EXHIBIT 99(c)(2)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SIGMA CIRCUITS, INC.
and
T MERGER SUB (OR), INC.
and
XXXXXXXXXX INDUSTRIES, INC.
with the Guarantee of
TYCO INTERNATIONAL LTD.
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Dated as of October 26, 1999
TABLE OF CONTENTS
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ARTICLE I
TENDER OFFER AND MERGER
1.1 The Offer.............................................................................................. 7
1.2 Company Action......................................................................................... 8
1.3 Directors.............................................................................................. 10
1.4 The Merger............................................................................................. 11
1.5 Effective Time......................................................................................... 11
1.6 Conversion of Common Shares............................................................................ 11
1.7 Dissenting Shares...................................................................................... 12
1.8 Surrender of Common Shares............................................................................. 12
1.9 Options, Warrants and Employee Stock Purchase Plan..................................................... 14
1.10 Articles of Incorporation and Bylaws................................................................... 15
1.11 Directors and Officers................................................................................. 15
1.12 Other Effects of Merger................................................................................ 15
1.13 Proxy Statement........................................................................................ 15
1.14 Additional Actions..................................................................................... 16
1.15 Merger Without Meeting of Shareholders................................................................. 16
1.16 Lost, Stolen or Destroyed Certificates................................................................. 16
1.17 Material Adverse Effect................................................................................ 17
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1 Organization and Good Standing......................................................................... 18
2.2 Capitalization......................................................................................... 18
2.3 Subsidiaries........................................................................................... 19
2.4 Authorization; Binding Agreement....................................................................... 19
2.5 Governmental Approvals................................................................................. 20
2.6 No Violations.......................................................................................... 20
2.7 Securities Filings..................................................................................... 20
2.8 Company Financial Statements........................................................................... 21
2.9 Absence of Certain Changes or Events................................................................... 21
2.10 No Undisclosed Liabilities............................................................................. 22
2.11 Compliance with Laws................................................................................... 22
2.12 Permits................................................................................................ 22
2.13 Litigation............................................................................................. 22
2.14 Contracts.............................................................................................. 22
2.15 Employee Benefit Plans................................................................................. 23
2.16 Taxes and Returns...................................................................................... 26
2.17 Intellectual Property.................................................................................. 28
2.18 Disclosure Documents................................................................................... 29
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2.19 Labor Matters.......................................................................................... 29
2.20 Limitation on Business Conduct......................................................................... 30
2.21 Title to Property...................................................................................... 30
2.22 Owned and Leased Premises.............................................................................. 30
2.23 Environmental Matters.................................................................................. 30
2.24 Insurance.............................................................................................. 32
2.25 Product Liability and Recalls.......................................................................... 32
2.26 Customers.............................................................................................. 33
2.27 Interested Party Transactions.......................................................................... 33
2.28 Finders and Investment Bankers......................................................................... 33
2.29 Fairness Opinion....................................................................................... 33
2.30 Takeover Statutes...................................................................................... 33
2.31 Full Disclosure........................................................................................ 33
2.32 Year 2000.............................................................................................. 34
2.33 Rights Agreements...................................................................................... 34
2.34 Absence of Certain Payments............................................................................ 34
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
3.1 Organization and Good Standing......................................................................... 35
3.2 Authorization; Binding Agreement....................................................................... 35
3.3 Governmental Approvals................................................................................. 35
3.4 No Violations.......................................................................................... 36
3.5 Disclosure Documents................................................................................... 36
3.6 Finders and Investment Bankers......................................................................... 36
3.7 Financing Arrangements................................................................................. 37
3.8 No Prior Activities.................................................................................... 37
ARTICLE IV
ADDITIONAL COVENANTS OF THE COMPANY
4.1 Conduct of Business of the Company and the Company Subsidiaries........................................ 37
4.2 Notification of Certain Matters........................................................................ 40
4.3 Access and Information................................................................................. 40
4.4 Shareholder Approval................................................................................... 40
4.5 Reasonable Best Efforts................................................................................ 41
4.6 Public Announcements................................................................................... 41
4.7 Compliance............................................................................................. 41
4.8 No Solicitation........................................................................................ 41
4.9 SEC and Shareholder Filings............................................................................ 44
4.10 Takeover Statutes...................................................................................... 44
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4.11 Company Options and Stock Purchase Plan ............................................................... 44
ARTICLE V
ADDITIONAL COVENANTS OF PURCHASER AND PARENT
5.1 Reasonable Best Efforts................................................................................ 44
5.2 Public Announcements................................................................................... 45
5.3 Compliance............................................................................................. 45
5.4 Employee Benefit Plans................................................................................. 45
5.5 Indemnification........................................................................................ 46
5.6 Voting of Common Shares................................................................................ 46
5.7 Guarantee of Parent.................................................................................... 46
ARTICLE VI
MERGER CONDITIONS
6.1 Offer.................................................................................................. 47
6.2 Shareholder Approval................................................................................... 47
6.3 No Injunction or Action................................................................................ 47
6.4 Governmental Approvals................................................................................. 47
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1 Termination............................................................................................ 47
7.2 Effect of Termination and Abandonment.................................................................. 49
ARTICLE VIII
MISCELLANEOUS
8.1 Confidentiality........................................................................................ 50
8.2 Amendment and Modification............................................................................. 51
8.3 Waiver of Compliance; Consents......................................................................... 51
8.4 Survival............................................................................................... 51
8.5 Notices................................................................................................ 51
8.6 Binding Effect; Assignment............................................................................. 52
8.7 Expenses............................................................................................... 52
8.8 Governing Law.......................................................................................... 53
8.9 Counterparts........................................................................................... 54
8.10 Interpretation......................................................................................... 54
8.11 Entire Agreement....................................................................................... 54
8.12 Severability........................................................................................... 54
8.13 Specific Performance................................................................................... 55
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8.14 Third Parties.......................................................................................... 55
8.15 Disclosure Letter...................................................................................... 55
8.16 Jurisdiction........................................................................................... 55
8.17 Waiver of Jury Trial................................................................................... 55
GUARANTEE..................................................................................... 58
GLOSSARY OF DEFINED TERMS..................................................................... 59
ANNEX I.......................................................................................A-1
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT") is made and
entered into as of October 26, 1999, by and among Sigma Circuits, Inc.,
("PARENT"), a Delaware company and an indirect subsidiary of Tyco International
Ltd., a Bermuda company ("GUARANTOR"), T Merger Sub (OR), Inc., an Oregon
corporation and a direct wholly owned subsidiary of Parent ("PURCHASER"), and
Xxxxxxxxxx Industries, Inc., an Oregon corporation (the "COMPANY").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of the Company,
Purchaser and Parent have approved the acquisition by Purchaser of the Company;
and
WHEREAS, in furtherance thereof, it is proposed that Purchaser
will make a cash tender offer (the "OFFER") to acquire all of the issued and
outstanding shares of common stock of the Company ("COMMON SHARES"), for $5.50
per share, or such higher price as may be paid in the Offer (the "PER SHARE
AMOUNT"), subject to any applicable withholding, net to the seller in cash
without interest; and
WHEREAS, also in furtherance of such acquisition, the
respective Boards of Directors of the Company, Purchaser and Parent have each
approved the merger (the "MERGER") of Purchaser with and into the Company
following the Offer in accordance with the laws of the State of Oregon; and
WHEREAS, concurrently with the execution of this Agreement and
as an inducement to Parent to enter into this Agreement, Parent, Purchaser and
the majority shareholder of the Company are entering into a Shareholder's
Agreement pursuant to which such holder has, among other things, agreed to
tender all of his Common Shares in the Offer, upon the terms and subject to the
conditions set forth in the Shareholder's Agreement; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, and as a condition to the Company's willingness to enter into this
Agreement, Guarantor has agreed fully and unconditionally to guarantee the
representations, warranties, covenants, agreements and other obligations of
Parent and Purchaser in this Agreement (the "GUARANTEE"); and
WHEREAS, the Board of Directors of the Company has approved
and resolved to recommend acceptance of the Offer and the Merger to the holders
of Common Shares and has determined that the consideration to be paid for each
Share in the Offer and the Merger is fair to and in the best interest of the
holders of Common Shares and to recommend that the holders of such Common Shares
accept the Offer and that the holders of Common Shares approve this Agreement
and the transactions contemplated hereby; and
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WHEREAS, the Company, Purchaser and Parent desire to make
certain representations, warranties and agreements in connection with, and
establish various conditions precedent to, the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
TENDER OFFER AND MERGER
1.1 THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with SECTION 7.1 hereof and that none of the
events set forth in ANNEX I hereto shall have occurred and be existing,
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"SECURITIES EXCHANGE ACT")) the Offer as promptly as practicable, but in no
event later than five business days following the first public announcement of
the Offer, and shall use reasonable best efforts to consummate the Offer. The
obligation of Purchaser to accept for payment any Common Shares tendered shall
be subject to the satisfaction of only those conditions set forth in ANNEX I
hereto. The Per Share Amount payable in the Offer shall be net to each seller in
cash, subject to reduction only for any applicable withholding or stock transfer
taxes payable by such seller. The Company agrees that no Common Shares held by
the Company or any Company Subsidiaries (as defined below) will be tendered
pursuant to the Offer.
(b) Without the prior written consent of the Company,
Purchaser shall not (i) decrease the Per Share Amount or change the form of
consideration payable in the Offer, (ii) decrease the number of Common Shares
sought in the Offer, (iii) amend or waive satisfaction of the Minimum Condition
(as defined in ANNEX I hereto) or (iv) impose additional conditions to the Offer
or amend any other term of the Offer in any manner adverse to the holders of the
Common Shares. The Offer shall initially expire twenty (20) business days after
the date of its commencement, unless this Agreement is terminated in accordance
with SECTION 7.1 hereof, in which case the Offer (whether or not previously
extended in accordance with the terms hereof) shall expire on such date of
termination. Purchaser agrees that it shall not terminate or withdraw the Offer
or extend the expiration date of the Offer unless at the expiration date of the
Offer the conditions to the Offer described in ANNEX I hereto shall not have
been satisfied or earlier waived. Notwithstanding the foregoing, Purchaser may,
without the consent of the Company, extend the Offer at any time, and from time
to time, (i) if at the then scheduled expiration date of the Offer any of the
conditions to Purchaser's obligation to accept for payment and pay for Common
Shares shall not have been satisfied or waived, until such time as such
conditions are satisfied or waived; (ii) for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or its staff applicable to the Offer; or (iii) if all conditions to
Purchaser's
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obligation to accept for payment and pay for Common Shares are satisfied or
waived but the number of Common Shares tendered is less than 90% of the then
outstanding number of Common Shares, for an aggregate period of not more than
ten (10) business days (for all such extensions) beyond the latest expiration
date that would be permitted under clause (i) or (ii) of this sentence.
(c) The Offer shall be made by means of an offer to purchase
(the "OFFER TO PURCHASE") having only the conditions set forth in ANNEX I
hereto. As soon as practicable on the date the Offer is commenced, Purchaser
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (together
with all amendments and supplements thereto, the "SCHEDULE 14D-1") with respect
to the Offer that will comply in all material respects with the provisions of,
and satisfy in all material respects the requirements of, such Schedule 14D-1
and all applicable federal securities laws and will contain (including as an
exhibit) or incorporate by reference the Offer to Purchase and forms of the
related letter of transmittal and summary advertisement (which documents,
together with any supplements or amendments thereto, and any other SEC schedule
or form which is filed in connection with the Offer and related transactions,
are referred to collectively herein as the "OFFER DOCUMENTS"). Each of Parent,
Purchaser and the Company agrees promptly to correct any information provided by
it for use in the Schedule 14D-1 or the Offer Documents if and to the extent
that such information shall have become false or misleading in any material
respect and to supplement the information provided by it specifically for use in
the Schedule 14D-1 or the Offer Documents to include any information that shall
become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and Purchaser further
agrees to take all steps necessary to cause the Schedule 14D-1, as so corrected
or supplemented, to be filed with the SEC and the Offer Documents, as so
corrected or supplemented, to be disseminated to holders of Common Shares, in
each case as and to the extent required by applicable federal securities laws.
The Company and its counsel shall be given a reasonable opportunity to review
and comment on any Offer Documents before they are filed with the SEC, and
Parent and Purchaser shall consider any such comments in good faith.
(d) Upon the terms and subject to the conditions of the Offer,
Purchaser shall accept for payment and pay for Common Shares as soon as
permitted under the terms of the Offer and applicable law.
1.2 COMPANY ACTION. (a) The Company hereby approves and
consents to the Offer and represents and warrants that the Board of Directors of
the Company, at a meeting duly called and held on October 25, 1999, at which all
of the Directors was present, duly approved and adopted this Agreement and the
transactions contemplated hereby, including the Offer and the Merger,
recommended that shareholders of the Company accept the Offer, tender their
Common Shares pursuant to the Offer and approve this Agreement and the
transactions contemplated hereby, including the Merger, and determined that this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, are fair
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to and in the best interests of the shareholders of the Company. The Company
hereby consents to the inclusion in the Offer Documents of such recommendation
of the Board of Directors of the Company. The Company represents that its Board
of Directors has received the written opinion (the "FAIRNESS OPINION") of Xxxxx,
Xxxxxxxx & Xxxx, Inc. (the "FINANCIAL ADVISOR") that the proposed consideration
to be received by the holders of Common Shares pursuant to the Offer and the
Merger is fair to such holders from a financial point of view. The Company has
been authorized by the Financial Advisor to permit, subject to the prior review
and consent by the Financial Advisor (such consent not to be unreasonably
withheld), the inclusion of the Fairness Opinion (or a reference thereto) in the
Offer Documents, the Schedule 14D-9 (as hereinafter defined) and the Proxy
Statement (as hereinafter defined).
(b) The Company shall file with the SEC, as promptly as
practicable after the filing by Parent of the Schedule 14D-1 with respect to the
Offer, a Tender Offer Solicitation/ Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the "SCHEDULE 14D-9") that
will comply in all material respects with the provisions of all applicable
federal securities laws. The Company shall mail such Schedule 14D-9 to the
shareholders of the Company as promptly as practicable after the commencement of
the Offer. The Schedule 14D-9 and the Offer Documents shall contain the
recommendations of the Board of Directors of the Company described in SECTION
1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if and
to the extent that it shall become false or misleading in any material respect
(and each of Parent and Purchaser, with respect to written information supplied
by it specifically for use in the Schedule 14D-9, shall promptly notify the
Company of any required corrections of such information and cooperate with the
Company with respect to correcting such information) and to supplement the
information contained in the Schedule 14D-9 to include any information that
shall become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the Company shall
take all steps necessary to cause the Schedule 14D-9 as so corrected or
supplemented to be filed with the SEC and disseminated to holders of Common
Shares to the extent required by applicable federal securities laws. Purchaser
and its counsel shall be given a reasonable opportunity to review and comment on
the Schedule 14D-9 before it is filed with the SEC, and the Company shall
consider any such comments in good faith.
(c) In connection with the Offer, the Company shall promptly
upon execution of this Agreement furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Common Shares and
security position listings of Common Shares held in stock depositories, each as
of a recent date, and shall promptly furnish Purchaser with such additional
information reasonably available to the Company, including updated lists of
shareholders, mailing labels and security position listings, and such other
information and assistance as Purchaser or its agents may reasonably request for
the purpose of communicating the Offer to the record and beneficial holders of
Common Shares. Subject to the requirements of applicable law and except as
necessary to disseminate the Offer Documents and otherwise for the purpose of
effecting the transactions contemplated hereby,
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Parent and Purchaser shall hold in confidence the materials furnished pursuant
to this SECTION 1.2(c), use such information only in connection with the Offer,
the Merger and the other transactions contemplated by this Agreement and, if
this Agreement is terminated, as promptly as practicable return to the Company
such materials and all copies thereof in the possession of Parent and Purchaser.
1.3 DIRECTORS. Promptly upon the purchase by Parent of Common
Shares pursuant to the Offer (and provided that the Minimum Condition has been
satisfied), Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company as
will give Parent, subject to compliance with Section 14(f) of the Securities
Exchange Act, representation on the Board of Directors of the Company equal to
at least that number of directors which equals the product of the total number
of directors on the Board of Directors of the Company (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the percentage that
the aggregate number of Common Shares beneficially owned by Parent or any
affiliate of Parent (including for purposes of this SECTION 1.3 such Common
Shares as are accepted for payment pursuant to the Offer, but excluding Common
Shares held by the Company) bears to the number of Common Shares outstanding. At
such time, if requested by Parent, the Company will also cause each committee of
the Board of Directors of the Company to include persons designated by Parent
constituting the same percentage of each such committee as Parent's designees
are of the Board of Directors of the Company. The Company shall, upon request by
Parent, promptly increase the size of the Board of Directors of the Company or
exercise reasonable best efforts to secure the resignations of such number of
directors as is necessary to enable Parent's designees to be elected to the
Board of Directors of the Company in accordance with the terms of this SECTION
1.3 and to cause Parent's designees so to be elected; PROVIDED, HOWEVER, that,
in the event that Parent's designees are appointed or elected to the Board of
Directors of the Company, until the Effective Time (as hereinafter defined) the
Board of Directors of the Company shall have at least two directors who are
directors on the date hereof, one of whom will be Xxxxxx Xxxxxxxxxx and one of
whom will be a director who is neither an officer of the Company nor a designee,
shareholder, affiliate or associate (within the meaning of the federal
securities laws) of Guarantor (such directors, the "INDEPENDENT DIRECTORS").
Subject to applicable law, the Company shall promptly take all action necessary
pursuant to Section 14(f) of the Securities Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this SECTION
1.3 and shall include in the Schedule 14D-9 mailed to shareholders promptly
after the commencement of the Offer (or in an amendment thereof or an
information statement pursuant to Rule 14f-1 if Parent has not theretofore
designated directors) such information with respect to the Company and its
officers and directors as is required under Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this SECTION 1.3. Parent will supply the
Company, and be solely responsible for, any information with respect to itself
and its nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1. Notwithstanding anything in this Agreement to the
contrary, subsequent to the designation of the directors by Parent referred to
in the first sentence of this
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Section 1.3 and prior to the Effective Time, the unanimous vote of the
Independent Directors shall be required to (i) amend or terminate this Agreement
on behalf of the Company, (ii) exercise or waive any of the Company's rights or
remedies hereunder, (iii) extend the time for performance of Parent's
obligations hereunder, (iv) take any other action by the Company in connection
with this Agreement required to be taken by the Board of Directors of the
Company or (v) amend the Company's Second Amended and Restated Articles of
Incorporation or the Company's Bylaws, each as in effect on the date of this
Agreement.
1.4 THE MERGER. Upon the terms and subject to the conditions
of this Agreement, the Merger shall be consummated in accordance with the Oregon
Business Corporation Act (the "OREGON CODE"). At the Effective Time (as defined
in SECTION 1.5 hereof), upon the terms and subject to the conditions of this
Agreement, Purchaser shall be merged with and into the Company in accordance
with the Oregon Code and the separate existence of Purchaser shall thereupon
cease, and the Company, as the surviving corporation in the Merger (the
"SURVIVING CORPORATION"), shall continue its corporate existence under the laws
of the State of Oregon as an indirect subsidiary of Parent. The parties shall
prepare and execute articles of merger (the "ARTICLES OF MERGER") that comply in
all respects with the requirements of the Oregon Code and with the provisions of
this Agreement.
1.5 EFFECTIVE TIME. The Merger shall become effective at the
time of the filing of the Articles of Merger with the Secretary of State of
Oregon in accordance with the applicable provisions of the Oregon Code or at
such later time as may be specified in the Articles of Merger. As soon as
practicable after all of the conditions set forth in ARTICLE VI of this
Agreement have been satisfied or waived by the party or parties entitled to the
benefit of the same, the parties hereto shall cause the Merger to become
effective. Parent and the Company shall mutually determine the time of such
filing and the place where the closing of the Merger (the "CLOSING") shall
occur. The time when the Merger shall become effective is herein referred to as
the "EFFECTIVE TIME," and the date on which the Effective Time occurs is herein
referred to as the "CLOSING DATE."
1.6 CONVERSION OF COMMON SHARES. At the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holder of any of the securities specified below:
(a) Each Common Share issued and outstanding immediately
before the Effective Time (other than any Dissenting Shares (as hereinafter
defined) and Common Shares to be canceled pursuant to SECTION 1.6(b)) shall be
canceled and extinguished and be converted into the right to receive the Per
Share Amount in cash payable to the holder thereof, without interest, upon
surrender of the certificate representing such Common Share in accordance with
SECTION 1.8 hereof. From and after the Effective Time, the holders of
certificates evidencing ownership of Common Shares outstanding immediately prior
to the Effective Time shall cease to have any rights with respect to such Common
Shares except as otherwise provided for herein or by applicable Law (as defined
below).
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(b) Each Common Share owned by Guarantor, Parent, Purchaser or
any direct or indirect wholly owned subsidiary of Guarantor immediately before
the Effective Time shall be canceled and extinguished, and no payment or other
consideration shall be made with respect thereto.
(c) The shares of Purchaser common stock outstanding
immediately prior to the Merger shall be converted into 1,000 shares of the
common stock of the Surviving Corporation (the "SURVIVING CORPORATION COMMON
STOCK"), which shares of the Surviving Corporation Common Stock shall constitute
all of the issued and outstanding capital stock of the Surviving Corporation and
shall be owned by Parent.
1.7 DISSENTING SHARES. (a) Notwithstanding any provision of
this Agreement to the contrary, any Common Shares issued and outstanding
immediately prior to the Effective Time and held by a holder who has demanded
and perfected his demand for appraisal of his Common Shares in accordance with
the Oregon Code (including but not limited to Sections 60.561 - 60.581 thereof),
and as of the Effective Time has neither effectively withdrawn nor lost his
right to such appraisal ("DISSENTING SHARES"), shall not be converted into or
represent a right to receive cash pursuant to SECTION 1.6 hereof, but the holder
thereof shall be entitled to only such rights as are granted by the Oregon Code.
(b) Notwithstanding the provisions of SECTION 1.7(a) hereof,
if any holder of Common Shares who demands appraisal of his Common Shares under
the Oregon Code shall effectively withdraw or lose (through failure to perfect
or otherwise) his right to appraisal, then as of the Effective Time or the
occurrence of such event, whichever occurs later, such holder's Common Shares
shall automatically be converted into and represent only the right to receive
cash as provided in SECTION 1.6 hereof, without interest thereon, upon surrender
of the certificate or certificates representing such Common Shares.
(c) The Company shall give Purchaser (i) prompt notice of any
written demands for appraisal or payment of the fair value of any Common Shares,
withdrawals of such demands and any other instruments served pursuant to the
Oregon Code received by the Company after the date hereof and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the Oregon Code. The Company shall not voluntarily make any
payment with respect to any demands for appraisal and shall not, except with the
prior written consent of Purchaser, settle or offer to settle any such demands.
1.8 SURRENDER OF COMMON SHARES. (a) Prior to the Effective
Time, Purchaser shall appoint ChaseMellon Shareholder Services, L.L.C. or such
other commercial bank or trust company designated by Purchaser and reasonably
acceptable to the Company to act as exchange agent hereunder (the "EXCHANGE
AGENT") for the payment of the Per Share Amount upon surrender of certificates
representing the Common Shares. All of the fees and
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expenses of the Exchange Agent shall be borne by Purchaser.
(b) Parent shall cause the Surviving Corporation to provide
the Exchange Agent with cash in amounts necessary to pay for all of the Common
Shares pursuant to SECTION 1.8(c) hereof when and as such amounts are needed by
the Exchange Agent.
(c) On the Closing Date, Purchaser shall instruct the Exchange
Agent to mail to each holder of record of a certificate representing any Common
Shares canceled upon the Merger pursuant to SECTIONS 1.6(a) hereof, within five
business days of receiving from the Company a list of such holders of record,
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates shall pass, only upon
delivery of the certificates to the Exchange Agent and shall be in such form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the certificates. Each holder
of a certificate or certificates representing any Common Shares canceled upon
the Merger pursuant to SECTIONS 1.6(a) hereof may thereafter surrender such
certificate or certificates to the Exchange Agent, as agent for such holder, to
effect the surrender of such certificate or certificates on such holder's behalf
for a period ending one year after the Effective Time. Upon the surrender of
certificates representing the Common Shares, Parent shall cause the Exchange
Agent to pay the holder of such certificates in exchange therefor cash in an
amount equal to the Per Share Amount multiplied by the number of Common Shares
represented by such certificate. Until so surrendered, each such certificate
(other than certificates representing Dissenting Shares) shall represent solely
the right to receive the aggregate Per Share Amount relating thereto.
(d) If payment of cash in respect of canceled Common Shares is
to be made to a person other than the person in whose name a surrendered
certificate or instrument is registered, it shall be a condition to such payment
that the certificate or instrument so surrendered shall be properly endorsed or
shall be otherwise in proper form for transfer and that the person requesting
such payment shall have paid any transfer and other taxes required by reason of
such payment in a name other than that of the registered holder of the
certificate or instrument surrendered or shall have established to the
satisfaction of Parent or the Exchange Agent that such tax either has been paid
or is not payable.
(e) At the Effective Time, the stock transfer books of the
Company shall be closed, and no transfer of Common Shares shall be made
thereafter, other than transfers of Common Shares that have occurred prior to
the Effective Time. In the event that, after the Effective Time, certificates
are presented to the Surviving Corporation, they shall be canceled and exchanged
for cash as provided in SECTIONS 1.6(a).
(f) The Per Share Amount paid in the Merger shall be net to
the holder of Common Shares in cash, and without interest thereon subject to
reduction only for any applicable withholding or stock transfer taxes payable by
such holder.
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(g) Promptly following the date which is one year after the
Effective Time, the Exchange Agent shall deliver to Parent all cash,
certificates and other documents in its possession relating to the transactions
contemplated hereby, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a certificate representing Common Shares (other than
certificates representing Dissenting Shares and certificates representing Common
Shares held directly or indirectly by Purchaser, Parent or Guarantor) may
surrender such certificate to the Surviving Corporation and (subject to any
applicable abandoned property, escheat or similar law) receive in consideration
therefor the aggregate Per Share Amount relating thereto, without any interest
thereon.
(h) None of the Company, Parent, Purchaser, Guarantor, the
Surviving Corporation or the Exchange Agent shall be liable to any holder of
Common Shares for any cash delivered to a public official pursuant to any
abandoned property, escheat or similar law, rule, regulation, statute, order,
judgment or decree.
1.9 OPTIONS, WARRANTS AND EMPLOYEE STOCK PURCHASE PLAN. (a)
Each option outstanding immediately prior to the Effective Time to purchase
Common Shares (a "COMPANY OPTION") under the Company's 1995 Stock Incentive Plan
or any other stock option plan or agreement of the Company, whether or not then
vested or exercisable, shall constitute the right to receive an amount in cash
equal to the positive difference, if any, between the Per Share Amount and the
exercise price of the Company Option multiplied by the number of Common Shares
for which the Company Option was exercisable immediately prior to the Effective
Time, subject to reduction only for any applicable withholding taxes. The
Company shall provide a period of at least 30 days prior to the Effective Time
during which Company Options may be exercised to the extent exercisable at the
Effective Time and, upon the expiration of such period, all unexercised Company
Options shall immediately terminate. The Company may, in its sole discretion,
permit holders of Company Options that are not exercisable before the Effective
Time to exchange such options for cash as described in the first sentence of
this Section 1.9(a). In lieu of exercising Company Options as described in this
Section 1.9(a), the holders shall be given the right, and the Company shall
encourage the holders of Company Options to exercise such right, to exchange
such options for cash as described in the first sentence of this Section 1.9(a).
In no event will any Company Options be exercisable after the Effective Time,
except to receive cash as provided in the first sentence of this Section 1.9(a).
(b) Each of the warrants of the Company, dated November 17,
1995, to purchase Common Shares at a price of $12.00 per share, subject to
adjustment (the "COMPANY WARRANTS"), shall be exercisable, from and after the
Effective Time, for an amount of cash equal to the Per Share Amount multiplied
by the number of Common Shares for which such warrant was exercisable
immediately prior to the Effective Time. Except as aforesaid, the exercise of
any Company Warrant shall remain subject to all terms and conditions provided in
the applicable Company Warrant and/or Warrant Agreement. Each of the Company and
Parent shall take all action necessary to provide that, upon consummation
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of the Merger, all Company Warrants outstanding immediately prior to the
Effective Time shall be exercisable for a cash amount as aforesaid.
(c) The Company shall take such action as is necessary to
cause the ending date of the then current offering period under the Company's
employee stock purchase plan (the "COMPANY STOCK PURCHASE PLAN") to be prior to
the Effective Time and to terminate such plan as of the Effective Time.
1.10 ARTICLES OF INCORPORATION AND BYLAWS. Subject to SECTION
5.5 hereof, unless otherwise determined by Parent prior to the Effective Time,
at and after the Effective Time (a) the Second Amended and Restated Articles of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended as provided by the Oregon Code and such Articles of
Incorporation; PROVIDED, HOWEVER, that (i) Article II shall be amended and
restated in its entirety to provide that the capital stock of the Surviving
Corporation shall consist solely of 1,000 shares of common stock; and (b) the
Bylaws of the Surviving Corporation shall be the Bylaws of Purchaser in effect
at the Effective Time (subject to any subsequent amendments).
1.11 DIRECTORS AND OFFICERS. At and after the Effective Time,
the directors of Purchaser immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, and the officers of the Company
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, in each case until their successors are duly elected or
appointed and qualified.
1.12 OTHER EFFECTS OF MERGER. The Merger shall have all
further effects as specified in the applicable provisions of the Oregon Code.
1.13 PROXY STATEMENT. (a) Following the consummation of the
Offer and if required by the Securities Exchange Act because of action by the
Company's shareholders necessary in order to consummate the Merger, the Company
shall prepare and file with the SEC and, when cleared by the SEC, shall mail to
shareholders, a proxy statement in connection with a meeting of the Company's
shareholders to vote upon the adoption of this Agreement and the Merger and the
transactions contemplated hereby and thereby (the "COMPANY PROPOSALS"), or an
information statement, as appropriate, satisfying all requirements of the
Securities Exchange Act (such proxy or information statement in the form mailed
by the Company to its shareholders, together with any and all amendments or
supplements thereto, is herein referred to as the "PROXY STATEMENT").
(b) Parent will furnish the Company with such information
concerning Parent and its subsidiaries as is necessary in order to cause the
Proxy Statement, insofar as it relates to Parent and its subsidiaries, to comply
with applicable Law. Parent agrees promptly to advise the Company if, at any
time prior to the meeting of shareholders of the Company
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referenced herein, any Parent Information (as defined below) in the Proxy
Statement is or becomes incorrect or incomplete in any material respect and to
provide the Company with the information needed to correct such inaccuracy or
omission. Parent will furnish the Company with such supplemental information as
may be necessary in order to cause the Proxy Statement, insofar as it relates to
Guarantor and its subsidiaries, to comply with applicable Law after the mailing
thereof to the shareholders of the Company.
(c) The Company and Parent agree to cooperate in making any
preliminary filings of the Proxy Statement with the SEC, as promptly as
practicable, pursuant to Rule 14a-6 or Rule 14c-5, as applicable, under the
Securities Exchange Act.
(d) The Company shall provide Parent for its review a copy of
the Proxy Statement prior to each filing thereof, with reasonable time and
opportunity for such review. Parent authorizes the Company to utilize in the
Proxy Statement the information concerning Parent and its subsidiaries provided
to the Company in connection with, or contained in, the Proxy Statement.
1.14 ADDITIONAL ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Purchaser or the Company or otherwise to carry
out this Agreement, the officers and directors of the Company and Purchaser
shall be authorized to execute and deliver, in the name and on behalf of
Purchaser or the Company, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of Purchaser or the
Company, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
1.15 MERGER WITHOUT MEETING OF SHAREHOLDERS. Notwithstanding
the foregoing provisions of this ARTICLE I, in the event that Purchaser, or any
other direct or indirect subsidiary of Parent, shall acquire at least 90 percent
of the outstanding Common Shares, the parties hereto agree to 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 shareholders
of the Company, in accordance with Section 60.491 of the Oregon Code.
1.16 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
certificates representing shares of Common Shares shall have been lost, stolen
or destroyed, the Exchange Agent shall make such payment in exchange for such
lost, stolen or destroyed certificates upon the making of an affidavit of that
fact by the holder thereof; PROVIDED, HOWEVER, that Parent may, in its
discretion and as a condition precedent to the issuance
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thereof, 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 or the Exchange Agent with respect to the
certificates alleged to have been lost, stolen or destroyed.
1.17 MATERIAL ADVERSE EFFECT. (a) When used in connection with
the Company or any Company Subsidiaries (as defined below) or Parent, Guarantor
or any of their respective subsidiaries, as the case may be, the term "MATERIAL
ADVERSE EFFECT" means any change, effect or circumstance that, individually or
when taken together with all other similar changes, effects or circumstances
that have occurred during the period relevant to the determination of such
Material Adverse Effect, is or is reasonably likely to be materially adverse to
the business, assets (including intangible assets), financial condition or
results of operations of the Company and any Company Subsidiaries or Parent,
Guarantor and their respective subsidiaries, as the case may be, in each case
taken as a whole; PROVIDED, HOWEVER, that effects of changes that are applicable
to or arise on account of (A) any changes in economic, regulatory, or political
conditions generally, (B) the United States securities markets, (C) this
Agreement or the transactions contemplated by this Agreement and (D) the effect
of the public announcement of the transactions contemplated hereby, including
any effect on customers or employees of the Company, shall be excluded from the
definition of "Material Adverse Effect" and from any determination as to whether
a Material Adverse Effect has occurred or may occur.
(b) The failure of a representation or warranty to be true and
correct, either individually or together with the failure of other
representations or warranties to be true and correct, shall be deemed to have a
Material Adverse Effect if (x) the business, assets (including intangible
assets), financial condition, results of operations, or prospects of the Company
and its subsidiaries or Parent or Guarantor and their subsidiaries, as the case
may be, in each case taken as a whole, are or would reasonably be expected to be
materially worse than if such representation or warranty had been true and
correct, (y) in the case of the Company, such representation or warranty
materially misstates the capitalization of the Company and/or its subsidiaries
or (z) the failure of such representation or warranty to be true and correct
materially and adversely affects the ability of the Company or Parent, as the
case may be, to timely consummate the transactions contemplated by this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser
that, except as set forth in the correspondingly numbered Sections of the
letter, dated the date hereof, from the Company to Parent (the "COMPANY
DISCLOSURE LETTER"):
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2.1 ORGANIZATION AND GOOD STANDING. The Company and each of
the Company Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The Company and
each of the Company Subsidiaries is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the character of the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not reasonably be
expected to have a Material Adverse Effect. The Company has heretofore made
available to Parent accurate and complete copies of the Articles of
Incorporation and Bylaws, as currently in effect, of the Company. For purposes
of this Agreement, the term "COMPANY SUBSIDIARY" shall mean any "subsidiary" (as
such term is defined in Rule 1-02 of Regulation S-X of the SEC) of the Company.
2.2 CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of (A) 50,000,000 Common Shares and (B)
500,000 shares of preferred stock (the "PREFERRED SHARES"). As of October 22,
1999, (i) 13,129,751 Common Shares were issued and outstanding, (ii) no shares
of Preferred Shares were issued and outstanding, (iii) 1,809,550 Common Shares
were reserved for future issuance pursuant to outstanding Company Options, of
which 752,431 shares are or will be exercisable before March 1, 2000 and 546,750
shares become exercisable on or after that date at prices below $5.50 per share,
(iv) no Common Shares were reserved for future issuance pursuant to the Company
Stock Purchase Plan, (v) 46,333 shares of Common Shares were reserved for future
issuance upon exercise of Company Warrants, (vi) 1,743,559 Common Shares were
reserved for future issuance upon exercise of the conversion rights contained in
that certain Deferral Loan and Lease Modification Agreement dated as of October
12, 1999 among the Company and the lenders and lessors named therein (the
"Deferral Agreement") (as of the date of this Agreement the Company has received
no notice of intent to exercise such conversion rights) and (vii) 1,381,382
Common Shares reserved for issuance upon the conversion of the Company's 9%
Convertible Subordinated Notes due December 29, 2008 (the "NOTES"). No material
change in the capitalization of the Company has occurred between October 22,
1999 and the date hereof. No other capital stock of the Company is authorized or
issued. All issued and outstanding Common Shares are duly authorized, validly
issued, fully paid and non-assessable. Except as set forth in the Company
Securities Filings (as hereinafter defined) filed prior to the date of this
Agreement or as otherwise contemplated by this Agreement, as of the date hereof,
there are no outstanding rights, subscriptions, warrants, puts, calls,
unsatisfied preemptive rights, options or other agreements of any kind relating
to any of the outstanding, authorized but unissued shares of the capital stock
or any other security of the Company, and there is no authorized or outstanding
security of any kind convertible into or exchangeable for any such capital stock
or other security. Except as disclosed in the Company Securities Filings filed
prior to the date of this Agreement, there are no obligations, contingent or
other, of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any shares of Common Shares or the capital stock of any
Company
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Subsidiary or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any such Company Subsidiary or any other
entity.
2.3 SUBSIDIARIES. Section 2.3 of the Company Disclosure Letter
sets forth the name and jurisdiction of incorporation of each Company
Subsidiary, each of which is wholly owned by the Company except as otherwise
indicated in said Section 2.3 of the Company Disclosure Letter. Except as set
forth in Section 2.3 of the Company Disclosure Letter, all of the capital stock
and other interests of the Company Subsidiaries so held by the Company are owned
by it or a Company Subsidiary as indicated in said Section 2.3 of the Company
Disclosure Letter, free and clear of any claim, lien, encumbrance or security
interest with respect thereto. All of the outstanding shares of capital stock of
each of the Company Subsidiaries directly or indirectly held by the Company are
duly authorized, validly issued, fully paid and non-assessable and were issued
free of preemptive rights and in compliance with applicable Laws. No equity
securities or other interests of any of the Company Subsidiaries are or may
become required to be issued or purchased by reason of any options, warrants,
rights to subscribe to, puts, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock of any Company Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any Company
Subsidiary is bound to issue additional shares of its capital stock, or options,
warrants or rights to purchase or acquire any additional shares of its capital
stock or securities convertible into or exchangeable for such shares. Except as
set forth in the Company Securities Filings filed prior to the date of this
Agreement or Section 2.3 of the Company Disclosure Letter, the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity, with respect to which interest the Company has invested
or is required to invest $50,000 or more, excluding securities in any publicly
traded company held for investment by the Company and comprising less than five
percent of the outstanding stock of such company.
2.4 AUTHORIZATION; BINDING AGREEMENT. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, including, but not limited to, the Merger, have been duly and validly
authorized by the Company's Board of Directors, and no other corporate
proceedings on the part of the Company or any Company Subsidiary are necessary
to authorize the execution and delivery of this Agreement or to consummate the
transactions contemplated hereby (other than adoption of this Agreement by the
holders of Common Shares with voting power equal to a majority of the voting
power of all outstanding Common Shares, if required, in accordance with the
Oregon Code). This Agreement has been duly and validly executed and delivered by
the Company and constitutes the legal, valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except to
the extent that enforceability thereof may be limited by applicable
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bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by principles of equity regarding
the availability of remedies (the "ENFORCEABILITY EXCEPTIONS").
2.5 GOVERNMENTAL APPROVALS. No consent, approval, waiver or
authorization of, notice to or declaration or filing with ("CONSENT") any nation
or government, any state or other political subdivision thereof or any entity,
authority or body exercising executive, legislative, judicial or regulatory
functions of or pertaining to government, including, without limitation, any
governmental or regulatory authority, agency, department, board, commission or
instrumentality, any court, tribunal or arbitrator and any self-regulatory
organization ("GOVERNMENTAL AUTHORITY"), on the part of the Company or any of
the Company Subsidiaries is required in connection with the execution or
delivery by the Company of this Agreement or the consummation by the Company of
the transactions contemplated hereby other than (i) the filing of the Articles
of Merger with the Secretary of State of Oregon in accordance with the Oregon
Code, (ii) filings with the SEC, (iii) filings under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR ACT"), (iv) filings pursuant to the rules and
regulations of The NASDAQ Stock Market ("NASDAQ") and (v) those Consents that,
if they were not obtained or made, would not reasonably be expected to have a
Material Adverse Effect.
2.6 NO VIOLATIONS. Except as set forth in Section 2.6 of the
Company Disclosure Letter, the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance by the
Company with any of the provisions hereof will not (i) conflict with or result
in any breach of any provision of the Second Amended and Restated Articles of
Incorporation or Bylaws of the Company or similar documents of any of the
Company Subsidiaries, (ii) require any Consent under or result in a violation or
breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of, any Company Material
Contract (as defined below ), (iii) result in the creation or imposition of any
lien or encumbrance of any kind upon any of the assets of the Company or any
Company Subsidiary or (iv) subject to obtaining the Consents from Governmental
Authorities referred to in SECTION 2.5 hereof, violate any applicable provision
of any statute, law, rule or regulation or any order, decision, injunction,
judgment, award or decree ("LAW") to which the Company or any Company Subsidiary
or its assets or properties are subject, except, in the case of each of clauses
(ii), (iii) and (iv) above, for any deviations from the foregoing which would
not reasonably be expected to have a Material Adverse Effect.
2.7 SECURITIES FILINGS. The Company has made available to
Parent true and complete copies of (i) its Annual Report on Form 10-K and 10-K/A
for the Fiscal Year ended June 30, 1999, as filed with the SEC, (ii) its proxy
statements relating to all of the meetings of shareholders (whether annual or
special) of the Company since July 1, 1996 as filed with
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the SEC, and (iii) all other reports, statements and registration statements and
amendments thereto (including, without limitation, Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, in each case as
amended) filed by the Company with the SEC since July 1, 1996. The reports and
statements set forth in clauses (i) through (iii) above, and those subsequently
provided or required to be provided pursuant to this SECTION 2.7, are referred
to collectively herein as the "COMPANY SECURITIES FILINGS." Except as set forth
in Section 2.7 of the Company Disclosure Letter, as of their respective dates,
or as of the date of the last amendment thereof, if amended after filing, the
Company Securities Filings (i) were prepared in all material respects in
accordance with the requirements of the Securities Act of 1933, as amended (the
"SECURITIES ACT") and the rules and regulations promulgated thereunder, or the
Securities Exchange Act, as the case may be, and none of the Company Securities
Filings contained or, as to the Company Securities Filings subsequent to the
date hereof, will contain, any untrue statement of a material fact or omitted
or, as to the Company Securities Filings subsequent to the date hereof, will
omit, to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
2.8 COMPANY FINANCIAL STATEMENTS. The audited consolidated
financial statements and unaudited interim financial statements of the Company
included in the Company Securities Filings (the "COMPANY FINANCIAL STATEMENTS")
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in the
notes thereto) and present fairly, in all material respects, the financial
position of the Company and the Company Subsidiaries as at the dates thereof and
the results of their operations and cash flows for the periods then ended,
subject, in the case of the unaudited interim financial statements, to normal
year-end audit adjustments, any other adjustments described therein and the fact
that certain information and notes have been condensed or omitted in accordance
with the Securities Exchange Act.
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in the Company Securities Filings filed prior to the date of this Agreement or
Section 2.9 of the Company Disclosure Letter, from June 30, 1999, through the
date of this Agreement, there has not been: (i) any event that has had or would
reasonably be expected to have a Material Adverse Effect; (ii) any declaration,
payment or setting aside for payment of any dividend or other distribution or
any redemption or other acquisition of any shares of capital stock or securities
of the Company by the Company; (iii) any material damage or loss to any material
asset or property, whether or not covered by insurance; (iv) any change by the
Company in accounting principles or practices; (v) any material revaluation by
the Company of any of its assets, including writing down the value of inventory
or writing off notes or accounts receivable other than in the ordinary course of
business; (vi) any sale of a material amount of property of the Company, except
in the ordinary course of business; or (vii) any other action or event,
involving an amount exceeding $250,000, that would have required the consent of
Parent pursuant to SECTION 4.1 hereof had such action or event occurred after
the date of this Agreement.
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2.10 NO UNDISCLOSED LIABILITIES. Except as set forth in the
Company Securities Filings filed prior to the date of this Agreement or Section
2.10 of the Company Disclosure Letter, neither the Company nor any Company
Subsidiary has any liabilities (absolute, accrued, contingent or other), except
liabilities (a) adequately provided for in the Company's audited balance sheet
(including any related notes thereto) for the fiscal year ended June 30, 1999
included in the Company's 1999 Annual Report on Form 10-K and 10-K/A (the "1999
BALANCE SHEET"), (b) incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected on the
1999 Balance Sheet, (c) incurred since June 30, 1999 in the ordinary course of
business consistent with past practice, (d) incurred in connection with this
Agreement or (e) which would not reasonably be expected to have a Material
Adverse Effect.
2.11 COMPLIANCE WITH LAWS. Except as set forth in Section 2.11
of the Company Disclosure Letter, the business of the Company and each of the
Company Subsidiaries has been operated in compliance with all Laws applicable
thereto, except for any non-compliance which would not reasonably be expected to
have a Material Adverse Effect.
2.12 PERMITS. Except as set forth in Section 2.12 of the
Company Disclosure Letter, (i) the Company and the Company Subsidiaries have all
permits, certificates, licenses, approvals and other authorizations from
Governmental Authorities required in connection with the operation of their
respective businesses (collectively, "COMPANY PERMITS"), (ii) neither the
Company nor any Company Subsidiary is in violation of any Company Permit and
(iii) no proceedings are pending or, to the knowledge of the Company,
threatened, to revoke or limit any Company Permit, except, in the case of each
of clauses (i), (ii) and (iii) above, those the absence or violation of which
would not reasonably be expected to have a Material Adverse Effect.
2.13 LITIGATION. Except as disclosed in the Company Securities
Filings filed prior to the date of this Agreement or Section 2.13 of the Company
Disclosure Letter, there is no suit, action or proceeding ("LITIGATION") pending
or, to the knowledge of the Company, threatened against the Company or any of
the Company Subsidiaries which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect, nor is there any
judgment, decree, injunction, rule or order of any Governmental Authority
outstanding against the Company or any Company Subsidiary which, individually or
in the aggregate, would reasonably be expected to have a Material Adverse
Effect.
2.14 CONTRACTS. Section 2.14 of the Company Disclosure Letter
includes, as of the date hereof, a list of the Company's material contracts (the
"COMPANY MATERIAL CONTRACTS") which includes (i) all loan agreements,
indentures, mortgages, pledges, conditional sale or title retention agreements,
security agreements, guaranties, standby letters of credit, equipment leases or
lease purchase agreements, each in an amount equal to or exceeding $250,000 to
which the Company or any Company subsidiary is a party or by which
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any of them is bound; (ii) all contracts, agreements, commitments or other
understandings or arrangements other than those addressed in Section 2.15 to
which the Company or any of its subsidiaries is a party or by which any of them
or any of their respective properties or assets are bound or affected, but
excluding contracts, agreements, commitments or other understandings or
arrangements entered into in the ordinary course of business and involving, in
the case of any such contact, agreement, commitment, or other understanding or
arrangement, individual payments or receipts by the Company or any Company
Subsidiary of less than $250,000 over the term of such contract, commitment,
agreement, or other understanding or arrangement; and (iii) all agreements which
are required to be filed as "material contracts" with the SEC pursuant to the
requirements of the Securities Exchange Act but have not been so filed with the
SEC. The Company is not a party to any agreements to acquire in the future the
stock or substantially all the assets of another person. Except as disclosed in
Section 2.14 of the Company Disclosure Letter or in the Company Securities
Filings filed prior to the date of this Agreement, all such Company Material
Contracts are valid and binding and are in full force and effect and enforceable
against the Company or such Company Subsidiary in accordance with their
respective terms, subject to the Enforceability Exceptions, and neither the
Company nor any Company Subsidiary is in violation or breach of or default under
any such Company Material Contract, except where the failure to be in full force
and effect or where such violation or breach would not reasonably be expected to
have a Material Adverse Effect. To the knowledge of the Company, no party (other
than the Company or Company Subsidiaries) is in default, violation or breach of
any Company Material Contract where such violation or breach would reasonably be
expected to have a Material Adverse Effect.
2.15 EMPLOYEE BENEFIT PLANS. (a) Section 2.15(a) of the
Company Disclosure Letter lists all employee pension benefit plans (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), all employee welfare benefit plans (as defined in Section
3(1) of ERISA) and all other bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and other similar
fringe or employee benefit plans, programs or arrangements, and any employment,
executive compensation or severance agreements, written or otherwise, as
amended, modified or supplemented, for the benefit of, or relating to, any
former or current employee, officer or consultant who is an individual or an
individual doing business in a corporate form (or any of their beneficiaries) of
the Company or any other entity (whether or not incorporated) or which is under
common control with the Company (an "ERISA AFFILIATE") within the meaning of
Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder (the "CODE") or Section 4001(a)(14) or
(b) of ERISA, or any Company Subsidiary, with respect to which the Company has
or could have any current (actual or contingent) material liability (together
for purposes of this SECTION 2.15, the "EMPLOYEE PLANS"). Prior to the date of
this Agreement, the Company has provided or made available to Parent copies of
(i) each such written Employee Plan (or a written description of any Employee
Plan which is not written) and all related trust agreements, insurance and other
contracts (including policies), summary plan descriptions, summaries of
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material modifications and any material communications to plan participants,
(ii) the three most recent annual reports on Form 5500 series, with accompanying
schedules and attachments, filed with respect to each Employee Plan required to
make such a filing, and (iii) the most recent favorable determination letters
issued for each Employee Plan and related trust which is intended to qualify
under Section 401(a) of the Code (and, if an application for such determination
is pending, a copy of the application for such determination).
(b) (i) None of the Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person (other than in
accordance with Section 4980B of the Code or Part 6 of Subtitle B of Title I of
ERISA), and none of the Employee Plans is a "multiemployer plan" as such term is
defined in Section 3(37) of ERISA; (ii) to the knowledge of the Company, no
"party in interest" or "disqualified person" (as defined in Section 3(14) of
ERISA and Section 4975 of the Code) has at any time engaged in a transaction
with respect to any Employee Plan which could subject the Company or any ERISA
Affiliate, directly or indirectly, to a tax, penalty or other liability for
prohibited transactions under ERISA or Section 4975 of the Code, except for any
such tax, penalty or liability that would not reasonably be expected to result
in a Material Adverse Effect; (iii) to the knowledge of the Company, no
fiduciary of any Employee Plan has breached any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA, except where such
breach would not reasonably be expected to result in a Material Adverse Effect;
(iv) all Employee Plans have been established and maintained substantially in
accordance with their terms and have operated in compliance with the
requirements prescribed by any and all statutes (including ERISA and the Code),
orders, or governmental rules and regulations currently in effect with respect
thereto (including all applicable requirements for notification to participants
or the Department of Labor, the Internal Revenue Service (the "IRS") or the
Secretary of the Treasury), except where failure to do so would not reasonably
be expected to result in a Material Adverse Effect; and the Company and each
Company Subsidiary have performed all obligations required to be performed by
them under, are not in default under or in violation of any Employee Plan except
where failure to do so would not reasonably be expected to result in a Material
Adverse Effect, and have no knowledge of any default or violation by any other
party to, any of the Employee Plans; (v) each Employee Plan which is subject to
Parts 1, 2 and 4 of Subtitle B of ERISA is the subject of a favorable
determination letter from the IRS, and to the knowledge of the Company nothing
has occurred which mayreasonably be expected to impair such determination; (vi)
all contributions required to be made with respect to any Employee Plan pursuant
to the terms of the Employee Plan have been made on or before their due dates
except for any failure to make contributions that would not reasonably be
expected to result in a Material Adverse Effect; (vii) no facts exist or have
existed under which the Company or any ERISA Affiliate could incur any liability
under Title IV of ERISA; and (viii) there are no complaints, charges or claims
against the Company pending or to the Company's knowledge threatened to be
brought by or filed with any governmental authority based on, arising out of, in
connection with or otherwise relating to the classification of any individual by
the Company as an independent contractor or "leased employee" (within the
meaning of section 414(n) of the Code) rather than as an employee.
-24-
(c) Section 2.15(c) of the Company Disclosure Letter sets
forth a true and complete list of each current or former employee, officer or
director of the Company or any Company Subsidiary who holds (i) any option to
purchase Common Shares as of the date hereof, together with the number of shares
of Common Shares subject to such option, the option price of such option (to the
extent determined as of the date hereof), whether such option is intended to
qualify as an incentive stock option within the meaning of Section 422(b) of the
Code (an "ISO"), and the expiration date of such option; (ii) any shares of
Common Shares that are restricted as a result of an agreement with or stock plan
of the Company; and (iii) any other right, directly or indirectly, to receive
Common Shares, except as otherwise disclosed in Section 2.15 of the Company
Disclosure Letter, together with the number of shares of Company Stock subject
to such right. Section 2.15(c) of the Company Disclosure Letter also sets forth
the total number of any such ISOs and any such nonqualified options and other
such rights.
(d) Unless otherwise disclosed in Section 2.15(a) of the
Company Disclosure Letter, Section 2.15(d) of the Company Disclosure Letter sets
forth a true and complete list of (i) all employment agreements with officers of
the Company or any of the Company Subsidiaries; (ii) all agreements with
consultants who are individuals obligating the Company or any of the Company
Subsidiaries to make annual cash payments in an amount exceeding $250,000; (iii)
all agreements which individually or in the aggregate are or could be material
with respect to the services of independent contractors or leased employees who
are individuals or individuals doing business in a corporate form whether or not
they participate in any of the Employee Plans; (iv) all officers of the Company
or any of the Company Subsidiaries who have executed a non-competition agreement
with the Company or any of the Company Subsidiaries; (v) all severance
agreements, programs and policies of the Company or any of the Company
Subsidiaries with or relating to its employees, in each case with outstanding
commitments exceeding $250,000, excluding programs and policies required to be
maintained by law; and (vi) all plans, programs, agreements and other
arrangements of the Company which contain change in control provisions.
(e) (i) Except as set forth in Section 2.15(e) of the Company
Disclosure Letter, no Employee Plan is an employee stock ownership plan (within
the meaning of Section 4975(e)(7) of the Code) or otherwise invests in Company
Stock; and (ii) the consummation of the transactions contemplated by this
Agreement will not result in an increase in the amount of compensation or
benefits or accelerate the vesting or timing of payment of any benefits or
compensation payable in respect of any employee except as otherwise provided in
SECTION 1.9 hereof or disclosed in Section 2.15(e) of the Company Disclosure
Letter or except where such increase or acceleration would not reasonably be
expected to result in a Material Adverse Effect. The Company will take all
actions within its control to ensure that all actions required to be taken by a
fiduciary of any Employee Plan in order to effectuate the transaction
contemplated by this Agreement shall comply with the terms of such Plan, ERISA
and other applicable laws. The Company will take all actions
-25-
within its control to ensure that all actions required to be taken by a
trustee of any Employee Plan that owns Company Stock shall have been duly
authorized by the appropriate fiduciaries of such Plan and shall comply with
the terms of such Plan, ERISA and other applicable laws.
(f) Except as set forth in Section 2.15(f) of the Company
Disclosure Letter, the Company maintains no Employee Plan covering non-U.S.
employees.
(g) The Company has fiduciary liability insurance of at least
$500,000 in effect covering the fiduciaries of the Employee Plans (including the
Company) with respect to whom the Company may have liability.
2.16 TAXES AND RETURNS. (a) The Company and each of the
Company Subsidiaries has timely filed, or caused to be timely filed, all
material Tax Returns (as hereinafter defined) required to be filed by it, and
all such tax returns are true, complete and correct in all material respects,
and has timely paid, collected or withheld, or caused to be paid, collected or
withheld, all material amounts of Taxes (as hereinafter defined) required to be
paid, collected or withheld, other than such Taxes for which adequate reserves
in the Company Financial Statements have been established and which are being
contested in good faith. Except as set forth in Section 2.16 of the Company
Disclosure Letter, there are no material claims or assessments pending against
the Company or any of the Company Subsidiaries for any alleged deficiency in any
Tax, and the Company has not been notified in writing of any proposed Tax claims
or assessments against the Company or any of the Company Subsidiaries (other
than in each case, claims or assessments for which adequate reserves in the
Company Financial Statements have been established and which are being contested
in good faith or claims or assessments which are immaterial in amount). Neither
the Company nor any of the Company Subsidiaries has executed any waivers or
extensions of any applicable statute of limitations to assess any material
amount of Taxes. There are no outstanding requests by the Company or any of the
Company Subsidiaries for any extension of time within which to file any material
Tax Return or within which to pay any material amounts of Taxes shown to be due
on any Tax Return. The statute of limitations period for assessment of federal
income taxes has not expired for any taxable year from the taxable year
ended June 30, 1996, the Company's first taxable year as a C corporation. To the
best knowledge of the Company, there are no liens for material amounts of Taxes
on the assets of the Company or any of the Company Subsidiaries except for
statutory liens for current Taxes not yet due and payable. There are no
outstanding powers of attorney enabling any party to represent the Company or
any of the Company Subsidiaries with respect to Tax matters.
(b) For purposes of this Agreement, the term "TAX" shall mean
any federal, state, local, foreign or provincial income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
alternative or add-on minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty imposed by any
Governmental Authority. The term "TAX RETURN" shall mean a report, return or
other
-26-
information (including any attached schedules or any amendments to such report,
return or other information) required to be supplied to or filed with a
governmental entity with respect to any Tax, including an information return,
claim for refund, amended return or declaration or estimated Tax.
(c) Except as set forth in Section 2.16 of the Company
Disclosure Letter, (i) neither the Company nor any of the Company Subsidiaries
has been a member of an affiliated group within the meaning of Section 1504 of
the Code or filed or been included in a combined, consolidated or unitary Tax
Return, other than of the Company and the Company Subsidiaries; (ii) other than
with respect to the Company and the Company Subsidiaries, neither the Company
nor any of the Company Subsidiaries is currently liable for Taxes of any other
person, or is currently under any contractual obligation to indemnify any person
with respect to Taxes (except for customary agreements to indemnify lenders or
securityholders in respect of taxes other than income taxes), or is a party to
any tax sharing agreement or any other agreement providing for payments by the
Company or any of the Company Subsidiaries with respect to Taxes; (iii) neither
the Company nor any of the Company Subsidiaries is a party to any joint venture,
partnership or other arrangement or contract which could be treated as a
partnership for federal income tax purposes; (iv) neither the Company nor any of
the Company Subsidiaries has entered into any sale leaseback or any leveraged
lease transaction that fails to satisfy the requirements of Revenue Procedure
75-21 (or similar provisions of foreign law); (v) neither the Company nor any of
the Company Subsidiaries has agreed or is required, as a result of a change in
method of accounting or otherwise, to include any adjustment under Section 481
of the Code (or any corresponding provision of state, local or foreign law) in
taxable income; (vi) neither the Company nor any of the Company Subsidiaries is
a party to any agreement, contract, arrangement or plan that would result
(taking into account the transactions contemplated by this Agreement),
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code; (vii) the prices for
any property or services (or for the use of property) provided by the Company or
any of the Company Subsidiaries to any other subsidiary or to the Company have
been arm's length prices, determined using a method permitted by the Treasury
Regulations under Section 482 of the Code; (viii) neither the Company nor any of
the Company Subsidiaries is liable with respect to any indebtedness the interest
of which is not deductible for applicable federal, foreign, state or local
income tax purposes; (ix) neither the Company nor any of the Company
Subsidiaries is a "consenting corporation" under Section 341(f) of the Code or
any corresponding provision of state, local or foreign law; (x) the Company and
each Company Subsidiary have complied with all applicable laws, rules, and
regulations relating to the withholding and payment of Taxes except where the
amount of taxes involved is not material; and (xi) none of the assets owned by
the Company or any of the Company Subsidiaries is property that is required to
be treated as owned by any other person pursuant to Section 168(g)(8) of the
Internal Revenue Code of 1954, as amended, as in effect immediately prior to the
enactment of the Tax Reform Act of 1986, or is "tax-exempt use property" within
the meaning of Section 168(h) of the Code.
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(d) The amount of net operating losses (as defined in Section
172 of the Code) of the Company and the Company Subsidiaries as of the end of
the fiscal year ended June 30, 1999 is as set forth in the Company's financial
statements for such year.
2.17 INTELLECTUAL PROPERTY. (a) Section 2.17(a) of the Company
Disclosure Letter sets forth a list of (i) all patents and patent applications
owned by the Company and/or each of the Company Subsidiaries worldwide; (ii) all
trademark and service xxxx registrations and all trademark and service xxxx
applications, material common law trademarks, material trade dress and material
slogans, and all trade names owned by the Company and/or each of its
subsidiaries worldwide; (iii) all copyright registrations and copyright
applications owned by the Company and/or each of the Company Subsidiaries
worldwide; and (iv) all licenses in which the Company and/or any of the Company
Subsidiaries is (A) a licensor with respect to any of the patents, trademarks,
service marks, trade names or copyrights listed in Section 2.17 of the Company
Disclosure Letter which are material to the Company or (B) a licensee of any
other person's patents, trade names, trademarks, service marks or copyrights
material to the Company except for any licenses of software programs that are
commercially available "off the shelf."
(b) The Company or the Company Subsidiaries own, or are
licensed or otherwise possess legal enforceable rights to use, all patents,
trademarks, trade names, service marks, trade dress, slogans, copyrights and any
applications therefor, technology, know-how, trade secrets, computer software
programs or applications, domain names and tangible or intangible proprietary
information or materials that are used in the respective businesses of the
Company and the Company Subsidiaries as currently conducted (the "COMPANY
INTELLECTUAL PROPERTY RIGHTS"), except for any such failures to own, be licensed
or possess that would not reasonably be expected to have a Material Adverse
Effect.
(c) Except as disclosed in Section 2.17(c) of the Company
Disclosure Letter, the Company and/or each Company Subsidiary has made all
necessary filings and recordations for the patents, patent applications,
trademark and service xxxx registrations, trademark and service xxxx
applications, copyright registrations and copyright applications set forth in
Section 2.17(a) of the Company Disclosure Letter, except where the failure to
make such filings or recordations would not reasonably be expected to have a
Material Adverse Effect. There are not currently pending, and to the Knowledge
of the Company there are no valid grounds for, any bona fide claims (i) that the
business of the Company or any of the Company Subsidiaries infringes on any
copyright, patent, trademark, service xxxx or trade secret; (ii) against the use
by the Company or any of the Company Subsidiaries of any trademarks, trade
names, trade secrets, copyrights, patents, technology, know-how or computer
software programs and applications used in the business of the Company or any of
the Company Subsidiaries as currently conducted or as proposed to be conducted;
(iii) challenging the ownership, validity or effectiveness of any of the Company
Intellectual Property Rights; or (iv) challenging the license or legally
enforceable right to use of any third-party patents, trademarks, service marks
and copyrights by the Company or any of the
-28-
Company Subsidiaries, except, in the case of each of clauses (i), (ii), (iii)
and (iv) above, for matters that, if determined adversely to the Company, would
not reasonably be expected to have a Material Adverse Effect.
(d) Except as set forth in the Company Securities Filings
filed prior to the date of this Agreement or Section 2.17 of the Company
Disclosure Letter, to the Knowledge of the Company, there is no material
unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property by any third party, including any employee or former
employee of the Company or any of the Company Subsidiaries.
(e) KNOWLEDGE OF THE COMPANY DEFINED. For purposes of this
Section 2.17, the parties acknowledge and agree that the phrase "to the
Knowledge of the Company": (i) will be limited to the knowledge of the officers
and employees of the Company identified in Paragraph 2.17(e) of the Company
Disclosure Letter and (ii) will not be deemed to impose any obligation on the
Company to conduct a patent, trademark or copyright search.
2.18 DISCLOSURE DOCUMENTS. The Proxy Statement will comply in
all material respects with the applicable requirements of the Securities
Exchange Act except that no representation or warranty is being made by the
Company with respect to the Parent Information included in the Proxy Statement.
The Proxy Statement will not, at the time the Proxy Statement is filed with the
SEC or first sent to shareholders or at the time of the Company's shareholders'
meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading except that no representation or warranty is being made by the
Company with respect to the Parent Information (as defined below) included in
the Proxy Statement. The Schedule 14D-9 will comply in all material respects
with the Securities Exchange Act except that no representation or warranty is
being made by the Company with respect to the Parent Information included in the
Schedule 14D-9. Neither the Schedule 14D-9 nor any of the information relating
to the Company or its affiliates provided by or on behalf of the Company
specifically for inclusion in the Schedule 14D-1 or the Offer Documents will, at
the respective times the Schedule 14D-9, the Schedule 14D-1 and the Offer
Documents are filed with the SEC and are first published, sent or given to
shareholders of the Company, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
2.19 LABOR MATTERS. Except as set forth in the Company
Securities Filings filed prior to the date of this Agreement or Section 2.19 of
the Company Disclosure Letter, (i) there are no controversies pending or, to the
knowledge of the Company or any of the Company Subsidiaries, threatened, between
the Company or any of the Company Subsidiaries and any of their respective
employees, which controversies would reasonably be expected to have a Material
Adverse Effect; (ii) neither the Company nor any of the Company
-29-
Subsidiaries is a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or the Company
Subsidiaries, nor, as of the date of this Agreement, does the Company or any of
the Company Subsidiaries know of any activities or proceedings of any labor
union to organize any such employees; and (iii) neither the Company nor any of
the Company Subsidiaries has any knowledge of any strikes, slowdowns, work
stoppages, lockouts, or threats thereof, by or with respect to any employees of
the Company or any of the Company Subsidiaries which would reasonably be
expected to have a Material Adverse Effect.
2.20 LIMITATION ON BUSINESS CONDUCT. Except as set forth in
the Company Securities Filings filed prior to the date of this Agreement,
neither the Company nor any of the Company Subsidiaries is a party to, or has
any obligation under, any contract or agreement, written or oral, which contains
any covenants currently or prospectively limiting in any material respect the
freedom of the Company or any of the Company Subsidiaries to engage in any line
of business or to compete with any entity.
2.21 TITLE TO PROPERTY. Except as set forth in the Company
Securities Filings filed prior to the date of this Agreement or Section 2.21 of
the Company Disclosure Letter, each of the Company and each of the Company
Subsidiaries owns the properties and assets that it purports to own free and
clear of all liens, charges, mortgages, security interests or encumbrances of
any kind ("LIENS"), except for Liens which arise in the ordinary course of
business and do not materially impair the Company's or the Company Subsidiaries'
ownership or use of such properties or assets, Liens for taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
reserves have been established in accordance with GAAP and Liens securing
obligations under the Company's credit agreements, loan agreements and equipment
leases (the "CREDIT AGREEMENTS"). Except as set forth in Schedule 2.21 of the
Company Disclosure Letter, with respect to the property and assets it leases,
the Company, the Company Subsidiaries, and to the best of the Company's
knowledge each of the other parties thereto, is in material compliance with such
leases, and the Company or the Company Subsidiaries, as the case may be, hold a
valid leasehold interest free of any Liens, except those referred to above. The
rights, properties and assets presently owned, leased or licensed by the Company
and the Company Subsidiaries include all rights, properties and assets necessary
to permit the Company and the Company Subsidiaries to conduct their business in
all material respects in the same manner as their businesses have been conducted
prior to the date hereof.
2.22 OWNED AND LEASED PREMISES. Each of the buildings,
structures and premises leased by the Company or any of the Company Subsidiaries
is in reasonably good repair and operating condition, except as would not
reasonably be expected to have a Material Adverse Effect.
2.23 ENVIRONMENTAL MATTERS. Except as set forth in the Company
Securities Filings filed prior to the date of this Agreement or Section 2.23 of
the Company Disclosure
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Letter:
(a) The Company and the Company Subsidiaries are in material
compliance with the Environmental Laws (as defined below), which compliance
includes the possession by the Company and the Company Subsidiaries of all
material permits and governmental authorizations required under applicable
Environmental Laws, and compliance in all material respects with the terms and
conditions thereof, except in each case where such non-compliance would not
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of the Company Subsidiaries has received any communication (written or
oral), whether from a governmental authority, citizens group, employee or
otherwise, that alleges that the Company or any of the Company Subsidiaries is
not in such material compliance, and there are no circumstances that may prevent
or interfere with such compliance in the future, except where such
non-compliance would not reasonably be expected to have a Material Adverse
Effect.
(b) There are no Environmental Claims (as defined below),
including claims based on "arranger liability," pending or, to the best
knowledge of the Company, threatened against the Company or any of the Company
Subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of the Company Subsidiaries has retained
or assumed either contractually or by operation of law, except for such
Environmental Claims that would not reasonably be expected to have a Material
Adverse Effect.
(c) To the knowledge of the Company, there are no past or
present actions, inactions, activities, circumstances, conditions, events or
incidents, including the release, emission, discharge, presence or disposal of
any Material of Environmental Concern (as hereinafter defined), that would form
the basis of any Environmental Claim against the Company or any of the Company
Subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of the Company Subsidiaries have retained
or assumed either contractually or by operation of law, except for such
Environmental Claims that would not reasonably be expected to have a Material
Adverse Effect.
(d) The Company is in compliance in all material respects with
Environmental Laws as they relate to (i) any on-site or off-site locations where
the Company or any of the Company Subsidiaries has stored, disposed or arranged
for the disposal of Materials of Environmental Concern for itself (but not on
behalf of others) or (ii) any underground storage tanks located on property
owned or leased by the Company or any of the Company Subsidiaries. To the
knowledge of Company, there is no asbestos contained in or forming part of any
building, building component, structure or office space owned or leased by the
Company or any of the Company Subsidiaries. To the knowledge of Company, no
polychlorinated biphenyls (PCB's) or PCB-containing items are used or stored at
any property owned or leased by the Company or any of the Company Subsidiaries.
-31-
(e) For purposes of this Agreement:
(i) "ENVIRONMENTAL CLAIM" means any written claim, action,
cause of action, investigation or notice by any person or entity
alleging potential liability (including potential liability for
investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, or
penalties) arising out of, based on or resulting from (x) the presence,
or release into the environment, of any Material of Environmental
Concern at any location, whether or not owned or operated by the
Company or any of the Company Subsidiaries, or (y) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law.
(ii) "ENVIRONMENTAL LAWS" means all Federal, state, local and
foreign laws or regulations relating to pollution or protection of
human health and the environment (including ambient air, surface water,
ground water, land surface or sub-surface strata), including laws and
regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern.
(iii) "MATERIALS OF ENVIRONMENTAL CONCERN" means chemicals,
pollutants, contaminants, hazardous materials, hazardous substances and
hazardous wastes, toxic substances, petroleum and petroleum products
that are regulated under the Environmental Laws.
2.24 INSURANCE. The Company maintains insurance that provides
adequate coverage for normal risks incident to the business of the Company and
the Company Subsidiaries and their respective properties and assets and in
character and amount comparable to that carried by persons engaged in similar
businesses. The insurance polices maintained by the Company are with reputable
insurance carriers and have no premium delinquencies.
2.25 PRODUCT LIABILITY AND RECALLS. (a) Except as disclosed in
the Company SEC Filings filed prior to the date of this Agreement or Section
2.25 of the Company Disclosure Letter, to the Company's knowledge, there is no
claim, pending or overtly threatened, against the Company or any Company
Subsidiaries for injury to person or property of employees or any third parties
suffered as a result of the sale of any product or performance of any service by
the Company or any Company Subsidiaries, including claims arising out of the
defective or unsafe nature of its products or services, which would reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.
(b) Except as disclosed in the Company SEC Filings filed prior
to the date of this Agreement or Section 2.25 of the Company Disclosure Letter,
there is no pending or, to the knowledge of the Company, overtly threatened
recall or investigation of any product
-32-
sold by the Company or any Company Subsidiaries, which recall or investigation
would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
2.26 CUSTOMERS. Section 2.26 of the Company Disclosure Letter
sets forth a list of the Company's ten (10) largest customers (detailed, in the
case of government agencies, by separate government agency) in terms of gross
sales for the fiscal year ended June 30, 1999. Except as set forth in Section
2.26 of the Company Disclosure Letter, since June 30, 1999, there have not been
any changes in the business relationships of the Company with any of the
customers named therein that would constitute a Material Adverse Effect. Except
as set forth in Section 2.26 of the Company Disclosure Letter, no customer of
the Company accounted for more than 5% of the revenues of the Company and the
Company Subsidiaries, taken as whole, for the fiscal year ended June 30, 1999.
2.27 INTERESTED PARTY TRANSACTIONS. Except as set forth in
Section 2.27 of the Company Disclosure Letter or in the Company Securities
Filings filed prior to the date of this Agreement, since the date of the
Company's proxy statement dated October 25, 1999, no event has occurred that
would be required to be reported pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
2.28 FINDERS AND INVESTMENT BANKERS. Neither the Company nor
any of its officers or directors has employed any broker, finder or financial
advisor or otherwise incurred any liability for any brokerage fees, commissions,
or financial advisors' or finders' fees in connection with the transactions
contemplated hereby, other than pursuant to agreements with McDonald
Investments, Inc. and Xxxxx, Xxxxxxxx & Xxxx, Inc., the terms of which have been
disclosed to Parent.
2.29 FAIRNESS OPINION. The Company's Board of Directors has
received from the Financial Advisor a written opinion addressed to it for
inclusion in the Schedule 14D-9 and the Proxy Statement to the effect that the
consideration to be received by the shareholders of the Company pursuant to each
of the Offer and the Merger is fair to the Company's shareholders from a
financial point of view.
2.30 TAKEOVER STATUTES. Assuming Parent and its "associates"
and "affiliates" (as defined in Section 60.825 of the Oregon Code) collectively
beneficially own and have beneficially owned at all times during the three-year
period prior to the date hereof less than fifteen percent (15%) of the Company
Stock outstanding, Sections 60.825 - 60.845 of the Oregon Code is, and shall be,
inapplicable to the acquisition of Common Shares pursuant to the Offer and the
Merger.
2.31 FULL DISCLOSURE. No statement contained in any
certificate or schedule, including, without limitation, the Company Disclosure
Letter, furnished or to be furnished by the Company or the Company Subsidiaries
to Parent or Purchaser in, or pursuant to the provisions of, this Agreement
contains or shall contain any untrue statement of a material fact
-33-
or omits or will omit to state any material fact necessary, in the light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
2.32 YEAR 2000. Except as would not reasonably be expected to
have a Material Adverse Effect on the Company:
(a) None of the computer software, computer firmware, computer
hardware (whether general or special purpose) or other similar or related items
of automated, computerized or software systems that are used or relied on by
Company or by any of the Company Subsidiaries in the conduct of their respective
businesses will malfunction, will cease to function, will generate incorrect
data or will produce incorrect results that are caused by processing, providing
or receiving (i) date-related data from, into and between the twentieth and
twenty-first centuries or (ii) date-related data in connection with any valid
date in the twentieth and twenty-first centuries.
(b) None of the products and services sold, licensed,
rendered, or otherwise provided by the Company or by any of the Company
Subsidiaries in the conduct of their respective businesses will malfunction,
will cease to function, will generate incorrect data or will produce incorrect
results that are caused by processing, providing or receiving (i) date-related
data from, into and between the twentieth and twenty-first centuries or (ii)
date-related data in connection with any valid date in the twentieth and
twenty-first centuries.
(c) Neither the Company nor any of the Company Subsidiaries
has made any other representations or warranties regarding the ability of any
product or service sold, licensed, rendered, or otherwise provided by the
Company or by any of the Company Subsidiaries in the conduct of their respective
businesses to operate without malfunction, to operate without ceasing to
function, to generate correct data or to produce correct results when
processing, providing or receiving (i) date-related data from, into and between
the twentieth and twenty-first centuries and (ii) date-related data in
connection with any valid date in the twentieth and twenty-first centuries.
2.33 RIGHTS AGREEMENTS. There are no "rights agreements",
"poison pills" or similar defensive installments, arrangements or agreements
that would prevent or interfere with the consummation of the transactions
contemplated by this Agreement.
2.34 ABSENCE OF CERTAIN PAYMENTS. None of the Company, any
Company Subsidiaries or any of their respective affiliates, officers, directors,
employees or agents or other people acting on behalf of any of them have (i)
engaged in any activity prohibited by the United States Foreign Corrupt
Practices Act of 1977 or any other similar law, regulation, decree, directive or
order of any other country and (ii) without limiting the generality of the
preceding clause (i), used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others.
None of the Company, the Company Subsidiaries or any of
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their respective affiliates, directors, officers, employees or agents of other
persons acting on behalf of any of them, has accepted or received any unlawful
contributions, payments, gifts or expenditures.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and
warrant to the Company that:
3.1 ORGANIZATION AND GOOD STANDING. Each of Guarantor, Parent
and Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted.
3.2 AUTHORIZATION; BINDING AGREEMENT. Parent, Purchaser and
Guarantor have all requisite corporate power and authority to execute and
deliver this Agreement or the Guarantee, as the case may be, and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Guarantee and the consummation of the transactions
contemplated hereby and thereby, including, but not limited to, the Merger, have
been duly and validly authorized by the respective Boards of Directors of
Parent, Purchaser and Guarantor, as appropriate, and no other corporate
proceedings on the part of Parent, Purchaser, Guarantor or any other subsidiary
of Guarantor are necessary to authorize the execution and delivery of this
Agreement or the Guarantee, as applicable, or to consummate the transactions
contemplated hereby and thereby (other than the requisite approval by the sole
shareholder of Purchaser of this Agreement and the Merger). This Agreement has
been duly and validly executed and delivered by each of Parent and Purchaser and
constitutes the legal, valid and binding agreement of Parent and Purchaser,
enforceable against each of Parent and Purchaser in accordance with its terms,
subject to the Enforceability Exceptions. The Guarantee has been duly and
validly executed and delivered by Guarantor, and constitutes the legal, valid
and binding agreement of Guarantor enforceable against Guarantor in accordance
with its terms, subject to the Enforceability Exceptions.
3.3 GOVERNMENTAL APPROVALS. No Consent from or with any
Governmental Authority on the part of Parent, Purchaser or Guarantor is required
in connection with the execution or delivery by Parent, Purchaser and Guarantor
of this Agreement or the Guarantee, as the case may be, or the consummation by
Parent, Purchaser and Guarantor of the transactions contemplated hereby or
thereby other than (i) the filing of the Articles of Merger with the Secretary
of State of Oregon in accordance with the Oregon Code, (ii) filings with the
SEC, (iii) filings under the HSR Act (iv) filings pursuant to the rules and
regulations of NASDAQ or the New York Stock Exchange and (v) those Consents
that, if they were not obtained or made, would not reasonably be expected to
have a Material Adverse Effect.
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3.4 NO VIOLATIONS. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by Parent or Purchaser with any of the provisions hereof will not (i)
conflict with or result in any breach of any provision of the Memorandum of
Association and Bye-Laws or other governing instruments of Guarantor or similar
documents of any subsidiary of Guarantor, including Parent and Purchaser, (ii)
require any Consent under or result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of, any material note, bond, mortgage, indenture,
contract, lease, license, agreement or instrument to which Guarantor or any
subsidiary of Guarantor, including Parent, is a party or by which any of them or
any of their respective assets or property is subject, (iii) result in the
creation or imposition of any material lien or encumbrance of any kind upon any
of the assets of Guarantor or any subsidiary of Guarantor, including Parent, or
(iv) subject to obtaining the Consents from Governmental Authorities referred to
in SECTION 3.3 hereof, violate any Law to which Guarantor or any subsidiary of
Guarantor, including Parent, or its assets or properties are subject, except in
any such case for any such conflicts, violations, breaches, defaults or other
occurrences that would not prevent or delay consummation of the Offer or the
Merger, or otherwise materially and adversely affect the ability of Parent or
Purchaser to perform their respective obligations under this Agreement.
3.5 DISCLOSURE DOCUMENTS. None of the information supplied by
Parent, or Purchaser or their respective officers, directors, representatives,
agents or employees (the "PARENT INFORMATION") for inclusion in the Proxy
Statement will, at the time the Proxy Statement is filed with the SEC or first
mailed to the Company's shareholders, at the time of the Company's shareholders'
meeting, contain any untrue statement of a material fact, or will omit to state
any material fact necessary in order to make the statements therein, in light of
the circumstances in which they were made not misleading or necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for such shareholders' meeting which has become false or misleading.
Neither the Schedule 14D-1 or the Offer Documents or any amendments thereof or
supplements thereto nor any of the Parent Information provided specifically for
inclusion in the Schedule 14D-9 will, at the respective times the Schedule
14D-1, the Offer Documents or the Schedule 14D-9 are filed with the SEC or first
published, sent or given to the Company's shareholders, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Notwithstanding the foregoing, neither Parent
nor Purchaser makes any representation or warranty with respect to any
information that has been supplied by the Company or its accountants, counsel or
other authorized representatives for use in any of the foregoing documents. The
Schedule 14D-1 and the Offer Documents will comply as to form in all material
respects with the provisions of the Securities Exchange Act.
3.6 FINDERS AND INVESTMENT BANKERS. Neither Parent, Guarantor,
Purchaser nor any of their respective officers or directors has employed any
broker, finder or financial
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advisor or otherwise incurred any liability for any brokerage fees, commissions
or financial advisors' or finders' fees in connection with the transactions
contemplated hereby.
3.7 FINANCING ARRANGEMENTS. Parent (including for this purpose
one or more other subsidiaries of Guarantor ), has funds available to it
sufficient to enable the Purchaser to purchase the Common Shares in accordance
with the terms of this Agreement and to pay all amounts due (or which will, as a
result of the transactions contemplated hereby, become due) in respect of any
indebtedness of the Company for money borrowed.
3.8 NO PRIOR ACTIVITIES. Except for obligations or liabilities
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby
(including any financing in connection therewith), Purchaser has not incurred
any obligations or liabilities and has not engaged in any business or activities
of any type or kind whatsoever or entered into any agreements or arrangements
with any person or entity.
ARTICLE IV
ADDITIONAL COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
4.1 CONDUCT OF BUSINESS OF THE COMPANY AND THE COMPANY
SUBSIDIARIES. (a) Unless Parent shall otherwise consent in writing (which
consent, in the case of paragraphs (D), (E), (F), (G), (H), (I), or (J) below,
shall not be unreasonably withheld) and except as expressly contemplated by this
Agreement or in the Company Disclosure Letter, during the period from the date
of this Agreement to the Effective Time, (i) the Company shall conduct, and it
shall cause the Company Subsidiaries to conduct, its or their businesses in the
ordinary course and consistent with past practice, and the Company shall, and it
shall cause the Company Subsidiaries to, use its or their reasonable best
efforts to preserve substantially intact its business organization, to keep
available the services of its present officers and employees and to preserve the
present commercial relationships of the Company and the Company Subsidiaries
with persons with whom the Company or the Company Subsidiaries do significant
business and (ii) without limiting the generality of the foregoing, neither the
Company nor any of the Company Subsidiaries will:
(A) amend or propose to amend its Articles of
Incorporation or Bylaws (or similar organizational documents);
(B) authorize for issuance, issue, grant, sell,
pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any
shares of, or any options, warrants, commitments, subscriptions or rights of any
kind to acquire or sell any shares of, the capital stock or other securities of
the Company or any of the Company Subsidiaries, including, but not limited to,
any securities convertible into or exchangeable for shares of stock of any class
of the Company or any of the Company Subsidiaries, except for (a) the issuance
of shares
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pursuant to the exercise of Company Options outstanding on the date of this
Agreement in accordance with their present terms, (b) the issuance of shares
pursuant to the Company Stock Purchase Plans as in effect on the date of this
Agreement, (c) the issuance of shares upon the exercise of Company Warrants
outstanding on the date of this Agreement in accordance with their present
terms, or (d) the issuance of shares upon the conversion of the Notes in
accordance with the indenture relating to the Notes on its present terms;
(C) split, combine or reclassify any shares of its
capital stock or declare, pay or set aside any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, other than dividends or distributions to the Company or a
Company Subsidiary (except that in no case may the Company or a Company
Subsidiary declare or pay any cross-border dividends), make or allow any Company
Subsidiary to make any cross-border capital contributions, or directly or
indirectly redeem, purchase or otherwise acquire or offer to acquire any shares
of its capital stock or other securities (other than the repurchase of 100,000
Common Shares from Xxxxxxx X. Xxxxxxxx pursuant to that certain Stock Purchase
Agreement dated December 22, 1998 between the Company and Xx. Xxxxxxxx);
(D) (a) create or incur any indebtedness for borrowed
money or issue any debt securities, except pursuant to the Credit Agreements, or
(b) make any loans or advances, except in the ordinary course of business
consistent with past practice;
(E) (a) sell, pledge, dispose of or encumber any
assets of the Company or any of Company Subsidiaries (except for (i) sales of
assets in the ordinary course of business and in a manner consistent with past
practice, (ii) pledges to secure debt permitted under paragraph (D), (iii)
dispositions of obsolete or worthless assets, and (iv) sales of immaterial
assets not in excess of $250,000 in the aggregate); (b) acquire (by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership
or other business organization or division thereof; (c) authorize any capital
expenditures or purchases of fixed assets which are, in the aggregate, in excess
of $250,000 from the date hereof until February 29, 2000; (d) assume, guarantee
(other than guarantees of obligations of the Company Subsidiaries entered into
in the ordinary course of business) or endorse or otherwise as an accommodation
become responsible for, the obligations of any person, or make any loans or
advances, except in the ordinary course of business consistent with past
practice; or (e) voluntarily incur any material liability or obligation
(absolute, contingent or otherwise) except in the ordinary course of business
consistent with past practice.
(F) increase in any manner the compensation of any of
its officers or employees (other than, except with respect to employees who are
executive officers or directors, in the ordinary course of business reasonably
consistent with past practice) or enter into, establish, amend or terminate any
employment, consulting, retention, change in control, collective bargaining,
bonus or other incentive compensation, profit sharing, health or other welfare,
stock option or other equity, pension, retirement, vacation, severance, deferred
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compensation or other compensation or benefit plan, policy, agreement, trust,
fund or arrangement with, for or in respect of, any shareholder, officer,
director, employee, consultant or affiliate other than, in any such case
referred to above, as may be required by Law or as required pursuant to the
terms of agreements in effect on the date of this Agreement and other than
arrangements with new employees (other than employees who will be officers of
the Company) hired in the ordinary course of business consistent with past
practice and providing for compensation (other than equity-based compensation)
and other benefits consistent with those provided for similarly situated
employees of the Company as of the date hereof;
(G) alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate structure or
ownership of any Company Subsidiary or the Company;
(H) except as may be required as a result of a change
in law or as required by the SEC, change any of the accounting principles or
practices used by it;
(I) make any tax election or settle or compromise any
income tax liability;
(J) pay, discharge or satisfy any material claims,
liabilities or obliga- tions (absolute, accrued, asserted or unasserted,
contingent or other), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of liabilities
reflected or reserved against in, or contemplated by, the financial statements
(or the notes thereto) of the Company contained in the Company SEC Filings filed
prior to the date of this Agreement or incurred in the ordinary course of
business consistent with past practice;
(K) except to the extent necessary for the exercise
of its fiduciary duties by the Board of Directors of the Company as set forth
in, and consistent with the provisions of, SECTION 4.8 hereof, waive, amend or
allow to lapse any term or condition of any confidentiality or "standstill"
agreement to which the Company or any Company Subsidiary is a party; or
(L) take, or agree in writing or otherwise to take,
any of the foregoing actions or any action which would make any of the
representations or warranties of the Company contained in this Agreement untrue
or incorrect in any material respect at or prior to the Effective Time.
(b) The Company shall, and the Company shall cause
each of the Company Subsidiaries to, comply with all Laws applicable to it or
any of its properties, assets or business and to maintain in full force and
effect all the Company Permits necessary for such business, except in any such
case for any failure so to comply or maintain that would not
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reasonably be expected to result in a Material Adverse Effect.
4.2 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent if any of the following occur after the date of this
Agreement: (i) receipt of any notice or other communication in writing from any
third party alleging that the Consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement; (ii) receipt
of any material notice or other communication from any Governmental Authority
(including, but not limited to, the National Association of Securities Dealers
("NASD"), NASDAQ or any other securities exchange) in connection with the
transactions contemplated by this Agreement; (iii) the occurrence of an event
which would be reasonably likely (A) to have a Material Adverse Effect or (B) to
cause any condition set forth in ANNEX I hereto to be unsatisfied in any
material respect at any time prior to the consummation of the Offer; or (iv) the
commencement or threat of any Litigation involving or affecting the Company or
any of the Company Subsidiaries, or any of their respective properties or
assets, or, to the Company's knowledge, any employee, agent, director or
officer, in his or her capacity as such, of the Company or any of the Company
Subsidiaries which, if pending on the date hereof, would have been required to
have been disclosed pursuant to this Agreement or which relates to the
consummation of the Offer or the Merger.
4.3 ACCESS AND INFORMATION. Between the date of this Agreement
and the Effective Time, and without intending by this SECTION 4.3 to limit any
of the other obligations of the parties under this Agreement, the Company will
give, and shall direct its accountants and legal counsel to give, Parent and its
authorized representatives (including, without limitation, its financial
advisors, accountants and legal counsel), at reasonable times and without undue
disruption to or interference with the normal conduct of the business and
affairs of the Company, access as reasonably required in connection with the
transactions provided for in this Agreement to all offices and other facilities
and to all contracts, agreements, commitments, books and records of or
pertaining to the Company and the Company Subsidiaries and will furnish Parent
with (a) such financial and operating data and other information with respect to
the business and properties of the Company and the Company Subsidiaries as
Parent may from time to time reasonably request in connection with such
transactions and (b) a copy of each material report, schedule and other document
filed or received by the Company or any of the Company Subsidiaries pursuant to
the requirements of applicable securities laws, the NASD or NASDAQ.
4.4 SHAREHOLDER APPROVAL. As soon as practicable following the
consummation of the Offer, the Company will take all steps necessary to duly
call, give notice of, convene and hold a meeting of its shareholders for the
purpose of voting upon the Company Proposals and for such other purposes as may
be necessary or desirable in connection with effectuating the transactions
contemplated hereby, if such meeting is required. Except as otherwise
contemplated by this Agreement, the Board of Directors of the Company will
recommend to the shareholders of the Company that they approve the Company
Proposals.
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4.5 REASONABLE BEST EFFORTS. Subject to the terms and
conditions herein provided, the Company agrees to use reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including, but not limited to, (i) obtaining all Consents from Governmental
Authorities and other third parties required for the consummation of the Offer
and the Merger and the transactions contemplated thereby and (ii) timely making
all necessary filings under the HSR Act. Upon the terms and subject to the
conditions hereof, the Company agrees to use reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary to satisfy the other conditions of the Closing set forth herein.
4.6 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in
effect, the Company shall not, and shall use reasonable best efforts to cause
its affiliates not to, issue or cause the publication of any press release or
any other announcement with respect to the Offer or the Merger or the
transactions contemplated hereby without the consent of Parent (such consent not
to be unreasonably withheld or delayed), except where such release or
announcement is required by applicable Law or pursuant to any applicable listing
agreement with, or rules or regulations of, the NASD or NASDAQ, in which case
the Company, prior to making such announcement, will consult with Parent
regarding the same.
4.7 COMPLIANCE. In consummating the transactions contemplated
hereby, the Company shall comply in all material respects with the provisions of
the Securities Exchange Act and the Securities Act and shall comply, and cause
the Company Subsidiaries to comply or to be in compliance, in all material
respects, with, all other applicable Laws.
4.8 NO SOLICITATION. (a) The Company shall not, directly or
indirectly, through any officer, director, employee, representative or agent of
the Company or any of the Company Subsidiaries, solicit or encourage the
initiation of (including by way of furnishing information) any inquiries or
proposals regarding any merger, sale of assets, sale of shares of capital stock
(including without limitation by way of a tender offer) or similar transactions
involving the Company or any Company Subsidiaries that if consummated would
constitute an Alternative Transaction (as defined below) (any of the foregoing
inquiries or proposals being referred to herein as a "COMPANY TAKEOVER
PROPOSAL"). Nothing contained in this Agreement shall prevent the Board of
Directors of the Company from (i) furnishing information to a third party which
has made a BONA FIDE Company Takeover Proposal that is a Superior Proposal (as
defined below) not solicited in violation of this Agreement, provided that such
third party has executed an agreement with confidentiality provisions
substantially similar to those then in effect between the Company and an
affiliate of Parent (the "CONFIDENTIALITY AGREEMENT") or (ii) subject to
compliance with the other terms of this SECTION 4.8, considering and negotiating
a bona fide Company Takeover Proposal that is a Superior Proposal not solicited
in violation of this Agreement; provided that, as to each of clauses (i) and
(ii), the Board of Directors of the Company reasonably determines in good faith
(after
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due consultation with independent counsel, which may be Stoel Rives LLP) that it
is or is reasonably likely to be required to do so in order to discharge
properly its fiduciary duties. For purposes of this Agreement, a "SUPERIOR
PROPOSAL" means any proposal made by a party to acquire, directly or indirectly,
for consideration consisting of cash and/or securities, all of the equity
securities of the Company entitled to vote generally in the election of
directors or all the assets of the Company (other than a de minimus amount of
assets not material to the conduct of the Company's business), on terms which
the Board of Directors of the Company reasonably believes (after due
consultation with a financial advisor of nationally recognized reputation, which
may be the Financial Advisor or McDonald Investments) to be more favorable from
a financial point of view to its shareholders than the Offer and the Merger
taking into account at the time of determination all factors relating to such
proposed transaction deemed relevant by the Board of Directors of the Company,
including, without limitation, the financing thereof, the proposed timing
thereof and all other conditions thereto and any changes to the financial terms
of this Agreement proposed by Parent and Purchaser. "ALTERNATIVE TRANSACTION"
means any of (i) a transaction pursuant to which any person (or group of
persons) other than Parent or its affiliates (a "THIRD PARTY") acquires or would
acquire more than 20% of the outstanding shares of any class of equity
securities of the Company, whether from the Company or pursuant to a tender
offer or exchange offer or otherwise, (ii) a merger or other business
combination involving the Company pursuant to which any Third Party acquires
more than 20% of the outstanding equity securities of the Company or the entity
surviving such merger or business combination, (iii) any transaction pursuant to
which any Third Party acquires or would acquire control of assets (including for
this purpose the outstanding equity securities of Company Subsidiaries and
securities of the entity surviving any merger or business combination including
any of the Company Subsidiaries) of the Company or any Company Subsidiaries
having a fair market value (as determined by the Board of Directors of the
Company in good faith) equal to more than 20% of the fair market value of all
the assets of the Company and the Company Subsidiaries, taken as a whole,
immediately prior to such transaction, or (iv) any other consolidation, business
combination, recapitalization or similar transaction involving the Company or
any of the Company Subsidiaries, other than the transactions contemplated by
this Agreement; PROVIDED, HOWEVER, that the term Alternative Transaction shall
not include any acquisition of securities by a broker dealer in connection with
a BONA FIDE public offering of such securities. Notwithstanding anything to the
contrary contained in this SECTION 4.8 or elsewhere in this Agreement, prior to
the Effective Time, the Company may, in connection with a possible Company
Takeover Proposal, refer any third party to this SECTION 4.8 and SECTION 8.7 and
make a copy of this SECTION 4.8 and SECTION 8.7 available to a third party.
(b) The Company shall immediately notify Parent and Purchaser
after receipt of any Company Takeover Proposal, or any modification of or
amendment to any Company Takeover Proposal, or any request for nonpublic
information relating to the Company or any of the Company Subsidiaries in
connection with a Company Takeover Proposal or for access to the properties,
books or records of the Company or any subsidiary by any person or entity that
informs the Board of Directors of the Company or such subsidiary that it is
considering
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making, or has made, a Company Takeover Proposal. Such notice to Parent and
Purchaser shall be made orally and in writing, and shall indicate the identity
of the person making the Company Takeover Proposal or intending to make the
Company Takeover Proposal or requesting non-public information or access to the
books and records of the Company, the terms of any such Company Takeover
Proposal or modification or amendment to a Company Takeover Proposal, and
whether the Company is providing or intends to provide the person making the
Company Takeover Proposal with access to information concerning the Company as
provided in SECTION 4.8(a). The Company shall also immediately notify Parent and
Purchaser, orally and in writing, if it enters into negotiations concerning any
Company Takeover Proposal.
(c) Except as set forth in this SECTION 4.8, neither the Board
of Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or indicate publicly its intention to withdraw or modify, in a manner
adverse to Parent, the approval or recommendation by such Board of Directors or
such committee of the Offer or the Company Proposals, (ii) approve or recommend,
or indicate publicly its intention to approve or recommend, any Company Takeover
Proposal or (iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement (each,
a "COMPANY ACQUISITION AGREEMENT") related to any Company Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the Effective Time the
Board of Directors of the Company determines in good faith, after due
consultation with outside counsel, that the failure to do so constitutes or is
reasonably likely to constitute a breach of its fiduciary duties to the
Company's shareholders under applicable law, the Board of Directors of the
Company may (subject to this and the following sentences) approve or recommend a
Superior Proposal and, in connection therewith, withdraw or modify its approval
or recommendation of the Offer or the Company Proposals, but only at a time that
is after the third business day following Parent's receipt of written notice
advising Parent that the Board of Directors of the Company has received a
Superior Proposal and, in the case of any previously received Superior Proposal
that has been materially modified or amended, such modification or amendment and
specifying the material terms and conditions of such Superior Proposal,
modification or amendment.
(d) Nothing contained in this SECTION 4.8 shall prohibit the
Company from taking and disclosing to its shareholders a position contemplated
by Rule 14e-2(a) promulgated under the Securities Exchange Act or from making
any disclosure to the Company's shareholders if, in the good faith judgment of
the Board of Directors of the Company, with the advice of outside counsel,
failure so to disclose could be determined to be a breach of its fiduciary
duties to the Company's shareholders under applicable law; PROVIDED, HOWEVER,
that neither the Company nor its Board of Directors nor any committee thereof
shall, except as permitted by SECTION 4.8(c), withdraw or modify, or indicate
publicly its intention to withdraw or modify, its position with respect to the
Offer or the Company Proposals or approve or recommend, or indicate publicly its
intention to approve or recommend, a Company Takeover Proposal.
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(e) The Company shall advise its officers and directors and
any investment banker or attorney retained by the Company in connection with the
transactions contemplated by this Agreement of the restrictions set forth in
this SECTION 4.8.
4.9 SEC AND SHAREHOLDER FILINGS. The Company shall send to
Parent a copy of all material public reports and materials as and when it sends
the same to its shareholders, the SEC or any state or foreign securities
commission.
4.10 TAKEOVER STATUTES. If any "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
enacted under state or federal laws in the United States (each a "TAKEOVER
STATUTE"), including, without limitation, Sections 60.825 - 60.845 of the Oregon
Code, is or may become applicable to the Offer or the Merger, the Company will
use reasonable best efforts to grant such approvals and take such actions as are
necessary so that the transactions contemplated by this Agreement and the
Company Proposals may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act so as to eliminate or minimize the effects
of any Takeover Statute on any of the transactions contemplated hereby.
4.11 COMPANY OPTIONS AND STOCK PURCHASE PLAN. (a) Prior to the
consummation of the Offer, the Company shall take all action necessary in order
to effectuate the provisions of Section 1.9(a) relating to Company Options.
(b) The Company will not accelerate the exercisability of any
Company Option that by its terms is not exercisable prior to March 1, 2000.
ARTICLE V
ADDITIONAL COVENANTS OF PURCHASER AND PARENT
Parent and Purchaser covenant and agree as follows:
5.1 REASONABLE BEST EFFORTS. Subject to the terms and
conditions herein provided, Parent and Purchaser agree to use reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement,
including, but not limited to, (i) obtaining all Consents from Governmental
Authorities and other third parties required for the consummation of the Offer
and the Merger and the transactions contemplated thereby and (ii) timely making
all necessary filings under the HSR Act. Upon the terms and subject to the
conditions hereof, Parent and Purchaser agree to use reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary to satisfy the other conditions of the Closing set forth
herein.
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5.2 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in
effect, Parent and Purchaser shall not, and shall use reasonable best efforts to
cause their affiliates not to, issue or cause the publication of any press
release or any other announcement with respect to the Offer or the Merger or the
transactions contemplated hereby without the consent of the Company (such
consent not to be unreasonably withheld or delayed), except where such release
or announcement is required by applicable Law or pursuant to any applicable
listing agreement with, or rules or regulations of, any stock exchange on which
shares of Guarantor's capital stock are listed or the NASD, or other applicable
securities exchange, in which case Parent, prior to making such announcement,
will consult with the Company regarding the same.
5.3 COMPLIANCE. In consummating the transactions contemplated
hereby, Parent and Purchaser shall comply in all material respects with the
provisions of the Securities Exchange Act and the Securities Act and shall
comply, and cause their subsidiaries to comply or to be in compliance, in all
material respects, with all other applicable Laws.
5.4 EMPLOYEE BENEFIT PLANS. (a) As of the Effective Time,
Parent shall cause the Surviving Corporation to honor and satisfy all
obligations and liabilities with respect to the Employee Plans. Notwithstanding
the foregoing, the Surviving Corporation shall not be required to continue any
particular Employee Plan after the Effective Time, and any Employee Plan may be
amended or terminated in accordance with its terms and applicable Law. To the
extent that any Employee Plan is terminated or amended after the Effective Date
so as to eliminate the future benefits that are being provided with respect to
participants thereunder, Parent shall arrange for each individual who is then a
participant in such terminated or amended plan to participate in a Parent
Benefit Plan ("PARENT BENEFIT PLAN"), to the extent similarly situated employees
of the Parent participate in such Parent Benefit Plan, in accordance with the
eligibility criteria thereof, provided that (i) such participant shall receive
full credit for years of service with the Company or any of the Company
Subsidiaries prior to the Effective Time for all purposes for which such service
was recognized under the applicable Employee Plan, including, but not limited
to, recognition of service for eligibility, vesting (including acceleration
thereof pursuant to the terms of the applicable Employee Plan), entitlement to
commence benefits and, to the extent not duplicative of benefits received under
such Employee Plan, the amount of benefits, (ii) Parent shall cause any and all
pre-existing condition limitations (to the extent such limitations did not apply
to a pre-existing condition under the Employee Plans) and eligibility waiting
periods under any group health plans to be waived with respect to such
participant and his or her eligible dependents and (iii) Parent shall cause the
Parent Benefit Plans that are group welfare plans to provide such participant
with credit towards any applicable deductibles, co-payments and similar
exclusions for expenses incurred prior to the Effective Time.
(b) The provisions of this SECTION 5.4 are not intended to and
do not create rights of third party beneficiaries.
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5.5 INDEMNIFICATION. (a) From and after the Effective Time,
the Surviving Corporation shall indemnify and hold harmless all past and present
officers and directors (the "INDEMNIFIED PARTIES") of the Company and of the
Company Subsidiaries to the full extent such persons may be indemnified by the
Company pursuant to Oregon law, the Company's Second Amended and Restated
Articles of Incorporation and Bylaws, as each is in effect on the date of this
Agreement, for acts and omissions (x) arising out of or pertaining to the
transactions contemplated by this Agreement or arising out of the Offer
Documents or (y) otherwise with respect to any acts or omissions occurring or
arising at or prior to the Effective Time and shall advance reasonable
litigation expenses incurred by such persons in connection with defending any
action arising out of such acts or omissions, PROVIDED that such persons provide
the requisite affirmations and undertaking, as set forth in Section 60.397 of
the Oregon Code.
(b) In addition, Parent will provide, or cause the Surviving
Corporation to provide, for a period of not less than six years after the
Effective Time, the Company's current directors and officers an insurance and
indemnification policy that provides coverage for events occurring or arising at
or prior to the Effective Time (the "D&O INSURANCE") that is no less favorable
than the existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; PROVIDED, HOWEVER, that Parent and the
Surviving Corporation shall not be required to pay an annual premium for the D&O
Insurance in excess of 200% of the annual premium currently paid by the Company
for such insurance, but in such case shall purchase as much such coverage as
possible for such amount.
(c) This SECTION 5.5 is intended to benefit the Indemnified
Parties and shall be binding on all successors and assigns of Parent, Purchaser,
the Company and the Surviving Corporation. Parent hereby guarantees the
performance by the Surviving Corporation of the indemnified obligations pursuant
to this SECTION 5.5, which guaranty is absolute and unconditional and shall not
be affected by any circumstance whatsoever, including the bankruptcy or
insolvency of the Surviving Corporation or any other person. The Indemnified
Parties shall be intended third-party beneficiaries of this SECTION 5.5.
5.6 VOTING OF COMMON SHARES. At any meeting of the Company's
shareholders held for the purpose of voting upon the Company Proposals, all of
the Common Shares then owned by Parent, Purchaser or any other subsidiaries of
Parent shall be voted in favor of the Company Proposals.
5.7 GUARANTEE OF PARENT. Parent hereby guarantees the payment
by Purchaser of the Per Share Amount and any other amounts payable by Purchaser
pursuant to this Agreement and will cause Purchaser to perform all of its other
obligations under this Agreement in accordance with their terms.
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ARTICLE VI
MERGER CONDITIONS
The respective obligations of each party to effect the Merger
shall be subject to the fulfillment or waiver at or prior to the Effective Time
of the following conditions:
6.1 OFFER. The Offer shall have been consummated; PROVIDED
that this condition shall be deemed to have been satisfied with respect to the
obligation of Parent and Purchaser to effect the Merger if Purchaser fails to
accept for payment or pay for Common Shares pursuant to the Offer in violation
of the terms of the Offer or of this Agreement.
6.2 SHAREHOLDER APPROVAL. If required, the Company Proposals
shall have been approved at or prior to the Effective Time by the requisite vote
of the shareholders of the Company in accordance with the Oregon Code.
6.3 NO INJUNCTION OR ACTION. No order, statute, rule,
regulation, executive order, stay, decree, judgment or injunction shall have
been enacted, entered, promulgated or enforced by any court or other
Governmental Authority which prohibits or prevents the consummation of the
Merger which has not been vacated, dismissed or withdrawn prior to the Effective
Time. The Company and Parent shall use all reasonable best efforts to have any
of the foregoing vacated, dismissed or withdrawn by the Effective Time.
6.4 GOVERNMENTAL APPROVALS. All Consents of any Governmental
Authority required for the consummation of the Merger and the transactions
contemplated by this Agreement shall have been obtained, except for those
Consents the failure to obtain which will not have a material adverse effect on
the business, assets, condition (financial or other), liabilities or results of
operations of the Surviving Corporation and its subsidiaries taken as a whole.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the
shareholders of the Company described herein:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if any Governmental
Authority shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise
prohibiting the consummation of the transactions contemplated by this
Agreement and such order, decree or ruling or other action shall have
become final and nonappealable;
(c) by Parent if:
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(i) the Company shall have breached or failed to perform in
any material respect any of its covenants or other agreements contained
in this Agreement, which breach or failure to perform is incapable of
being cured or has not been cured within five (5) days after the giving
of written notice thereof to the Company (but not later than the
expiration of the twenty (20) business day period provided for the
Offer under SECTION 1.1(b) hereof);
(ii) any representation or warranty of the Company shall not
have been true and correct when made (without for this purpose giving
effect to qualifications of materiality contained in such
representation and warranty), if such failure to be true and correct,
individually or in the aggregate, would reasonably be expected to have
a Material Adverse Effect;
(iii) any representation or warranty of the Company shall
cease to be true and correct at any later date (without for this
purpose giving effect to qualifications of materiality contained in
such representation and warranty) as if made on such date (other than
representations and warranties made as of a specified date) other than
as a result of a breach or failure to perform by the Company of any of
its covenants or agreements under this Agreement if such failure to be
true and correct, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect; PROVIDED, HOWEVER, that
such representation or warranty is incapable of being cured or has not
been cured within five (5) days after the giving of written notice
thereof to the Company (but not later than the expiration of the twenty
(20) business day period provided for the Offer under SECTION 1.1(b)
hereof); PROVIDED, HOWEVER, that the right to terminate this Agreement
pursuant to this SECTION 7.1(c) shall not be available to Parent if
Purchaser or any other affiliate of Parent shall acquire shares of
Common Shares pursuant to the Offer;
(d) by Parent if, whether or not permitted to do so by this
Agreement, (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent
or Purchaser its approval or recommendation of the Offer or any of the
Company Proposals; (ii) the Board of Directors of the Company or any
committee thereof shall have approved or recommended to the
shareholders of the Company any Company Takeover Proposal or
Alternative Transaction; (iii) the Board of Directors of the Company or
any committee thereof shall have approved or recommended that the
shareholders of the Company tender their Common Shares in any tender or
exchange offer that is an Alternative Transaction; (iv) the Board of
Directors of the Company or any committee thereof shall have taken any
position or make any disclosures to the Company's shareholders
permitted pursuant to SECTION 4.8(e) which has the effect of any of the
foregoing; (v) the Board of Directors of the Company or any committee
thereof shall have resolved to take any of the foregoing actions;
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(e) by either Parent or the Company if, as the result of the
failure of the Minimum Condition or any of the other conditions set
forth in Annex I hereto, the Offer shall have terminated or expired in
accordance with its terms without Purchaser having purchased any Common
Shares pursuant to the Offer, PROVIDED that if the failure to satisfy
any conditions set forth in Annex I shall be a basis for termination of
this Agreement under any other clause of this Section 7.1, a
termination pursuant to this clause (e) shall be deemed a termination
under such other clause;
(f) by either Parent or the Company if the Offer shall not
have been consummated on or before February 29, 2000, PROVIDED that the
right to terminate this Agreement pursuant to this SECTION 7.1(f) shall
not be available to any party whose failure to perform any of its
obligations under this Agreement results in the failure of the Offer to
be consummated by such time;
(g) by the Company, if Parent or Purchaser shall have breached
or failed to perform in any material respect any of its
representations, warranties, covenants or other agreements contained in
this Agreement, which breach or failure to perform is incapable of
being cured or has not been cured within five (5) days after the giving
of written notice thereof to Parent; or
(h) by the Company, in order to accept a Superior Proposal,
PROVIDED that the Board of Directors of the Company reasonably
determines in good faith (after due consultation with independent
counsel, which may be Stoel Rives LLP), that it is or is reasonably
likely to be required to accept such proposal in order to discharge
properly its fiduciary duties; the Company has given parent three
business days' advance notice of the Company's intention to accept such
Superior Proposal; the Company shall in fact accept such proposal; the
Company shall have paid the fee and expenses contemplated by SECTION
8.7 hereof; and the Company shall have complied in all respects with
the provisions of Section 4.8.
The party desiring to terminate this Agreement pursuant to the preceding
paragraphs shall give written notice of such termination to the other party in
accordance with SECTION 8.5 hereof.
7.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and the abandonment of the Offer or the Merger
pursuant to this ARTICLE VII, this Agreement (other than SECTIONS 7.2, 8.1, 8.3,
8.5, 8.6, 8.7, 8.8, 8.10, 8.11, 8.12, 8.14 and 8.15 hereof) shall become void
and of no effect with no liability on the part of any party hereto (or of any of
its directors, officers, employees, agents, legal or financial advisors or other
representatives); PROVIDED, HOWEVER, that no such termination shall relieve any
party hereto from any liability for any willful breach of this Agreement prior
to termination. If this Agreement is terminated as provided herein, each party
shall use all reasonable best efforts to
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redeliver all documents, work papers and other material (including any copies
thereof) of any other party relating to the transactions contemplated hereby,
whether obtained before or after the execution hereof, to the party furnishing
the same.
ARTICLE VIII
MISCELLANEOUS
8.1 CONFIDENTIALITY. (a) Unless (i) otherwise expressly
provided in this Agreement, (ii) required by applicable Law or any listing
agreement with, or the rules and regulations of, the NASDAQ or any other
applicable securities exchange or the NASD, (iii) necessary to secure any
required Consents as to which the other party has been advised or (iv) consented
to in writing by Parent and the Company, all information (whether oral or
written) and documents furnished in connection herewith together with analyses,
compilations, studies or other documents prepared by such party which contain or
otherwise reflect such information shall be kept strictly confidential by the
Company, Parent, Purchaser and their respective officers, directors, employees
and agents. Prior to any disclosure permitted pursuant to the preceding
sentence, the party intending to make such disclosure shall consult with the
other party regarding the nature and extent of the disclosure. Nothing contained
herein shall preclude disclosures to the extent necessary to comply with
accounting, SEC and other disclosure obligations imposed by applicable Law. In
the event the transactions contemplated by this Agreement are not consummated,
each party shall return to the other any documents furnished by the other and
all copies thereof that any of them may have made and will hold in confidence
any information obtained from the other party except to the extent (a) such
party is required to disclose such information by Law or such disclosure is
necessary or desirable in connection with the pursuit or defense of a claim, (b)
such information was known by such party prior to such disclosure (and PROVIDED
that, except with respect to information referred to in the following clause
(c), such party shall have advised the other party of such knowledge upon or
promptly after its receipt of such information) or was thereafter developed or
obtained by such party independent of such disclosure or (c) such information is
or becomes generally available to the public other than by breach of this
SECTION 8.1 (or, to such party's knowledge, breach of a confidentiality
agreement with the other party). Prior to any disclosure of information pursuant
to the exception in clause (a) of the preceding sentence, the party intending to
disclose the same shall so notify the party which provided the same in order
that such party may seek a protective order or other appropriate remedy should
it choose to do so.
(b) The Parent and the Company further acknowledge that
certain of the business and activities of each of them is competitive with
business and activities of the other party, and each of them therefore agrees
that it will not use, or seek to obtain any competitive or other business
advantage as a result of, the information or documents so received by it in
connection herewith, such party acknowledging that such use would be unfair and
materially detrimental to the other party, PROVIDED that the provisions of this
SECTION 8.1(b) shall not apply to information referred to in clause (c) of
SECTION 8.1(a) hereof.
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8.2 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by a written agreement among the Company, Parent
and Purchaser.
8.3 WAIVER OF COMPLIANCE; CONSENTS. Any failure of the Company
on the one hand, or Parent and Purchaser on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived by Parent on
the one hand, or the Company on the other hand, only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in this
SECTION 8.3.
8.4 SURVIVAL. The respective representations, warranties,
covenants and agreements of the Company and Parent contained herein or in any
certificates or other documents delivered prior to or at the Closing shall
survive the execution and delivery of this Agreement, notwithstanding any
investigation made or information obtained by the other party, but shall
terminate at the Effective Time, except for those contained in SECTIONS 1.7,
1.8, 1.9, 1.14, 5.4, 5.5, 5.7 and 8.8 hereof and this SECTION 8.4, which shall
survive beyond the Effective Time.
8.5 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, by facsimile, receipt confirmed, or on the next business day when
sent by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to the Company, to:
XXXXXXXXXX INDUSTRIES INC.
00000 X.X. 00xx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
with a copy to:
Stoel Rives LLP
000 X.X. Xxxxx Xxxxxx
-00-
Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
(ii) if to Parent or Purchaser, to:
SIGMA CIRCUITS, INC.
c/o Tyco International (US) Inc.
Xxx Xxxx Xxxx
Xxxxxx, XX 00000
Attention: General Counsel
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
with a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
8.6 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto prior to the Effective Time without the
prior written consent of the Company, in the case of a proposed assignment by
Parent or Purchaser, or by Parent, in the case of a proposed assignment by the
Company, except that any Parent and Purchaser may assign its rights, interest
and obligations hereunder to any other wholly owned direct or indirect
subsidiary of Guarantor.
8.7 FEES AND EXPENSES. (a) Except as provided in SECTION
8.7(b) or 8.7(c) hereof, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs or expenses.
(b) The Company agrees that if this Agreement is terminated
pursuant to
(i) SECTION 7.1(d);
(ii) SECTION 7.1(h); or
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(iii) SECTION 7.1(e) OR 7.1(f) and, with respect to this
clause (iii), (A) at the time of such termination, there shall be
outstanding a BONA FIDE Company Takeover Proposal which has been made
directly to the shareholders of the Company or has otherwise become
publicly known or there shall be outstanding an announcement by any
credible third party of a BONA FIDE intention to make an Acquisition
Proposal (in each case whether or not conditional and whether or not
such proposal shall have been rejected by the Board of Directors of the
Company) or (B) an Alternative Transaction shall be publicly announced
by the Company or any third party within 12 months following the date
of such termination and such transaction shall at any time thereafter
be consummated on substantially the terms theretofore announced
then the Company shall pay to Parent the sum of (a) $5 million. Any payment
required by this SECTION 8.7(b) shall be made as promptly as practicable but in
no event later than two business days following termination of this Agreement in
the case of clause (i) above, upon termination of this Agreement in the case of
clause (ii) above and, in the case of clause (iii) above, upon consummation of
such Company Takeover Proposal, and shall be made by wire transfer of
immediately available funds to an account designated by Parent.
(c) The Company further agrees that if this Agreement is
terminated pursuant to SECTION 7.1(c)(i) hereof,
(i) the Company will pay to Parent, as promptly as practicable
but in no event later than two business days following termination of
this Agreement, the amount of all documented and reasonable costs and
expenses incurred by Parent, Purchaser and their affiliates (including
but not limited to fees and expenses of counsel and accountants and
out-of-pocket expenses (but not fees) of financial advisors) in an
aggregate amount not to exceed $500,000 in connection with this
Agreement or the transactions contemplated hereby ("PARENT EXPENSES");
and
(ii) in the event that the Company consummates a Company
Takeover Proposal (whether or not solicited in violation of this
Agreement) which is publicly announced within one year from the date of
termination of this Agreement, the Company will pay to Parent the sum
of $5 million, which payment shall be made not later than two business
days following consummation of such Company Takeover Proposal.
(d) The Company further agrees that if this Agreement is
terminated pursuant to SECTION 7.1(c)(ii) hereof, the Company will pay to
Parent, as promptly as practicable but in no event later than two business days
following termination of this Agreement, the Parent Expenses.
8.8 GOVERNING LAW. This Agreement shall be deemed to be made
in, and
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in all respects shall be interpreted, construed and governed by and in
accordance with the laws of, the State of New York.
8.9 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10 INTERPRETATION. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement. As used in this Agreement, (i) the term
"PERSON" shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an association, an
unincorporated organization, a Governmental Authority and any other entity, (ii)
unless otherwise specified herein, the term "AFFILIATE," with respect to any
person, shall mean and include any person controlling, controlled by or under
common control with such person and (iii) the term "SUBSIDIARY" of any specified
person shall mean any corporation 50 percent or more of the outstanding voting
power of which, or any partnership, joint venture, limited liability company or
other entity 50 percent or more of the total equity interest of which, is
directly or indirectly owned by such specified person.
8.11 ENTIRE AGREEMENT. This Agreement and the documents or
instruments referred to herein including, but not limited to, the Annex(es)
attached hereto and the Company Disclosure Letter referred to herein, which
Annex(es) and Company Disclosure Letter are incorporated herein by reference,
embody the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants, or undertakings other than those
expressly set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings among the parties with respect to such subject
matter. Notwithstanding the foregoing provisions of this SECTION 8.11, the
Confidentiality Letter shall remain in effect in accordance with its terms.
8.12 SEVERABILITY. (a) In case any provision in this Agreement
shall be held invalid, illegal or unenforceable in a jurisdiction, such
provision shall be modified or deleted, as to the jurisdiction involved, only to
the extent necessary to render the same valid, legal and enforceable, and the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby nor shall the validity, legality
or enforceability of such provision be affected thereby in any other
jurisdiction.
(b) Parent and the Company agree that the payments to Parent
provided in SECTION 8.7 are fair and reasonable in the circumstances,
considering not only the consideration payable to the holders of Common Shares
in the Offer and the Merger but also the outstanding funded indebtedness
(including capital leases) of the Company and the Company Subsidiaries and
Parent's anticipated costs, including lost opportunity costs, if the
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Offer and Merger are not consummated. If a court of competent jurisdiction shall
nonetheless, by a final, non-appealable judgment, determine that the amount of
such payments exceed the maximum amount permitted by law, then the amount of
such payments shall be reduced to the maximum amount permitted by law in the
circumstances, as determined by such court of competent jurisdiction.
8.13 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order 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 right or remedy to which such party may be entitled under
this Agreement, at law or in equity.
8.14 THIRD PARTIES. Nothing contained in this Agreement or in
any instrument or document executed by any party in connection with the
transactions contemplated hereby shall create any rights in, or be deemed to
have been executed for the benefit of, any person that is not a party hereto or
thereto or a successor or permitted assign of such a party; PROVIDED HOWEVER,
that the parties hereto specifically acknowledge that the provisions of SECTION
5.5 hereof are intended to be for the benefit of, and shall be enforceable by,
the Indemnified Parties.
8.15 DISCLOSURE LETTER. Parent acknowledges that the Company
Disclosure Letter (i) relates to certain matters concerning the disclosures
required and transactions contemplated by this Agreement, (ii) is qualified in
its entirety by reference to specific provisions of this Agreement, (iii) is not
intended to constitute and shall not be construed as indicating that any such
matter is required to be disclosed, nor shall such disclosure be construed as an
admission that such information is material with respect to the Company, except
to the extent required by this Agreement.
8.16 JURISDICTION. Each of the parties hereto submits to the
non-exclusive jurisdiction of the state and federal courts of the United States
located in the City of New York, Borough of Manhattan with respect to any claim
or cause of action arising out of this Agreement or the transactions
contemplated hereby.
8.17 WAIVER OF JURY TRIAL. PARENT, PURCHASER AND THE COMPANY
HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO
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TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREBY.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be signed and delivered by their respective duly
authorized officers as of the date first above written.
SIGMA CIRCUITS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
T MERGER SUB (OR), INC..
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
XXXXXXXXXX INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President and Chief Operating
Officer
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GUARANTEE
Guarantor guarantees each and every representation, warranty, covenant,
agreement and other obligation of Parent and Purchaser, and/or any of their
respective permitted assigns (and where any such representation or warranty is
made to the knowledge of Parent or Purchaser, such guarantee shall be deemed
made to the knowledge of Guarantor), and the full and timely performance of
their respective obligations under the provisions of the foregoing Agreement.
This is a guarantee of payment and performance, and not of collection, and
Guarantor acknowledges and agrees that this guarantee is unconditional, and no
release or extinguishment of Parent's and Purchaser's obligations or liabilities
(other than in accordance with the terms of the Agreement), whether by decree in
any bankruptcy proceeding or otherwise, shall affect the continuing validity and
enforceability of this guarantee, as well as any provision requiring or
contemplating performance by Guarantor.
The provisions of SECTIONS 8.2, 8.3, 8.5, 8.6, 8.8, 8.9, 8.10, 8.11,
8.12, 8.13, 8.14, 8.16 and 8.17 of the Agreement are incorporated herein,
MUTATIS MUTANDIS, except that notices and other communications hereunder to
Guarantor shall be delivered to Tyco International Ltd., The Xxxxxxx Building,
00 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxx XX00, Xxxxxxxxx: Secretary,
Telecopy No. (000) 000-0000, Confirm No. (000) 000-0000 (with a copy as provided
therefor in Section 8.5).
We understand that the Company is relying on this guarantee in entering
into the Agreement and may enforce this guarantee as if Guarantor were a party
thereto.
TYCO INTERNATIONAL LTD.
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President and Assistant Secretary
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GLOSSARY OF DEFINED TERMS
Section
Term Where Defined
---- -------------
"1999 Balance Sheet" 2.10
"affiliate" 8.10
"Agreement" the recitals
"Alternative Transaction" 4.8(a)
"arranger liability" 2.23(b)
"Articles of Merger" 1.4
"Closing" 1.5
"Closing Date" 1.5
"Code" 2.15(a)
"Common Option" 1.9(a)
"Common Shares" the recitals
"Company" the recitals
"Company Acquisition Agreement" 4.8(c)
"Company Disclosure Letter" Article II
"Company Financial Statements" 2.8
"Company Intellectual Property Rights" 2.17(b)
"Company Material Contracts" 2.14
"Company Permits" 2.12
"Company Proposals" 1.13(a)
"Company Securities Filings" 2.7
"Company Stock Purchase Plan" 1.9(c)
"Company Subsidiary" 2.1
"Company Takeover Proposal" 4.8(a)
"Company Warrants" 1.9(b)
"Confidentiality Agreement" 4.8(a)
"Consent" 2.5
"Credit Agreements" 2.21
"D&O Insurance" 5.5(b)
"Deferral Agreement" 2.2
"Oregon Code" 1.4
"disqualified person" 2.15(b)
"Dissenting Shares" 1.7(a)
"Effective Time" 1.5
"Employee Plans" 2.15(a)
"Enforceability Exceptions" 2.4
"Environmental Claim" 2.23(e)(i)
"Environmental Laws" 2.23(e)(ii)
"ERISA" 2.15(a)
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Section
Term Where Defined
----- -------------
"ERISA Affiliate" 2.15(a)
"excess parachute payments" 2.16(c)
"Exchange Agent" 1.8(a)
"Fairness Opinion" 1.2(a)
"Financial Advisor" 1.2(a)
"Governmental Authority" 2.5
"group" paragraph (h) of Annex I
"Guarantee" the recitals
"Guarantor" the recitals
"HSR Act" 2.5
"Indemnified Parties" 5.5(a)
"Independent Directors" 1.3
"IRS" 2.15(b)
"ISO" 2.15(c)
"Law" 2.6
"leased employee" 2.15(b)
"Liens" 2.21
"Litigation" 2.13
"Material Adverse Effect" 1.17(a)
"Materials of Environmental Concern" 2.23(e)(iii)
"Merger" the recitals
"Minimum Condition" the introductory paragraph
of Annex I
"multiemployer plan" 2.15(b)
"NASD" 4.2
"NASDAQ" 2.5
"Notes" 2.2
"Offer" the recitals
"Offer Documents" 1.1(c)
"Offer to Purchase" 1.1(c)
"Oregon Code" 1.4
"Parent" the recitals
"Parent Benefit Plan" 5.4(a)
"Parent Expenses" 8.7(c)(i)
"Parent Information" 3.5
"party in interest" 2.15(b)
"Per Share Amount" the recitals
"person" 8.10
"person/group" paragraph (h) of Annex I
"Preferred Shares" 2.2
"Proxy Statement" 1.13(a)
-60-
Section
Term Where Defined
---- --------------
"Purchaser" the recitals
"SEC" 1.1(b)
"Securities Act" 2.7
"Securities Exchange Act" 1.1(a)
"Schedule 14D-1" 1.1(c)
"Schedule 14D-9" 1.2(b)
"subsidiary" 8.10
"Superior Proposal" 4.8(a)
"Surviving Corporation" 1.4
"Surviving Corporation Common Stock" 1.6(c)
"Takeover Statute" 4.10
"Tax" 2.16(b)
"tax-exempt use property" 2.16(c)
"Tax Return" 2.16(b)
"Third Party" 4.8(a)
-61-
ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other provision
of the Offer, Purchaser shall not be required to accept for payment or, subject
to any applicable rules and regulations of the SEC, including Rule 14e-1(c)
promulgated under the Securities Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Common Shares promptly after
termination or withdrawal of the Offer), pay for, and (subject to any such rules
or regulations) may delay the acceptance for payment of any tendered Common
Shares and (except as provided in this Agreement) amend or terminate the Offer
as to any Common Shares not then paid for if (i) the condition that there shall
be validly tendered and not withdrawn prior to the expiration of the Offer a
number of Common Shares which represents at least 51% of the total number of
issued and outstanding Common Shares on a fully diluted basis (excluding,
however, shares of common stock issuable (x) upon exercise of conversion rights
pursuant to the Deferral Agreement and (y) upon exercise of Company Options that
are not exercisable prior to March 1, 2000), shall not each have been satisfied
(the "MINIMUM CONDITION") or (ii) any applicable waiting period under the HSR
Act shall not have expired or been terminated prior to the expiration of the
Offer or (iii) at any time after the date of this Agreement and before the time
of payment for any Common Shares (whether or not any Common Shares have
theretofore been accepted for payment or paid for pursuant to the Offer), any of
the following conditions exists:
(a) there shall be in effect an injunction or other order,
decree, judgment or ruling by a Governmental Authority of competent jurisdiction
or a Law shall have been promulgated, or enacted by a Governmental Authority of
competent jurisdiction which in any such case (i) restrains or prohibits the
making or consummation of the Offer or the consummation of the Merger, (ii)
prohibits or restricts the ownership or operation by Parent (or any of its
affiliates or subsidiaries) of any portion of the Company's business or assets,
or Guarantor's business or assets relating to the printed circuit board
business, which is material to the printed circuit board of all such entities
taken as a whole or which would substantially deprive Parent and/or its
affiliates or subsidiaries of the benefit of ownership of the Company's business
or assets, or compels Parent (or any of its affiliates or subsidiaries) to
dispose of or hold separate any portion of the Company's business or assets, or
Guarantor's business or assets relating to the printed circuit board business,
which is material to the printed circuit board business of all such entities
taken as a whole or which would substantially deprive Parent and/or its
affiliates or subsidiaries of the benefit of ownership of the Company's business
or assets, (iii) imposes material limitations on the ability of Purchaser
effectively to acquire or to hold or to exercise full rights of ownership of the
Common Shares, including, without limitation, the right to vote Common Shares
purchased by Purchaser pursuant to the Offer or the Merger on all matters
properly presented to the shareholders of the Company, or (iv) imposes any
material limitations on the ability of Parent and/or its affiliates or
subsidiaries effectively to control in any material respect the business and
operations of the Company, or (v) seeks to materially restrict any future
business activity by Guarantor (or any of its affiliates) relating to the
printed circuit board business, including,
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without limitation, by requiring the prior consent of any person or entity
(including any Governmental Authority) to future transactions by Guarantor (or
any of its affiliates); or
(b) there shall have been instituted, pending or threatened an
action by a Governmental Authority seeking to restrain or prohibit the making or
consummation of the Offer, the consummation of the Merger or to impose any other
restriction, prohibition or limitation referred to in the foregoing paragraph
(a); or
(c) this Agreement shall have been terminated by the Company
or Parent in accordance with its terms; or
(d) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in the Common Shares on NASDAQ, (ii) a
declaration of a banking moratorium or any general suspension of payments in
respect of banks in the United States or (iii) in the case of any of the
foregoing existing at the time of the execution of this Agreement, a material
acceleration or worsening thereof; or
(e) Parent and the Company shall have agreed that Purchaser
shall amend the Offer to terminate the Offer or postpone the payment for Common
Shares pursuant thereto; or
(f) any of the representations and warranties made by the
Company in the Merger Agreement shall not have been true and correct when made,
or shall thereafter have ceased to be true and correct as if made as of such
later date (other than representations and warranties made as of a specified
date) (in each case without for this purpose giving effect to qualifications of
materiality contained in such representation and warranty), or the Company shall
not have performed each obligation and agreement and complied with each covenant
to be performed and complied with by it under this Agreement, if such failure to
be true and correct or such failure to perform, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect,
PROVIDED, however, that such breach or failure to perform is incapable of being
cured or has not been cured within 5 days after the giving of written notice
thereof to the Company, PROVIDED, however, that no such 5-day cure period shall
require extension of the Offer beyond the twenty (20) business days provided
under SECTION 1.1(b) of the Agreement; or
(g) the Company's Board of Directors shall have modified or
amended its recommendation of the Offer in any manner adverse to Parent or shall
have withdrawn its recommendation of the Offer, or shall have recommended
acceptance of any Company Takeover Proposal or shall have resolved to do any of
the foregoing; or
(h) (i) any corporation, entity or "group" (as defined in
Section 13(d)(3) of the Securities Exchange Act) ("PERSON/GROUP"), other than
Parent and Purchaser and any person/group identified in the Company's Proxy
Statement dated October 25, 1999), shall
A-2
have acquired beneficial ownership of more than 15% of the outstanding Common
Shares, or shall have been granted any options or rights, conditional or
otherwise, to acquire a total of more than 15% of the outstanding Common Shares
and which, in each case, does not tender the Common Shares beneficially owned by
it in the Offer; (ii) any new group shall have been formed which beneficially
owns more than 15% of the outstanding Common Shares and which does not tender
the Common Shares beneficially owned by it in the Offer; or (iii) any
person/group (other than Parent or one or more of its affiliates) shall have
entered into an agreement in principle or definitive agreement with the Company
with respect to a tender or exchange offer for any Common Shares or a merger,
consolidation or other business combination with or involving the Company; or
(i) any change, development, effect or circumstance shall have
occurred or be threatened that would reasonably be expected to have a Material
Adverse Effect with respect to the Company; or
(j) the Company shall commence a case under any chapter of
Title XI of the United States Code or any similar law or regulation; or a
petition under any chapter of Title XI of the United States Code or any similar
law or regulation is filed against the Company which is not dismissed within 2
business days.
The foregoing conditions are for the sole benefit of Parent
and Purchaser and may be asserted by Parent or Purchaser regardless of the
circumstances giving rise to any such condition and may be waived by Parent or
Purchaser, in whole or in part, at any time and from time to time, in the sole
discretion of Parent. The failure by Parent or Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any right, the
waiver of such right with respect to any particular facts or circumstances shall
not be deemed a waiver with respect to any other facts or circumstances, and
each right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
Should the Offer be terminated pursuant to the foregoing
provisions, all tendered Common Shares not theretofore accepted for payment
shall forthwith be returned to the tendering shareholders.
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