortgages or other
encumbrances.
4.2. Capitalization. The authorized capital stock of the Parent
consists of (a) 50,000,000 shares of Parent Common Stock of which, as of
September 30, 2003, there are 25,973,850 shares issued and outstanding,
approximately 8,113,000 shares reserved for issuance in connection with the
exercise of outstanding options under Parent's stock option plans, outstanding
warrants and outstanding convertible notes, and no shares held in the Parent's
treasury, and (b) 5,000,000 shares of preferred stock, of which as of the date
hereof, no shares were issued or outstanding. No other capital stock of the
Parent is authorized, issued or outstanding. All issued and outstanding Shares
and capital stock of the Company Subsidiaries are duly authorized, validly
issued, fully paid and nonassessable. The shares of Parent Common Stock that
will be issued in connection with this Agreement will be, when issued in
accordance with this Agreement, duly authorized, validly issued, fully paid and
non-assessable.
4.3. Authorization of this Agreement. Each of the Parent and the
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement and, subject to approval by the shareholders of Parent, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized and approved by the Parent's and the
Purchaser's respective Board of Directors, each of the Board of Directors of the
Parent and the Purchaser has declared the advisability of this Agreement and the
consummation of the transactions contemplated hereby, and, no other corporate
proceedings on the part of the Parent and the Purchaser are necessary to
authorize this Agreement or consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by the Parent
and the Purchaser, and this Agreement constitutes a valid and binding agreement
of the Parent and the Purchaser, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application relating to or affecting the rights and remedies of
creditors, and the application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
8
4.4. Consents and Approvals; No Violation. Except for (i) filings
required under the Securities Act and the Exchange Act, (ii) the filing and
recordation of appropriate merger documents as required by the DGCL and, if
applicable, the laws of other states in which the Parent or the Purchaser is
qualified to do business, and (iii) filings under securities or blue sky laws or
takeover statutes of the various states, no filing with, and no permit,
authorization, consent or approval of, any public body or authority is necessary
for the consummation by the Parent and the Purchaser of the transactions
contemplated by this Agreement, the failure to make or obtain which is
reasonably likely to have a material adverse effect on the ability of the Parent
or the Purchaser to consummate the transactions contemplated hereby or on the
business or financial condition of the Parent, the Purchaser and the other
Parent Subsidiaries taken as a whole. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby nor
compliance by either the Parent or the Purchaser with any of the provisions
hereof will (i) conflict with or result in any violation of any provision of the
Certificate of Incorporation or By-Laws of the Parent or the Purchaser, (ii)
result in a violation or breach of, or constitute a default or give rise to any
right of termination, cancellation, loss of material benefits or acceleration or
give to any Person any interest in or result in the creation of any Lien upon
any of the properties or assets of the Parent, the Purchaser or any of the other
Parent Subsidiaries, with or without notice or lapse of time, or both, under the
Certificate of Incorporation or the By-Laws of the Parent or the Purchaser or
any note, bond, mortgage, indenture, license, benefit plan, agreement or other
instrument or obligation to which the Parent, the Purchaser or any of the other
Parent Subsidiaries is a party or by which any of them or any of their
properties or assets is bound or (iii) assuming the truth of the representations
and warranties of the Company contained herein and their compliance with all
agreements contained herein and assuming the due making or obtaining of all
filings, permits, authorizations, consents and approvals referred to in the
preceding sentence, violate any statute, rule, regulation, order, injunction,
writ or decree of any public body or authority by which the Parent, the
Purchaser or any of the other Parent Subsidiaries or any of their respective
assets or properties is bound, excluding from the foregoing clauses (ii) and
(iii) conflicts, violations, breaches or defaults which, either individually or
in the aggregate, are not reasonably likely to have a Parent Material Adverse
Effect.
4.5. Financial Statements and Reports. (a) The Parent has filed all
forms, reports and documents with the SEC required to be filed by it pursuant to
the Securities Act and the Exchange Act (collectively, the "Parent SEC
Filings"), all of which have complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act. None of such
Parent SEC Filings, at the time filed or subsequently amended by a Parent SEC
Filing filed prior to the date hereof, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Parent SEC Filings
filed after the date of this Agreement and prior to the Effective Time, (i) will
comply in all material respects with all applicable requirements of the
Securities Act and the Exchange Act and (ii) will not at the time they will be
filed, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that, except as set forth in Section 4.7
hereof, no representation is made by the Parent or the Purchaser with respect to
the S-4 Registration Statement or the Proxy Statement/Prospectus.
9
(b) The consolidated balance sheets and the related consolidated
statements of income, cash flow and changes in shareholder equity of the Parent
and the Parent Subsidiaries (i) contained in the Parent's Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2003, June 30, 2003 and September 30,
2003 and the Parent's Annual Report on Form 10-K for the year ended December 31,
2002 (collectively, the "Parent 2002-2003 Financial Statements"), and (ii) to be
contained in Parent SEC Filings filed after the date hereof (collectively with
the Parent 2002-2003 Financial Statements, the "Parent Financial Statements"),
when filed (i) complied or will comply in all material respects as to form with
the published rules and regulations of the SEC and (ii) presented or will
present fairly the consolidated financial position of the Parent and the Parent
Subsidiaries as of such date, and the consolidated results of their operations
and their cash flows for the periods presented therein, in conformity with GAAP,
except as otherwise noted therein, and subject in the case of quarterly
financial statements to normal year-end audit adjustments and except that the
quarterly financial statements do not contain all of the footnote disclosures
required by GAAP.
(c) The books and records of the Parent and its Subsidiaries have been
prepared and maintained in form and substance adequate in all material respects
for preparing the Parent's financial statements in accordance with GAAP.
4.6. Absence of Material Adverse Change. Since December 31, 2002,
except as reflected in the Parent 2002-2003 Financial Statements, there has not
been a Parent Material Adverse Effect.
4.7. Information in Proxy Statement/Prospectus, Registration Statement.
The S-4 Registration Statement (or any amendment thereof or supplement thereto),
at the date it becomes effective and at the time of the Company Stockholder
Meeting and Parent Shareholder Meeting, will 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 light of the
circumstances under which they are made, not misleading, except that no
representation is made by Parent or Purchaser with respect to statements made
therein based on information supplied by the Company for inclusion in the S-4
Registration Statement. None of the information supplied by Parent or Purchaser
for inclusion or incorporation by reference in the Proxy Statement/Prospectus
will, at the date mailed to stockholders of the Company and shareholders of the
Parent and at the time of the Company Stockholder Meeting and Parent Shareholder
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The S-4 Registration Statement will comply in all material respects
with the provisions of the Securities Act and the rules and regulations
thereunder.
10
4.8. Undisclosed Liabilities. Except for liabilities or obligations
reflected or reserved against in the Parent 2002-2003 Financial Statements,
incurred in the ordinary course of business after September 30, 2003, none of
the Parent or any of the Parent Subsidiaries has any liabilities or obligations
(whether absolute, accrued, contingent or otherwise) which are required by GAAP
to be so reflected or reserved against.
4.9. Taxes. The Parent and the Parent Subsidiaries have filed with the
appropriate governmental agencies all material Tax Returns required to be filed,
taking into account any extension of time to file granted to or obtained on
behalf of the Parent and the Parent Subsidiaries. All material Taxes of the
Parent and the Parent Subsidiaries required to be paid have been paid to the
proper authorities, other than such Taxes that are being contested in good faith
by appropriate proceedings and that are adequately reserved for in accordance
with GAAP. For purposes of this Agreement, "Tax" or "Taxes" shall mean all
United States federal, state or local or foreign taxes and any other applicable
taxes, duties levies, charges and assessments of any nature, including social
security payments and deductibles relating to wages, salaries and benefits and
payments to subcontractors (to the extent required under applicable tax law),
and also including all interest penalties and additions imposed with respect to
such amounts, and "Tax Return" shall mean any report, return, document,
declaration or other information or filing required to be supplied to any taxing
authority or jurisdiction (foreign or domestic) with respect to Taxes.
4.10. Litigation. Except for such matters as are not reasonably likely
to result in a Parent Material Adverse Effect, there are no (i) actions, suits
or proceedings or investigations pending or, to the knowledge of the Parent,
threatened, or (ii) outstanding awards, judgments, orders, writs, injunctions or
decrees, or, to the knowledge of the Parent, applications, requests or motions
therefor, against or affecting the assets, business, operations or financial
condition of the Parent or the Parent Subsidiaries at law or in equity in any
court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality.
4.11. Compliance with Laws. There are no violations or defaults by the
Parent or any of the Parent Subsidiaries under any statute, law, ordinance,
rule, regulation, judgment, order, decree, permit, concession, grant, franchise,
license or other governmental authorization or approval applicable to them or
any of their properties or their operations which are reasonably likely to have
a Parent Material Adverse Effect.
4.12. Finders and Investment Bankers. Except for Deutsche Bank
Securities, Inc., no agent, investment banker, broker, finder, intermediary, or
other Person acting on behalf of the Parent or any of the Parent Subsidiaries is
or shall be entitled to any brokerage, or finder's or other similar fee or
commission in connection with the Merger and the other transactions contemplated
by this Agreement.
4.13. Disclosure. No representation or warranty by the Parent or the
Purchaser in this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact necessary, in
light of the circumstances under which it was made, to make the statements
herein or therein not misleading. There is no fact known to the Parent or the
Purchaser which would reasonably be expected to have a Parent Material Adverse
Effect which has not been set forth in the Parent SEC Filings or in this
Agreement.
11
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.1. Conduct of the Business of the Company. Except as otherwise
expressly contemplated by this Agreement, prior to the Effective Time, neither
the Company nor any of the Company Subsidiaries will, without the prior written
consent of the Parent:
(a) amend its Certificate of Incorporation or By-Laws;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of additional
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any shares of capital stock of any class or any securities convertible into or
exercisable for shares of capital stock of any class, except as required by any
employee benefit or stock option plan or agreement existing as of the date
hereof;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock or
partnership interest, or redeem or otherwise acquire any shares of its capital
stock, except any distribution made by any of the Company Subsidiaries to the
Company or any of the other Company Subsidiaries; or
(d) merge with or into or consolidate with any other Person (other than
between the Company Subsidiaries) or make any acquisition of all or any part of
the assets or capital stock or business of any other Person except for tangible
property acquired in the ordinary course of business.
5.2. Conduct of the Business of Parent and the Purchaser. Except as
contemplated by this Agreement, during the period from the date of this
Agreement to the Effective Time, the Parent and the Parent Subsidiaries will
take no action that could reasonably be deemed to have a material adverse effect
on the ability of the parties to consummate the transactions contemplated by
this Agreement, or the timing thereof. Without limiting the generality of the
foregoing, and except as otherwise expressly contemplated by this Agreement,
prior to the Effective Time, neither the Parent nor any of the Parent
Subsidiaries will, without the prior written consent of the Company:
(a) amend the Articles of Incorporation or By-Laws of Parent in a
manner which would materially adversely change the rights of holders of Parent
Common Stock;
(b) during the period in which the Parent Common Stock Value is being
determined, pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock, except any
distribution made by any of the Parent Subsidiaries to the Parent or any of the
other Parent Subsidiaries; or
(c) agree to do any of the foregoing.
12
5.3. SEC Filings. All Company and Parent SEC filings filed after the
date of this Agreement and prior to the Effective Time (i) will be timely filed
and comply in all material respects with all applicable requirements of the
Securities Act and the Exchange Act and (ii) will not at the time they will be
filed, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that, except as set forth in Section 3.5,
with respect to the Company, and Section 4.7, with respect to Parent, no
representation is made by the Company or Parent, as the case may be, with
respect to the S-4 Registration Statement or the Proxy Statement/Prospectus.
5.4. Control of Company's Business. Nothing contained in this Agreement
shall give the Parent, directly or indirectly, the right to control or direct
the Company's operations prior to the Effective Time. Prior to the Effective
Time, Company shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision of its operations.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. Proxy Statement/Prospectus; S-4 Registration Statement. In
connection with the solicitation of approval of this Agreement and the Merger by
the Company's stockholders and the Parent's shareholders, the Company, the
Parent and the Purchaser shall as promptly as practicable prepare and file with
the SEC, a Registration Statement on Form S-4 (the "S-4 Registration Statement")
relating to the Merger, this Agreement, and the issuance of Parent Common Stock
and use commercially reasonable efforts to obtain and furnish the information
required to be included by the SEC in the S-4 Registration Statement. The
Company and the Parent, shall respond as promptly as practicable to any comments
made by the SEC with respect to the S-4 Registration Statement. The Company and
Parent each shall cause a definitive proxy statement to be mailed to its
stockholders and shareholders respectively, at the earliest practicable date
after the S-4 Registration Statement has been declared effective. Such
definitive proxy statement shall also constitute a prospectus of Parent with
respect to the Parent Common Stock to be issued in the Merger (such proxy
statements and prospectus are referred to herein as the "Proxy
Statement/Prospectus"), which prospectus is to be filed with the SEC as part of
a registration statement on the S-4 Registration Statement for the purpose of
registering under the Securities Act the Parent Common Stock to be issued
pursuant to Section 2.1(a). The Parent shall use all commercially reasonable
efforts to have the S-4 Registration Statement declared effective by the SEC.
The Parent shall also take any action required to be taken under applicable
state securities laws in connection with the issuance of Parent Common Stock in
the Merger to stockholders of the Company; provided, however, that Parent shall
not be required (i) to qualify to do business as a foreign corporation in any
jurisdiction in which it is not now qualified or (ii) to file a general consent
to service of process in any jurisdiction. The Company shall furnish all
information concerning the Company and the holders of the Shares as may be
reasonably requested by Parent in connection with such action. If at any time
prior to the Effective Time any information relating to the Company or Parent,
or any of their respective affiliates, officer or directors, should be
discovered by the Company or Parent which should be set forth in an amendment or
supplement to either the S-4 Registration Statement or the Proxy
Statement/Prospectus, so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, the party which discovers such information shall promptly
notify the other parties hereto and an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and, to the
extent required by law, disseminated to the stockholders of the Company.
13
6.2. Access to Information. (a) Each party hereto will (i) give the
other party hereto and its authorized representatives reasonable access during
normal business hours to all offices and other facilities and to all books and
records of such party and such party's subsidiaries, in order to permit such
party to make such inspections as it may reasonably require and (ii) will
furnish the other party with a copy of each report, schedule and other document
filed or received by it, during the period between the date hereof and the
Effective Time, pursuant to the requirements of federal and state securities
laws and such financial and operating data and other information with respect to
the business and properties of the other party and the other party's
subsidiaries as such party may from time to time reasonably request.
(b) Parent will furnish the Company with a copy of each publicly
available report, schedule and other document filed or received by it, during
the period between the date hereof and the Effective Time, pursuant to the
requirements of federal and state securities laws.
6.3. Consents. (a) The Parent and the Company each shall use their
commercially reasonable efforts to obtain all consents of third parties under
the agreements of the Company or the Parent, as the case may be, obtain all
material consents of governmental authorities, and to make all governmental
filings, necessary to the consummation of the transactions contemplated by this
Agreement.
(b) Each of the parties hereto agrees to furnish to each other party
hereto such necessary information and commercially reasonable assistance as such
other party may request in connection with its preparation of necessary filings
or submissions to any regulatory or governmental agency or authority, including,
without limitation, any filing necessary under any federal, state, local or
foreign statute or regulations. Each of the parties shall (1) give the other
party prompt notice of the commencement of any claim, action, suit or proceeding
by or before any governmental entity with respect to the Merger or any of the
transactions contemplated by this Agreement, (2) keep the other party informed
as to the status of any such claim, action, suit or pending or proceeding, and
(3) promptly inform the other party of any communication to or from any
governmental entity regarding the Merger or the transactions contemplated by
this Agreement. Each of the parties will consult and cooperate with one another,
and will consider in good faith the views of one another, in connection with any
analysis, appearance, presentation, memorandum, brief, argument, opinion or
proposal made or submitted in connection with any claim, action, suit or
proceeding by or before any governmental entity with respect to the Merger or
any of the transactions contemplated by this Agreement. In addition, except as
may be prohibited by any governmental entity or by any applicable federal,
state, local or foreign laws, ordinances or regulations, in connection with any
such claim, action, suit or proceeding, each of the parties will permit
authorized representatives of the other party to be present, to the extent
reasonably practicable, at each meeting or conference relating to any such
claim, action, suit or proceeding and to have access to and be consulted in
connection with any document, opinion or proposal made or submitted to any
governmental entity in connection with any such claim, action, suit or
proceeding.
14
(c) Notwithstanding anything to the contrary contained in this
Agreement, Parent shall not have any obligation under this Agreement: (i) to
dispose or cause any of the Parent Subsidiaries to dispose of any assets, or to
commit to cause the Company or any of the Company Subsidiaries to dispose of any
assets; (ii) to discontinue or cause any of the Parent Subsidiaries to
discontinue offering any product, or to commit to cause the Company or any of
the Company Subsidiaries to discontinue offering any product; (iii) to license
or otherwise make available, or cause any of the Parent Subsidiaries to license
or otherwise make available, to any persons, any technology, intellectual
property, software or other intangible assets, or to commit to cause the Company
or any of the Company Subsidiaries to license or otherwise make available to any
person any technology, intellectual property, software or other intangible
assets to the extent reasonably practicable; (iv) to hold separate or cause any
of the Parent Subsidiaries to hold separate any assets or operations, or to
commit to cause the Company or any of the Company Subsidiaries to hold separate
any assets or operations; or (v) to make or cause any of the Parent Subsidiaries
to make any commitment (to any governmental entity or otherwise) regarding its
future operations or the future operations of the Company or any of the Parent
Subsidiaries or Company Subsidiaries, if any of the actions described in (i)-(v)
above would materially interfere with Parent's anticipated benefits from the
transactions contemplated hereby or have a material adverse effect on Parent.
6.4. Board Actions; Company Stockholder Meeting. (a) The Board of
Directors of the Company has determined that the Merger is advisable and in the
best interests of its stockholders and, subject to Section 6.8 hereof, (i) the
Board of Directors of the Company will recommend to the Company's stockholders
the adoption and approval of this Agreement and the transactions contemplated
hereby and the other matters to be submitted to the Company's stockholders in
connection herewith and use its commercially reasonable efforts to obtain the
necessary approvals by the Company's stockholders of this Agreement and the
transactions contemplated hereby; (ii) the Proxy Statement/Prospectus shall
include a statement to the effect that the Board of Directors of the Company has
recommended that the Company's stockholders vote in favor of the adoption and
approval of the Merger at the Company's Stockholder Meeting; and (iii) neither
the Board of Directors of the Company nor any committee thereof shall withdraw,
amend or modify, or propose or resolve to withdraw, amend or modify, in a manner
adverse to Parent, the recommendation of the Board of Directors of the Company
that Company's stockholders vote in favor of and adopt and approve the Merger,
except as provided in Section 6.8.
(b) As soon as reasonably practicable after the date of the Agreement,
Company shall duly call, give notice of, convene and hold the Company
Stockholder Meeting for the purpose of approving this Agreement and the
transactions contemplated by this Agreement. The Company will convene the
Company Stockholder Meeting, as promptly as practicable and in any event use its
commercially reasonable efforts to convene such meeting within 45 days after the
S-4 Registration Statement is declared effective by the SEC.
6.5. Commercially Reasonable Efforts. Subject to the terms and
conditions hereof, each of the parties hereto agrees to use its commercially
reasonable efforts consistent with applicable legal requirements to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary or proper and advisable under applicable laws and regulations to
ensure that the conditions set forth in Article VII hereof are satisfied and to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement.
15
6.6. Public Announcements. The Parent and the Company will consult with
the other before issuing any press release or otherwise making any public
statements with respect to the Merger, except as may be required by law or by
obligations pursuant to any listing agreement with any securities exchange in
which case reasonable notice shall be given to the party not making such press
release or other public announcement.
6.7. Consent of the Purchaser and the Parent. (a) The Parent, as the
sole stockholder of the Purchaser, by executing this Agreement consents to the
execution and delivery of this Agreement by the Purchaser and the consummation
of the Merger by the Purchaser and the other transactions contemplated hereby,
and such consent shall be treated for all purposes as a vote duly cast at a
meeting of the stockholders of the Purchaser held for such purpose.
(b) Anything in this Agreement to the contrary notwithstanding, Parent,
in its capacity as a stockholder of Company, shall have the right to vote the
Shares that it owns or has the right to vote, at the Company Stockholder Meeting
in its sole and absolute discretion (including, without limitation, voting some
or all of such Shares for and/or against, and/or abstaining from voting with
respect to, the approval of this Agreement and transactions contemplated
hereby). Nothing in this Agreement shall be deemed to constitute the approval of
this Agreement and the transactions contemplated hereby by the Parent in its
capacity as a stockholder of the Company or to require that the Parent in its
capacity as a stockholder of the Company vote for, against or abstain from
voting with respect to the approval of this Agreement and the transactions
contemplated hereby.
6.8. No Solicitation. (a) The Company shall not, nor shall it authorize
or permit any of the Company Subsidiaries to, nor shall it authorize or permit
any of its, or the Company Subsidiaries', directors, officers or employees or
any investment banker, financial advisor, attorney, accountant or other
representative retained by or acting on behalf of it or any of the Company
Subsidiaries to, directly or indirectly through another Person, (i) solicit,
initiate or knowingly encourage (including by way of furnishing non-public
information), or take any other action designed to facilitate, any inquiries or
the making of any proposal which constitutes a Company Takeover Proposal (as
hereinafter defined), (ii) participate in any discussions or negotiations
regarding any Company Takeover Proposal or (iii) enter into any letter of
intent, agreement in principle, acquisition agreement or similar agreement (each
a "Company Acquisition Agreement") with respect to a Company Takeover Proposal,
or (iv) approve, endorse or recommend a Company Takeover Proposal; provided,
however, that if and to the extent that, at any time prior to the time of the
adoption of this Agreement by the Company's stockholders, the Board of Directors
of the Company determines in good faith, after consultation with outside
counsel, that failing to do so would violate its fiduciary duties to the
Company's stockholders under applicable law, the Company may, in response to any
Company Takeover Proposal which is likely to lead to a Company Superior Proposal
(as hereinafter defined) and which was not solicited by it and which did not
otherwise result from a breach of this Section 6.8(a); (x) furnish information
with respect to the Company and the Company Subsidiaries to any Person inquiring
about or making a Company Takeover Proposal pursuant to a customary
16
confidentiality agreement (as determined by the Company based on the advice of
its outside counsel); and (y) participate in discussions or negotiations
regarding such Company Takeover Proposal; provided that prior to or at the time
of furnishing any such information or entering into such discussions or
negotiations, the Company shall: (1) inform Parent in writing as to the fact
such information is to be provided, (2) furnish to Parent the identity of the
recipient of such information and/or the potential acquirer and the terms of
such Company Takeover Proposal and (3) furnish to or notify Parent of the
availability of such written information to Parent (to the extent such
information has not been previously furnished by the Company to Parent). Without
limiting the generality of the foregoing, the Company acknowledges and agrees
that any violation of the restrictions set forth in the preceding sentence by
any director, officer, employee, investment banker, financial advisor, attorney,
accountant or other representative of the Company or any of the Company
Subsidiaries shall be deemed to constitute a breach of this Section 6.8(a) by
the Company. For purposes of this Agreement, "Company Takeover Proposal" means
any inquiry, proposal or offer from any Person relating to any Company Takeover
Event. For purposes of this Agreement, "Company Takeover Event" means any direct
or indirect acquisition or purchase of a business that constitutes 10% or more
of the net revenues, net income or assets of the Company and the Company
Subsidiaries), taken as a whole, or 10% or more of any class of equity
securities of the Company, any tender offer or exchange offer that if
consummated would result in any Person beneficially owning 10% or more of any
class of any equity securities of the Company, or any sale, lease, exchange,
transfer or license of assets, or any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company (or any Company Subsidiary) whose business constitutes 10%
or more of the net revenues, net income or assets of the Company and the Company
Subsidiaries taken as a whole.
(b) Except as expressly permitted by this Section 6.8(b), the Board of
Directors of the Company shall not (i) withdraw or modify or propose publicly to
withdraw or modify, in a manner adverse to the Parent and the Purchaser, its
approval or recommendation of this Agreement, or (ii) approve or recommend, or
propose publicly to approve or recommend any Company Takeover Proposal, unless
(x) such Company Takeover Proposal is a Company Superior Proposal, (y) the Board
of Directors of the Company determines in good faith, after consultation with
outside counsel, that in light of a Company Superior Proposal it is necessary to
do so in order to comply with its fiduciary duties under applicable law, and (z)
neither the Company nor any Company Subsidiary nor any representative of the
Company or a Company Subsidiary shall have caused the Company Superior Proposal
to be made in violation of Section 6.8(a). For purposes of this Agreement, the
term "Company Superior Proposal" means any bona fide written proposal to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, more than two-thirds of the Shares then outstanding (including all
of the Shares owned by Parent) or all or substantially all the assets of the
Company, that the Board of Directors of the Company determines in good faith,
after taking into account advice from its financial advisor, to be more
favorable from a financial point of view to the Company and its stockholders
than the Merger and which would breach the Board of Directors' fiduciary duty to
not accept.
(c) Nothing contained in this Agreement shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rules 14d-9
and 14e-2(a) promulgated under the Exchange Act or from making any disclosure to
the Company's stockholders if, in the good faith judgment of the Board of
Directors of the Company, after consultation with outside counsel, such
disclosure is required under applicable law; provided that the Company does not
amend, withdraw or modify, or propose to amend, withdraw or modify, its position
with respect to the Merger, or approve, recommend or propose publicly to approve
or recommend a Company Takeover Proposal, unless the Company and the Board of
Directors has complied with the provisions of Section 6.8(b).
17
(d) Anything in this Agreement to the contrary notwithstanding, except
as expressly permitted by Section 6.8(b) in the case of a Company Superior
Proposal, the Company shall submit this Agreement for approval to the
stockholders of the Company at the Company Stockholder Meeting whether or not
the Board of Directors determines at any time subsequent to the date hereof that
the Agreement is no longer advisable and recommends that the stockholders reject
it.
6.9. Indemnification. (a) For a period of six years after the Effective
Time, the Parent shall, and shall cause the Surviving Corporation to, indemnify,
defend and hold harmless the present and former officers, directors, employees
and agents of the Company and the Company Subsidiaries (collectively, the
"Indemnified Parties") from and against, and pay or reimburse the Indemnified
Parties for, all losses, obligations, expenses, claims, damages or liabilities
(whether or not resulting from third-party claims and including interest,
penalties, out-of-pocket expenses and attorneys' fees incurred in the
investigation or defense of any of the same or in asserting any of their rights
hereunder) resulting from or arising out of actions or omissions occurring on or
prior to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement) to the full extent permitted or required under
applicable law as of the Effective Time and, in the case of indemnification by
the Surviving Corporation, to the extent permitted under the provisions of the
Certificate of Incorporation and the By-Laws of the Company in effect at the
date hereof (which provisions shall not be amended in any manner which adversely
affects any Indemnified Party, for a period of six years), including provisions
relating to payment and advances of expenses incurred in the defense of any
action or suit; provided that in the event any claim or claims are asserted or
made within such six-year period, all rights to indemnification in respect of
each such claim shall continue until final disposition of such claim. In the
event of any dispute as to indemnification provided for herein which cannot be
resolved within 30 days, the parties agree that the resolution of such dispute
shall be made by independent counsel jointly selected by the Indemnified Party
and the Parent. Prior to Closing, Parent shall enter into an indemnification
agreement with each of the directors of the Company (other than directors who
are also employees of the Company) providing for the indemnification
contemplated by this Section, in form and substance reasonably acceptable to the
Parent and such directors ("Indemnification Agreements"). The form of the
Indemnification Agreements shall be agreed to prior to the date of the filing of
the S-4 Registration Statement with the SEC.
(b) For not less than six years after the Effective Time, the Parent
and the Purchaser shall maintain in effect directors' and officers' liability
insurance covering the Indemnified Parties who are currently covered by the
Company's existing directors' and officers' liability insurance, with coverage
of at least $10.0 million and on other terms and conditions no less favorable to
such directors and officers than those in effect on the date hereof, which
insurance shall cover the actions of the directors and officers with respect to
the consideration and approval of the transactions and filings contemplated by
this Agreement and the Merger.
18
(c) Any Indemnified Party wishing to claim indemnification under
Section 6.9(a) shall provide notice to the Parent promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and (i) the Parent shall retain counsel satisfactory to the Parent, the
Indemnified Party and the insurer under any applicable directors' and officers'
liability insurance, (ii) the Parent shall pay all reasonable fees and expenses
of such counsel for the Indemnified Party promptly as statements therefor are
received, and (iii) the Parent will use all reasonable efforts to assist in the
vigorous defense of any such matter, provided that neither Parent nor the
Company shall be liable for any settlement of any claims effected without its
written consent, which consent, however, shall not be unreasonably withheld; and
provided, further, that neither Parent nor Company shall be obligated to pay the
fees and expenses of more than one counsel for all Indemnified Parties in any
single action unless in the reasonable judgment of counsel to such Indemnified
Party a conflict of interest exists between such Indemnified Party and any other
Indemnified Parties with respect to any claims as determined by Rule 1.7(b) of
the ABA Model Rules of Professional conduct. The omission by any Indemnified
Party to give notice as provided herein shall not relieve the Parent of its
indemnification obligation under this Agreement except to the extent that such
omission results in a failure of actual notice to the Parent and the Parent is
materially damaged as a result of such failure to give notice. The Parent and
the Indemnified Party shall cooperate in the defense of any action or claim
subject to this Section 6.9, including but not limited to furnishing all
available documentary or other evidence as is reasonably requested by the other.
(d) This Section 6.9 is intended for the benefit of the Indemnified
Parties whether or not parties to this Agreement and each of the Indemnified
Parties shall be entitled to enforce the covenants contained herein. Subject to
appropriate reimbursement assurances, Parent and the Surviving Corporation
jointly and severally agree to pay all expenses, including attorneys fees, that
may be incurred by any Indemnified Party in enforcing the provisions of this
Section 6.9. The rights of the Indemnified Parties under this Section 6.9 are in
addition to and not in limitation of any rights such Indemnified Parties may
have under the Company's Certificate of Incorporation, by-laws, under any
agreement, under the DGCL, or otherwise.
(e) If the Parent or the Surviving Corporation or any of their
respective successors or assigns (i) reorganizes or consolidates with or merges
into any other Person and is not the resulting, continuing or surviving
corporation or entity of such reorganization, consolidation or merger, or (ii)
liquidates, dissolves or transfers all or substantially all of its properties
and assets to any Person or Persons, then, and in such case, proper provision
will be made so that the successors and assigns of the Surviving Corporation
assumes all of the obligations of the Parent or the Surviving Corporation, as
the case may be, set forth in this Section 6.9.
6.10. Employee Benefits and Communication. The Parent shall maintain or
caused to be maintained for the benefit of each employee of the Parent or any of
its Subsidiaries who was an employee of the Company or any of its Subsidiaries
immediately prior to the Effective Time employee benefit plans and programs that
provide such employee with benefits, rights and entitlements which are
comparable to similarly situated employees of the Parent. Following the
Effective Time, Parent shall cause the Surviving Company to honor in accordance
with their terms all employment, severance and other compensation agreements and
arrangements existing on or prior to the execution of this Agreement which are
between the Company and any of the Company Subsidiaries and any officer,
director or employee thereof. After the date hereof, Parent and the Company
shall establish a mechanism reasonably acceptable to each by which Parent will
be permitted, prior to the Effective Time and subject to applicable law, to
communicate directly with Company employees regarding employee-related matters
after the Effective Time.
19
6.11. Tax Covenants. Whether before or after the Effective Time,
neither the Parent nor the Company shall take (or permit any of their Affiliates
to take) any action that could reasonably be expected to jeopardize
qualification of the Merger as a reorganization within the meaning of Section
368(a) of the Code. Each of the Parent and the Company shall use its respective
commercially reasonable efforts to cause the Merger to qualify as a
reorganization under the provisions of Section 368(a) of the Code and to cause
its respective officers to furnish such customary and appropriate
representations to Blank Rome LLP ("Parent's Counsel") and Winston & Xxxxxx LLP
("Company's Counsel") as may be reasonably requested to enable such counsel to
deliver the opinions described in Sections 7.2(c) and 7.3(c).
6.12. Section 16b-3. Prior to the Effective Time, Parent and the
Company shall take such steps as may be required to cause any dispositions of
capital stock of Parent and the Company (including derivative securities
thereof) resulting from the transactions contemplated by this Agreement by each
individual who is subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to the Company to be exempt under Rule 16b-3 of the
1934 Act.
6.13. Rule 145. Parent and the Company shall cooperate and use their
commercially reasonable efforts to identify those persons who may be deemed to
be "Affiliates" of Parent or Company within the meaning of Rule 145 promulgated
by the SEC under the Securities Act. Parent and the Company shall use their
respective commercially reasonable efforts to cause each person so identified to
deliver to Parent, no later than 15 days prior to the Effective Time, a written
agreement in form and substance reasonably satisfactory to Parent with respect
to the resale of Parent Common Stock.
6.14. Board Actions; Parent Shareholder Meeting. (a) The Board of
Directors of the Parent has determined that the Merger is advisable and in the
best interests of its shareholders. The Board of Directors of the Parent will
recommend to the Parent's shareholders the adoption and approval of this
Agreement and the transactions contemplated hereby and the other matters to be
submitted to the Parent's shareholders in connection herewith and use its
commercially reasonable efforts to obtain the necessary approvals by the
Parent's shareholders of this Agreement and the transactions contemplated
hereby.
(b) As soon as reasonably practicable after the date of the Agreement,
Parent shall duly call, give notice of, convene and hold the Parent Shareholder
Meeting for the purpose of approving this Agreement and the transactions
contemplated by this Agreement. The Parent will convene the Parent Shareholder
Meeting, as promptly as practicable and in any event use its commercially
reasonable efforts to convene such meeting within 45 days after the S-4
Registration Statement is declared effective by the SEC.
20
ARTICLE VII
CLOSING CONDITIONS
7.1. Conditions to the Obligations of the Parent, the Purchaser and the
Company. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) There shall not be in effect any statute, rule or regulation
enacted, promulgated or deemed applicable by any governmental authority of
competent jurisdiction that makes consummation of the Merger illegal and no
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect;
provided, however, that each of the parties shall use their commercially
reasonable efforts to prevent the entry of any such injunction or other order
and to appeal as promptly as possible any injunction or other order that may be
entered.
(b) This Agreement shall have been approved and adopted by the
affirmative vote of the holders of the requisite number of shares of Common
Stock in accordance with the Certificate of Incorporation and By-Laws of the
Company and the DGCL.
(c) The S-4 Registration Statement shall have become effective under
the Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order and no stop order or similar restraining order shall be
threatened or entered by the SEC or any state securities administration
preventing the Merger. No order suspending trading of Parent Common Stock on the
NASDAQ National Market shall have been issued or pending for that purpose.
7.2. Conditions to the Obligations of the Parent and the Purchaser. The
obligations of Parent and Purchaser to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions.
(a) The representations and warranties of the Company contained in this
Agreement that are qualified by materiality or contained in Section 3.2 shall be
true and correct as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date and the representations and warranties
of the Company contained in this Agreement that are not so qualified shall be
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date (except in
each case to the extent any such representation or warranty expressly speaks as
of an earlier specified date, in which case, as of such date), except in each
case where the failure of the representations and warranties (other than the
representations and warranties set forth in Section 3.2) to be so true and
correct (without giving effect to any qualification as to "material,"
"materiality," "material adverse effect" or similar qualifications) are not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect or Parent Material Adverse Effect.
21
(b) The Company shall have, in all material respects, performed all
covenants and agreements and complied with all conditions required by this
Agreement to be performed or complied with by the Company prior to or on the
Closing Date. The Company shall deliver to Parent a certificate of its Chief
Executive Officer, solely in his capacity as such, as to the satisfaction of the
conditions in paragraphs (a) and (b) of this Section 7.2.
(c) Parent shall have received from Parent's Counsel an opinion in
substantially the form attached hereto as Annex V, dated on or about the date of
mailing of the Proxy Statement/Prospectus, which opinion shall be reconfirmed at
the Effective Time, substantially to the effect that the Merger will be treated
for U.S. federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code. In rendering such opinion, Parent's Counsel shall be
entitled to request and rely upon representations contained in certificates of
officers of Parent and Company, which certificates are in substantially the form
attached hereto as Annex III and Annex IV, as the case may be.
(d) There shall not be pending any action, suit or proceeding by a
governmental entity (a) challenging or seeking to restrain or prohibit the
consummation of the Merger; (b) relating to the Merger and seeking material
monetary damages from the Parent, the Company or any of the Parent or Company
Subsidiary; (c) seeking to prohibit or limit in any material respect Parent's
ability to vote, receive dividends with respect to or otherwise exercise
ownership rights with respect to the capital stock of the Company; or (d) which
would materially and adversely affect the right of Parent, the Company or any
Parent or Company Subsidiary to own the assets or operate the business of the
Company after the Effective Time; provided that Parent shall use reasonable
efforts to resolve such matters.
(e) There shall not be pending any actions, suits or proceeding: (i)
which individually or in the aggregate, taking into account the totality of the
facts and circumstance and the probability of an adverse judgment, are
reasonably likely to have a Company Material Adverse Effect or Parent Material
Adverse Effect and (ii) which (A) challenges or seeks to restrain or prohibit
the consummation of the Merger; (B) relates to the Merger and seeks to obtain
from Parent or any of its subsidiaries damages; (C) seeks to prohibit or limit
in any material respect Parent's ability to vote, receive dividends with respect
to or otherwise exercise ownership rights with respect to the capital stock of
the Company; or (D) affects adversely the right of Parent, the Company or any
subsidiary of Parent to own the assets or operate the business of Company;
provided, however, that to the extent that any damages payable in connection
with any such claim, action, suit or proceeding will be fully reimbursed by
insurance coverage pursuant to insurance policies held by Company or Parent,
such damages shall be disregarded in determining the material adverse effect of
such claim, action, suit or proceeding on the policy holder.
(f) Since the date hereof, there shall not have been a Company Material
Adverse Effect.
22
(g) This Agreement shall have been approved and adopted by the
affirmative vote of the holders of the requisite number of shares of Parent
Common Stock in accordance with the Articles of Incorporation and By-Laws of the
Parent, the Pennsylvania Business Corporation Law and any applicable Nasdaq
Marketplace Rules.
7.3. Conditions to the Obligations of the Company. The obligations of
the Company to effect the Merger shall be subject to the fulfillment, at or
prior to the Effective Time, of the following conditions:
(a) The representations and warranties of the Parent and the Purchaser
contained in this Agreement that are qualified by materiality shall be true and
correct in all respects as of the date of this Agreement and as of the Closing
Date and the representations and warranties of the Parent contained in this
Agreement that are not so qualified shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date (except in each case to the extent any such
representation or warranty expressly speaks as of an earlier specified date, in
which case, as of such date), except in each case where the failure of the
representations and warranties to be so true and correct (without giving effect
to any qualification as to "material," "materiality," "material adverse effect"
or similar qualifications) are not, individually or in the aggregate, reasonably
likely to have a Parent Material Adverse Effect.
(b) The Parent and the Purchaser shall have, in all material respects,
performed all covenants and agreements and complied with all conditions required
by this Agreement to be performed or complied with by the Parent and the
Purchaser prior to or on the Closing Date. The Parent shall deliver to Company a
certificate of its Chief Executive Officer, solely in his capacity as such, as
to the satisfaction of the conditions in paragraphs (a) and (b) of this Section
7.3.
(c) Company shall have received from Company's Counsel an opinion in
substantially the form attached hereto as Annex VI, dated on or about the date
of mailing of the Proxy Statement/Prospectus, which opinion shall be reconfirmed
at the Effective Time, substantially to the effect that the Merger will be
treated for U.S. federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion, Company's
Counsel shall be entitled to request and rely upon representations contained in
certificates of officers of Parent and Company, which certificates are in
substantially the form attached hereto as Annex III and Annex IV, as the case
may be.
(d) The shares of Parent Common Stock that will be issued in connection
with the Merger shall have been approved for listing on the Nasdaq National
Market.
(e) There shall not be pending any action, suit or proceeding by a
governmental entity (a) challenging or seeking to restrain or prohibit the
consummation of the Merger; (b) relating to the Merger and seeking material
monetary damages from the Parent, the Company or any of the Parent or Company
Subsidiary; (c) seeking to prohibit or limit in any material respect Parent's
ability to vote, receive dividends with respect to or otherwise exercise
ownership rights with respect to the capital stock of the Company; or (d) which
would materially and adversely affect the right of Parent, the Company or any
Parent or Company Subsidiary to own the assets or operate the business of the
Company after the Effective Time; provided, however, that Company shall have
been deemed to waive the condition set forth in this Section 7.3(e) if (i)
Parent obtains written confirmation, in a form reasonably acceptable to the
Board of Directors of the Company, that the carrier of directors' and officers'
liability insurance policy required by Section 6.9(b) has accepted coverage of
the directors of the Company with respect to any such action, suit or proceeding
or (ii) Parent provides written confirmation, in a form reasonably acceptable to
the Board of Directors of the Company, of its obligation to indemnify the
directors of the Company with respect to any such action, suit or proceeding.
23
(f) There shall not be pending any actions, suits or proceeding: (i)
which individually or in the aggregate, taking into account the totality of the
facts and circumstance and the probability of an adverse judgment, are
reasonably likely to have a Company Material Adverse Effect or Parent Material
Adverse Effect and (ii) which (A) challenges or seeks to restrain or prohibit
the consummation of the Merger; (B) relates to the Merger and seeks to obtain
from Parent or any of its subsidiaries damages; (C) seeks to prohibit or limit
in any material respect Parent's ability to vote, receive dividends with respect
to or otherwise exercise ownership rights with respect to the capital stock of
the Company; or (D) affects adversely the right of Parent, the Company or any
subsidiary of Parent to own the assets or operate the business of Company;
provided, however, that to the extent that any damages payable in connection
with any such claim, action, suit or proceeding will be fully reimbursed by
insurance coverage pursuant to insurance policies held by Company or Parent,
such damages shall be disregarded in determining the material adverse effect of
such claim, action, suit or proceeding on the policy holder; and provided
further, however, that Company shall have been deemed to waive the condition set
forth in this Section 7.3(f) if (i) Parent obtains written confirmation, in a
form reasonably acceptable to the Board of Directors of the Company, that the
carrier of directors' and officers' liability insurance policy required by
Section 6.9(b) has accepted coverage of the directors of the Company with
respect to any such action, suit or proceeding or (ii) Parent provides written
confirmation, in a form reasonably acceptable to the Board of Directors of the
Company, of its obligation to indemnify the directors of the Company with
respect to any such action, suit or proceeding.
(g) The Parent shall have delivered to each of respective directors of
the Company the Indemnification Agreements required by Section 6.9(a), duly
executed by the Parent.
ARTICLE VIII
CLOSING
8.1. Time and Place. The closing of the Merger (the "Closing") shall
take place at the offices of Blank Rome LLP, One Xxxxx Square, Philadelphia,
Pennsylvania, as soon as practicable following satisfaction or waiver, if
permissible, of the conditions set forth in Article VII. The date on which the
Closing actually occurs is herein referred to as the "Closing Date."
8.2. Filings at the Closing. At the Closing, the Parent, the Purchaser
and the Company shall cause the Certificate of Merger, together with any other
documents required by law to effectuate the Merger, to be filed and recorded
with the Secretary of State of the State of Delaware in accordance with the
provisions of Sections 103 and 251 of the DGCL and shall take any and all other
lawful actions and do any and all other lawful things necessary to cause the
Merger to become effective.
24
ARTICLE IX
TERMINATION AND ABANDONMENT
9.1. Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval by the stockholders of the
Company:
(a) by mutual written consent duly authorized by of the Board of
Directors of the Parent and the Board of Directors of the Company;
(b) by either the Parent or the Company if the Merger shall not have
been consummated on or before June 30, 2004; provided, however, that the right
to terminate this Agreement shall not be available to any party whose failure to
fulfill any obligation under or breach of this Agreement has been the cause of,
or resulted in, the failure of the Merger to have occurred on or before the
aforesaid date;
(c) by either the Parent or the Company, if any court of competent
jurisdiction in the United States or other governmental agency of competent
jurisdiction shall have issued an order, decree or ruling or taken any other
action restraining, permanently enjoining or otherwise prohibiting the Merger,
and such order, decree, ruling or other action shall have become final and
non-appealable;
(d) by either the Parent or the Company, if the approval of the Merger
by the stockholders of the Company shall not have been obtained by reason of the
failure to obtain the required vote upon a vote held at a duly held meeting of
such stockholders or at any adjournment or postponement thereof;
(e) by the Company:
(i) upon the breach of any representation, warranty, covenant or other
agreement of Parent contained in this Agreement, or if any representation or
warranty of Parent shall be or shall have become inaccurate, in either case such
that Parent fails to cure such breach within fifteen (15) business days after
receiving notice of such breach (but only if such breach is capable of being
cured) and such breach would cause any of the conditions set forth in Section
7.3(a) or (b) not to be satisfied at the time of such breach or at the time such
representation or warranty was or shall have become inaccurate or, if capable of
being cured, at the end of such cure period; or
(ii) if the Parent Company Stock Value is less than $21.50 and Parent
has not elected to adjust the Exchange Ratio pursuant to Section 2.1(a)(ii)
hereof.
(f) By Parent:
25
(i) upon the breach of any representation, warranty, covenant or other
agreement of the Company contained in this Agreement, or if any representation
or warranty of the Company shall be or shall become inaccurate, in either case
such that the Company fails to cure such breach within fifteen (15) business
days after receiving notice of such breach (but only if such breach is capable
of being cured) and such breach would cause any of the conditions set forth in
Section 7.2(a) or (b) not to be satisfied at the time of such breach or at the
time such representation or warranty was or shall have become inaccurate, or, if
capable of being cured, at the end of such cure period;
(ii) if (a) the Board of Directors of the Company shall have failed to
recommend, or shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Parent its recommendation in favor of, the
adoption and approval of the Merger; (b) the Company shall have failed to
include in the Proxy Statement/Prospectus the recommendation of the Board of
Directors of the Company in favor of the adoption and approval of the Merger;
(c) the Company shall have entered into any Company Acquisition Agreement; or
(d) a tender or exchange offer relating to securities of the Company shall have
been commenced and the Company shall not have sent to its stockholders and, if
applicable, optionholders, within the required time in accordance with
applicable SEC rules after the commencement of such tender or exchange offer, a
statement disclosing that the Company recommends rejection of such tender or
exchange offer; or
(iii) if the approval of the Merger by the shareholders of the Parent
shall not have been obtained by reason of the failure to obtain the required
vote upon a vote held at a duly held meeting of such shareholders or at any
adjournment or postponement thereof.
9.2. Procedure and Effect of Termination. In the event of termination
and abandonment of the Merger by the Parent, the Purchaser or the Company
pursuant to Section 9.1, written notice thereof shall forthwith be given to the
others, and this Agreement shall terminate and the Merger shall be abandoned,
without further action by any of the parties hereto. The Purchaser agrees that
any termination by the Parent shall be conclusively binding upon it, whether
given expressly on its behalf or not, and the Company shall have no further
obligation with respect to it. If this Agreement is terminated as provided
herein, no party hereto shall have any liability or further obligation to any
other party to this Agreement; provided that any termination shall be without
prejudice to the rights of any party hereto arising out of any breach by any
other party of any covenant or agreement contained in this Agreement, and
provided, further, that the obligations set forth in Sections 3.7, 4.12, 9.2,
10.6 and 10.8 shall in any event survive any termination.
ARTICLE X
MISCELLANEOUS
10.1. Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement of
the Parent, the Purchaser and the Company at any time prior to the Effective
Time with respect to any of the terms contained herein; provided that after this
Agreement is adopted by the Company's stockholders, no such amendment or
modification shall be made that reduces the amount or changes the form of the
Merger Consideration or otherwise materially and adversely affects the rights of
the Company's stockholders hereunder, without the further approval of such
stockholders.
26
10.2. Waiver of Compliance; Consents. Any failure of the Parent or the
Purchaser, on the one hand, or the Company, on the other hand, to comply with
any obligation, covenant, agreement or condition herein may be waived by the
Company or the Parent, respectively, only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
10.2. The Purchaser hereby agrees that any consent or waiver of compliance given
by the Parent hereunder shall be conclusively binding upon it, whether given
expressly on its behalf or not.
10.3. Survival of Warranties. Each and every representation and
warranty made in this Agreement shall survive the date of this Agreement but
shall expire with, and be terminated and extinguished by, the Merger, or the
termination of this Agreement pursuant to Section 9.1. This Section 10.3 shall
have no effect upon any other obligation of the parties hereto, whether to be
performed before or after the Closing.
10.4. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if (a) delivered personally or by overnight
courier, (b) mailed by registered or certified mail, return receipt requested,
postage prepaid, or (c) transmitted by email, and in each case, addressed to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice; provided that notices of a change of address
shall be effective only upon receipt thereof):
(a) if to the Parent or the Purchaser, to
NCO Group, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Email: xxxx.xxxxxxx@xxxxxxxx.xxx
Fax: 000-000-0000
Attention: Xxxx X. Xxxxxxx, Xx.
with copies to
NCO Group, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Email: xxxx.xxxxxx@xxxxxxxx.xxx
Fax: 000-000-0000
Attention: Xxxxxx Xxxxxx
Blank Rome LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Email: xxxxx@xxxxxxxxx.xxx
Fax: 000-000-0000
Attention: Xxxxxxx X. Xxxxx, Esquire
27
(b) if to the Company, to
NCO Portfolio Management
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Email: xxxx.xxxxxx@xxxxxxxx.xxx
Fax: 000-000-0000
Attention: Xxxxxxx X. Xxxxxx
with a copy to
Winston & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Email: xxxxxxxxxx@xxxxxxx.xxx
Fax: 000-000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esquire
Any notice so addressed shall be deemed to be given (x) three business days
after being mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid (y) upon delivery, if transmitted by hand delivery,
overnight courier or telecopy and (z) when the addressor receives e-mail
delivery confirmation, if sent by e-mail.
10.5. Assignment; Parties in Interest. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto without the prior written consent of the
other parties. Except for Section 6.9, which is intended for the benefit of the
Company's directors, officers, employees and agents, and Section 6.11, which is
intended for the benefit of the Company's stockholders, this Agreement is not
intended to confer upon any other Person except the parties any rights or
remedies under or by reason of this Agreement.
10.6. Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by Parent;
provided, however, that if this Agreement is terminated due to the failure to
satisfy the conditions set forth in Section 7.2(d) or (e) or pursuant to Section
9.1(c) or 9.1(f)(i) or (ii), Company shall bear and pay its own costs and
expenses.
28
10.7. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, as provided in Section 10.13, this being in
addition to any other remedy to which they are entitled at law or in equity.
10.8. Governing Law. This Agreement, and all matters arising out of or
related to this Agreement, shall be governed in all respects, including as to
validity, interpretation and effect, by the internal laws of the State of
Pennsylvania, without giving effect to the conflict of laws rules thereof to the
extent such rules would permit the application of the laws of another
jurisdiction.
10.9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.10. Interpretation. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
10.11. Entire Agreement. This Agreement, including the Annexes hereto,
embody the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein and supersedes all prior agreements and
the understandings between the parties with respect to such subject matter.
10.12. Severability. If any provision, including any phrase, sentence,
clause, section or subsection, of this Agreement is invalid, inoperative or
unenforceable for any reason, such circumstances shall not have the effect of
rendering such provision in question invalid, inoperative or unenforceable in
any other case or circumstance, or of rendering any other provision herein
contained invalid, inoperative, or unenforceable to any extent whatsoever.
10.13. Jurisdiction and Process. In any action between or among any of
the parties, whether arising out of this Agreement or otherwise, (a) each of the
parties irrevocably consents to the exclusive jurisdiction and venue of the
federal and state courts located in the State of Delaware, (b) if any such
action is commenced in a state court, then, subject to applicable law, no party
shall object to the removal of such action to any federal court located in the
State of Delaware, (c) each of the parties irrevocably waives the right to trial
by jury, (d) each of the parties irrevocably consents to service of process by
first class certified mail, return receipt requested, postage prepaid, to the
address at which such party is to receive notice in accordance with Section 10.4
and (e) the prevailing parties shall be entitled to recover their reasonable
attorneys' fees and court costs from the other parties.
29
10.14. Interpretation of Representations. Each representation and
warranty made in this Agreement or pursuant hereto is independent of all other
representations and warranties made by the same parties, whether or not covering
related or similar matters, and must be independently and separately satisfied.
Except as set forth herein, exceptions or qualifications to any such
representation or warranty shall not be construed as exceptions or
qualifications to any other representation or warranty.
10.15. Reliance by Parent and Purchaser. Notwithstanding the right of
Parent and Purchaser to investigate the business, assets and financial condition
of the Company and the Company Subsidiaries, and notwithstanding any knowledge
obtained or obtainable by Parent and Purchaser as a result of such
investigation, Parent and Purchaser have the unqualified right to rely upon, and
have relied upon, each of the representations and warranties made by the Company
in this Agreement or pursuant hereto.
10.16. Tax Disclosure. Notwithstanding anything to the contrary in this
Agreement or any other agreement relating to the transaction described in this
Agreement, the parties hereto shall be permitted to disclose the U.S. federal
income tax treatment and tax structure of the transaction described in this
Agreement (including any materials, opinions or analyses relating to such tax
treatment or tax structure, but without disclosure of identifying information
or, except to the extent relating to such tax structure or tax treatment, any
nonpublic commercial or financial information) on and after the date hereof.
Moreover, notwithstanding any other provision of this agreement, there shall be
no limitation on either party's ability to consult any tax adviser, whether or
not independent from the parties, regarding the U.S. federal income tax
treatment or tax structure of the transaction described in this Agreement.
Except as otherwise required by law, any such disclosure as to tax structure or
tax treatment shall be made in a manner that preserves confidentiality as to the
parties and their business operations and any other non-tax related proprietary
information with respect thereto.
[remainder of page intentionally left blank - signature page to follow]
30
IN WITNESS WHEREOF, the Parent, the Purchaser and the Company
have caused this Agreement to be signed by their respective duly authorized
officers as of the date first above written.
PARENT: NCO GROUP, INC.
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
PURCHASER: NCPM ACQUISITION CORPORATION
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
THE COMPANY NCO PORTFOLIO MANAGEMENT, INC.
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
31
ANNEX I
DEFINED TERMS
DGCL : as defined in Section 1.1(a).
Certificate of Merger: as defined in Section 1.5.
Certificates: as defined in Section 2.5(b).
Closing: as defined in Section 8.1.
Closing Date: as defined in Section 8.1.
Code: as defined in the second recital of this Agreement.
Common Stock: as defined in Section 2.1(a).
Company: as defined in the first paragraph of this Agreement.
Company Acquisition Agreement: as defined in Section 6.8(a).
Company Material Adverse Effect: means a Material Adverse Effect with
respect to the Company and the Company Subsidiaries, taken as a whole.
Company Option Plan: as defined in Section 2.6.
Company Preferred Stock: as defined in Section 3.2(a).
Company SEC Filings: means all SEC filings of forms, reports and
documents made by the Company since March 1, 2001 including all exhibits;
thereto (whether actually filed with such filings or incorporated by reference
into such Company SEC Filings.
Company Stockholder Meeting: the annual or special meeting of the
stockholders of the Company to be held to vote on the approval of this Agreement
and the transactions contemplated hereby.
Company Subsidiary: means any corporation of which the outstanding
securities having ordinary voting power to elect a majority of the board of
directors are directly or indirectly owned by the Company or any limited
partnership of which the Company or any Company Subsidiary is the general
partner or the ownership of 50% or more of a limited partnership interest.
Company Superior Proposal: as defined in Section 6.8(b).
32
Company Takeover Event: as defined in Section 6.8(a).
Company Takeover Proposal: as defined in Section 6.8(a).
Company's Counsel: as defined in Section 6.11.
Director Options: as defined in Section 2.6.
Effective Time: as defined in Section 1.5.
Exchange Act: as defined in Section 3.4.
Exchange Agent: as defined in Section 2.5(a).
Exchange Fund: as defined in Section 2.5(a).
Exchange Ratio: as defined in Section 2.1(a)
GAAP: shall mean generally accepted accounting principles under current
United States accounting rules and regulations, consistently applied throughout
the periods covered. In no event shall the consistent application of the
historical accounting policies used by the Company have priority over GAAP,
regardless of materiality.
Indemnification Agreement: as defined in Section 6.9(a).
Indemnified Parties: as defined in Section 6.9(a).
Material Adverse Effect: an event, occurrence, violation, inaccuracy,
circumstance or other matter will be deemed to have a "Material Adverse Effect"
on the entity and such entity's subsidiaries if such event, occurrence,
violation, inaccuracy, circumstance or other matter (considered alone or
together with any other matter or matters) had or could reasonably be expected
to have a material adverse effect on (i) the business, condition (financial or
otherwise), capitalization, assets, liabilities, operations, revenues, results
of operations, cash flows, financial performance or prospects of the entity and
such entity's subsidiaries, taken as a whole, or (ii) the ability of an entity
to consummate the Merger or any of the other transactions contemplated by the
Merger Agreement or to perform any of its obligations under the Merger
Agreement; provided, however, that in determining whether there has been a
Material Adverse Effect, (a) any adverse effects directly resulting from or
directly attributable to general economic conditions or general conditions in
the industry in which the entity and entity subsidiaries do business which
conditions do not affect the entity and any entity subsidiaries in a materially
disproportionate manner; (b) any change in the market price or trading volume of
the Company's stock after the date hereof; (c) any adverse change, effect,
event, occurrence, state of facts or developments resulting from or relating to
compliance with the terms of, or the taking of any action required by, this
Agreement; or (d) with respect to the Company only, the taking of any action by
the Parent or any of the Parent's Subsidiaries, or the taking of any action
approved or consented to by the Parent, shall be disregarded.
33
Merger: as defined in the first recital of this Agreement.
Merger Consideration: as defined in Section 2.1(a).
Options: as defined in Section 2.6.
Parent: as defined in the first paragraph of this Agreement.
Parent Common Stock: as defined in Section 2.1(a).
Parent Common Stock Value: means the mean average of the closing sale
prices for Parent Common Stock as quoted in the Nasdaq National Market System,
as reported by The Wall Street Journal, for the ten trading day period ending on
the second trading day next preceding the Closing Date.
Parent Financial Statements: as defined in Section 4.5(b).
Parent 2002-2003 Financial Statements: as defined in Section 4.5(b).
Parent Material Adverse Effect: means a Material Adverse Effect with
respect to the Parent and the Parent Subsidiaries, taken as a whole.
Parent SEC Filings: as defined in Section 4.5(a).
Parent Shareholder Meeting: the annual or special meeting of the
shareholders of the Parent to be held to vote on the approval of this Agreement
and the transactions contemplated hereby.
Parent Subsidiary: means any corporation of which the outstanding
securities having ordinary voting power to elect a majority of the board of
directors are directly or indirectly owned by Parent.
Parent's Counsel: as defined in Section 6.11.
Person: any natural person, firm, partnership, association,
corporation, company, trust, business trust, governmental authority or other
entity.
Plan Options: as defined in Section 2.6.
Proxy Statement/Prospectus: as defined in Section 6.1.
Purchaser: as defined in the first paragraph of this Agreement.
Purchaser Common Stock: as defined in Section 2.4.
34
S-4 Registration Statement: as defined in Section 6.1.
Securities Act: as defined in Section 3.4.
SEC: means the Securities and Exchange Commission.
Shares: as defined in Section 2.1(a).
Surviving Corporation: as defined in Section 1.1(a).
Surviving Corporation Common Stock: as defined in Section 2.4.
Tax or Taxes: as defined in Section 4.9.
35
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER....................................................................................1
1.1. The Merger.............................................................................1
1.2. Certificate of Incorporation...........................................................1
1.3. By-Laws................................................................................1
1.4. Directors and Officers.................................................................2
1.5. Effective Time.........................................................................2
ARTICLE II CONVERSION OF SHARES.........................................................................2
2.1. Company Common Stock...................................................................2
2.2. Fractional Interests...................................................................3
2.3. Anti-Dilution Provisions...............................................................3
2.4. Purchaser Common Stock.................................................................3
2.5. Exchange of Shares.....................................................................3
2.6. Employee Stock Options.................................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................................5
3.1. Organization...........................................................................5
3.2. Capitalization.........................................................................6
3.3. Authorization of this Agreement........................................................6
3.4. Consents and Approvals; No Violation...................................................6
3.5. Information in Proxy Statement/Prospectus, Registration Statement......................7
3.6. Opinion of Financial Advisor...........................................................7
3.7. Finders and Brokers....................................................................7
3.8. Disclosure.............................................................................7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE PURCHASER...............................8
4.1. Organization...........................................................................8
i
Page
4.2. Capitalization.........................................................................8
4.3. Authorization of this Agreement........................................................8
4.4. Consents and Approvals; No Violation...................................................9
4.5. Financial Statements and Reports.......................................................9
4.6. Absence of Material Adverse Change....................................................10
4.7. Information in Proxy Statement/Prospectus, Registration Statement.....................10
4.8. Undisclosed Liabilities...............................................................10
4.9. Taxes.................................................................................11
4.10. Litigation............................................................................11
4.11. Compliance with Laws..................................................................11
4.12. Finders and Investment Bankers........................................................11
4.13. Disclosure............................................................................11
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER.......................................................12
5.1. Conduct of the Business of the Company................................................12
5.2. Conduct of the Business of Parent and the Purchaser...................................12
5.3. SEC Filings...........................................................................13
5.4. Control of Company's Business.........................................................13
ARTICLE VI ADDITIONAL AGREEMENTS.......................................................................13
6.1. Proxy Statement/Prospectus; S-4 Registration Statement................................13
6.2. Access to Information.................................................................14
6.3. Consents..............................................................................14
6.4. Board Actions; Company Stockholder Meeting............................................15
6.5. Commercially Reasonable Efforts.......................................................15
6.6. Public Announcements..................................................................16
6.7. Consent of the Purchaser and the Parent...............................................16
6.8. No Solicitation.......................................................................16
6.9. Indemnification.......................................................................18
6.10. Employee Benefits and Communication...................................................19
6.11. Tax Covenants.........................................................................20
6.12. Section 16b-3.........................................................................20
6.13. Rule 145..............................................................................20
ii
Page
6.14. Board Actions; Parent Shareholder Meeting.............................................20
ARTICLE VII CLOSING CONDITIONS.........................................................................21
7.1. Conditions to the Obligations of the Parent, the Purchaser and the Company............21
7.2. Conditions to the Obligations of the Parent and the Purchaser.........................21
7.3. Conditions to the Obligations of the Company..........................................23
ARTICLE VIII CLOSING...................................................................................24
8.1. Time and Place........................................................................24
8.2. Filings at the Closing................................................................24
ARTICLE IX TERMINATION AND ABANDONMENT.................................................................25
9.1. Termination...........................................................................25
9.2. Procedure and Effect of Termination...................................................26
ARTICLE X MISCELLANEOUS................................................................................26
10.1. Amendment and Modification............................................................26
10.2. Waiver of Compliance; Consents........................................................27
10.3. Survival of Warranties................................................................27
10.4. Notices...............................................................................27
10.5. Assignment; Parties in Interest.......................................................28
10.6. Expenses..............................................................................28
10.7. Specific Performance..................................................................29
10.8. Governing Law.........................................................................29
10.9. Counterparts..........................................................................29
10.10. Interpretation........................................................................29
10.11. Entire Agreement......................................................................29
10.12. Severability..........................................................................29
10.13. Jurisdiction and Process..............................................................29
10.14. Interpretation of Representations.....................................................29
10.15. Reliance by Parent and Purchaser......................................................30
10.16. Tax Disclosure........................................................................30
iii
Page
ANNEX I: Defined Terms
ANNEX III: Form of Parent Tax Certificate
ANNEX IV: Form of Company Tax Certificate
ANNEX V: Form of Tax Opinion from Parent's Counsel
ANNEX VI: Form of Tax Opinion from Company's Counsel
iv
================================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
NCO GROUP, INC.,
NCPM ACQUISITION CORPORATION
AND
NCO PORTFOLIO MANAGEMENT, INC.
Dated as of December 12, 2003
================================================================================
