Exhibit 2
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AGFA CORPORATION
AUTOLOGIC ACQUISITION CORP.
AND
AUTOLOGIC INFORMATION INTERNATIONAL, INC.
September 25, 2001
TABLE OF CONTENTS
Page
ARTICLE I The Offer....................................................... 2
SECTION 1.1 The Offer..................................................... 2
SECTION 1.2 Offer Documents............................................... 3
SECTION 1.3 Company Actions............................................... 4
SECTION 1.4 Directors..................................................... 5
ARTICLE II The Merger...................................................... 6
SECTION 2.1 The Merger.................................................... 6
SECTION 2.2 Effective Time; Closing....................................... 6
SECTION 2.3 Effect of the Merger.......................................... 6
SECTION 2.4 Certificate of Incorporation; Bylaws.......................... 6
SECTION 2.5 Directors and Officers........................................ 7
SECTION 2.6 Effect on Capital Stock....................................... 7
SECTION 2.7 Payment for Shares............................................ 8
SECTION 2.8 Stock Transfer Books.......................................... 9
SECTION 2.9 Stock Options................................................. 9
SECTION 2.10 Dissenting Shares............................................. 10
ARTICLE III Representations and Warranties of the Company................... 11
SECTION 3.1 Organization; Subsidiaries.................................... 11
SECTION 3.2 Company Capitalization........................................ 12
SECTION 3.3 Obligations With Respect to Capital Stock..................... 13
SECTION 3.4 Authority; Non-Contravention.................................. 13
SECTION 3.5 SEC Filings; Company Financial Statements..................... 15
SECTION 3.6 Absence of Certain Changes or Events.......................... 16
SECTION 3.7 Taxes......................................................... 19
SECTION 3.8 Properties.................................................... 21
SECTION 3.9 Intellectual Property......................................... 22
SECTION 3.10 Compliance with Laws.......................................... 25
SECTION 3.11 Litigation.................................................... 25
SECTION 3.12 Employee Benefit Plans........................................ 25
SECTION 3.13 Material Contracts............................................ 28
SECTION 3.14 Investment Banking Fees....................................... 30
SECTION 3.15 Insurance..................................................... 30
SECTION 3.16 Disclosure.................................................... 30
SECTION 3.17 Fairness Opinion.............................................. 31
SECTION 3.18 Related Party Transactions.................................... 31
SECTION 3.19 Joint Ventures; Partnerships and Similar Arrangements......... 31
SECTION 3.20 Environmental Matters......................................... 32
ARTICLE IV Representations and Warranties of Parent and Merger Sub......... 33
SECTION 4.1 Organization, Standing and Power.............................. 33
SECTION 4.2 Authority; Non-Contravention.................................. 33
SECTION 4.3 Disclosure.................................................... 34
SECTION 4.4 Brokers' and Finders' Fees.................................... 34
SECTION 4.5 Financing..................................................... 35
ARTICLE V Conduct Prior to the Effective Time............................. 35
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SECTION 5.1 Conduct of Business by the Company............................ 35
ARTICLE VI Additional Agreements.......................................... 38
SECTION 6.1 Stockholder Approval.......................................... 38
SECTION 6.2 No Solicitation............................................... 39
SECTION 6.3 Obligations of Merger Sub..................................... 42
SECTION 6.4 Confidentiality; Access to Information........................ 42
SECTION 6.5 Public Disclosure............................................. 42
SECTION 6.6 Reasonable Efforts; Notification.............................. 42
SECTION 6.7 Indemnification............................................... 44
SECTION 6.8 Takeover Statutes; Rights Plan................................ 44
SECTION 6.9 Certain Employee Benefits..................................... 45
SECTION 6.10 Employment, Noncompetition, and Other Agreements.............. 45
SECTION 6.12 Transfer Tax.................................................. 45
SECTION 6.12 Termination of Certain Agreements............................. 45
ARTICLE VII Conditions to the Merger....................................... 46
SECTION 7.1 Conditions to Obligations of Each Party to Effect the Merger.. 46
ARTICLE VIII Termination.................................................... 46
SECTION 8.1. Termination................................................... 46
SECTION 8.2. Effect of Termination......................................... 48
SECTION 8.3. Fees and Expenses Payable by the Company...................... 48
SECTION 8.4 Termination Fee............................................... 49
ARTICLE IX General Provisions............................................. 49
SECTION 9.1. Effectiveness of Representations, Warranties and Agreements... 49
SECTION 9.2. Notices....................................................... 50
SECTION 9.3. Amendment..................................................... 51
SECTION 9.4. Waiver........................................................ 51
SECTION 9.5 Interpretation; Certain Defined Terms......................... 51
SECTION 9.6 Counterparts.................................................. 52
SECTION 9.7 Entire Agreement; Third Party Beneficiaries................... 52
SECTION 9.8 Severability.................................................. 53
SECTION 9.9 Other Remedies; Specific Performance.......................... 53
SECTION 9.10 Governing Law................................................. 53
SECTION 9.11 Rules of Construction......................................... 53
SECTION 9.12 Assignment.................................................... 53
SECTION 9.13 Jurisdiction.................................................. 53
Annex A
Exhibit A Stockholders' Agreements
Exhibit B Transaction Option Agreement
ii
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
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into as of September 25, 2001, among Agfa Corporation, a Delaware corporation
("Parent"), Autologic Acquisition Corp., a Delaware corporation and a wholly
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owned subsidiary of Parent ("Merger Sub"), and Autologic Information
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International, Inc., a Delaware corporation ("Company").
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WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have unanimously approved the acquisition of the Company by Parent,
by means of the merger (the "Merger") of Merger Sub with and into the Company,
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upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, to effectuate the acquisition, Parent and the Company each
desire that Merger Sub commence a cash tender offer to purchase all of the
outstanding shares of common stock, par value $0.01 per share, of the Company
(the "Shares" or "Company Common Stock"), upon the terms and subject to the
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conditions set forth in this Agreement and the Offer Documents (as defined in
Section 1.2), and the Board of Directors of the Company has unanimously approved
such tender offer and agreed to recommend to its stockholders that they accept
the tender offer and tender their Company Common Stock pursuant thereto;
WHEREAS, concurrently with or prior to the execution and delivery of
this Agreement and as a condition of and inducement to Parent and Merger Sub
entering into this Agreement (i) Volt Information Sciences, Inc. ("Volt") is
entering into an agreement, dated as of the date hereof, in the form of Exhibit
A-1 hereto (the "Volt Stockholder's Agreement"), providing for the tender of the
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Shares held by such stockholder pursuant to the Offer (as defined in Section
1.1) and certain other matters with respect to its Shares and (ii) the Board of
Directors of the Company has approved the execution and delivery of the Volt
Stockholder's Agreement;
WHEREAS, concurrently with or prior to the execution and delivery of
this Agreement and as a condition of and inducement to Parent and Merger Sub
entering into this Agreement (i) the officers and directors of the Company are
entering into an agreement, dated as of the date hereof, in the form of Exhibit
A-2 hereto (the "Individual Stockholders' Agreement" and, together with the Volt
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Stockholder's Agreement, the "Stockholders' Agreements"), providing for the
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tender of the Shares held by such stockholders pursuant to the Offer and certain
other matters with respect to their Shares and (ii) the Board of Directors of
the Company has approved the execution and delivery of the Individual
Stockholders' Agreement;
WHEREAS, concurrently with or prior to the execution and delivery of
this Agreement and as a further condition of and inducement to Parent and Merger
Sub entering into this Agreement (i) Parent and the Company are entering into an
agreement, dated as of the date hereof, in the form of Exhibit B hereto (the
"Transaction Option Agreement"), pursuant to which the Company is granting
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Parent an option to purchase shares of Company Common Stock and (ii) the Board
of Directors of the Company has approved the execution and delivery of the
Transaction Option Agreement; and
WHEREAS, Parent, Merger Sub and the Company are making herein certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also prescribing various conditions to consummation
thereof.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained in this
Agreement, the Stockholders' Agreements and the Transaction Option Agreement,
the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer.
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(a) Provided that none of the events set forth in the Annex A hereto shall
have occurred and be continuing, as promptly as practicable (but in no event
later than five business days after the date of the public announcement (on the
date hereof or on the following day) by Parent and the Company of this
Agreement), Parent shall cause Merger Sub to commence (within the meaning of
Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
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Act")), an offer to purchase (the "Offer") all outstanding shares of the Company
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Common Stock at a price of $7.127 per share, net to the seller in cash (the
"Offer Consideration"). The obligations of Parent and Merger Sub to commence
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the Offer, consummate the Offer, accept for payment and pay for shares of
Company Common Stock validly tendered in the Offer and not withdrawn shall be
subject to those conditions set forth on Annex A hereto.
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(b) Parent and Merger Sub expressly reserve the right to amend or modify
the terms of the Offer, except that, without the prior written consent of the
Company, Merger Sub shall not (and Parent shall cause Merger Sub not to) (i)
decrease the Offer Consideration or change the form of consideration therefor or
decrease the number of Shares sought pursuant to the Offer, (ii) change the
conditions to the Offer set forth in Annex A hereto, (iii) impose conditions to
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the Offer in addition to those set forth in Annex A, (iv) waive the condition
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that there shall be validly tendered and not withdrawn prior to the time the
Offer expires a number of shares of Company Common Stock which constitutes a
majority of the Shares outstanding on a fully-diluted basis on the date of
purchase ("on a fully-diluted basis" means, as of any date: the number of shares
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of Company Common Stock outstanding, together with Shares which the Company may
be required to issue pursuant to obligations outstanding at that date under
employee stock option or similar benefit plans, warrants or otherwise) (the
"Minimum Condition"), (v) extend the expiration date of the Offer (except as set
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forth below ), or (vi) amend any term of the Offer in any manner adverse to
holders of shares of Company Common Stock; provided, however, that: (A) except
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as set forth above, Merger Sub may waive any condition to the Offer, in whole or
in part, in its sole discretion; (B) the Offer may be extended in connection
with an increase in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules, regulations, interpretations or positions of the
United States Securities and Exchange Commission (the "SEC") or the staff
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thereof; (C) if all of the conditions to the Offer
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set forth on Annex A are not satisfied or waived on any Offer expiration date,
and if all of such conditions are then still reasonably capable of being
satisfied prior to the Termination Date (as defined in Section 9.5(g)), Merger
Sub may, in its sole discretion, extend the Offer from time to time (each such
individual extension not to exceed ten (10) business days after the previously
scheduled expiration date) until such conditions are satisfied or waived, but in
no event later than the termination of this Agreement in accordance with its
terms; and (D) the Offer may be extended for one or more periods not to exceed
twenty (20) business days in the aggregate, if on such expiration date the
conditions of the Offer described on Annex A hereto shall have been satisfied or
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earlier waived, but the number of shares of Company Common Stock that have been
validly tendered and not withdrawn represents less than ninety percent (90%) of
the then issued and outstanding shares of Company Common Stock on a fully
diluted basis. Notwithstanding the foregoing, Merger Sub may not, without the
Company's prior written consent, extend the Offer pursuant to clause (C) of the
prior sentence if the failure to satisfy any of the conditions to the Offer set
forth on Annex A attached hereto was directly or indirectly caused by an act or
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omission of Parent or Merger Sub that constitutes a material breach of this
Agreement. Assuming the prior satisfaction or waiver of the conditions to the
Offer set forth on Annex A hereto, Merger Sub shall, and Parent shall cause
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Merger Sub to, accept for payment, and pay for, in accordance with the terms of
the Offer, all shares of Company Common Stock validly tendered and not withdrawn
pursuant to the Offer as soon as it is permitted to do so under applicable law.
The initial expiration date of the Offer (unless extended as provided herein)
shall be 20 business days from the commencement of the Offer.
SECTION 1.2 Offer Documents. As soon as practicable on the date of
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commencement of the Offer, Parent and Merger Sub shall (i) file or cause to be
filed with the SEC a Tender Offer Statement on Schedule TO promulgated under
Section 14(d)(1) of the Exchange Act (the "Schedule TO") with respect to the
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Offer which shall contain the offer to purchase and related letter of
transmittal and other ancillary Offer documents and instruments pursuant to
which the Offer will be made (collectively with any supplements or amendments
thereto, the "Offer Documents") and shall contain (or shall be amended in a
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timely manner to contain) all information which is required to be included
therein in accordance with the Exchange Act and the rules and regulations
thereunder and any other applicable law, and shall conform in all material
respects with the requirements of the Exchange Act and any other applicable law;
provided, however, that no agreement or representation hereby is made or shall
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be made by Parent or Merger Sub with respect to information supplied by the
Company expressly for inclusion in, or with respect to Company information
derived from the Company's public filings with the SEC that is included or
incorporated by reference in, the Offer Documents, (ii) deliver a copy of the
Schedule TO to the Company at its principal executive office, (iii) give
telephonic notice of and mail to the National Association of Securities Dealers,
Inc. (the "NASD") a copy of the Schedule TO in accordance with Rule 14d-3
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promulgated under the Exchange Act, and (iv) mail the Offer Documents to the
holders of Company Common Stock. Parent, Merger Sub and the Company each agree
promptly to correct any information provided by them for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect and Parent and Merger Sub further agrees to take all lawful
action necessary to cause the Offer Documents as so corrected to be filed
promptly with the SEC and to be disseminated to holders of Company Common Stock,
in each case as and to the extent required by applicable law. In conducting the
Offer, Parent and Merger Sub shall comply in all material
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respects with the provisions of the Exchange Act and any other applicable law.
The Company and its counsel shall be given the opportunity to review and comment
on the Offer Documents and any amendments thereto prior to the filing thereof
with the SEC. Parent and Merger Sub agree to provide the Company and its counsel
any comments Parent, Merger Sub or their counsel may received from the SEC with
respect to the Offer Documents promptly after the receipt of such comments.
SECTION 1.3 Company Actions. The Company hereby consents to the Offer and
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represents that (a) its Board of Directors (at a meeting duly called and held)
has unanimously (i) approved and declared advisable each of this Agreement, the
Transaction Option Agreement, the Stockholders' Agreements, and the transactions
contemplated hereby and thereby, including the Offer and the Merger, and such
approval constitutes approval of the foregoing for purposes of Section 203 of
the Delaware General Corporation Law (as amended, the "DGCL") such that the
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Offer, the Merger, this Agreement, the Transaction Option Agreement and the
Stockholders' Agreements are not and shall not be subject to any restriction
pursuant to Section 203 of the DGCL, and (ii) resolved to recommend acceptance
of the Offer and approval and adoption of this Agreement and the Merger by the
holders of Company Common Stock (the recommendations referred to in this clause
(ii) are collectively referred to in this Agreement as the "Recommendations"),
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and (b) Xxxxxx Xxxxx Xxxxxxx & Xxx, Inc. ("MLGA") has delivered to the Board of
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Directors of the Company its written opinion that, as of the date hereof, the
Offer Consideration to be received by the holders of Company Common Stock in the
Offer pursuant to this Agreement is fair, from a financial point of view, to
such holders and The Xxxxxxx Companies Incorporated ("Xxxxxxx") has delivered to
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a Special Committee of the Board of Directors of the Company its written opinion
that, as of the date hereof, the Offer Consideration to be received by the
holders of the Company Common Stock other than Volt in the Offer pursuant to
this Agreement is fair, from a financial point of view, to such holders. The
Company hereby consents to the inclusion in the Offer Documents of the
Recommendations. The Company hereby agrees to file with the SEC on the date of
filing by Parent and Merger Sub of the Schedule TO, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing the
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Recommendations and otherwise complying with Rule 14d-9 under the Exchange Act
and shall mail or cause to be mailed the Schedule 14D-9 to the holders of the
Company Common Stock on the same date as the Offer Documents are mailed. The
Schedule 14D-9 shall comply in all material respects with the Exchange Act and
any other applicable law and shall contain (or shall be amended in a timely
manner to contain) all information which is required to be included therein in
accordance with the Exchange Act and the rules and regulations thereunder and
any other applicable law; provided, however, that no agreement or representation
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hereby is made or shall be made by the Company with respect to information
supplied by Parent or Merger Sub expressly for inclusion in the Schedule 14D-9
for purposes of compliance with Section 14(f) of the Exchange Act. The Company,
Parent and Merger Sub each agree promptly to correct any information provided by
them for use in the Schedule 14D-9 if and to the extent that it shall have
become false or misleading in any material respect and the Company further
agrees to take all lawful action necessary to cause the Schedule 14D-9 as so
corrected to be filed promptly with the SEC and disseminated to the holders of
Company Common Stock, in each case as and to the extent required by applicable
law. Parent, Merger Sub and their counsel shall be given an opportunity to
review and comment on the Schedule 14D-9 and any amendments thereto prior to
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the filing thereof with the SEC. The Company agrees to provide Parent and Merger
Sub and their counsel any comments the Company or its counsel may receive from
the SEC with respect to the Schedule 14D-9 promptly after the receipt of such
comments. In connection with the Offer, the Company shall promptly furnish, or
cause its transfer agent to furnish, Parent with mailing labels, security
position listings and all available listings or computer files containing the
names and addresses of the record holders of the Company Common Stock as of the
latest practicable date and shall furnish, or cause its transfer agent to
furnish, Parent with such information and assistance (including updated lists of
stockholders, mailing labels and lists of security positions) as Parent, Merger
Sub or any of their agents may reasonably request in communicating the Offer to
the record and beneficial holders of Company Common Stock. Subject to the
requirements of applicable law, and except for such actions as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Offer and the Merger, Parent and Merger Sub and each of their affiliates,
associates, partners, employees, agents and advisors shall hold in confidence
the information contained in such labels and lists, shall use such information
only in connection with the Offer and the Merger, and, if this Agreement is
terminated, in accordance with its terms, shall deliver promptly to the Company
all copies of such information then in their possession or under their control.
SECTION 1.4 Directors.
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(a) Promptly following Merger Sub's acceptance for payment of and payment
for such number of shares of Company Common Stock which represents at least a
majority of the issued and outstanding shares of Company Common Stock on a fully
diluted basis, on the Offer Closing Date (as defined in Section 9.5) (the
"Appointment Time"), Merger Sub shall be entitled, subject to compliance with
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Section 14(f) of the Exchange Act, to designate such number of directors,
rounded up to the next whole number (and in no event less than a majority of the
Board of Directors) as will give Merger Sub representation on the Board of
Directors of the Company equal to the product of (x) the number of directors on
the Board of Directors of the Company (giving effect to any increase in the
number of directors pursuant to this Section 1.4) and (y) the percentage that
such number of Shares so purchased by Merger Sub bears to the aggregate number
of Shares issued and outstanding on the Offer Closing Date (such number being,
the "Board Percentage"), and the Company shall, upon request by Merger Sub,
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promptly satisfy the Board Percentage by (i) increasing the size of the Board of
Directors of the Company or (ii) using its reasonable best efforts to secure the
resignations of such number of directors as is necessary to enable Merger Sub's
designees to be elected to the Board of Directors of the Company and shall use
reasonable best efforts to cause Merger Sub's designees promptly to be so
elected. At the request of Merger Sub, the Company shall take, at the Company's
expense, all lawful action necessary to effect any such election, including,
without limitation, if necessary, calling a special meeting of its stockholders
for the purpose of such election and mailing to its stockholders the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, unless such information has previously been provided to the
Company's stockholders in the Schedule 14D-9.
(b) Following the election or appointment of Merger Sub's designees
pursuant to this Section 1.4 and prior to the Effective Time (as defined in
Section 2.2) of the Merger, any (i) amendment or termination of this Agreement,
(ii) extension for the performance or waiver of the
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obligations or other acts of Parent or Merger Sub, or (iii) waiver of the
Company's rights hereunder shall require the concurrence of a majority of
directors of the Company then in office who are "Continuing Directors". The term
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"Continuing Director" shall mean (i) each member of the Board of Directors of
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the Company on the date hereof and (ii) any successor to any Continuing Director
that was recommended to succeed such Continuing Director by a majority of the
Continuing Directors then on the Board of Directors.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions of
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this Agreement and the applicable provisions of the DGCL, at the Effective Time,
Merger Sub shall be merged with and into the Company, the separate corporate
existence of Merger Sub shall cease, and the Company shall continue as the
surviving corporation of the Merger (as the context requires, the Company is
sometimes hereinafter referred to as the "Surviving Corporation").
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SECTION 2.2 Effective Time; Closing. Subject to the provisions of this
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Agreement, on the Closing Date (as defined below) the parties shall file a
certificate of merger or, if applicable, certificate of ownership and merger (in
any such case, the "Certificate of Merger") executed in accordance with the
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relevant provisions of the DGCL and shall make all other filings or recordings
required under the DGCL and other applicable law. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Delaware Secretary of State, or at such other time specified in the Certificate
of Merger as Merger Sub and the Company shall agree (the time the Merger becomes
effective being hereinafter referred to as the "Effective Time"). The closing
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of the Merger will take place at 10:00 a.m. (Boston time) on a date to be
specified by Parent or Merger Sub, which shall be no later than the second
business day after satisfaction or waiver of the conditions set forth in Article
VII (the "Closing Date"), at the offices of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, 125
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High Street, High Street Tower, Boston, Massachusetts, unless another date, time
or place is agreed to in writing by the parties hereto.
SECTION 2.3 Effect of the Merger. At the Effective Time, the effect of
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the Merger shall be as provided in this Agreement and the applicable provisions
of the DGCL. Without limiting the generality of the foregoing, at the Effective
Time, the Surviving Corporation shall possess all the property, rights,
privileges, powers and franchises of Company and Merger Sub, and shall be
subject to all debts, liabilities and duties of Company and Merger Sub.
SECTION 2.4 Certificate of Incorporation; Bylaws.
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(a) At the Effective Time, the Certificate of Incorporation of Merger Sub,
as in effect immediately prior to the Effective Time, shall be the Certificate
of Incorporation of the Surviving Corporation until thereafter amended as
provided by law; provided, however, that at the Effective Time Article I of the
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Certificate of Incorporation of the Surviving Corporation shall be amended to
read: "The name of the corporation is "Autologic Information International,
Inc.," and the provisions regarding indemnification of officers and directors
shall conform to the similar provisions presently contained in the Company's
Certificate of Incorporation.
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(b) At the Effective Time, the By-laws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by law.
SECTION 2.5 Directors and Officers. The initial directors of the
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Surviving Corporation shall be the directors of Merger Sub immediately prior to
the Effective Time, until their respective successors are duly elected or
appointed and qualified. The initial officers of the Surviving Corporation shall
be the officers of the Merger Sub immediately prior to the Effective Time, until
their respective successors are duly appointed.
SECTION 2.6 Effect on Capital Stock. Subject to the terms and conditions
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of this Agreement, at the Effective Time, by virtue of the Merger and without
any action on the part of Parent, Merger Sub, the Company or any security holder
of the Company:
(a) Conversion of Company Common Stock. Each share of Company Common Stock
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issued and outstanding immediately prior to the Effective Time, other than any
shares of Company Common Stock to be canceled pursuant to Section 2.6(b) and
Dissenting Shares (as defined in Section 2.10), will be canceled and
extinguished and automatically converted into the right to receive the Offer
Consideration, payable to the holder thereof, without any interest thereon, less
any required withholding transfer and other conveyance taxes, upon surrender of
the certificate representing such share of Company Common Stock in the manner
provided in Section 2.7 (the "Merger Consideration").
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(b) Cancellation of Company-Owned and Parent-Owned Stock. Each share of
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Company Common Stock held by Company or owned by Parent or Merger Sub (or any of
their respective subsidiaries) immediately prior to the Effective Time shall be
canceled and extinguished and no consideration shall be delivered or deliverable
in exchange therefor.
(c) Options. At the Effective Time, all outstanding options to purchase
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Company Common Stock, whether under the 1976 Incentive Stock Option Plan, the
1985 Director's Option Plan and the 1995 Stock Option Plan (the "Company Stock
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Option Plans") or option agreements or otherwise, shall be treated in accordance
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with Section 2.9 of this Agreement.
(d) Capital Stock of Merger Sub. Each share of common stock, par value
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$0.01 per share, of Merger Sub (the "Merger Sub Common Stock"), issued and
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outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable share of common stock, $0.01 par
value per share, of the Surviving Corporation. Following the Effective Time,
each certificate evidencing ownership of shares of Merger Sub common stock shall
evidence ownership of such shares of capital stock of the Surviving Corporation.
SECTION 2.7 Payment for Shares.
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(a) Paying Agent. Prior to the Effective Time, Merger Sub shall appoint a
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United States bank or trust company reasonably acceptable to the Company to act
as paying agent (the
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"Paying Agent") for the payment of the Merger Consideration, and Merger Sub
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shall deposit or shall cause to be deposited with the Paying Agent in a separate
fund established for the benefit of the holders of shares of Company Common
Stock, for payment in accordance with this Article II, through the Paying Agent
(the "Payment Fund"), immediately available funds in amounts necessary to make
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the payments pursuant to Section 2.6(a).
(b) Payment Procedures. As soon as reasonably practicable after the
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Effective Time, the Surviving Corporation shall instruct the Paying Agent to
mail to each holder of record (other than the Company, Parent, Merger Sub or any
of their respective subsidiaries or holders of Dissenting Shares) of a
certificate or certificates which, immediately prior to the Effective Time,
evidenced outstanding shares of Company Common Stock (the "Certificates"), (i) a
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form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent, and shall be in such
form and have such other provisions as the Surviving Corporation reasonably may
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment therefor. Upon surrender of a Certificate
for cancellation to the Paying Agent, together with such letter of transmittal,
duly executed, and such other customary documents as may be required pursuant to
such instructions, the holder of such Certificate shall be paid in cash an
amount equal to the product of (x) the number of shares of Company Common Stock
represented by such Certificate and (y) the Merger Consideration, and the
Certificate so surrendered shall forthwith be canceled. Absolutely no interest
shall be paid or accrued on the Merger Consideration payable upon the surrender
of any Certificate. If payment is to be made to a person other than the person
in whose name the surrendered Certificate is registered, it shall be a condition
of payment that the Certificate so surrendered shall be promptly 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
of the Merger Consideration to a person other than the registered holder of the
surrendered Certificate or shall have established to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 2.7(b), each
Certificate shall represent for all purposes only the right to receive the
Merger Consideration as contemplated in Section 2.6.
(c) Termination of Payment Fund; Interest. Any portion of the Payment Fund
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which remains undistributed to the holders of Company Common Stock after 180
days from the Effective Time shall be delivered to the Surviving Corporation,
upon demand, and any holders of Company Common Stock who have not theretofore
complied with this Article II and the instructions set forth in the letter of
transmittal mailed to such holder after the Effective Time shall thereafter look
only to the Surviving Corporation for payment of the Merger Consideration to
which they are entitled. Any interest accrued in respect of the Payment Fund
shall inure to the benefit of and be paid to the Surviving Corporation.
(d) No Liability. Neither Parent nor the Surviving Corporation shall be
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liable to any holder of shares of Company Common Stock for any cash from the
Payment Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
8
(e) Withholding Rights. Each of the Surviving Corporation and Parent shall
------------------
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended (the "Code"),
----
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by the Surviving Corporation or Parent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which such deduction
and withholding was made by the Surviving Corporation or Parent.
(f) Lost, Stolen or Destroyed Certificates. In the event that any
--------------------------------------
Certificates shall have been lost, stolen or destroyed, the Paying Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, the Merger
Consideration into which the shares of Company Common Stock represented by such
Certificates were converted; provided, however, that Parent may, in its
-------- -------
discretion and as a condition precedent to the issuance of such Merger
Consideration, require the owner of such lost, stolen or destroyed certificates
to deliver a bond in such sum as it may reasonably direct as indemnity against
any claim that may be made against Parent, the Surviving Corporation or the
Paying Agent with respect to the Certificates alleged to have been lost, stolen
or destroyed.
SECTION 2.8 Stock Transfer Books. At the Effective Time, the stock
--------------------
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Paying Agent for any reason, they
shall be canceled and exchanged as provided in this Article II. All cash paid
upon the surrender of Certificates in accordance with the terms of this Article
II shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such Certificates.
SECTION 2.9 Stock Options. Promptly after the Offer Closing Date (but
-------------
subject to the next sentence), each holder of a then outstanding Company Option
(as defined in Section 3.2), shall, in settlement thereof, receive from Merger
Sub for each Share subject to such Company Option (whether or not such Company
Option is vested) an amount in cash equal to the difference between (i) the
Offer Consideration and (ii) the sum of the per Share exercise price of such
Company Option and applicable withholding taxes, to the extent such difference
is a positive number (such amount being hereinafter referred to as, the "Option
------
Consideration"); provided, however, that with respect to any person subject to
------------- -------- -------
Section 16(a) of the Exchange Act, any such amount shall be paid as soon as
practicable after the first date payment can be made without liability to such
person under Section 16(b) of the Exchange Act. Upon receipt of the Option
Consideration, the Company Option shall be canceled; provided that each option
holder shall not be entitled to the Option Consideration unless and until such
holder shall have signed an agreement reasonably acceptable to Parent agreeing
to such termination. The surrender of a Company Option to the Company in
exchange for the Option Consideration shall be deemed a release of any and all
rights the holder had or may have had in respect of such Company Option. In
accordance with the terms of the Company Option Plans, at the Effective Time,
all outstanding Company Options shall be terminated and shall no longer
represent the right to
9
acquire Company Common Stock (or capital stock of the Surviving Corporation).
Prior to the Effective Time, the Company shall obtain all necessary consents or
releases from holders of Company Options under the Company Stock Option Plans
and take all such other lawful action as may be necessary to give effect to the
transactions contemplated by this Section 2.9. The Company shall use its
reasonable best efforts to ensure that (i) all Company Stock Option Plans shall
terminate as of the Effective Time and the provisions in any other plan, program
or arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any subsidiary thereof shall be
canceled as of the Effective Time, and (ii) following the Effective Time no
participant in any Company Stock Option Plan or any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any subsidiary thereof shall have the
right thereunder to acquire equity securities of the Company, the Surviving
Corporation or any subsidiary thereof.
SECTION 2.10 Dissenting Shares. Notwithstanding any other provisions of
-----------------
this Agreement to the contrary, shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal for
such shares in accordance with the DGCL (collectively, the "Dissenting Shares")
-----------------
shall not be converted into or represent the right to receive the Merger
Consideration. Such stockholders instead shall be entitled to receive payment
of the appraised value of such shares of Company Common Stock held by them in
accordance with the provisions of the DGCL, except that all Dissenting Shares
held by stockholders who shall have failed to perfect or who effectively shall
have withdrawn or lost their rights to appraisal of such shares of Company
Common Stock under the DGCL shall thereupon be deemed to have been converted
into and to have become exchangeable, as of the Effective Time, for the right to
receive, without any interest thereon, the Merger Consideration upon surrender
in the manner provided in Section 2.7 of the Certificate or Certificates that,
immediately prior to the Effective Time, evidenced such shares of Company Common
Stock. The Company shall give Parent (i) prompt notice of any demands for
appraisal of Shares received by the Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect to any
such demands. The Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as follows:
SECTION 3.1 Organization; Subsidiaries.
--------------------------
(a) The Company and each of its subsidiaries identified in Section 3.1(a)
--------------
of the written disclosure schedule delivered by Company to Parent (the "Company
-------
Disclosure Schedule") is duly organized, validly existing and in good standing
-------------------
under the laws of the jurisdiction in which it is organized and has the
requisite corporate power and authority to carry on its business as now being
conducted. The Company and each of its subsidiaries is duly
10
qualified or licensed to do business and is in good standing in each
jurisdiction (domestic or foreign) in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed would not have a Material Adverse Effect (as defined in Section 9.5)
on the Company. Section 3.1(a) of the Company Disclosure Schedule indicates the
--------------
jurisdiction of organization of each subsidiary of the Company and the Company's
direct or indirect equity interest therein. True and correct copies of the
Certificate of Incorporation and By-laws of the Company and copies of similar
governing instruments of each of its subsidiaries (collectively, the "Company
-------
Charter Documents") have been delivered to Parent and each such instrument is in
-----------------
full force and effect.
(b) Except as set forth on Section 3.1(a) of the Company Disclosure
--------------
Schedule, neither the Company nor any of its subsidiaries owns any capital stock
of, or any equity interest of any nature in, any other corporation, partnership,
joint venture arrangement or other business entity, except for passive
investments in equity interests of public companies as part of the cash
management program of the Company. All subsidiaries of the Company are owned by
the Company in the manner set forth on Section 3.1(a) to the Company Disclosure
--------------
Schedule. Neither the Company nor any of its subsidiaries has agreed or is
obligated to make, or is bound by any written, oral or other agreement,
contract, subcontract, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan or
legally binding commitment or undertaking of any nature under which it may
become obligated to make any future material investment in or material capital
contribution to any other entity. The Company does not have any subsidiaries
that would constitute a "significant subsidiary" within the meaning of Rule 1-02
of Regulation S-X promulgated by the SEC other than Xitron, Incorporated, a
Michigan corporation. Neither the Company, nor any of its subsidiaries, is a
general partner of any general partnership, limited partnership or other similar
entity.
SECTION 3.2 Company Capitalization.
----------------------
(a) The authorized capital stock of the Company consists solely of (i)
12,000,000 shares of Company Common Stock, par value $0.01 per share, of which
there are 5,787,970 shares issued and outstanding as of the date hereof and (ii)
1,000,000 shares of Preferred Stock, par value $0.01 per share, none of which
are issued and outstanding as of the date hereof. As of the date hereof, there
are no shares of Company Common Stock held in treasury by the Company.
(b) As of the date hereof, 238,800 shares of Company Common Stock are
subject to issuance pursuant to outstanding options to purchase Company Common
Stock under the Company Stock Option Plans (collectively, the "Company
-------
Options"). Section 3.2(b) of the Company Disclosure Schedule sets forth the
------- --------------
following information with respect to each Company Option outstanding as of the
date of this Agreement: (i) the name of the optionee; (ii) the number of shares
of Company Common Stock subject to such Company Option; (iii) the exercise price
of such Company Option; (iv) the date on which such Company Option was granted
or assumed; (v) the date on which installments of such Company Option become
exercisable; and (vi) the date on which such Company Option expires. The
Company has made
11
available to Parent accurate and complete copies of the Company Stock Option
Plans and the standard forms of stock option agreements evidencing Company
Options. There are no options outstanding to purchase shares of Company Common
Stock from the Company other than pursuant to the Transaction Option Agreement
and the Company Stock Option Plans. To the Company's knowledge, there are no
options outstanding to purchase shares of Company Common Stock from persons
other than the Company other than pursuant to the Volt Stockholder's Agreement.
(c) All outstanding shares of Company Common Stock are and all shares of
Company Common Stock which may be issued pursuant to the exercise of the Company
Options will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and are not subject to preemptive rights created by statute, the
Certificate of Incorporation or By-laws of the Company or any agreement or
document to which the Company is a party or by which it is bound. All
outstanding shares of Company Common Stock, all outstanding Company Options and
all outstanding shares of capital stock of each subsidiary of the Company have
been issued and granted in compliance in all material respects with (i) all
applicable securities laws and other applicable Legal Requirements and (ii) all
requirements set forth in applicable agreements or instruments. For the purposes
of this Agreement, "Legal Requirements" means any federal, state, local,
------------------
municipal, foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Entity (as defined in
Section 3.4). There are no outstanding bonds, debentures, notes or other
indebtedness or debt securities of the Company which require consent for the
Company to perform its obligations under any actions contemplated by this
Agreement, the Transaction Option Agreement or the Stockholders' Agreements or
which have the right to vote (or are convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of the
Company may vote.
SECTION 3.3 Obligations With Respect to Capital Stock. Except as set
-----------------------------------------
forth in Section 3.2 hereof, there are no equity securities, partnership
interests or similar ownership interests of any class of Company equity
security, or any securities exchangeable or convertible into or exercisable for
such equity securities, partnership interests or similar ownership interests,
issued, reserved for issuance or outstanding, in any such case issued by the
Company. The Company owns all of the securities of its subsidiaries identified
in Section 3.1 of the Company Disclosure Schedule, free and clear of all
-----------
Encumbrances (as defined below), and there are no other equity securities,
partnership interests or similar ownership interests of any class of equity
security of any subsidiary of the Company, or any security exchangeable or
convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding, in any such case issued by any such subsidiary. For purposes of
this Agreement, "Encumbrances" means any lien, pledge, hypothecation, charge,
------------
mortgage, security interest, encumbrance, claim, infringement, interference,
option, right of first refusal, preemptive right, community property interest or
restriction of any nature (including any restriction on the voting of any
security, any restriction on the transfer of any security (except under Federal
and state securities laws) or other asset, any restriction on the receipt of any
income derived from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any asset). Except pursuant to the Transaction
12
Option Agreement and Company Options, there are no subscriptions, options,
warrants, equity securities, partnership interests or similar ownership
interests, calls, rights (including preemptive rights), commitments or
agreements of any character to which the Company or any of its subsidiaries is a
party or by which it is bound obligating the Company or any of its subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold, or
repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or
acquisition of, any shares of capital stock, partnership interests or similar
ownership interests of the Company or any of its subsidiaries or obligating the
Company or any of its subsidiaries to grant, extend, accelerate the vesting of
or enter into any such subscription, option, warrant, equity security, call,
right, commitment or agreement. Except as set forth in Schedule 3.3 of the
------------
Company Disclosure Schedule, there are no registration rights with respect to
any equity security of any class of the Company or with respect to any equity
security, partnership interest or similar ownership interest of any class of any
of its subsidiaries.
SECTION 3.4 Authority; Non-Contravention.
----------------------------
(a) The Company has all requisite corporate power and authority to enter
into this Agreement, the Transaction Option Agreement and the Stockholders'
Agreements and, subject, if required with respect to the consummation of the
Merger, to the Company Stockholder Approvals (as defined below), to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement, the Transaction Option Agreement and the Stockholders'
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of the Company, subject, if required with respect to the consummation of the
Merger, only to the approval and adoption of this Agreement and the approval of
the Merger by Company's stockholders (the "Company Stockholder Approvals")
-----------------------------
pursuant to the DGCL and the filing of the Certificate of Merger pursuant to the
DGCL. The affirmative vote of the holders of a majority of the outstanding
shares of the Company Common Stock is sufficient for the Company's stockholders
to approve and adopt this Agreement and approve the Merger, and no other
approval of any holder of any securities of the Company is required in
connection with the consummation of the transactions contemplated hereby. This
Agreement, the Stockholders' Agreements and the Transaction Option Agreement
have been duly executed and delivered by the Company and, assuming the due
execution and delivery by the other parties thereto, constitute the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforceability may be limited by
bankruptcy and other similar laws affecting the rights of creditors generally
and general principles of equity. There is no vote of the holders of any class
or series of the Company's securities necessary to approve the Transaction
Option Agreement or the Stockholders' Agreement. The Company has complied with,
or has taken all actions necessary to render inapplicable any state takeover
statute or regulation applicable to the Merger, this Agreement and the
transactions contemplated hereby.
(b) The execution and delivery of this Agreement, the Transaction Option
Agreement and the Stockholders' Agreements by the Company do not, and the
performance of this Agreement, the Transaction Option Agreement and the
Stockholders' Agreements by the Company will not, (i) conflict with or violate
any Company Charter Documents, (ii) subject to obtaining the Company Stockholder
Approvals (if required) and compliance with the
13
requirements set forth in Section 3.4(c), conflict with or violate any law,
rule, regulation, order, judgment, injunction or decree applicable to the
Company or any of its subsidiaries or by which the Company or any of its
subsidiaries or any of their respective properties is bound or affected, or
(iii) except as set forth in Section 3.4(b) of the Company Disclosure Schedule,
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or impair the Company's
rights or alter the rights or obligations of any third party under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of an Encumbrance on any of the properties or assets of
the Company or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, agreement, lease, license, permit, franchise, concession or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or its or any of their
respective assets are bound or affected, except, in the case of clauses (ii) and
(iii), for such conflicts, violations, breaches, defaults, impairments,
alterations, terminations, amendments, accelerations, cancellations or
Encumbrances or rights which would not have a Material Adverse Effect on the
Company.
(c) No action by or in respect of, or filing with any court,
administrative agency or commission or other governmental authority or
instrumentality, foreign or domestic ("Governmental Entity") or other person, is
-------------------
required to be obtained or made by the Company in connection with the execution
and delivery of this Agreement, the Transaction Option Agreement or the
Stockholders' Agreements or the consummation by the Company of the transactions
contemplated hereby and thereby, except for (i) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (ii) compliance with any applicable requirements of
the Securities Act of 1933, as amended (the "Securities Act"), the Exchange Act,
--------------
and any other applicable securities laws, whether state or foreign and (iii)
such other consents, authorizations, filings, approvals and registrations which
if not obtained would not have a Material Adverse Effect on the Company or have
a material adverse effect on the ability of the Company to consummate the
transactions contemplated by this Agreement, the Stockholders' Agreements and
the Transaction Option Agreement.
SECTION 3.5 SEC Filings; Company Financial Statements.
-----------------------------------------
(a) The Company has filed all forms, reports and documents required to be
filed by the Company with the SEC since January 29, 1996 under Section 13(a) or
Section 15(d) of the Exchange Act. All such required forms, reports and
documents (including those that the Company may file subsequent to the date
hereof) are referred to herein as the "Company SEC Reports." As of their
-------------------
respective dates, the Company SEC Reports (i) were prepared in all material
respects in accordance with the requirements of the Exchange Act, and the rules
and regulations of the SEC thereunder applicable to such Company SEC Reports and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except to the extent corrected prior to the date of this Agreement
by a subsequently
14
filed Company SEC Report. None of the Company's subsidiaries is required to file
any forms, reports or other documents with the SEC.
(b) (i) Each of the consolidated financial statements of the Company
(including, in each case, any related notes thereto) contained in the Company
SEC Reports (the "Company Financials"), (i) complied as to form in all material
------------------
respects with the published rules and regulations of the SEC with respect
thereto as in effect on the date of filing such SEC Reports, (ii) were prepared
in accordance with United States generally accepted accounting principles
("GAAP") as in effect on the date of filing such SEC Reports applied on a
----
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited interim financial statements, as
may be permitted by the SEC under Forms 10-Q, 8-K or any successor forms under
the Exchange Act) and (iii) fairly presented, in all material respects, the
consolidated financial position of Company and its subsidiaries as at the
respective dates thereof and the consolidated results of Company's operations
and cash flows for the periods indicated, except that the unaudited interim
financial statements may not contain footnotes and were or are subject to normal
and recurring year-end adjustments.
(ii) The consolidated balance sheet of the Company contained in the
Company SEC Reports as of November 3, 2000 is hereinafter referred to as the
"Company Balance Sheet." Except as disclosed in the Company Financials or in the
---------------------
Company SEC Reports filed, in each case, prior to the date hereof, neither the
Company nor any of its subsidiaries has any liabilities or obligations of any
nature (absolute, accrued, contingent or otherwise) which would have a Material
Adverse Effect on the Company except (i) for liabilities incurred since the date
of the Company Balance Sheet in the ordinary course of business consistent with
past practice, (ii) liabilities incurred in connection with this Agreement, the
Transaction Option Agreement or the Stockholders' Agreements and (iii)
liabilities, commitments and contingencies not required to be included therein
under GAAP or that are reflected on the Company Disclosure Schedule.
SECTION 3.6 Absence of Certain Changes or Events. Except as set forth in
------------------------------------
the Company SEC Reports or in Section 3.6 of the Company Disclosure Schedule,
-----------
since the date of the Company Balance Sheet, the business of the Company and
each of its subsidiaries has been conducted in the ordinary course consistent
with past practices (other than the transactions contemplated by this Agreement,
the Stockholders' Agreements and the Transaction Option Agreement) and there is
not and has not been by the Company or any of its subsidiaries:
(a) any Material Adverse Change (as defined in Section 9.5);
(b) except as provided in this Agreement, any waiver of any stock
repurchase rights, acceleration, amendment or change in the period of
exercisability of options or restricted stock, repricing of options granted
under any employee, consultant, director or other stock plans or authorization
of cash payments in exchange for any options granted under any of such plans;
(c) granted any increase in compensation or fringe benefits, bonus or
severance or termination pay to any director, officer or employee other than in
the ordinary course of business, consistent with past practice, except pursuant
to written agreements in effect, or policies existing,
15
on the date hereof (or as required by applicable law), copies of which have been
provided to Parent, or any adoption or entering into any new severance plan or
agreements;
(d) any entering into any licensing or other agreement with regard to the
acquisition, distribution or licensing of any Intellectual Property, or transfer
or license to any person or entity of any Intellectual Property, other than non-
exclusive licenses, distribution or other similar agreements entered in the
ordinary course of business consistent with past practice;
(e) any declaration, setting aside or payment of any dividends on or
making of any other distributions (whether in cash, stock, equity securities or
property) in respect of any capital stock of the Company or split, combination
or reclassification of any capital stock of the Company or any subsidiary or
issuance or authorization of the issuance of any other securities in respect of,
in lieu of or in substitution for, any capital stock of the Company or any
subsidiary;
(f) any purchase, redemption or other acquisition, directly or indirectly,
of any shares of capital stock of the Company or any of its subsidiaries, except
repurchases of unvested shares at cost in connection with the termination of the
employment relationship with any employee pursuant to stock option or purchase
agreements in effect on the date hereof;
(g) any issuance, delivery, sale, authorization, pledge or other
encumbrance with respect to any shares of capital stock or any securities
convertible into shares of capital stock, or subscriptions, rights, warrants or
options to acquire any shares of capital stock or any securities convertible
into shares of capital stock, or entering into other agreements or commitments
of any character obligating the Company or any of its subsidiaries to issue any
such shares or convertible securities, other than the issuance, delivery and/or
sale of (A) shares of Company Common Stock pursuant to the exercise of
outstanding Company Options, and (B) pursuant to grants of Company Options to
newly hired employees in the ordinary course of business consistent with past
practice, and in accordance with the terms and conditions of the Company Option
Plan pursuant to which such Company Option was granted;
(h) any amendments to the Company Charter Documents;
(i) any acquisition or agreement to acquire by merger or consolidation
with, or, by purchase of any equity interest in or a portion of the assets
(outside the ordinary course of business) of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof; or other acquisition or agreement to acquire
any assets which are material, individually or in the aggregate, to the business
of the Company or any of its subsidiaries or any entering into any material
joint ventures, partnerships or strategic relationships or alliances (other than
such strategic relationships or alliances entered into in the ordinary course of
business);
(j) any sale, lease, license, encumbrance placed on or other disposition
of any properties or assets of the Company or of any subsidiary other than
sales, leases, licenses or encumbrances of assets or properties in the ordinary
course of business consistent with past practice;
16
(k) any incurrence of any indebtedness for borrowed money, or guarantee of
any such indebtedness of another person, issuance or sale of any debt securities
or options, warrants, calls or other rights to acquire any debt securities of
the Company or any subsidiary, any entering into any "keep well" or other
agreement to maintain any financial statement condition or entering into any
arrangement having the economic effect of any of the foregoing, other than in
the ordinary course of business consistent with past practice;
(l) any making of any loan, advance or capital contribution to or
investment in any person, other than in the ordinary course of business
consistent with past practice;
(m) any creation or assumption by the Company or any of its subsidiaries
of any Encumbrance on any assets, other than Encumbrances that do not materially
detract from the value of such assets or materially impair the use thereof by
the Company or its subsidiaries;
(n) any adoption or amendment (except as required by law) of any employee
benefit plan or employee stock purchase or employee stock option plan, or any
entering into any employment contract or collective bargaining agreement, or
material change in any management policies or procedures;
(o) any material capital expenditures, except in accordance with the
current Company annual budget and plan, as previously disclosed to Parent;
(p) any modification, amendment or termination of any Material Contract
(as defined in Section 3.13) to which the Company or any of the Company's
subsidiaries is a party or waiver, release or assignment of any material rights
or claims thereunder or any entering into any contract that would be deemed a
Material Contract;
(q) any revaluation of any of the Company's or any of its subsidiaries'
assets or, except as required by GAAP, any making of any change in accounting
methods, principles or practices;
(r) any extension, amendment or modification of the terms of, or any
rights to, any Intellectual Property, including the pricing, policy or practice
for any license of software of the Company or of any of the Company's
subsidiaries to a third party, such as through discounts or similar practices,
lengthening the term of any license or changing the standard basis of pricing
other than in the ordinary course of business, consistent with past practice;
(s) any payment, discharge or satisfaction of any claims (including claims
of stockholders), indebtedness, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), except for payments,
discharges or satisfactions of liabilities, indebtedness or obligations in the
ordinary course of business consistent with past practice or in accordance with
their terms as in effect on the date hereof;
(t) any adoption of a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or reorganization (except
as contemplated by this Agreement);
17
(u) any settlement or compromise of any litigation (whether or not
commenced prior to the date of this Agreement), other than settlements or
compromises of litigation that did not provide for injunctive or similar relief
and where the amount paid (after giving effect to insurance proceeds actually
received) in settlement or compromise did not exceed $25,000; provided that the
aggregate amount paid in connection with the settlement or compromise of all
such litigation matters did not exceed $50,000;
(v) any amendment of any term of any outstanding security of the Company
or any of its subsidiaries;
(w) any damage, destruction or casualty loss whether or not covered by
insurance affecting the business or assets of the Company or any of its
subsidiaries which has had or would have a Material Adverse Effect on the
Company;
(x) any making of any material Tax (as defined in Section 3.7 below)
election inconsistent with past practices or settlement or compromise of any
material Federal, state, local or foreign Tax liability or agreement to an
extension of a statute of limitations for any assessment of any Tax; or
(y) any taking of any action that would materially delay the consummation
of the transactions contemplated hereby or, except as permitted by this Section
3.6, make any of the representations and warranties untrue or incorrect in any
material respect;
(z) any agreement in writing or otherwise any taking of any of the actions
(by the Company or any of its subsidiaries) described in Section 3.6 (a) through
(y) above.
SECTION 3.7 Taxes. To the extent the following representations and
-----
warranties pertain to a period prior to the date hereof, since January 29, 1996:
(a) The Company and each of its subsidiaries have timely filed all
material Tax Returns required to be filed and have paid all Taxes owed (whether
or not shown as due on such returns) or has properly accrued on its books and
records in accordance with GAAP a provision for the payment of all such taxes
that are due or claimed to be due. All Tax Returns filed by the Company and each
of its subsidiaries were true, complete and correct in all material respects.
(b) The Company and each of its subsidiaries have withheld all Taxes
including, without limitation, all Taxes which the Company and each of its
subsidiaries are obligated to withhold for amounts paid or owing to employees,
creditors and third parties.
(c) Neither the Company nor any of its subsidiaries has been delinquent in
the payment of any material Tax, nor is there any material Tax deficiency
outstanding, proposed or assessed against the Company or any of its
subsidiaries. The Company and its subsidiaries have not executed any unexpired
waiver of any statute of limitations on or extended the period for the
assessment or collection of any Tax, and no power of attorney with respect to
Tax matters has been executed or filed with any Tax authority.
18
(d) None of the Tax Returns filed or Taxes payable by the Company or any
of its subsidiaries have been the subject of an audit, action, suit, proceeding,
claim, examination, deficiency or assessment by any taxing authority, and no
such, audit, action, suit, proceeding, claim, examination, deficiency or
assessment is currently pending or, to the knowledge of the Company or any of
its subsidiaries, threatened. No claim has ever been made by a Tax authority in
a jurisdiction where the Company or any of its subsidiaries file Tax Returns
that the Company or any of its subsidiaries is or may be subject to any unpaid
Tax in that jurisdiction.
(e) Neither the Company nor any of its subsidiaries has any liability for
unpaid Taxes which has not been accrued for or reserved on the Company Balance
Sheet, whether asserted or unasserted, contingent or otherwise, other than any
liability for unpaid Taxes that may have accrued since the date of the Company
Balance Sheet in connection with the operation of the business of the Company
and its subsidiaries in the ordinary course.
(f) There is no agreement, plan or arrangement to which the Company or any
of its subsidiaries is a party, including this Agreement, the Stockholders'
Agreements, the Transaction Option Agreement and the agreements entered into in
connection herewith and therewith that, individually or collectively, would be
reasonably likely to give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code, or which would
impose a withholding Tax obligation on Parent, the Company or any of its
subsidiaries or the Surviving Corporation for amounts described in Section 4999
of the Code.
(g) Neither the Company nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by the Company or any of its subsidiaries.
(h) Except as set forth in Section 3.7(h) of Company Disclosure Schedule,
--------------
neither the Company nor any of its subsidiaries is party to or has any
obligation under any Tax-sharing, Tax indemnity or Tax allocation agreement or
arrangement (including but not limited to any advance pricing agreement, closing
agreement or other agreement relating to taxes with a Tax authority).
(i) Neither the Company nor any of its subsidiaries has been or will be
required (either as a result of the transactions contemplated by this Agreement,
the Stockholders' Agreements, the Transaction Option Agreement or otherwise) to
include in taxable income any items of income attributable to, or that accrued
in, a prior taxable period that was required to have been but was not recognized
in a prior taxable period.
(j) Neither the Company nor any of its subsidiaries has ever been a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in any distribution of stock intended to
qualify as tax-free treatment under the Code.
(k) Except as set forth in the Company SEC Reports or in Section 3.7(k) of
--------------
Company Disclosure Schedule, neither the Company nor any of its subsidiaries has
any net operating losses or other tax attributes presently subject to limitation
under Sections 382, 383 or 384 of the
19
Code or the federal consolidated return regulations (other than limitations
imposed as a result of the transactions contemplated by this Agreement, the
Stockholders' Agreements and the Transaction Option Agreement).
(l) There are no outstanding rulings of, or requests for rulings with, any
Tax authority addressed to the Company or any of its subsidiaries that are, or
if issued would be, binding on the Company or any of its subsidiaries.
(m) Neither the Company nor any of its subsidiaries has ever (i) made an
election under Section 1362 at the Code to be treated as an S corporation for
federal income tax purposes or (ii) made a similar election under any comparable
provision of any state, local or foreign Tax law.
(n) Neither the Company nor any of its subsidiaries has ever been a member
of a group filing a consolidated federal income Tax Return or a combined,
consolidated, unitary or other affiliated group Tax Return for state, local or
foreign Tax purposes (other than a group the common parent of which was the
Company), and neither the Company nor any of its subsidiaries has any liability
for the Taxes of any other person under Treasury Regulations Section 1.1502-6
(or any corresponding provision of state, local or foreign tax law), as a
transferee or successor, by contract, or otherwise.
(o) Except as set forth in Section 3.7(o) of the Company Disclosure
--------------
Schedule, neither the Company nor any of its subsidiaries has, or has had, a
permanent establishment or other taxable presence in (or would otherwise be
treated as having engaged in business in), any foreign country other than a
country under the laws of which a subsidiary of the Company is organized.
(p) No portion of the amounts deliverable pursuant to this Agreement, the
Stockholders' Agreements and the Transaction Option Agreement to holders of
Company Common Stock is subject to Tax withholding, including but not limited to
the Tax withholding provisions of Section 3406 of the Code, or of subchapter A
of Chapter 3 of the Code, or of any other provision of law.
(q) None of the shares of Company Common Stock outstanding are subject to
a "substantial risk of forfeiture" within the meaning of Section 83 of the Code.
(r) There are no liens or encumbrances for Taxes on any of the assets of
the Company or any of its subsidiaries except for ad valorem taxes that are not
yet due or payable.
(s) Neither the Company nor any of its subsidiaries owns or has owned,
directly, indirectly or by attribution, any interest in an entity that would be
treated as a "passive foreign investment company" within the meaning of Section
1297 of the Code. Neither the Company nor any of its subsidiaries is a party to
any joint venture, partnerships, limited liability company or other arrangement
which could be treated as a partnership for tax purposes.
(t) For the purposes of this Agreement, "Tax" or "Taxes" refers to (i) any
--- -----
and all federal, state, local and foreign taxes, assessments and other
governmental charges, duties,
20
impositions and liabilities relating to taxes, including taxes based upon or
measured by gross receipts, gross or net income, capital profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise, withholding,
payroll, recapture, employment, alternative or add-on minimum, lease, service,
license, severance, stamp, occupation premium, environmental, windfall profit,
excise and property taxes, customs, duties and other taxes, governmental fees
and other like assessments and charges of any kind whatsoever, together with all
interest, penalties, additions to tax and additional amounts with respect
thereto, (ii) any liability for payment of any amounts of the type described in
clause (i) as a result of being a member of an affiliated consolidated, combined
or unitary group, and (iii) any liability for amounts of the type described in
clauses (i) and (ii) as a result of any express or implied obligation to
indemnify another person or as a result of any obligations under any agreements
or arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity. The term "Tax Returns" as used
-----------
herein means all returns, declarations, reports, claims for refund, information
statements and other documents relating to Taxes, including all schedules and
attachments thereto, and including all amendments thereof, and the term "Tax
---
Return" means any one of the foregoing Tax Returns.
------
SECTION 3.8 Properties.
----------
(a) The Company or one of its subsidiaries (i) has good and marketable
title to all the properties and assets (A) reflected in the Company Balance
Sheet, in each case, as being owned by the Company or one of its subsidiaries
(other than any such properties or assets sold or disposed of since such date in
the ordinary course of business consistent with past practice) or (B) acquired
after the date of the Company Balance Sheet which are material to the Company's
or any of its subsidiaries' business, free and clear of all Encumbrances, except
statutory Encumbrances securing payments not yet due, and such Encumbrances
which would not have a Material Adverse Effect on the Company and (ii) is the
lessee of all leasehold estates (x) reflected in the Company Balance Sheet or
(y) acquired after the date of the Company Balance Sheet, in each case, which
are material to the business of the Company and its subsidiaries taken as a
whole (except for leases that have expired by their terms since the date
thereof) and is in possession of the properties purported to be leased
thereunder, and each such lease is in full force and effect and constitutes a
legal, valid and binding obligation of, and is legally enforceable against, the
Company or any one of its subsidiaries, as the case may be, and there is no
default thereunder by the Company or any of its subsidiaries which would have a
Material Adverse Effect on the Company and, to the Company's or any of its
subsidiaries' knowledge, as of the date hereof, there is no material default by
the lessor. Neither the Company nor any of its subsidiaries has received notice
of and neither has knowledge of any pending, threatened or contemplated
condemnation proceeding affecting any premises owned or leased by the Company or
any of its subsidiaries or any part thereof or of any sale or other disposition
of any such owned or leased premises or any part thereof in lieu of
condemnation.
SECTION 3.9 Intellectual Property.
---------------------
(a) "Intellectual Property" means all of the following as they exist in all
---------------------
jurisdictions throughout the world, in each case, owned by or licensed to, the
Company or any subsidiary of
21
the Company in the business of the Company or any of its subsidiaries, as the
case may be, as currently conducted or proposed to be conducted:
(i) patents, patent applications, and other patent rights
(including any divisions, continuations, continuations-in-part, substitutions,
or reissues thereof, whether or not patents are issued on any such applications
and whether or not any such applications are modified, withdrawn, or
resubmitted);
(ii) trademarks, service marks, trade dress, trade names, brand
names, Internet domain names and Web sites, designs, logos, or corporate names,
whether registered or unregistered, and all registrations and applications for
registration thereof and all goodwill associated therewith;
(iii) copyrights, including all renewals and extensions thereof,
copyright registrations and applications for registration thereof, and non-
registered copyrights;
(iv) trade secrets, concepts, ideas, designs, research, processes,
procedures, techniques, methods, know-how, data, mask works, discoveries,
inventions, modifications, extensions, improvements, and other proprietary
rights (whether or not patentable or subject to copyright, mask work, or trade
secret protection) (collectively, "Technology"); and
----------
(v) computer software programs, including, without limitation, all
source code, object code, and documentation related thereto (the "Software").
--------
(b) Section 3.9(b) of the Company Disclosure Schedule:
--------------
(i) sets forth all United States and foreign patents and patent
applications, trademark and service xxxx registrations and applications,
Internet domain name registrations and applications, and copyright registrations
and applications owned by the Company or any of its subsidiaries;
(ii) sets forth all material licenses, sublicenses, and other
agreements or permissions under which the Company or any of its subsidiaries is
a licensor or licensee of any Intellectual Property, other than "off the shelf"
software; and
(iii) sets forth and describes the status of any material agreements
involving Intellectual Property currently in negotiation or proposed by the
Company or any of its subsidiaries.
(c) The Company or a subsidiary of the Company exclusively owns or has the
right to use all Intellectual Property necessary to the conduct of the business
of the Company and each of its subsidiaries, as the case may be, except where
the failure to so own or have the right to use such Intellectual Property would
not have a Material Adverse Effect on the Company. All Intellectual Property
owned by the Company or any of its subsidiaries is free and clear of all
Encumbrances, except where such Encumbrances would not have a Material Adverse
Effect on the Company.
22
(d) Except as set forth on Section 3.9(d) of the Company Disclosure
--------------
Schedule, none of the Intellectual Property owned by the Company or any of its
subsidiaries or, to the Company's and its subsidiaries' knowledge, any
Intellectual Property licensed to the Company or any of its subsidiaries,
infringes on the intellectual property or other proprietary rights of third
parties, except where such infringement would not have a Material Adverse Effect
on the Company.
(e) Except as set forth in Section 3.9(e) of the Company Disclosure
--------------
Schedule, neither the Company nor any of its subsidiaries is or has been, during
the three (3) years preceding the date hereof, a party to any claim or action,
nor, to the knowledge of the Company or any of its subsidiaries, is any claim or
action threatened, that challenges the validity, enforceability, ownership or
right to use, sell or license any Intellectual Property, or alleges the
infringement of or by the Intellectual Property, except for claims that would
not have a Material Adverse Effect on the Company. Except as set forth in
Section 3.9(e) of the Company Disclosure Schedule, to the knowledge of the
--------------
Company and each of its subsidiaries, no third party is infringing upon any
Intellectual Property owned by or licensed to or by the Company.
(f) The Company and each of its subsidiaries have taken all reasonably
necessary action to maintain and protect the validity and enforceability of each
item of Intellectual Property owned by them except for failures to take such
actions as would not have a Material Adverse Effect on the Company.
(g) The Company and each of its subsidiaries have taken reasonable
precautions to protect the secrecy, confidentiality and value of its trade
secrets and the proprietary nature and value of the Technology, except for
failures to take such precautions as would not have a Material Adverse Effect on
the Company.
(h) Except as set forth on Section 3.9(h) of the Company Disclosure
--------------
Schedule, each employee, contractor, agent and consultant of the Company and
each of its subsidiaries who is engaged in the development, design or creation
of any Intellectual Property has executed a nondisclosure and assignment of
inventions agreement to protect the confidentiality of and to vest in the
Company or a subsidiary of the Company, as the case may be, exclusive ownership
of all Intellectual Property developed, designed or created by such person, and,
to the Company's and each of its subsidiaries' knowledge, no such person has
violated such agreement. Except as set forth on Section 3.9(h) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries has any
written or oral agreements with employees, contractors, agents or consultants
with respect to the ownership of Intellectual Property created by them during
the course of their employment with the Company or any of its subsidiaries as a
result of which any such employee, contractor, agent or consultant may have
rights to any portion of the Intellectual Property so created by such
individual. To the knowledge of the Company and each of its subsidiaries, no
material trade secret or confidential information of the Company or any of its
subsidiaries has been used, divulged, appropriated or misappropriated for the
benefit of any person other than the Company or a subsidiary of the Company or
otherwise to the detriment of the Company or any of its subsidiaries, except for
such violations that would not have a Material Adverse Effect on the Company.
To the knowledge of the Company and each of its subsidiaries,
23
no employee, contractor, agent or consultant of the Company or any of its
subsidiaries has used any trade secrets or other confidential information of any
other person in the course of their work for the Company or any of its
subsidiaries in violation of the rights of such other person.
(i) To the knowledge of the Company and its subsidiaries, no officer,
employee, contractor, agent or consultant of the Company or any of its
subsidiaries is in violation of any material term of any employment contract,
patent disclosure agreement, proprietary information agreement, noncompetition
agreement, nonsolicitation agreement, confidentiality agreement, or any other
similar contract or agreement or any restrictive covenant relating to the right
of any such officer, employee, contractor, agent or consultant to be employed or
engaged by the Company or any of its subsidiaries because of the nature of the
business conducted or proposed to be conducted by the Company or any of its
subsidiaries or relating to the use of trade secrets or proprietary information
of others in the conduct of the business of the Company or any of its
subsidiaries. To the Company's and each of its subsidiaries' knowledge, the
continued employment or retention of their respective officers, employees,
contractors, agents or consultants does not subject the Company or any of its
subsidiaries to any liability with respect to any of the foregoing matters.
(j) All material Software (other than related documentation and off-the-
shelf Software) owned by, or licensed to, the Company or any of its
subsidiaries, is described in Section 3.9(j) of the Company Disclosure Schedule.
--------------
SECTION 3.10 Compliance with Laws.
--------------------
(a) Neither the Company nor any of its subsidiaries is in conflict with,
or has violated or is in violation of, any Legal Requirement applicable to the
Company or any of its subsidiaries or by which the Company or any of its
subsidiaries or any of their respective properties is bound or affected, except
for conflicts and violations that would not have a Material Adverse Effect on
the Company. To the Company's and each of its subsidiaries' knowledge, no
investigation or review by any Governmental Entity is pending or, has been
threatened in a writing delivered to the Company or any of its subsidiaries
against the Company or any of its subsidiaries, nor, to the Company's or any of
its subsidiaries' knowledge, has any Governmental Entity indicated an intention
to conduct an investigation of the Company or any of its subsidiaries. There is
no judgment, injunction, order or decree binding upon the Company or any of its
subsidiaries which would have a Material Adverse Effect on the Company.
(b) The Company and its subsidiaries hold those permits, licenses,
easements variances, exemptions, consents, certificates, orders and approvals
from governmental authorities (including, without limitation those permits
required under environmental laws) that are material to or necessary for the
operation of the business of the Company and each of its subsidiaries as
currently conducted (collectively, the "Company Permits"), and are in compliance
---------------
with the terms of the Company Permits, except where the failure to hold or be in
compliance with such Company Permits would not have a Material Adverse Effect on
the Company.
SECTION 3.11 Litigation. Except as set forth in Section 3.11 of the
---------- ------------
Company Disclosure Schedule, there are no claims, suits, actions, arbitrations,
investigations or
24
proceedings (or any basis therefor) pending or, to the knowledge of the Company
or any of its subsidiaries, threatened against, relating to or affecting the
Company, any of its subsidiaries, any officer, director or employee of the
Company or any of its subsidiaries in their capacity as such or any person for
whom the Company or any of its subsidiaries may be liable or to which any of the
Company's or any of its subsidiaries' respective properties may be bound, before
any Governmental Entity or any arbitrator that seeks to restrain or enjoin the
consummation of the transactions contemplated by this Agreement, the
Stockholders' Agreements or the Transaction Option Agreement and which would
have a Material Adverse Effect on the Company or would prevent or delay the
ability of the parties hereto to consummate the transactions contemplated by
this Agreement, the Stockholders' Agreements or the Transaction Option Agreement
or for the Company to perform its obligations hereunder or thereunder. As of the
date hereof, no director, officer or employee of the Company or any of its
subsidiaries has asserted a claim to seek indemnification from the Company or
any of its subsidiaries under any of the Company Charter Documents or any
indemnification agreement between the Company or any of its subsidiaries and
such person.
SECTION 3.12 Employee Benefit Plans.
----------------------
(a) (i) Each employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
-----
maintained or contributed to, as the case may be, by the Company or any other
entity that, together with the Company, would be treated as a single employer
under Section 414 of the Code or Section 4001 of ERISA, which is required to
comply with ERISA ("Employee Plans"), complies in all material respects with all
--------------
applicable requirements of ERISA, the Code, and other applicable laws. To the
knowledge of the Company, no "reportable event" or "prohibited transaction" (as
such terms are defined in ERISA) or termination has occurred with respect to any
such Employee Plans which may result in liability of the Company to any
Governmental Entity or other person. Each Employee Plan that is intended to be
qualified under Section 401(a) of the Code currently has a favorable
determination letter from the Internal Revenue Service as to its qualification
under Section 401(a) of the Code, and nothing has occurred since the date of
such letter that could reasonably be expected to cause the loss of such
qualification. No Employee Plan is a Multiple Employer Plan as defined in
Section 4001(a)(3) of ERISA.
(ii) The Company has in all material respects performed all
obligations required to be performed by it under ERISA, the Code and any other
applicable Legal Requirements and under the terms of each Employee Plan. To the
best knowledge of the Company, there exists no material default or violation by
any other party with respect to any of such Legal Requirements or terms
applicable to any of the Employee Plans.
(iii) Other than routine claims for benefits, the Company has not
received any notice of any pending material claims or lawsuits which have been
asserted or instituted against any of the Employee Plans, the assets of the
trust or funds under the Employee Plans, the sponsor or administrator of any of
the Employee Plans, or against any fiduciary of any of the Employee Plans with
respect to the operation of such Employee Plans.
25
(iv) The Company has not received any written notice of any pending
investigation or pending enforcement action by the Pension Benefit Guaranty
Corporation, the Department of Labor, the Internal Revenue Service or any other
Governmental Entity with respect to any of the Employee Plans.
(v) To the best knowledge of the Company, all contributions
required to be made under the terms of the Employee Plans have been timely made.
No Employee Plan has an "accumulated funding deficiency" (within the meaning of
Section 412 of the Code or Section 302 of ERISA).
(b) Each of the Company's "group health plans" (within the meaning of
Section 5000(b)(1) of the Code) have been operated in substantial compliance
with the group health plan continuation coverage requirements of Section 4980B
of the Code and Sections 601 through 608 of ERISA ("COBRA"), Title XXII of the
-----
Public Health Service Act and the provisions of the Social Security Act, as
amended.
(c) To the best knowledge of the Company, there has been no act or
omission by the Company that has given rise to or may give rise to material
fines, penalties, Taxes, or related charges under Section 502(c), (i) or (1) or
Section 4071 of ERISA or Chapter 43 of the Code or the imposition of a lien
pursuant to Sections 401(a)(29) or 412(n) of the Code or pursuant to ERISA.
(d) True and complete copies of the following documents with respect to
each of the Employee Plans and other employee benefit plans, programs, policies
and arrangements maintained by the Company for domestic or international
employees (as applicable) including, but not limited to, Code Section 125 plans,
and plans or policies providing vacation, severance, deferred compensation,
employer stock option, purchase or other stock benefits, and incentive
compensation (the "Benefit Arrangements") have been delivered by the Company to
--------------------
Parent: (i) any current written plans, related trust documents and group annuity
contracts, if any, and all amendments thereto (or, if no written plan document
exists, a written description of the terms of the plan), (ii) the most recent
summary plan description, and (iii) the most recent actuarial report, valuation
and/or trust statement relating to such plan.
(e) Neither the Company nor any of its subsidiaries is a party to or
obligated under any agreement, plan, contract or other arrangement pursuant to
which the Company, any subsidiary or Parent is or might be required to make
payments that would not be deductible for federal income tax purposes by reason
of the application of Section 280G of the Code.
(f) All Benefit Arrangement have been maintained in substantial compliance
with their terms and with the requirements prescribed by any and all applicable
laws, including, but limited to, ERISA and the Code.
(g) Except as required by COBRA, there are no employee post-retirement
health or welfare plans in effect.
26
(h) The Company and each of its subsidiaries is in compliance in all
material respects with all applicable foreign, federal, state and local laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
their respective employees. Except as set forth on Schedule 3.12(h) of the
----------------
Company Disclosure Schedule, there are no pending, or, to the Company's or any
of its subsidiaries' knowledge, threatened, material claims or actions against
the Company or any of its subsidiaries under any worker's compensation policy or
long-term disability policy. To the Company's and each of its subsidiaries'
knowledge, no employee of the Company or any of its subsidiaries has materially
violated any employment contract, nondisclosure agreement or noncompetition
agreement by which such employee is bound due to such employee being employed by
the Company or any of its subsidiaries and disclosing to the Company or any of
its subsidiaries or using trade secrets or proprietary information of any other
person or entity.
(i) (1) Neither the Company nor any of its subsidiaries is a party to, nor
is bound by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization; (2) to the knowledge of
the Company and each of its subsidiaries, neither the Company nor any of its
subsidiaries is the subject of any proceeding asserting that it or any of its
subsidiaries has committed an unfair labor practice or seeking to compel it to
bargain with any labor organization as to wages or conditions of employment; (3)
there is no strike, work stoppage or other labor dispute involving the Company
or any of its subsidiaries pending or, to the Company's or any of its
subsidiaries' knowledge, threatened; (4) no grievance (within the meaning of
U.S. labor laws) is pending or , to the knowledge of the Company or any of its
subsidiaries, threatened against the Company or any of its subsidiaries; (5) to
the knowledge of the Company and each of its subsidiaries, the Company and each
of its subsidiaries is in compliance with all applicable laws (domestic and
foreign), agreements, contracts and policies relating to employment practices,
wages, hours, and terms and conditions of employment except for failures so to
comply, if any, that could have a Material Adverse Effect on the Company; (6)
the Company and each of its subsidiaries has paid in full to all employees of
the Company and its subsidiaries all wages, salaries, commissions, bonuses,
benefits and other compensation due and payable to such employees under any
policy, practice, agreement, plan, program, statue or other law; (7) except as
set forth in Section 3.12(i) of the Company Disclosure Schedule, neither the
Company nor any of its subsidiaries is liable for any severance pay or other
payments to any employee arising from the termination of employment under any
benefit or severance policy, practice, agreement, plan, or program of the
Company or any of its subsidiaries, nor to the knowledge of the Company or any
of its subsidiaries will the Company or any of its subsidiaries have any
liability which exists or arises, or may be deemed to exist or arise, under any
applicable law or otherwise, as a result of or in connection with the
transactions contemplated hereunder or as a result of the termination by the
Company or any of its subsidiaries of any persons employed by the Company or any
of its subsidiaries on or prior to the Effective Time; and (8) the Company and
each of its subsidiaries is in compliance with its obligations pursuant to the
Worker Adjustment and Retraining Notification Act of 1988, and all other
employee notification and bargaining obligations arising under any collective
bargaining agreement, statute or otherwise.
(j) Each International Employee Plan (as defined below) has been
established, maintained and administered in material compliance with its terms
and conditions and with the
27
requirements prescribed by any and all statutory or regulatory laws that are
applicable to such International Employee Plan. Furthermore, no International
Employee Plan has material unfunded liabilities, l not offset by insurance or
fully accrued. Except as required by law, no condition exists that would prevent
the Company or Parent from terminating or amending any International Employee
Plan at any time for any reason in accordance with the terms of each such
International Employee Plan (other than expenses typically incurred in a
termination event). For purposes of this Section 3.12(j), "International
Employee Plan" shall mean each Company Employee Plan that has been adopted or
maintained by the Company, whether formally or informally, for the benefit of
employees outside the United States.
SECTION 3.13 Material Contracts.
------------------
(a) Section 3.13 of the Company Disclosure Schedule sets forth a list of
------------
all of the following agreements, contracts and commitments, written or oral, to
which the Company or any of its subsidiaries is a party or by which any of them
or any of their respective properties is bound as of the date of this Agreement:
(i) mortgages, indentures, security agreements and other material agreements and
instruments relating to the borrowing of money by or extension of credit to the
Company or any of its subsidiaries (other than accounts payable, accrued
expenses, customer advances and similar items in the ordinary course of business
that might be deemed the extension of credit) or the guarantee by the Company or
any of its subsidiaries of the indebtedness of any person where the amount of
such borrowed money, credit extension or indebtedness exceeds $25,000
individually; (ii) employment agreements, consulting agreements and commitments
with any officer, employee or member of the Company's or any of its
subsidiaries' Board of Directors not cancelable by the Company or one of its
subsidiaries, as the case may be, on not more than 90 days' notice and without
liability or financial obligation or which involve payments in excess of
$25,000; (iii) agreements, orders or commitments not cancelable by the Company
or one of its subsidiaries, as the case may be, on not more than 90 days' notice
and without liability or financial obligation for the purchase by the Company or
any one of its subsidiaries of supplies or finished products exceeding $50,000
per year; (iv) agreements or commitments for capital expenditures involving
payments in excess of $25,000 for any single item or $100,000 in the aggregate;
(v) agreements that restrict the Company's or any of its subsidiaries' ability
to compete in any business, any line of business or in any geographic region or
would so limit the Company, any of its subsidiaries, or the Surviving
Corporation or any of its subsidiaries after the Effective Time; (vi) except as
contemplated in Section 2.9 with respect to Company Options set forth in Section
-------
3.2(b) in the Company Disclosure Schedule, agreements or plans, including any
------
stock option plan, stock appreciation right or stock purchase plan, any of the
benefits of which will be accelerated or the value of which will be calculated
by the occurrence of any of the transactions contemplated by this Agreement, the
Transaction Option Agreement or the Stockholders' Agreements; (vii) agreements,
contracts and commitments other than those described in the foregoing clauses
(i) through (vi) which in any case involve payments or receipts of more than
$100,000 per year and which are not cancelable on not more than 90 days' notice
and without liability or financial obligation; (viii) agreements pursuant to
which the Company or any of its subsidiaries manufactures products for sale by
third parties (i.e. OEM or private labeling agreements); (ix) indemnification
agreements or subrogation agreements other than those contemplated in the
Company Charter Documents, licenses entered into or warranties given in the
ordinary course of
28
business and similar ordinary course of business undertakings; (x) agreements
with U.S. or foreign distributors; and (xi) agreements, contracts and
commitments which are currently effective and which have been, or as of the date
of this Agreement will be, required to be filed by the Company or any of its
subsidiaries with the SEC pursuant to the requirements of the Exchange Act and
the rules and regulations thereunder (the items in (i) through (xi) above being,
collectively, the "Material Contracts").
------------------
(b) The Company has heretofore furnished to Parent a complete and correct
copy of each Material Contract (unless any such Material Contract has not been
reduced to writing, in which case the Company has provided a complete and
correct written description thereof). Each such Material Contract identified in
Section 3.13 of the Company Disclosure Schedule is a valid and binding
------------
obligation of the Company or one of its subsidiaries, as the case may be, and is
in full force and effect without amendment, except where not being a valid and
binding obligation or in full force and effect without amendment would not have
a Material Adverse Effect on the Company. The Company or one of its
subsidiaries, as the case may be, has performed, and to the Company's and each
of its subsidiaries' knowledge, each other party to any such Material Contract
has performed, in all material respects, the obligations required to be
performed by it under the Material Contracts, neither the Company nor any of its
subsidiaries is, and to the Company's and each of its subsidiaries' knowledge,
no other party to any such Material Contract is (with or without lapse of time
or the giving of notice, or both), in material breach or default thereunder, and
to the Company's and each of its subsidiaries' knowledge no event has occurred
which, after notice or the passage of time or both, would constitute a material
default under any such Material Contract or impair the Company's or any of its
subsidiaries' material rights under any Material Contract, or give to any person
rights of termination, amendment, acceleration or cancellation of the Material
Contract.
SECTION 3.14 Investment Banking Fees. Except for fees payable to MLGA and
-----------------------
Xxxxxxx pursuant to engagement letters copies of which have been provided to
Parent, neither the Company nor any of its subsidiaries has incurred, nor will
they incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement,
the Transaction Option Agreement, or the Stockholders' Agreements or any
transaction contemplated hereby or thereby.
SECTION 3.15 Insurance. The Company and each of its subsidiaries have
---------
policies of insurance and bonds of the type and in amounts customarily carried
by persons conducting business or owning assets similar to those of the Company
and its subsidiaries. There is no material claim pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds, other than such claims which, if
adversely determined, would not have a Material Adverse Effect on the Company.
All premiums due and payable under all such policies have been paid and the
Company and its subsidiaries are otherwise in compliance in all material
respects with the terms of such policies and bonds. To the knowledge of the
Company and each of its subsidiaries, there has been no threatened termination
of, or material threatened premium increase with respect to, any of such
material policies.
29
SECTION 3.16 Disclosure. The information contained in the Schedule 14D-9
----------
(other than information furnished in writing by Parent or Merger Sub expressly
for inclusion in the Schedule 14D-9, as to which the Company makes no
representations or warranties) will not, at the time the Schedule 14D-9 is filed
with the SEC, stock exchange or other regulatory agency (or such filings are
amended or supplemented) and first published, sent or given to holders of
Company Common Stock, 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 made therein, in light of the circumstances under which they
were made, not misleading. None of the information supplied or to be supplied
by the Company or its subsidiaries or representatives for inclusion or
incorporation by reference in (i) any of the Offer Documents will, at the time
the Offer Documents are first published, sent or given to holders of Company
Common Stock and at any time they are amended or supplemented, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading, (ii) the Schedule
TO and all amendments or supplements thereto will, at the respective times filed
with the SEC, stock exchange or any other regulatory agency, and on the date
mailed to the holders of Company Common Stock, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (iii) the proxy statement or
information statement relating to the Company Stockholders' Meeting (such proxy
statement or information statement as amended or supplemented from time to time
being hereinafter referred to as the "Proxy Statement") will, at the respective
---------------
times filed with the SEC, stock exchange or any other regulatory agency, on the
date mailed to the holders of Company Common Stock and at the time of the
Company Stockholders' Meeting (as defined in Section 6.1) 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. If at any time
prior to the Effective Time any event relating to the Company or any of its
subsidiaries, affiliates, officers or directors should be discovered by the
Company which is required to be set forth in a supplement to the Proxy Statement
or an amendment or supplement to the Offer Documents or the Schedule 14D-9, the
Company shall promptly inform Parent and Merger Sub. The -Schedule 14D-9 and
the Proxy Statement will comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any statements made or to be made or to be
incorporated by reference in any of the foregoing documents based on information
supplied by Parent or Merger Sub expressly for inclusion or incorporation by
reference thereof.
SECTION 3.17 Fairness Opinion. The Company has received the opinion of
----------------
each of MLGA and Xxxxxxx to the effect that, as of the date thereof, the Offer
Consideration to be received by the holders of Company Common Stock in the Offer
and the Merger Consideration to be received by holders of Company Common Stock
in the Merger is fair from a financial point of view to the holders of Company
Common Stock in the case of the MLGA opinion and the holders of Company Common
Stock other than Volt in the case of the Xxxxxxx opinion, and signed, true and
complete copies of which opinions have been delivered to Parent.
30
SECTION 3.18 Related Party Transactions. Except as reflected in the
--------------------------
Company SEC Reports, no director, officer, employee, "affiliate" or "associate"
(as such terms are defined in Rule 12b-2 under the Exchange Act) of the Company
or any of its subsidiaries (i) has outstanding any indebtedness or other similar
obligations (other than advances in the ordinary course of business) to the
Company or any of its subsidiaries; (ii) to the knowledge of the Company, owns
any direct or indirect interest of any kind in, or is a director, officer,
employee, partner, affiliate or associate of, or consultant or lender to, or
borrower from, or has the right to participate in the management, operations or
profits of, any person or entity which is (1) a competitor, supplier, customer,
distributor, lessor, tenant, creditor or debtor of the Company or any of its
subsidiaries, or (2) participates in any transaction to which the Company or any
of its subsidiaries is a party or (iii) is otherwise a party to any contract,
arrangement or understanding with the Company or any of its subsidiaries.
SECTION 3.19 Joint Ventures; Partnerships and Similar Arrangements.
-----------------------------------------------------
Neither the Company nor any of its subsidiaries has any ownership interests in
or other economic rights to any joint venture, legal partnership or similar
arrangement or is a party to any agreement relating to a joint venture , legal
partnership or similar arrangement. There are no agreements, orally or in
writing, obligating the Company or any of its subsidiaries to discuss, consider
or form any joint venture, legal partnership or similar arrangement.
SECTION 3.20. Environmental Matters. Except as set forth in Section 3.20
---------------------
of the Company Disclosure Schedule, or to the extent the inaccuracy of any of
the following would not have a Material Adverse Effect on the Company :
(a) The Company and each of its subsidiaries are in compliance with, and
for the past five years have been in compliance with, all applicable federal,
state and local laws, statutes, codes, rules, regulations, ordinances, orders,
determinations or rules of common law pertaining to the environment, natural
resources and public or employee health and safety including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended ("CERCLA"), the Superfund Amendments and
------
Reauthorization Act of 1986, as amended, the Resource Conservation and Recovery
Act of 1976, as amended, the Oil Pollution Act of 1990, as amended, the Safe
Drinking Water Act, as amended, the Hazardous Materials Transportation Act, as
amended, the Toxic Substances Control Act, as amended, and other environmental
conservation or protection laws ("Environmental Laws").
------------------
(b) No judicial or administrative proceedings are pending or, to the
Company's or any of its subsidiaries' knowledge, threatened against the Company
or any of its subsidiaries alleging the violation of, or liability under,
Environmental Laws.
(c) The Company and each of its subsidiaries have obtained all permits,
registrations, licenses and authorizations required to be obtained or filed by
the Company and each of its subsidiaries under any Environmental Laws in
connection with the Company's and each of its subsidiaries' operations, and the
Company and each of its subsidiaries are in compliance with the terms and
conditions of all such Permits.
31
(d) There have been no reports of environmental investigations, studies,
audits, tests, reviews or other analyses conducted within the past three years
by, on behalf of, or which are known to or in the possession of the Company or
any of its subsidiaries with respect to any property or facility currently or
formerly owned, operated or leased by the Company or any of its subsidiaries
which have not been delivered to Parent prior to execution of this Agreement.
(e) No Encumbrances have been placed upon any assets of the Company or any
of its subsidiaries in connection with any actual or alleged liability under
Environmental Laws.
(f) There are no hazardous or toxic substances, wastes, materials,
chemicals, petroleum or petroleum products, asbestos or asbestos containing
materials, pollutants or contaminants as defined under any Environmental Law
present (x) on, at, or beneath any facility currently, or (y) to the knowledge
of the Company or any of its subsidiaries, on, at or beneath any facility
formerly, owned or operated by the Company or any of its subsidiaries, except in
each case as used in the ordinary course of business and in compliance with
Environmental Laws.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
SECTION 4.1 Organization, Standing and Power. Each of Parent and Merger
--------------------------------
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has the requisite
power and authority to carry on its business as now being conducted, and is duly
qualified or licensed to business and is in good standing in each jurisdiction
(domestic or foreign) in which the nature of its business or the ownership or
leasing of its properties, makes such qualification or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed would not have a Material Adverse Effect on Parent.
SECTION 4.2 Authority; Non-Contravention.
----------------------------
(a) Each of Parent and Merger Sub has all requisite corporate power and
authority to enter into this Agreement, the Transaction Option Agreement and the
Stockholders' Agreements and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement, the Transaction
Option Agreement and the Stockholders' Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Parent and Merger Sub. This
Agreement, the Transaction Option Agreement and the Stockholders' Agreements
have been duly executed and delivered by each of Parent and Merger Sub and,
assuming the due execution and delivery by the Company, constitute the valid and
binding obligations of Parent and Merger Sub enforceable in accordance with
their terms, except as enforceability may be
32
limited by bankruptcy and other similar laws affecting the rights of creditors
generally and general principles of equity.
(b) The execution and delivery of this Agreement, the Transaction Option
Agreement, and the Stockholders' Agreements do not and the consummation of the
transactions contemplated hereby and thereby by each of Parent and Merger Sub
will not conflict with or violate the Certificate of Incorporation or By-Laws of
Parent or Merger sub, (ii) subject to compliance with the requirements set forth
in Section 4.2(c), conflict with or violate any law, rule, regulation, order,
judgment, injunction or decree applicable to Parent or Merger Sub or by which
Parent or Merger Sub is bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under any note, bond, mortgage, indenture, agreement,
lease, license, permit, franchise, concession or other instrument or obligation
to which Parent or Merger Sub is a party or by which Parent or Merger Sub is
bound or affected, except, in the case of clauses (ii) and (iii), for such
conflicts, violations, breaches, or defaults which would not have a Material
Adverse Effect on Parent.
(c) No action by or in respect of, or filing with any Governmental Entity
or other person, is required to be obtained or made by Parent or Merger Sub in
connection with the execution and delivery of this Agreement, the Transaction
Option Agreement or the Stockholders' Agreements or the consummation by Parent
and Merger Sub of the transactions contemplated hereby and thereby, except for
(i) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business, (ii) compliance
with any applicable requirements of the Exchange Act, and any other applicable
securities laws, whether domestic or foreign, and (iii) such other consents,
authorizations, filings, approvals and registrations which if not obtained or
made would not have a Material Adverse Effect on Parent or have a material
adverse effect on the ability of Parent or Merger Sub to consummate the
transactions contemplated by this Agreement, the Stockholders' Agreements and
the Transaction Option Agreement.
SECTION 4.3 Disclosure. The information contained in the Schedule TO and
----------
the Offer Documents (other than information furnished in writing by the Company
expressly for inclusion in the Schedule TO or the Offer Documents, as to which
Parent and Merger Sub make no representations or warranties) will not, at the
respective times the Schedule TO and such Offer Documents are filed with the
SEC, stock exchange or other regulatory agency (or such filings are amended or
supplemented) and first published, sent or given to holders of Company Common
Stock, 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 made therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by
Parent or Merger Sub for inclusion or incorporation by reference in (i) the
Schedule 14D-9 will, at the time the Schedule 14D-9 is filed with the SEC, and
at any time it is amended or supplemented, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (ii) the Proxy Statement will, at the
date it is first mailed to the Company's stockholders or at the time of the
Company Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any
33
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. If at any time prior to the Effective Time any event with respect to
Parent or Merger Sub, or with respect to information supplied by Parent or
Merger Sub for inclusion in the Schedule 14D-9 or the Proxy Statement, shall
occur which is required to be described in an amendment of, or a supplement to,
such documents, Parent and Merger Sub shall promptly inform the Company. No
representation or warranty is made by Parent or Merger Sub with respect to
statements made or to be made or to be incorporated by reference in any of the
foregoing documents based on information supplied by the Company expressly for
inclusion or incorporation by reference therein.
SECTION 4.4 Brokers' and Finders' Fees. Parent has not incurred, nor
--------------------------
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or any similar charges in connection with this
Agreement, the Transaction Option Agreement or the Stockholders' Agreements or
any transaction contemplated hereby or thereby.
SECTION 4.5 Financing. Parent has available funds sufficient in amount to
---------
permit Merger Sub to consummate the Offer and the Merger and the respective
transactions contemplated hereby, and to pay related fees and expenses. No
later than contemporaneously with consummation of the Offer contemplated hereby,
Parent will make such funds available to Merger Sub to enable Merger Sub to
fulfill its obligations hereunder. Parent and Merger Sub expressly acknowledge
that Parent's and Merger Sub's ability to obtain financing is not a condition to
the obligations of Parent and Merger Sub hereunder.
ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
SECTION 5.1 Conduct of Business by the Company. During the period from
----------------------------------
the date of this Agreement and continuing until the earlier of the termination
of this Agreement pursuant to its terms or the Appointment Time, the Company and
each of its subsidiaries shall, except to the extent that Parent shall otherwise
consent in writing, carry on its business in the ordinary course consistent with
past practice and in compliance in all material respects with all applicable
laws and regulations, pay its debts and Taxes when due subject to good faith
disputes over such debts or Taxes, pay or perform other material obligations
when due, and use its reasonable best efforts to (i) preserve intact its present
business organization, (ii) keep available the services of its present officers
and employees and (iii) preserve its relationships with customers, suppliers,
licensors, licensees and others with which it has business dealings. In
addition, during that period the Company will promptly notify Parent of any
material event involving its business or operations consistent with the
agreements contained herein.
In addition, except as permitted by the terms of this Agreement, the
Transaction Option Agreement or the Stockholders' Agreements, and except as
contemplated by this Agreement, the Transaction Option Agreement or the
Stockholders' Agreements, without the prior written consent of Parent during the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement pursuant to its terms or the Appointment Time,
34
except as set forth in Section 5.1 of the Company Disclosure Schedule, the
-----------
Company shall not do and shall not permit any of its subsidiaries to do any of
the following:
(a) Except as provided in this Agreement, waive any stock repurchase
rights, accelerate, amend or change the period of exercisability of options or
restricted stock, reprice options granted under any employee, consultant,
director or other stock plans or authorize cash payments in exchange for any
options granted under any of such plans;
(b) Grant any increase in compensation or fringe benefits, bonus or
severance or termination pay to any director, officer or employee other than in
the ordinary course of business, consistent with past practice, except pursuant
to written agreements in effect, or policies existing, on the date hereof (or as
required by applicable law), copies of which have been provided to Parent, or
adopt or enter into any new severance plan or agreement;
(c) Enter into any licensing or other agreement with regard to the
acquisition, distribution or licensing of any Intellectual Property, or transfer
or license to any person or entity any Intellectual Property, other than non-
exclusive licenses, distribution or other similar agreements entered in the
ordinary course of business consistent with past practice;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock of the Company or split, combine or reclassify any capital
stock of the Company or any subsidiary or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for, any capital
stock of the Company or any subsidiary;
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of the Company or any of its subsidiaries, except
repurchases of unvested shares at cost in connection with the termination of the
employment relationship with any employee pursuant to stock option or purchase
agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber any
shares of capital stock or any securities convertible into shares of capital
stock, or subscriptions, rights, warrants or options to acquire any shares of
capital stock or any securities convertible into shares of capital stock, or
enter into other agreements or commitments of any character obligating it to
issue any such shares or convertible securities, other than the issuance,
delivery and/or sale of (i) shares of Company Common Stock pursuant to the
exercise of outstanding Company Options, and (ii) pursuant to grants of Company
Options to newly hired employees in the ordinary course of business consistent
with past practice and in accordance with the terms and conditions of the
Company Option Plan pursuant to which such Company Option was granted;
(g) Cause or permit any amendments to the Company Charter Documents;
(h) Acquire or agree to acquire by merging or consolidating with, or, by
purchasing any equity interest in or a portion of the assets (outside the
ordinary course of business) of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof; or otherwise acquire or agree to acquire any assets which are
35
material, individually or in the aggregate, to the business of the Company or
any subsidiary or enter into any material joint ventures, partnerships,
strategic relationships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any properties
or assets of the Company or of any subsidiary other than sales, leases,
licenses, or encumbrances of assets or properties in the ordinary course of
business consistent with past practice;
(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of the Company or
any subsidiary, enter into any "keep well" or other agreement to maintain any
financial statement condition or enter into any arrangement having the economic
effect of any of the foregoing, other than in the ordinary course of business
consistent with past practice;
(k) Make any loan, advance or capital contribution to or investment in any
person, other than in the ordinary course of business consistent with past
practice;
(l) Create or assume any Encumbrance on any assets of the Company or any
of its subsidiaries, other than Encumbrances that do not materially detract from
the value of such assets or materially impair the use thereof by the Company or
its subsidiaries;
(m) Adopt or amend (except as required by law) any employee benefit plan
or employee stock purchase or employee stock option plan, or enter into any
employment contract or collective bargaining agreement, pay any special bonus or
special remuneration to any employee, or change any management policies or
procedures ;
(n) Make any material capital expenditures, except in accordance with the
current Company annual budget and plan, as previously disclosed to Parent;
(o) Modify, amend or terminate any Material Contract to which the Company
or any of the Company's subsidiaries is a party or waive, release or assign any
material rights or claims thereunder or enter into any contract that would be
deemed a Material Contract had it existed on the date hereof;
(p) Revalue any of the Company's or any of its subsidiaries' assets or,
except as required by GAAP, make any change in accounting methods, principles or
practices;
(q) Extend, amend or modify the terms of, or any rights to, any
Intellectual Property, including the pricing, policy or practice for any license
of software of the Company or of any subsidiary to a third party, such as
through discounts or similar practices, lengthening the term of any license or
changing the standard basis of pricing other than in the ordinary course of
business, consistent with past practice;
(r) Pay, discharge or satisfy any claims (including claims of
stockholders), indebtedness, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), except for payments,
discharges or satisfactions of liabilities, indebtedness or
36
obligations in the ordinary course of business consistent with past practice or
in accordance with their terms as in effect on the date hereof;
(s) Adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization (except as
contemplated by this Agreement);
(t) Settle or compromise any litigation (whether or not commenced prior
to the date of this Agreement), other than settlements or compromises of
litigation that do not provide for injunctive or similar relief and where the
amount paid (after giving effect to insurance proceeds actually received) in
settlement or compromise does not exceed $25,000, provided that the aggregate
amount paid in connection with the settlement or compromise of all such
litigation matters shall not exceed $50,000;
(u) Amend any term of any outstanding security of the Company or any of
its subsidiaries;
(v) Make any material Tax election inconsistent with past practices or
settle or compromise any material Federal, state, local or foreign Tax liability
or agree to an extension of a statute of limitations for any assessment of any
Tax;
(w) Take any action that would materially delay the consummation of the
transactions contemplated hereby or, except to the extent permitted by this
Section 5.1, make any of the representations and warranties untrue or incorrect
in any material respect; or
(x) Agree in writing or otherwise to take (or permit any of its
subsidiaries to agree in writing or otherwise to take) any of the actions
described in Section 5.1 (a) through (w) above.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Stockholder Approval.
--------------------
(a) To the extent Company Stockholder Approval of this Agreement is
required by the DGCL, the Company will take all action necessary in accordance
with the DGCL, the Company's Certificate of Incorporation, as amended, and its
By-laws to convene a meeting of Stockholders of the Company (the "Company
-------
Stockholders' Meeting") as promptly as practicable following the Offer Closing
---------------------
Date to consider and vote upon the Merger, this Agreement and the transactions
contemplated hereby.
(b) The Proxy Statement shall include the Recommendations of the
Board of Directors of the Company to the holders of Company Common Stock, except
to the extent that the Board of Directors of the Company shall have withdrawn or
modified its approval or Recommendation of this Agreement or the Merger in
accordance with Section 6.2.
37
(c) The Company's Board of Directors shall (i) cause the Company to
use its reasonable best efforts (through its agents or otherwise) to solicit
from the holders of the Company Common Stock proxies in favor of the Merger,
this Agreement and the transactions contemplated hereby and (ii) cause the
Company to take all other lawful action reasonably necessary to secure
stockholder approval of the Merger, this Agreement and the transactions
contemplated hereby.
(d) Notwithstanding the foregoing, if Merger Sub shall acquire at
least 90% of the issued and outstanding Company Common Stock in the Offer, the
parties shall take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the expiration of the Offer
without a meeting of stockholders in accordance with Section 253 of the DGCL.
(e) To the extent Company Stockholder Approval is required by the
DGCL, the Company shall prepare a preliminary Proxy Statement relating to the
Company Stockholders' Meeting and a form of proxy for use at the Company
Stockholders' Meeting relating to the vote of the holders of the Company Common
Stock with respect to the Merger, this Agreement and the transactions
contemplated hereby. The Company shall cause the preliminary Proxy Statement to
be filed with the SEC at the earliest practicable date following the Offer
Closing Date. Parent and the Company shall cooperate with each other in the
preparation of the Proxy Statement, and the Company shall notify Parent of the
receipt of any comments of the SEC with respect to the preliminary Proxy
Statement and of any requests by the SEC for any amendment or supplement thereto
or for additional information and shall promptly provide to Parent copies of all
correspondence between the Company or any representative of the Company and the
SEC. As promptly as practicable after comments are received from the SEC with
respect to the preliminary Proxy Statement, the Company shall use its reasonable
best efforts to respond to the comments of the SEC and, to the extent comments
of the SEC relate to Parent or Merger Sub, Parent and Merger Sub shall use their
reasonable best efforts to respond to the comments of the SEC. The Company
shall give Parent and its counsel the opportunity to review all amendments and
supplements to the Proxy Statement and all responses to requests for additional
information and replies to comments of the SEC prior to their being filed with
or sent to the SEC and Parent and Merger Sub shall provide the Company with such
information about them as may be required to be included in the Proxy Statement
or as may be reasonably required to respond to any comment of the SEC. After
all the comments received from the SEC have been cleared by the SEC staff and
all information required to be contained in the Proxy Statement has been
included therein by the Company, the Company shall file with the SEC the
definitive Proxy Statement and the Company shall use its reasonable best efforts
to have the Proxy Statement cleared by the SEC as soon thereafter as
practicable. The Company shall cause the Proxy Statement to be mailed to record
holders of Company Common Stock as promptly as practicable after clearance by
the SEC.
(f) Parent and Merger Sub agree to cause all shares of Company
Common Stock purchased pursuant to the Offer and all other shares of Company
Common Stock owned by Parent, Merger Sub or any affiliate of Parent, or with
respect to which Parent, Merger Sub or any affiliate of Parent exercise voting
control, to be voted in favor of the approval and adoption of the Merger and
this Agreement.
38
SECTION 6.2 No Solicitation.
---------------
(a) Subject to Section 6.2(b), from the date hereof until the Effective
Time or termination of this Agreement in accordance with Article VIII hereof,
whichever is earlier, neither the Company nor any of its subsidiaries shall, nor
shall the Company or any of its subsidiaries, authorize or permit any of its or
their officers, directors, employees, investment bankers, attorneys,
accountants, consultants or other agents or advisors to, directly or indirectly,
(i) solicit, initiate or take any action to facilitate or encourage any
Acquisition Proposal (as defined below) or make any inquiries or make any
proposal that constitutes or could reasonably be expected to lead to an
Acquisition Proposal, (ii) enter into, continue or participate in any
discussions or negotiations with, furnish any information relating to the
Company or any of its subsidiaries or afford access to the business, properties,
assets, books or records of the Company or any of its subsidiaries to, otherwise
cooperate in any way with, or assist, participate in, facilitate or encourage
any effort by any third party to do or seek to make, or that has made, an
Acquisition Proposal, (iii) approve, endorse or recommend any Acquisition
Proposal or (iv) enter into any letter of intent or similar document or any
contract, agreement or commitment contemplating or otherwise relating to any
Acquisition Proposal.
(b) Notwithstanding the foregoing, the Board of Directors of the Company,
directly or indirectly through advisors, agents or other intermediaries, may (i)
engage in negotiations or discussions with any third party (whether or not such
third party has had previous discussions or negotiations with the Company) that,
subject to the Company's compliance with Section 6.2(a)(i), makes (and may
continue such discussions and negotiations until such third party withdraws) a
bona fide Acquisition Proposal that the Special Committee of the Board of
Directors of the Company reasonably determines constitutes a Superior Proposal
(as defined below), provided, however, that in the event the Company is
contacted by a third party (whether or not such third party has had previous
discussions or negotiations with the Company) and such third party indicates
that it is interested in acquiring all or a portion of the Company, but an
Acquisition Proposal is not made, the Company may nevertheless provide such
third party with a copy of the Confidentiality Agreement (as defined in Section
6.4) and a copy of this Agreement, (ii) furnish to such third party nonpublic
information relating to the Company or any of its subsidiaries, (iii) take and
disclose to its stockholders a position contemplated by Rules 14d-9 and 14e-2(a)
under the Exchange Act or otherwise make disclosure to them, (iv) following
receipt of such an Acquisition Proposal, withdraw, modify in a manner adverse to
Parent and Merger Sub its Recommendations, and/or (v) take any action ordered to
be taken by the Company by any court of competent jurisdiction if, in the case
of (i), (ii), (iii) and (iv) (1) neither the Company nor any representative of
Company and its subsidiaries shall have violated any of the restrictions set
forth in Section 6.2(a)(i), (2) the Board of Directors of the Company determines
in good faith (based on the written opinion of its outside legal counsel) that
the failure to take such action could result in a breach of its fiduciary
obligations to the Company's stockholders under applicable law, (3) prior to
furnishing any nonpublic information to, or entering into any discussions with,
such person or group, the Company gives Parent at least two business days
advance written notice of the identity of such person or group and if and when
an Acquisition Proposal has been made all of the material terms and conditions
of such Acquisition Proposal and of the Company's intention to furnish nonpublic
information to, or enter into
39
discussions with, such person or group, and the Company receives from such
person or group an executed confidentiality agreement containing terms at least
as restrictive with regard to the Company's confidential information as the
Confidentiality Agreement (as defined in Section 6.4), (4) contemporaneously
with furnishing any such nonpublic information to such person or group, the
Company furnishes such nonpublic information to Parent (to the extent such
nonpublic information has not been previously furnished by the Company to
Parent) and (5) the Company keeps Parent informed on a prompt basis (no less
regularly than on a daily basis) of the status of any such Acquisition Proposal
including notifying Parent promptly (no less regularly than on a daily basis) of
any material changes to the terms and conditions of any such Acquisition
Proposal. The Company and its subsidiaries will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal, and shall use its
reasonable best efforts to cause any such parties in possession of non-public
information about the Company that was furnished by or on behalf of the Company
to return or destroy all such information in the possession of any such party or
in the possession of any agent or advisor of any such party. Without limiting
the foregoing, it is understood that any violation of the restrictions set forth
in this Section 6.2 by any officer, director or employee of the Company or any
of its subsidiaries or any investment banker, attorney or other advisor or
representative of the Company or any of its subsidiaries shall be deemed to be a
breach of this Section 6.2 by the Company.
For purpose of this Agreement, "Superior Proposal" means any bona fide,
-----------------
unsolicited written Acquisition Proposal for all of the outstanding shares of
Company Common Stock on terms that the Special Committee (as defined below) of
the Company's Board of Directors determines in their good faith judgement
(based, with respect to consideration payable, on the opinion of the Special
Committee's (as defined below) financial advisor) to be (x) more favorable to
the Company's stockholders than as provided hereunder, (y) reasonably capable of
being completed and (z) if financing is necessary in order to consummate such
Superior Proposal, supported by available financing or a financing commitment
letter or "highly confident" letter from a nationally recognized investment
banking firm or nationally recognized lending institution; provided, however,
-------- -------
that any such letter not be subject to any non-traditional conditions
(including, without limitation, any due diligence condition or any condition
relating to the financial condition or operating results of any party).
For purposes of this Agreement, "Acquisition Proposal" shall mean any offer
--------------------
or proposal by a third party, other than Parent, Merger Sub or any affiliate
thereof, relating to: (A) any acquisition or purchase from the Company by any
person or "group" (as defined under Section 13(d) of the Exchange Act and the
rules and regulations thereunder) of more than a 15% interest in the outstanding
voting securities of the Company or any of its subsidiaries or any tender offer
or exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 15% or more of the outstanding voting securities
of the Company or any of its subsidiaries or any merger, consolidation, business
combination or similar transaction involving the Company pursuant to which the
stockholders of the Company immediately preceding such transaction would hold
less than 85% of the equity interests in the surviving or resulting entity of
such transaction; (B) any sale, lease, exchange, transfer, license other than in
the ordinary course of business, acquisition, or disposition of more than 15% of
the consolidated assets of the
40
Company; (C) any liquidation or dissolution of the Company or (D) any other
transaction the consummation of which would or could reasonably be expected to
impede, interfere with, prevent or materially delay the consummation of the
transactions contemplated hereby.
For purposes of this Agreement, the "Special Committee" shall mean a
-----------------
committee of the Company's Board of Directors comprised solely of members of the
Company's Board of Directors who are directors on the date hereof and who are
otherwise not (1) employees, officers, directors, appointees, nominees or
affiliates of Volt or any of its affiliates (other than the Company), Parent or
Merger Sub or any of their affiliates, or (2) employees or officers of the
Company.
SECTION 6.3 Obligations of Merger Sub. Parent will cause Merger Sub to
-------------------------
perform its obligations under this Agreement, including, without limitation,
paying the Offer Consideration, and to consummate the Offer and the Merger on
the terms and subject to the conditions set forth in this Agreement.
SECTION 6.4 Confidentiality; Access to Information.
--------------------------------------
(a) The parties acknowledge that the Company and Parent have previously
executed the mutual Confidentiality Agreement, dated as of December 21, 2000 (as
supplemented by a letter agreement dated August 16, 2001) between the Company
and Parent, the "Confidentiality Agreement"), which Confidentiality Agreement
-------------------------
will continue in full force and effect in accordance with its terms.
(b) Without limiting the provisions of Section 6.4(a), the Company will
afford Parent and its accountants, counsel and other representatives reasonable
access during normal business hours to the properties, books and records and
personnel of the Company during the period prior to the Effective Time to obtain
all information concerning the business, including the status of product
development efforts, properties, results of operations and personnel of the
Company, as Parent may reasonably request, including without limitation copies
of working papers of accountants, contracts, and other corporate documents, and
access to other parties with whom it has business dealings. No information or
knowledge obtained in any investigation pursuant to this Section will affect or
be deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Offer and the
Merger.
SECTION 6.5 Public Disclosure. Parent and the Company will consult with
-----------------
each other and, to the extent practicable, agree, before issuing any press
release or otherwise making any public statement with respect to the Offer,
Merger, this Agreement, the Transaction Option Agreement or the Stockholders'
Agreements or an Acquisition Proposal, except (i) as required by law or legal
process, (ii) in connection with obtaining any requisite governmental approvals,
or (iii) in connection with obligations pursuant to any requirement of any
national securities exchange or national securities quotation system. The
parties have agreed to the text of the joint press release announcing the
signing of this Agreement.
41
SECTION 6.6 Reasonable Efforts; Notification.
--------------------------------
(a) Upon the terms and subject to the conditions set forth in this
Agreement, the Transaction Option Agreement and the Stockholders' Agreements,
each of the parties agrees to use reasonable best efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, the Transaction Option Agreement and the Stockholders' Agreements,
including using reasonable best efforts to accomplish the following: (i) the
taking of all reasonable acts necessary to cause the conditions precedent set
forth in the Annex A and Article VII to be satisfied, (ii) the obtaining of all
-------
necessary actions or nonactions, waivers, consents, approvals, orders and
authorizations from Governmental Entities (including with respect to antitrust
matters, if required) and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity, (iii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iv) the defending of any suits, claims, actions,
investigations or proceedings, whether judicial or administrative, challenging
this Agreement, the Transaction Option Agreement or the Stockholders' Agreements
or the consummation of the transactions contemplated hereby and thereby,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (v) the execution or
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to carry out fully the purposes of, this Agreement.
Notwithstanding anything in this Agreement to the contrary, except pursuant to
the Transaction Option Agreement and the Stockholders' Agreements, neither
Parent nor any of its affiliates shall be under any obligation to make
proposals, execute or carry out agreements or submit to orders providing for the
sale or other disposition or holding separate (through the establishment of a
trust or otherwise) of any assets or categories of assets of Parent, any of its
affiliates or the Company or its subsidiaries or the holding separate of the
shares of Company Common Stock (or shares of stock of the Surviving Corporation)
or imposing or seeking to impose any limitation on the ability of Parent or any
of its subsidiaries or affiliates to conduct their business or own such assets
or to acquire, hold or exercise full rights of ownership of the shares of
Company Common Stock (or shares of stock of the Surviving Corporation).
(b) Each of the Company and Parent will give prompt notice to the other of
(i) any notice or other communication from any person alleging that the consent
of such person is or may be required in connection with the transactions
contemplated hereby, (ii) any notice or other communication from any
Governmental Entity in connection with the transactions contemplated hereby,
(iii) any litigation relating to, involving or otherwise affecting Company,
Parent or their respective subsidiaries that relates to the consummation of the
transactions contemplated hereby. The Company shall give prompt notice to Parent
of any representation or warranty made by it contained in this Agreement, the
Transaction Option Agreement or the Stockholders' Agreements becoming untrue or
inaccurate, or any failure of the Company to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, the Transaction Option Agreement or the
Stockholders'
42
Agreements, in each case, such that the conditions set forth in the Annex A or
-------
Article VII would not be satisfied, provided, however, that no such notification
-------- -------
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement, the Transaction Option Agreement or the Stockholders' Agreements.
Parent shall give prompt notice to the Company of any representation or warranty
made by it or Merger Sub contained in this Agreement, the Transaction Option
Agreement or the Stockholders' Agreements becoming untrue or inaccurate, or any
failure of Parent or Merger Sub to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement, the Transaction Option Agreement or the Stockholders'
Agreements, in each case, such that the conditions set forth in the Annex A or
-------
Article VII would not be satisfied, provided, however, that no such notification
-------- -------
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement, the Transaction Option Agreement or the Stockholders' Agreements.
SECTION 6.7 Indemnification.
---------------
(a) For six (6) years after the Effective Time, the Surviving Corporation
will indemnify and hold harmless (including advancement of expenses) the current
and former directors and officers of the Company in respect of acts or omissions
occurring on or prior to the Effective Time to the extent provided in the
Company Charter Documents in effect on the date hereof; provided that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law. It is understood that, unless made by a court, any
determination as to whether a person seeking indemnification pursuant to this
Section 6.7 has met any applicable legal standard for indemnification shall be
made by a committee consisting of at least two of Parent's independent
directors.
(b) The Company shall purchase, effective on the Offer Closing Date, a
"run-off" insurance policy of the Company's current directors' and officers'
insurance and indemnification policy with the maximum aggregate limit of
liability that can be obtained for a premium of $150,000 covering claims that
may be made during a period of six (6) years after the Offer Closing Date
against those who are directors and officers of the Company prior to the
Effective Time for events occurring on or prior to the Effective Time, with
retention and co-insurance amounts no greater than the minimum amounts required
by Delaware state law. Such policies may be subject to such customary
conditions and exclusions.
(c) In the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then, and in each such case, to the extent necessary
to effectuate the purposes of this Section 6.7, proper provision shall be made
so that the successors and assigns of Parent and the Surviving Corporation
assume the obligations set forth in this Section 6.7; provided that, in the case
of any such assignment by Parent or the Surviving Corporation, Parent and the
Surviving Corporation shall remain liable for all of their respective
obligations under this Agreement.
43
(d) The provisions of this Section 6.7 are intended to be for the benefit
of, and shall be enforceable by, each indemnified party, his or her heirs and
his or her representatives and are in addition to, and not in substitution for,
any other rights to indemnification or contribution that any such person may
have by contract or otherwise.
SECTION 6.8 Takeover Statutes; Rights Plan. If any takeover statute or
------------------------------
"poison pill" shareholder rights plan is or may become applicable to the Offer
or Merger or the other transactions contemplated by this Agreement, the
Transaction Option Agreement or the Stockholders' Agreements, each of Parent and
the Company and their respective Boards of Directors shall grant such approvals
and take such lawful actions as are necessary to ensure that such transactions
may be consummated as promptly as practicable on the terms contemplated by this
Agreement, the Transaction Option Agreement and the Stockholders' Agreements and
otherwise act to eliminate or minimize the effects of such statute and any
regulations promulgated thereunder on such transactions or to make such rights
plan inapplicable to Parent and Merger Sub in connection with the transactions
contemplated by this Agreement, the Transaction Option Agreement and the
Stockholders' Agreements. The Company agrees that on and after the date hereof,
it will not adopt any "poison pill" rights plan or any similar anti takeover
plan or take any other action that would impede or prevent completion of the
Offer, the Merger, this Agreement, the Transaction Option Agreement or the
Stockholders' Agreements.
SECTION 6.9 Certain Employee Benefits. From and after the Offer Closing
-------------------------
Date, Parent shall cause the Company and the Surviving Corporation to honor and
satisfy all obligations and liabilities that an employee of the Company and its
subsidiaries has as of the Offer Closing Date under any Employee Plan.
Notwithstanding the preceding sentence, Parent shall have the right to amend or
terminate any Employee Plan at any time after the Offer Closing Date, in
accordance with its terms and applicable Legal Requirements; provided however,
----------------
that to the extent permitted under applicable Legal Requirements, employees of
the Company and its subsidiaries as of the Offer Closing Date will be granted
credit for all service with the Company and its subsidiaries only for purposes
of determining eligibility under each employee benefit plan, program or
arrangement of Parent or its affiliates in which such employees are eligible to
participate (except under or with respect to any employee savings plan (e.g.
401(k) plan), pension plan and any post-retirement medical plan). The
provisions of this Section 6.9 are intended to be for the benefit of, and shall
be enforceable by, the employees of the Company and its subsidiaries, their
heirs and their representatives.
SECTION 6.10 Employment and Other Agreements. The Company agrees to
-------------------------------
cooperate with Parent in its efforts to negotiate agreements with key employees
identified by Parent between the date hereof and the Effective Time.
SECTION 6.11 Transfer Tax. The Company, Merger Sub and Parent shall
------------
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees and any similar
taxes which become payable in connection with the transactions contemplated by
this Agreement (together with any related interest, penalties or additions to
tax, "Transfer Taxes"). All Transfer Taxes shall be the responsibility of the
--------------
holders of the Company Common Stock.
44
SECTION 6.12 Termination of Certain Agreements On or prior to the Offer
---------------------------------
Closing Date, the Company shall have terminated (i) the Agreement and Plan of
Merger dated October 5, 1995 and as amended as of November 10, 1995 and December
7, 1995 between Volt, Autologic, Incorporated and Information International,
Inc. and (ii) the Registration Rights Agreement dated January 19, 1996 between
the Company and Volt.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.1 Conditions to Obligations of Each Party to Effect the Merger.
------------------------------------------------------------
The obligations of Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) if required by the DGCL, the Company Stockholder Approval shall have
been obtained; provided, however, that no party shall entitled to assert the
-------- -------
failure of this condition if such party breaches its obligations under Section
6.1 hereof;
(b) Merger Sub shall have accepted for payment and paid for all of the
Shares tendered pursuant to the Offer; provided that neither Parent nor Merger
--------
Sub shall be entitled to assert the failure of this condition if Merger Sub
materially breaches its obligations under Section 1.1 hereof or fails to
purchase the Shares pursuant to the Offer in breach of its obligations under
this Agreement; and
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger.
ARTICLE VIII
TERMINATION
SECTION 8.1. Termination. This Agreement may be terminated and the Offer
-----------
and Merger abandoned at any time prior to the Offer Closing Date or the
Effective Time, as set forth below, notwithstanding Company Stockholder
Approval:
(a) prior to the Effective Time, by mutual written consent of Parent and
the Company (after the Offer Closing Date, subject to Section 1.4(b) hereof) for
any reason;
(b) prior to the Effective Time, by Parent or the Company if there shall
be any law or regulation of any competent authority that makes consummation of
the Merger illegal or otherwise prohibited or if a court of competent
jurisdiction or Governmental Entity shall have issued a non-appealable final
order, decree or ruling or taken any other action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the Offer
or the Merger;
45
(c) prior to the Offer Closing Date, by the Company if (i) the
representations and warranties of the Parent and Merger Sub set forth herein
(without giving effect to any materiality limitations contained therein) shall
fail to be true and correct on a given date as though made on and as such date
(except for representations and warranties made as of a specified date, which
shall fail to be so true and correct as of such date) and the failure of such
representations and warranties to be so true and correct in the aggregate
materially impairs Parent and Merger Sub's ability to consummate the Offer and
the Merger or (ii) either Parent or Merger Sub shall have failed to perform or
comply in all material respects with its obligations, agreements or covenants
contained in this Agreement, which failure, in the case of (i) or (ii), is not
curable or, if curable, is not cured by the earlier of (x) 15 calendar days
after written notice of such failure is given by the Company to Parent or Merger
Sub and (y) the Termination Date;
(d) prior to the Offer Closing Date, by Parent if (i) the representations
and warranties of the Company set forth herein (without giving effect to any
materiality limitations contained therein) shall fail to be true and correct on
a given date as though made on and as such date (except for representations and
warranties made as of a specified date, which shall fail to be so true and
correct as of such date) and the failure of such representations and warranties
to be so true and correct in the aggregate has a Material Adverse Effect on the
Company , or (ii) the Company shall have failed to perform or comply in all
material respects with its obligations, agreements or covenants contained in
this Agreement, which failure, in the case of (i) or (ii), is not curable or, if
curable, is not cured by the earlier of (x) 15 calendar days after written
notice of such failure is given by Merger Sub to the Company and (y) the
Termination Date;
(e) prior to the Effective Time, by Parent or the Company, if, at the
Company Stockholders' Meeting (including any adjournment or postponement
thereof), if required, the Company Stockholder Approval shall not have been
obtained (provided that the right to terminate this Agreement under this Section
8.1(e) shall not be available to Parent if it has failed to vote as specified in
Section 6.1(f));
(f) prior to the Effective Time, by the Company, if, prior to the adoption
of this Agreement at the Company Stockholders' Meeting, the Board of Directors
of the Company shall have approved, and the Company shall enter into, a
definitive agreement providing for the implementation of a Superior Proposal;
but only if prior to termination under this subsection (f) (i) the Company is
not then in breach of Section 6.2, (ii) the Company's Board of Directors shall
have authorized the Company, subject to complying with the terms of this
Agreement, to enter into a binding written agreement concerning a transaction
that constitutes a Superior Proposal and the Company shall have notified the
Parent in writing that it intends to enter into such an agreement, (iii) during
the ten (10) business day period after the Company's notice: (A) the Company
shall have offered to negotiate with, and, if accepted, negotiated in good faith
with, Parent to attempt to make such adjustments in the terms and conditions of
this Agreement as would enable the Company to proceed with the Merger and (B)
the Board of Directors of the Company shall have concluded, after considering
the results of such negotiations and the revised proposals made by the Parent,
if any, that any Superior Proposal giving rise to the Company's notice continues
to be a Superior Proposal; (iv) such termination is within five (5) business
days following the ten (10) business day period referred to above, and (v) no
termination pursuant to
46
this Section 8.1(f) shall be effective unless the Company shall simultaneously
make the payment of the termination fee required by Section 8.4 and certain
expenses of Parent and Merger Sub as required by Section 8.3(b);
(g) prior to the Offer Closing Date, by the Company, (x) if the
Offer shall have expired or have been withdrawn or terminated without any shares
of Company Common Stock being purchased thereunder or (y) if no shares of
Company Common Stock have been purchased thereunder on or prior to December 31,
2001; provided, however, that the Company's right to terminate this Agreement
-------- -------
pursuant to this Section 8.1(g) shall not be available to the Company if the
Company is in material breach of this Agreement and such breach has been the
proximate cause of the failure of the Offer to be consummated ;
(h) prior to the Offer Closing Date, by Parent, (x) if the Offer
shall have expired or have been withdrawn or terminated without any shares of
Company Common Stock being purchased thereunder, whether or not the Offer has
commenced, or (y) if no shares of Company Common Stock have been purchased
thereunder on or prior to December 31, 2001; provided, however, that Parent's
-------- -------
right to terminate this Agreement pursuant to this Section 8.1(h) shall not be
available to Parent if Parent or Merger Sub is in material breach of this
Agreement and such breach has been the proximate cause of the failure of the
Offer to be consummated; or
(i) prior to the Offer Closing Date, by Parent, if the Company's
Board of Directors (i) shall have withdrawn or modified in a manner adverse to
Parent or Merger Sub (including by amendment of the Schedule 14D-9) its approval
of the Merger Agreement or the transactions contemplated thereby or its
Recommendations, (ii) shall have recommended an Acquisition Proposal or (iii)
shall have adopted any resolution to effect any of the foregoing.
SECTION 8.2. Effect of Termination. In the event of the termination of
---------------------
this Agreement pursuant to Section 8.1, written notice thereof shall forthwith
be given to the other party or parties specifying the provision hereof pursuant
to which such termination is made, and this Agreement, except as provided in
Section 9.1, shall forthwith become void and there shall be no liability on the
part of any party hereto or any of its affiliates, directors, officers or
stockholders except (i) as set forth in Section 8.3 and 8.4 hereof, and (ii)
nothing herein shall relieve any party from liability for any breach hereof.
SECTION 8.3. Fees and Expenses.
-----------------
(a) If the Offer is not consummated, each party will bear its
own costs and expenses (including legal, accounting and investment banking fees
and expenses) incurred in connection with this Agreement and the transactions
contemplated hereby. If the Merger is consummated, Parent shall be responsible
for the insurance premium provided for in Section 6.7(b) and all of the
Company's fees and expenses (including legal, accounting and investment banking
fees and expenses) up to a maximum of $750,000, which limit shall include any
amounts paid by the Company (whether before or after the date of this
Agreement). Subject to such limit, Parent or the Company shall pay or reimburse
Volt for any amounts paid by Volt on behalf of the Company and not taken into
account in calculating the Offer Consideration.
47
(b) Upon the termination of this Agreement by the Company
pursuant to Section 8.1(f) or Section 8.1(i), the Company shall reimburse Parent
for actual, documented out-of-pocket expenses of Parent and Merger Sub incurred
in connection with this Agreement and the transactions contemplated by this
Agreement (including, but not limited to, fees and expenses of Parent's counsel,
accountants and financial advisors) in an aggregate amount not to exceed
$350,000 .
(c) The expenses to be reimbursed pursuant to Section 8.3(b)
shall be paid by wire transfer of immediately available funds to an account
designated by Parent or by check if Parent fails to designate an account, in
either case within ten (10) days following written demand from Parent to the
Company.
SECTION 8.4 Termination Fee. The Company shall pay Parent $1,486,030 if:
---------------
(i) this Agreement is terminated by the Company pursuant to Section 8.1(f) or by
Parent pursuant to Section 8.1(i) or (ii) this Agreement is terminated by Parent
pursuant to Section 8.1(d) and on or prior to the 180th day after the date of
termination the Company enters into a definitive agreement providing for a
Qualified Acquisition and on or prior to the first anniversary of the date of
termination, such Qualified Acquisition is consummated. Any payment due under
Section 8.4(i) shall be made concurrently with the termination of this Agreement
pursuant to Section 8.1(f) or 8.1(i), as the case may be, and any payment due
under this Section 8.4(ii) shall be made upon consummation of such Qualified
Acquisition, in each case by wire transfer of immediately available funds to an
account designated by Parent or, if no wire transfer instructions have been
provided to the Company by Parent, by check. A "Qualified Acquisition" shall
---------------------
mean an Acquisition Proposal in which the amount to be received with respect to
each share of Company Common Stock equals or exceeds the Merger Consideration.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Effectiveness of Representations, Warranties and Agreements.
-----------------------------------------------------------
Except as otherwise provided in this Section 9.1, the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time (except that with respect to the
representations and warranties made by Company, Parent or Merger Sub herein,
such representations and warranties shall terminate on the Offer Closing Date)
or upon the termination of this Agreement pursuant to Section 8.1, as the case
may be. The Confidentiality Agreement shall survive termination of this
Agreement. This Section 9.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time
(including, without limitation, the confidentiality obligations herein and
Sections 8.2 through 8.4).
SECTION 9.2. Notices. All notices, claims, demands and other
-------
communications hereunder shall be deemed to have been duly given or made, and
shall be effective, on the date
48
such notices, claims, demands or other communications, as the case may be, are
delivered to the recipient thereof in person, by a commercial delivery service
or by facsimile (receipt confirmed) at the following addresses or facsimile
numbers:
(a) If to Parent or Merger Sub:
Agfa Corporation
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
(b) If to the Company:
Autologic Information International, Inc.
0000 Xxxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxx LLP
The Heritage on the Garden
00 Xxxx Xxxxx
00
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. XxXxxxx, Esq.
Tel.: (000) 000-0000
Fax: (000) 000-0000
or to such other addresses as the person to whom such notice is given may have
previously furnished to the others in writing in the manner set forth above.
SECTION 9.3. Amendment. This Agreement may be amended by the parties
---------
hereto by action taken by or on behalf of their respective Boards of Directors
(subject to Section 1.4(b)) at any time prior to the Effective Time; provided,
however, that, after obtaining Company Stockholder Approval, if necessary, no
amendment may be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 9.4. Waiver. At any time prior to the Effective Time, subject to
------
Section 1.1(b) and to the extent legally permitted, any party hereto may, with
respect to any other party hereto, (a) extend the time for the performance of
any of the obligations or other acts (except to the extent prohibited by law),
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
SECTION 9.5 Interpretation; Certain Defined Terms.
-------------------------------------
(a) When a reference is made in this Agreement to Sections, such reference
shall be to a Section of this Agreement unless otherwise indicated. The words
"include," "includes" and "including" when used herein shall be deemed in each
------- -------- ---------
case to be followed by the words "without limitation." The table of contents and
------------------
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. When
reference is made herein to "the business of" an entity, such reference shall be
---------------
deemed to include the business of all direct and indirect subsidiaries of such
entity. References to this Agreement include all Schedules and Annexes attached
hereto.
(b) For purposes of this Agreement, the terms "knowledge" or "knows" mean
--------- -----
with respect to a party hereto, with respect to any matter in question, that any
of the officers (or, with respect to foreign entities, persons performing
similar functions) of such party has actual knowledge of such matter, after
reasonable inquiry of such matter.
(c) For purposes of this Agreement, "Offer Closing Date" means the date on
------------------
which Merger Sub first accepts for payment and pays for all shares of Company
Common Stock validly tendered and not withdrawn pursuant to the Offer.
(d) For purposes of this Agreement, the terms "Material Adverse Change" or
-----------------------
"Material Adverse Effect" when used in connection with an entity means any
-----------------------
change, event, circumstance, occurrence or effect that either individually or in
the aggregate with all other such
50
changes, events, circumstances, occurrences and effects is materially adverse or
may reasonably be expected to be materially adverse to the business, properties,
financial condition, assets, including intangible assets, prospects,
capitalization or results of operations of such entity and its direct and
indirect subsidiaries taken as a whole; provided, that the following shall not
--------
be taken into account in determining whether there has been or would be a
material adverse change or effect: (i) any adverse change or effect resulting
from the announcement or pendency of the Offer or the Merger and (ii) any
adverse change or effect resulting from a change in accounting rules or
procedures announced by the Financial Accounting Standards Board.
(e) For purposes of this Agreement, the term "person" shall mean any
------
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
(f) For purposes of this Agreement, "subsidiary" of a specified entity
----------
will be any corporation, partnership, limited liability company, joint venture
or other legal entity of which the specified entity (either alone or through or
together with any other subsidiary) owns, directly or indirectly, 50% or more of
the stock or other equity or partnership interests, the holders of which are
generally entitled to vote for the election of the Board of Directors or other
governing body of such corporation or other legal entity.
(g) For purposes of this Agreement, "Termination Date" means March 1,
----------------
2002; provided, however, that if on March 1, 2002 the only condition to the
-------- -------
Offer set forth on Annex A attached hereto that has not been satisfied or waived
-------
is the condition that any applicable regulatory approvals shall been obtained
prior to the expiration of the Offer, then the term "Termination Date" shall
----------------
mean May 1, 2002.
SECTION 9.6 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
SECTION 9.7 Entire Agreement; Third Party Beneficiaries. This Agreement
-------------------------------------------
and the documents and instruments and other agreements among the parties hereto
as contemplated by or referred to herein, including the Transaction Option
Agreement, the Stockholders' Agreements, the Confidentiality Agreement, the
Company Disclosure Schedule and Annex A attached hereto (a) constitute the
-------
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, it being understood that
the Confidentiality Agreement shall continue in full force and effect until the
Closing Date and shall survive any termination of this Agreement; and (b) are
not intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 6.7 and Section 6.9.
SECTION 9.8 Severability. In the event that any provision of this
------------
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void
51
or unenforceable, the remainder of this Agreement will continue in full force
and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto, unless the parties agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.
SECTION 9.9 Other Remedies; Specific Performance. Except as otherwise
------------------------------------
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy. 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 seek 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, this
being in addition to any other remedy to which they are entitled at law or in
equity.
SECTION 9.10 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.11 Rules of Construction. The parties hereto agree that they
---------------------
have been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
SECTION 9.12 Assignment. This Agreement shall not be assigned by operation
----------
of law or otherwise, except that Parent and Merger Sub may assign all or any of
their rights hereunder to any affiliate thereof provided that no such assignment
shall relieve the assigning party of its obligations hereunder.
SECTION 9.13 Jurisdiction. Each party hereby irrevocably submits to the
------------
exclusive jurisdiction of the Court of Chancery in the State of Delaware in any
action, suit or proceeding arising in connection with this Agreement, and agrees
that any such action, suit or proceeding shall be brought only in such court
(and waives any objection based on forum non conveniens or any other objection
--------------------
to venue therein); provided, however, that such consent to jurisdiction is
-------- -------
solely for the purpose referred to in this Section 9.13 and shall not be deemed
to be a general submission to the jurisdiction of said court or in the State of
Delaware other than for such purposes. Each party hereto hereby waives any
right to a trial by jury in connection with any such action, suit or proceeding.
* * * * *
52
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
and Plan of Merger to be executed by their duly authorized respective officers
as of the date first written above.
AGFA CORPORATION
By: /s/ Eddy Rottie
----------------------------------------
Name: Eddy Rottie
Title: Executive Vice President and CFO
AUTOLOGIC ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Assistant Secretary
AUTOLOGIC INFORMATION
INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President and Chief Operating Officer
53
ANNEX A
The capitalized terms used in this Annex A shall have the respective
meanings given to such terms in the Agreement and Plan of Merger, dated as of
September 25, 2001 among Parent, Merger Sub and the Company (the "Merger
------
Agreement") to which this Annex A is attached.
---------
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Merger Sub shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Merger Sub's obligation to pay for or return tendered Shares promptly after
expiration or termination of the Offer), to pay for any Shares tendered, and may
postpone the acceptance for payment or payment for any Shares tendered, and may
terminate the Offer (whether or not any Shares have theretofore been purchased
or paid for) if, by the expiration of the Offer (as it may be extended in
accordance with Section 1.1 of the Merger Agreement) (i) the Minimum Condition
shall not have been satisfied; (ii) any regulatory approvals required by any
Governmental Authority shall not have been obtained or (iii) at any time on or
after the date of the Merger Agreement and before acceptance for payment of, or
payment for, such Shares any of the following events has occurred and continues
to exist as of the scheduled expiration date of the Offer (as it may be extended
in accordance with Section 1.1 of the Merger Agreement), unless the failure of
the conditions set forth in clauses (i), (ii) or (iii) are the result of a
material breach by Parent or Merger Sub of any of their obligations under the
Merger Agreement:
(A) There shall have been threatened by any Governmental Authority, or
instituted or pending any action, proceeding, review, investigation, application
or counterclaim by or before any court or Governmental Authority (other than
actions, proceedings, applications or counterclaims filed or initiated by or on
behalf of Parent or Merger Sub or any of their affiliates), which (i) seeks to
challenge the acquisition by Merger Sub of the Shares, restrain, prohibit or
delay the making or consummation of the Offer or the Merger or any other merger
or business combination involving Merger Sub or any of its affiliates and the
Company or any of its subsidiaries, prohibit the performance of any of the
contracts or other agreements entered into by Parent, Merger Sub or any of their
affiliates in connection with the acquisition of the Company or the Shares, or
obtain any damages in connection with any of the foregoing, (ii) seeks to make
the purchase of or payment for, some or all of the Shares pursuant to the Offer,
the Merger or otherwise, illegal, (iii) seeks to impose limitations on the
ability of Merger Sub or the Company or any of their respective affiliates or
subsidiaries effectively to acquire or hold, or requiring Merger Sub, the
Company or any of their respective affiliates or subsidiaries to dispose of or
hold separate, any portion of the assets or the business of Merger Sub or its
affiliates or the Company or its subsidiaries, or impose limitations on the
ability of Merger Sub, the Company or any of their respective affiliates or
subsidiaries to continue to conduct, own or operate all or any portion of their
businesses and assets as heretofore conducted, owned or operated, (iv) seeks to
impose or may result in material limitations on the ability of Merger Sub or any
of its affiliates to exercise full rights of ownership of the Shares purchased
by them, including, without limitation, the right to vote the Shares purchased
by them on all matters properly presented to the stockholders of the Company, or
the right to vote any shares of capital stock of any subsidiary
54
directly or indirectly owned by the Company, (v) is reasonably likely to result
in a material diminution in the benefits expected to be derived by Parent and
Merger Sub as a result of the transactions contemplated by the Offer, including
the Merger, or (vi) seeks to impose voting, procedural, price or other
requirements in addition to those under DGCL and federal securities laws (each
as in effect on the date of the Offer to Purchase) or any material condition to
the Offer that is unacceptable (in its reasonable judgment) to Parent and Merger
Sub; or
(B) There shall have been proposed, sought, promulgated, enacted, entered,
enforced or deemed applicable to the Offer or the Merger by any domestic,
foreign or supranational government or any governmental, administrative or
regulatory authority or agency or by any court or tribunal, domestic, foreign or
supranational, any statute, rule, regulation, judgment, decree, order or
injunction that might, directly or indirectly, result in any of the consequences
referred to in clauses (i) through (vi) of paragraph (A) above; or
(C) there shall have occurred (i) any general suspension of, or limitation
on prices for, trading in securities on any national securities exchange or the
over-the-counter market in the United States (other than a shortening of trading
hours or any coordinated trading halt triggered solely as a result of a
specified increase or decrease in a market index) for a continuous period of
four (4) days, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iii) any material limitation
(whether or not mandatory) by any U.S. or foreign Governmental Entity on the
extension of credit by banks or other lending institutions in the United States,
(iv) a commencement of a war or armed hostilities or other national calamity
directly involving the United States and Parent shall have determined that there
is a reasonable likelihood that such event would have a material adverse
significance to Parent, Parent's subsidiaries, the Company or the Company's
subsidiaries, or (v) in the case of any of the foregoing existing at the time of
the execution of the Merger Agreement, a material acceleration or worsening
thereof; or
(D) the representations and warranties of the Company contained in Article
III of the Merger Agreement (without giving effect to any materiality
limitations contained therein) shall fail to be true and correct (except for
representations and warranties made as of a specified date, which shall fail to
be so true and correct as of such date) and the failure of such representations
and warranties to be so true and correct in the aggregate has a Material Adverse
Effect on the Company; or
(E) The obligations of the Company contained in the Merger Agreement shall
not have been performed or complied with in all material respects by the
Company; or
(F) The Merger Agreement shall have been terminated in accordance with its
terms; or
(G) The Company's Board of Directors (i) shall have withdrawn or modified
in a manner adverse to Parent or Merger Sub (including by amendment of the
Schedule 14D-9) its approval of the Merger Agreement or the transactions
contemplated thereby or its Recommendations, (ii) shall have recommended an
Acquisition Proposal or (iii) shall have adopted any resolution to effect any of
the foregoing; or
55
(H) There shall have occurred a Material Adverse Change in the Company;
in any such case, which, in the reasonable judgment of Merger Sub in any such
case, and regardless of the circumstances (including any action or inaction by
Parent or Merger Sub other than any action or inaction by Parent or Merger Sub
constituting a breach of the Merger Agreement) giving rise to any condition,
makes it inadvisable to proceed with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Merger Sub and its
affiliates and may be asserted by Merger Sub regardless of the circumstances
(other than any action or inaction by Parent, Merger Sub or any of their
affiliates) giving rise to any such condition or may be waived by Merger Sub, in
whole or in part, from time to time in its sole discretion, except as otherwise
provided in the Merger Agreement. The failure by Merger Sub at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right and may be asserted
at any time and from time to time.
56
