EXHIBIT 2.1
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EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of April 10, 2001
Among
ILLINOIS TOOL WORKS INC.
XXXXXX ACQUISITION INC.
and
FOILMARK, INC.
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS .................................................................1
SECTION 1.01 Definitions .................................................1
ARTICLE II
THE OFFER AND THE MERGER ...................................................10
SECTION 2.01 The Offer ..................................................10
SECTION 2.02 Company Actions ............................................12
SECTION 2.03 Board of Directors; Section 14(f) ..........................13
SECTION 2.04 The Merger .................................................14
SECTION 2.05 Closing ....................................................14
SECTION 2.06 Effective Time .............................................14
SECTION 2.07 Certificate of Incorporation and By-laws ...................14
SECTION 2.08 Directors ..................................................15
SECTION 2.09 Officers ...................................................15
ARTICLE III
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES .........................15
SECTION 3.01 Effect on Capital Stock ....................................15
SECTION 3.02 Exchange of Certificates ...................................16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY ..............................18
SECTION 4.01 Organization, Standing and Power ...........................18
SECTION 4.02 Company Subsidiaries; Equity Interests .....................19
SECTION 4.03 Capital Structure ..........................................19
SECTION 4.04 Authorization; Validity of Agreement; Necessary Action .....20
SECTION 4.05 No Conflicts; Consents .....................................21
SECTION 4.06 SEC Documents; Financial Statements;
Undisclosed Liabilities ....................................21
SECTION 4.07 Information Supplied .......................................22
SECTION 4.08 Absence of Certain Changes or Events .......................22
SECTION 4.09 Taxes ......................................................23
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SECTION 4.10 Benefit Plans; ERISA Compliance; Excess
Parachute Payments .........................................25
SECTION 4.11 Litigation .................................................26
SECTION 4.12 Compliance with Applicable Laws ............................27
SECTION 4.13 Contracts; Debt Instruments ................................28
SECTION 4.14 Guarantees .................................................28
SECTION 4.15 Intellectual Property ......................................29
SECTION 4.16 Takeover Laws ..............................................29
SECTION 4.17 Affiliate Transactions .....................................30
SECTION 4.18 Environmental, Health, and Safety ..........................30
SECTION 4.19 Real and Personal Property .................................31
SECTION 4.20 Insurance ..................................................32
SECTION 4.21 Compensation ...............................................33
SECTION 4.22 Certain Advances ...........................................33
SECTION 4.23 Licenses and Permits .......................................33
SECTION 4.24 Copies of Certain Documents ................................34
SECTION 4.25 Underlying Documents .......................................34
SECTION 4.26 Risk Management Instruments ................................34
SECTION 4.27 Brokers; Fees and Expenses .................................34
SECTION 4.28 Opinion of Financial Advisor ...............................34
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB ...........................35
SECTION 5.01 Organization, Standing and Power ...........................35
SECTION 5.02 Sub ........................................................35
SECTION 5.03 Financing ..................................................35
SECTION 5.04 Ownership of Company Common Stock ..........................35
SECTION 5.05 Authorization; Validity of Agreement; Necessary Action .....35
SECTION 5.06 No Conflicts; Consents .....................................36
SECTION 5.07 Information Supplied .......................................36
SECTION 5.08 Brokers ....................................................37
SECTION 5.09 Litigation .................................................37
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS ..................................37
SECTION 6.01 Conduct of Business ........................................37
SECTION 6.02 No Solicitation ............................................40
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ARTICLE VII
ADDITIONAL AGREEMENTS ......................................................43
SECTION 7.01 Preparation of Proxy Statement; Stockholders Meeting .......43
SECTION 7.02 Access to Information; Confidentiality .....................43
SECTION 7.03 Reasonable Best Efforts; Notification ......................44
SECTION 7.04 Stock Options ..............................................46
SECTION 7.05 ESPP .......................................................46
SECTION 7.06 Indemnification; D&O Insurance .............................47
SECTION 7.07 Public Announcements .......................................48
SECTION 7.08 Transfer Taxes .............................................48
SECTION 7.09 Potential Litigation .......................................48
SECTION 7.10 Certain Employee Matters ...................................49
SECTION 7.11 Parent Guarantee of Bradford Agreement;
Shareholder Notes ..........................................49
ARTICLE VIII
CONDITIONS PRECEDENT .......................................................50
SECTION 8.01 Conditions to Each Party's Obligation to Effect the Merger .50
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER ..........................................50
SECTION 9.01 Termination ................................................50
SECTION 9.02 Effect of Termination; Fees and Expenses ...................52
SECTION 9.03 Amendment ..................................................53
SECTION 9.04 Extension; Waiver ..........................................53
SECTION 9.05 Procedure for Termination, Amendment, Extension or Waiver ..53
ARTICLE X
GENERAL PROVISIONS .........................................................54
SECTION 10.01 Nonsurvival of Representations and Warranties .............54
SECTION 10.02 Notices ...................................................54
SECTION 10.03 Interpretation ............................................55
SECTION 10.04 Severability ..............................................56
SECTION 10.05 Counterparts ..............................................56
SECTION 10.06 Entire Agreement; No Third-Party Beneficiaries ............56
SECTION 10.07 Governing Law .............................................56
SECTION 10.08 Assignment ................................................56
SECTION 10.09 Enforcement ...............................................56
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER dated as of April 10, 2001 (the
"Agreement"), between Illinois Tool Works Inc., a Delaware corporation
("Parent"), Xxxxxx Acquisition Inc., a Delaware corporation ("Sub"), and a
wholly owned subsidiary of Parent, and Foilmark, Inc., a Delaware corporation
(the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all of the issued and outstanding
shares of Company Common Stock (as defined herein) for U.S. $6.36 per share of
Company Common Stock (the "Offer Price"), net to the Seller in cash upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, the respective Boards of Directors of Sub and the Company have
approved the merger (the "Merger") of Sub into the Company, on the terms and
subject to the conditions set forth in this Agreement, whereby each issued share
of Company Common Stock not owned directly or indirectly by Parent or the
Company, will be converted into the right to receive an amount in cash equal to
the Offer Price;
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Parent and the Principal Company Stockholders (as defined herein) are
entering into Stock Option and Tender Agreements (as defined herein); and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. (a) As used in this Agreement, the following
terms shall have the following meanings:
"Affiliate" means, for any Person, another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person, where "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a Person, whether through the ownership
of voting securities, by contract, as trustee or executor, or otherwise.
"Affiliated Group" means any affiliated group within the meaning of
Section 1504(a) of the Code or any similar group defined under a similar
provision of state, local, or foreign law.
"Alternative Acquisition" has the meaning set forth in Section 6.02(a).
"Alternative Acquisition Proposal" has the meaning set forth in Section
6.02(a).
"Applicable Law" means any statute, law (including common law),
ordinance, rule or regulation applicable to the Company or any Company
Subsidiary or their respective properties or assets.
"Applicable Tax Law" means any Applicable Law relating to Taxes,
including regulations and other official pronouncements of any Governmental
Entity or political subdivision of such jurisdiction charged with interpreting
such Applicable Law.
"Bradford" has the meaning set forth in Section 7.11.
"Certificate" or "Certificates" mean the certificate or certificates
that immediately prior to the Effective Time represented outstanding shares of
Company Common Stock.
"Certificate of Merger" means a certificate of merger, or other
appropriate documents, to be filed with the Secretary of State of the State of
Delaware to effect the Merger.
"Closing" means the closing of the Merger.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the heading hereof.
"Company Board" means the Board of Directors of the Company.
"Company By-laws" means the by-laws of the Company, as amended to the
date of this Agreement.
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"Company Capital Stock" has the meaning set forth in Section 4.03.
"Company Charter" means the certificate of incorporation of the
Company, as amended to the date of this Agreement.
"Company Common Stock" means the common stock, par value $.01 per
share, of the Company.
"Company Disclosure Letter" means the letter, dated as of the date of
this Agreement, delivered by the Company to Parent and Sub.
"Company Employee Stock Option" means any option to purchase Company
Common Stock granted under any Company Option Plan and any Individual Option.
"Company Leased Real Property" has the meaning set forth in Section
4.19(a).
"Company Material Adverse Effect" means a material adverse effect on
the business, assets and liabilities (taken together), results of operations,
financial condition or prospects of the Company and the Company Subsidiaries
taken as a whole, or a material adverse effect on the ability of the Company to
perform its obligations under the Transaction Agreements to which it is a party
or on the ability of the Company to consummate the Offer, the Merger and the
other Transactions.
"Company Option Plans" means the Company's Amended and Restated 1995
Stock Incentive Compensation Plan, the 1997 Non-Employee Director's Stock Plan
and the HoloPak Technologies, Inc. 1993 Non-Qualified Stock Option Plan.
"Company Owned Real Property" has the meaning set forth in Section
4.19(a).
"Company Plans" has the meaning set forth in Section 4.10(a).
"Company Preferred Stock" has the meaning set forth in Section 4.03.
"Company SAR" means any stock appreciation right linked to the price of
Company Common Stock and granted under any Company Option Plan.
"Company SEC Documents" means all reports, schedules, forms, statements
and other documents required to be filed by the Company with the SEC since June
30, 1997.
"Company Stockholder Approval" has the meaning set forth in Section
4.04(c).
"Company Stockholders Meeting" means a meeting of the Company's
stockholders for the purpose of seeking Company Stockholder Approval.
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"Company Subsidiaries" means all the Subsidiaries of the Company.
"Company Warrants" means warrants to purchase Company Common Stock.
"Confidentiality Agreement" means the confidentiality agreement, dated
November 3, 2000, between the Company and Parent.
"Consent" means any consent, approval, license, Permit, Order or
authorization.
"Consulting Agreement" has the meaning set forth in Section 7.11.
"Contract" means any contract, lease, license, indenture, note, bond,
mortgage, agreement, Permit, concession, franchise, instrument, undertaking,
commitment, understanding or other arrangement (whether written or oral).
"DGCL" means the Delaware General Corporation Law, as amended from time
to time.
"D&O Insurance" means directors' and officers' insurance.
"Dissenters' Shares" means shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and that are held by any
Person who is entitled to demand and properly demands payment of the fair value
of such shares pursuant to, and who complies in all respects with, Section 262
of the DGCL.
"Effective Time" shall have the meaning set forth in Section 2.06.
"Environmental, Health and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976 and the Occupational Safety and Health Act
of 1970, each as amended, together with all other Applicable Laws (including
rules, regulations, codes, common law, plans, injunctions, judgments, Orders,
decrees, rulings and charges thereunder) of any Governmental Entity concerning
pollution or protection of the environment, public health and safety, or
employee health and safety, including laws relating to emissions, discharges,
releases, or threatened releases of Hazardous Substances into ambient air,
surface water, ground water, or lands or otherwise relating to the manufacture,
generation, processing, distribution, use, treatment, storage, disposal,
clean-up, transport, or handling of Hazardous Substances, in each case as now in
effect and applicable to the Company.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
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"ERISA Affiliate" means, with respect to any Person, any corporation,
trade or business which, together with such Person, is a member of a controlled
group of corporations or a group of trades or businesses under common control
within the meaning of section 414 of the Code.
"ESPP" has the meaning set forth in Section 7.05(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Fund" shall have the meaning set forth in Section 3.02(a).
"Filed Company SEC Documents" means all Company SEC Documents that were
filed and publicly available prior to the date of this Agreement.
"Financial Statements" means the consolidated financial statements of
the Company and its Subsidiaries included in each of the Company's Annual Report
on Form 10-K for the fiscal years ended June 30, 1999 and June 30, 2000, each of
Company's Quarterly Reports on Form 10-Q for the quarters ended September 30,
2000 and December 31, 2000 and any consolidated financial statements of the
Company filed with the SEC after the date hereof, including in each case the
footnotes thereto.
"Fully Diluted Shares" has the meaning set forth in Exhibit A hereto.
"GAAP"as to any Person means generally accepted United States
accounting principles, applied on a basis consistent with the basis on which the
most recent audited financial statements of such Person were prepared prior to
the date of this Agreement.
"Governmental Entity" means any:
(i) federal, state, local, municipal, or foreign government;
(ii) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official,
instrumentality or entity and any court or other tribunal);
(iii) multi-national organization or body; or
(iv) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power.
"Hazardous Substance" means any hazardous, acutely hazardous, or toxic
substance, waste or contaminant, or any other material, including, without
limitation, petroleum hydrocarbons and asbestos, regulated under any
Environmental, Health and Safety Law and applicable to the material,
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substance, waste or contaminant in the jurisdiction in which such material,
substance, waste or contaminant is located.
"HoloPak" has the meaning set forth in Section 7.11.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Incumbent Directors" has the meaning set forth in Section 2.03(c).
"Indebtedness" means, without duplication, (i) all obligations for
borrowed money, or with respect to deposits or advances of any kind, (ii) all
obligations evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations upon which interest charges are customarily paid, (iv) all
obligations under conditional sale or other title retention agreements relating
to purchased property, (v) all obligations issued or assumed as the deferred
purchase price of property or services (excluding obligations to creditors for
raw materials, inventory, services and supplies incurred in the ordinary and
usual course of business), (vi) all capitalized lease obligations, (vii) all
obligations of others secured by a Lien, other than Permitted Liens under
clauses (i), (ii) or (iii) of the definition thereof, on property or assets of
the Company or a Company Subsidiary, whether or not the obligations secured
thereby have been assumed, (viii) all obligations under interest rate or
currency hedging transactions (valued at the termination value thereof), (ix)
all letters of credit and (x) all guarantees and arrangements having the
economic effect of a guarantee of any indebtedness of any other Person (other
than a Company Subsidiary).
"Indemnified Party" has the meaning set forth in Section 7.06.
"Individual Options" means the options granted (i) to Xxxxx Xxxxxx,
Xxxxxxx Xxxxx and Xxxx Xxxxxxxx under the two Stock Option Agreements dated as
of January 4, 1990 (as the same may have been amended pursuant to the letter
agreements dated May 3, 1999, (ii) to Xxxxxx Xxxxxx under the Stock Option
Agreement dated as of July 31, 1991, and (iii) to Xxxxx Xxxxxx under the Stock
Option Agreement dated as of July 31, 1991.
"Intellectual Property Rights" means, collectively, the registrations
and applications for all patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, service marks, service xxxx rights, copyrights
and other proprietary intellectual property rights and all technology, know-how,
data, computer programs and other tangible or intangible proprietary information
or material.
"IRS" means the Internal Revenue Service.
"Knowledge" means an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
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(i) such individual is actually aware of such fact or other matter; or
(ii) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a due
inquiry.
The Company will be deemed to have "Knowledge" of a particular fact or
other matter if: Xxxxx X. Xxxxx, Xx., Xxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxx Xxxxxxxx,
Xxxxx Xxxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxxxxx; or a Company Subsidiary has
Knowledge of such fact or other matter.
"Liens" means pledges, liens, charges, mortgages, encumbrances and
security interests of any kind or nature whatsoever.
"Material Contracts" means Contracts that are material to the business,
properties, assets and liabilities (taken together), financial condition,
results of operations or prospects of the Company and the Company Subsidiaries
taken as a whole and those which are set forth in Section 4.13(a) of the Company
Disclosure Letter.
"Material Intellectual Property Rights" means all Intellectual Property
Rights which are material to the conduct of the business of the Company and the
Company Subsidiaries taken as a whole.
"Maximum Premium" has the meaning set forth in Section 7.06(b).
"Merger" has the meaning set forth in the recitals hereto.
"Merger Consideration" means the U.S. dollar cash amount equal to the
price per share of Company Common Stock paid pursuant to the Offer.
"Minimum Tender Condition" has the meaning set forth in Exhibit A
hereto.
"Offer" has the meaning set forth in the recitals hereto.
"Offer Documents" has the meaning set forth in Section 2.01(b).
"Offer Price" has the meaning set forth in the recitals hereto.
"Order" means with respect to any Person, any award, decision,
injunction, judgment, stipulation, order, ruling, subpoena, writ, decree,
consent decree, or verdict entered, issued, made, or rendered by any court,
administrative agency, arbitrator or other Governmental Entity affecting such
Person or any of its properties.
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"ordinary and usual course of business" means an action taken by a
Person that is consistent with the past practices of such Person and is taken in
the ordinary course of normal day-to-day operations of such Person.
"Outside Date" has the meaning set forth in Section 9.01(b)(i).
"Parent" has the meaning set forth in the heading hereto.
"Parent Board" has the meaning set forth in Section 5.05.
"Parent Disclosure Letter" means the letter, dated as of the date of
this Agreement, delivered by Parent to the Company.
"Parent Material Adverse Effect" means a material adverse effect on the
ability of Parent or Sub to perform its obligations under this Agreement or on
the ability of Parent or Sub to consummate the Offer, the Merger and the other
Transactions.
"Paying Agent" means the bank or trust company selected by Parent prior
to the Effective Time to act as paying agent for the payment of the Merger
Consideration.
"Pending Offering Period" has the meaning set forth in Section 7.05(a).
"Permit" has the meaning set forth in Section 4.23.
"Permitted Liens" has the meaning set forth in Section 4.19(a).
"Person" means any individual, firm, corporation (including any
non-profit corporation), general or limited partnership, company, limited
liability company, trust, joint venture, estate, association, organization,
labor union, or other entity or Governmental Entity.
"Principal Company Stockholders" means those stockholders of the
Company identified in Part A of the Parent Disclosure Letter.
"Proceedings" means any action, arbitration, audit, hearing,
proceeding, investigation, litigation, or suit (whether civil, criminal,
administrative or investigative) commenced, brought, conducted or heard by or
before, or otherwise involving, any Governmental Entity or arbitrator.
"Proxy Statement" means a proxy or information statement of the Company
relating to the approval of this Agreement by the Company's stockholders.
"Schedule 14D-9" means the Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer, as amended from time to time.
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"Schedule TO" means the Tender Offer Statement on Schedule TO with
respect to the Offer, as amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Option and Tender Agreements" means the agreements entered into
by Parent and the Principal Company Stockholders pursuant to which each of the
Principal Company Stockholders has agreed to take specified actions in
furtherance of the Offer and the Merger.
"Stock Transfer Taxes" means any state, local, foreign or provincial
Tax which is attributable to the transfer of Company Common Stock pursuant to
this Agreement.
"Sub" has the meaning set forth in the heading hereto.
"Sub Board" has the meaning set forth in Section 5.05.
"Subsequent Transaction" has the meaning set forth in Section 7.03(c).
"Subsidiary" means, with respect to any Person, any corporation,
association, general or limited partnership, company, limited liability company,
trust, joint venture, organization or other entity of which more than 50% of the
total voting power of shares of capital stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Superior Company Proposal" has the meaning set forth in Section
6.02(e).
"Surviving Corporation" has the meaning set forth in Section 2.04.
"Tax" or "Taxes" means: (i) any income, corporation, gross income,
gross receipts, franchise, profits, gains, capital stock, capital duty,
withholding, social security (or similar), employment, unemployment, disability,
real property, personal property, wealth, welfare, stamp, excise, license,
severance, environmental (including taxes under Section 59A of the Code),
customs duties, occupation, sales, use, transfer, registration, value added,
payroll, premium, property, or windfall profits tax, estimated, ad valorem or
excise tax, alternative or add-on minimum tax or other tax of any kind
whatsoever (whether or not measured in whole or in part by net income and
including any fee, assessment or other charge in the nature of or in lieu of any
tax) imposed by any Tax Authority, including any interest, penalty, or addition
thereto, whether disputed or not; and (ii) any liability by contract or
agreement for the payment of any amount of the type described in clause (i) as a
result
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of the Company or any Company Subsidiary being a successor to or transferee of
any other corporation at any time on or prior to the Closing Date, and any
interest, penalties, additions to tax (whether imposed by law, contractual
agreement or otherwise) and any liability in respect of any tax as a result of
being a member of any affiliated, consolidated, combined, unitary or similar
group.
"Tax Authority" means, with respect to any Tax, the Governmental Entity
or political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Taxes for such entity or subdivision,
including any Governmental Entity that imposes, or is charged with collecting,
social security or similar charges or premiums.
"Tax Period" means, with respect to any Tax, the period for which the
Tax is reported as provided under any Applicable Tax Law.
"Tax Return" means all Federal, state, local, provincial and foreign
Tax Returns, declarations, statements, reports, schedules, forms and information
Returns and any amended Tax Return relating to Taxes.
"Termination Fee" has the meaning set forth in Section 9.02(b).
"Transactions" means, collectively, the Offer, the Merger and the other
transactions contemplated by the Transaction Agreements.
"Transaction Agreements" means this Agreement and the Stock Option and
Tender Agreements.
"Transfer Taxes" means any state, local, foreign or provincial Tax
which is attributable to the transfer of the beneficial ownership of the
Company's or the Company's Subsidiaries' real or personal property.
"Voting Company Debt" means any bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote.
ARTICLE II
THE OFFER AND THE MERGER
SECTION 2.01 The Offer.
(a) As promptly as practicable but in no event later than ten (10)
business days after the date of this Agreement, Sub shall, and Parent shall
cause Sub to, commence the Offer within the meaning
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of the applicable rules and regulations of the SEC. The obligation of Sub to,
and of Parent to cause Sub to, accept for payment, and pay for, any shares of
Company Common Stock tendered pursuant to the Offer shall be subject only to the
conditions set forth in Exhibit A (any of which may be waived by Sub in its sole
discretion, except as otherwise provided herein). Sub expressly reserves the
right to modify the terms of the Offer, except that, without the consent of the
Company, Sub shall not (i) reduce the number of shares of Company Common Stock
subject to the Offer or reduce or waive the Minimum Tender Condition, (ii)
reduce the consideration per share of Company Common Stock to be paid pursuant
to the Offer below the Offer Price, (iii) modify or add to the conditions set
forth in Exhibit A, (iv) except as provided in the next sentence, extend the
Offer or (v) change the form of consideration payable in the Offer.
Notwithstanding the foregoing, Sub may, without the consent of the Company, (A)
extend the Offer for up to forty-five (45) days, if at the initial scheduled
expiration date of the Offer (which shall be twenty (20) business days following
the commencement of the Offer) any of the conditions to Sub's obligation to
purchase shares of Company Common Stock are not satisfied or waived, until such
time as such conditions are satisfied or waived, (B) extend the Offer, if all of
the conditions to the Offer are satisfied or waived but the number of the Shares
validly tendered and not withdrawn is less than ninety percent (90%) of the then
outstanding number of shares on a Fully Diluted Basis, for an aggregate period
not to exceed twenty (20) business days (for all such extensions); provided,
that Sub shall immediately accept and promptly pay for all Company Common Stock
tendered prior to the date of an extension pursuant to clause (B) and shall
otherwise meet the requirements of Rule 14d-11 under the Exchange Act in
connection with each such extension, (C) extend the Offer for any period
required by any rule, regulation, interpretation or position of the SEC or the
staff thereof applicable to the Offer, and (D) extend the Offer in increments of
not more than twenty (20) business days, if at the initial scheduled expiration
of the Offer (or any extension thereof) the waiting period (and any extension
thereof) applicable to any of the Transactions under the HSR Act shall not have
been terminated or shall not have expired or any consents, approvals and filings
under any foreign antitrust law, the absence of which would prohibit the
consummation of the Merger, shall not have been obtained or made. On the terms
and subject to the conditions of the Offer and this Agreement, Sub shall pay for
all shares of Company Common Stock validly tendered and not withdrawn pursuant
to the Offer as soon as practicable after the expiration of the Offer and, with
respect to any extension of the Offer, as soon as practicable after shares of
Company Common Stock are validly tendered. Sub may, at any time, transfer or
assign to one or more Subsidiaries of Parent the right to purchase all or any
portion of the shares of Company Common Stock tendered pursuant to the Offer,
but any such transfer or assignment shall not relieve Sub or Parent of their
respective obligations under the Offer or prejudice the rights of tendering
stockholders to receive payment for shares of Company Common Stock validly
tendered and accepted for payment.
(b) On the date of commencement of the Offer, Parent and Sub shall file
with the SEC a Tender Offer Statement on Schedule TO with respect to the Offer,
which shall contain an offer to purchase and a related letter of transmittal and
summary advertisement (such Schedule TO and the documents included therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "Offer Documents"). The Offer Documents will comply as
to form in
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all material respects with the applicable provisions of the Exchange Act and the
rules and regulations promulgated thereunder. Parent shall deliver copies of the
proposed forms of the Offer Documents to the Company within a reasonable time
prior to the commencement of the Offer for review and comment by the Company and
its counsel. Each of Parent, Sub and the Company shall promptly correct any
information provided by it for use in the Offer Documents if and to the extent
that such information shall have become false or misleading in any material
respect, and each of Parent and Sub shall take all steps necessary to amend or
supplement the Offer Documents and to cause the Offer Documents, as so amended
or supplemented, to be filed with the SEC and to be disseminated to the
Company's stockholders, in each case as and to the extent required by applicable
Federal securities laws. Parent and Sub shall provide the Company and its
counsel in writing with any comments Parent, Sub or their counsel may receive
from the SEC or its staff with respect to the Offer Documents promptly after the
receipt of such comments.
SECTION 2.02 Company Actions.
(a) The Company hereby approves of and consents to each of the
Transactions.
(b) On the date the Offer Documents are filed with the SEC, the Company
shall file with the SEC the Schedule 14D-9 containing the recommendations
described in Section 4.04(b) and shall mail the Schedule 14D-9 to the holders of
Company Common Stock. The Schedule 14D-9 will comply as to form in all material
respects with the applicable provisions of the Exchange Act and the rules and
regulations promulgated thereunder. The Company shall deliver copies of the
proposed form of the Schedule 14D-9 to Parent within a reasonable time prior to
the filing thereof with the SEC for review and comment by Parent and its
counsel. Each of the Company, Parent and Sub shall promptly correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that such information shall have become false or misleading in any material
respect, and the Company shall take all steps necessary to amend or supplement
the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented
to be filed with the SEC and disseminated to the Company's stockholders, in each
case as and to the extent required by applicable Federal securities laws. The
Company shall provide Parent and its counsel in writing with any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its transfer
agent to furnish Sub promptly with mailing labels containing the names and
addresses of the record holders of Company Common Stock as of a recent date and
of those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings, computer files
and all other information in the Company's possession or control regarding the
beneficial owners of Company Common Stock, and shall furnish to Sub such
information and assistance (including updated lists of stockholders, security
position listings and computer files) as Parent may reasonably request in
communicating the Offer to the Company's stockholders. Subject to the
requirements of Applicable Law, and except for such steps as are necessary to
disseminate the Offer Documents and
12
any other documents necessary to consummate the Transactions, Parent and Sub
shall hold in confidence the information contained in any such labels, listings
and files, shall use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, shall deliver to the Company
or destroy all copies of such information then in their possession.
SECTION 2.03 Board of Directors; Section 14(f).
(a) If requested by Parent, promptly after the acceptance for payment
of the shares of Company Common Stock to be purchased pursuant to the Offer as a
result of which Sub and its Affiliates own at least enough shares of Company
Common Stock to satisfy the Minimum Tender Condition, Sub shall be entitled to
designate such number of directors on the Company Board (and on each committee
of the Company Board and on each board of directors of each Company Subsidiary
designated by Parent) as will give Sub representation on the Company Board (or
such committee or Company Subsidiary board of directors) equal to at least that
number of directors, rounded up to the next whole number, which is the product
of (a) the total number of directors on the Company Board (or such committee or
Company Subsidiary board of directors) giving effect to the directors appointed
or elected pursuant to this sentence multiplied by (b) the percentage that (i)
such number of shares of Company Common Stock so accepted for payment and paid
for by Sub plus the number of shares of Company Common Stock otherwise owned by
Sub or any other subsidiary of Parent bears to (ii) the Fully Diluted Shares,
and the Company shall, at such time, cause Sub's designees to be so appointed or
elected. The Company shall take all actions necessary to cause the persons
designated by Parent to be directors on the Company Board (or a committee of the
Company Board or the board of directors of a Company Subsidiary designated by
Parent) pursuant to the preceding sentence to be so appointed or elected
(whether, at the request of Parent, by means of increasing the size of the
Company Board (or such committee or Company Subsidiary board of directors) or
seeking the resignation of directors and causing Parent's designees to be
appointed or elected).
(b) The Company's obligation to appoint designees of Parent and/or Sub
to the Company Board shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions
required pursuant to Section 14(f) and Rule l4f-1 in order to fulfill its
obligations under this Section 2.03, and shall include in the Schedule 14D-9
such information with respect to the Company and its officers and directors as
is required under Section 14(f) and Rule 14f-1. Parent and Sub will supply to
the Company any information with respect to any of them and their nominees,
officers, directors and Affiliates required by Section 14(f) and Rule 14f-1.
(c) Notwithstanding anything in this Section 2.03 to the contrary,
until the Effective Time, the Company shall retain as members of the Company
Board at least two (2) directors who are directors of the Company as of the date
hereof (the "Incumbent Directors"). Following the election or appointment of
Parent's and/or Sub's designees pursuant to this Section 2.03 and prior to the
Effective Time, any amendment or termination of this Agreement, extension for
the performance or
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waiver of the obligations or other acts of Parent or Sub or waiver of the
Company's rights hereunder, will require the concurrence of each of the
Incumbent Directors.
SECTION 2.04 The Merger. On the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, Sub shall be merged
with and into the Company at the Effective Time. At the Effective Time, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation"). At the election of
Parent, any direct or indirect Subsidiary or other Affiliate of Parent may be
substituted for Sub as a constituent corporation in the Merger. In such event,
the parties shall execute an appropriate amendment to this Agreement in order to
reflect the foregoing.
SECTION 2.05 Closing. The Closing shall take place at the offices of
Xxxxx, Xxxxx & Xxxxx, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 at 10:00
a.m. on the second business day following the satisfaction (or, to the extent
permitted by Applicable Law, waiver by all parties) of the conditions set forth
in Article VIII (or, to the extent permitted by law, waived by the parties
entitled to the benefits thereof), or at such other place, time and date as
shall be agreed in writing between Parent and the Company.
SECTION 2.06 Effective Time. As soon as practicable after the Closing,
Parent and the Company will cause the Certificate of Merger to be executed and
filed with the Secretary of State of the State of Delaware as provided in
Section 251 or 253 of the DGCL. The Merger shall become effective at the time
when the Certificate of Merger has been duly filed with the Secretary of State
of the State of Delaware or such other time as shall be agreed upon by the
parties and set forth in the Certificate of Merger in accordance with the DGCL
(the "Effective Time"). From and after the Effective Time, the Merger shall have
all the effects provided by Section 259 of the DGCL, including without
limitation, the effect that the Surviving Corporation shall possess all of the
assets, rights, privileges, powers and franchises and shall be subject to all of
the liabilities, restrictions, disabilities and duties of the Company and Sub,
all as provided under the DGCL.
SECTION 2.07 Certificate of Incorporation and By-laws. (a) The
Certificate of Incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
Applicable Law; provided, however, that such Certificate of Incorporation shall
be amended to become identical to the Certificate of Incorporation of Sub as in
effect immediately prior to the Effective Time except that Article I thereof
shall be amended to change the name of the Surviving Corporation to the name of
the Company.
(b) The By-laws of Sub as in effect immediately prior to the Effective
Time shall be the By-laws of the Surviving Corporation until thereafter changed
or amended as provided therein or by Applicable Law.
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SECTION 2.08 Directors. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's certificate of incorporation and by-laws.
SECTION 2.09 Officers. The officers of the Company shall, from and
after the Effective Time, be the officers of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's certificate of incorporation and by-laws.
ARTICLE III
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 3.01 Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital
stock of Sub shall be converted into and become one fully paid and nonassessable
share of common stock, par value $0.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share
of Company Common Stock that is owned by the Company, the Company Subsidiaries,
Parent or Sub shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Company Common Stock and Options. (i) Subject to
Sections 3.01(b), and 3.01(d), each issued and outstanding share of Company
Common Stock shall be converted into the Merger Consideration.
(ii) As of the Effective Time, all such shares of Company
Common Stock shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock shall
cease to have any rights with respect thereto, except the right to
receive the Merger Consideration upon surrender of such certificate in
accordance with Section 3.02, without interest.
(iii) Company Employee Stock Options shall be treated as set
forth in Section 7.04.
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(d) Dissenters' Rights. Notwithstanding anything in this Agreement to
the contrary, Dissenters' Shares shall not be converted into Merger
Consideration as provided in Section 3.01(c), but rather the holders of
Dissenters' Shares shall be entitled to payment of the fair value of such
Dissenters' Shares in accordance with Section 262 of the DGCL; provided,
however, that if any such holder shall fail to perfect or otherwise shall waive,
withdraw or lose the right to receive payment of fair value under Section 262 of
the DGCL, then the right of such holder to be paid the fair value of such
holder's Dissenters' Shares shall cease and such Dissenters' Shares shall be
treated as if they had been converted as of the Effective Time into Merger
Consideration as provided in Section 3.01(c). The Company shall provide prompt
notice to Parent of any demands received by the Company for appraisal of any
shares of Company Common Stock, attempted withdrawals of any such demands and
any other documents received in connection with any assertion of rights to
payment of fair value under Section 262 of the DGCL, and Parent shall have the
right to participate in and direct all negotiations and proceedings with respect
to such demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands, or agree to do any of the foregoing.
SECTION 3.02 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall select a
bank or trust company to act as the Paying Agent for the payment of the Merger
Consideration upon surrender of Certificates representing Company Common Stock.
The Surviving Corporation shall provide to the Paying Agent on a timely basis,
as and when needed after the Effective Time, cash necessary to pay for the
shares of Company Common Stock converted into the right to receive the Merger
Consideration pursuant to Section 3.01(c) (such cash being hereinafter referred
to as the "Exchange Fund").
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
Certificate or Certificates, (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 Paying Agent and shall
be in a form and have such other provisions as Parent may reasonably specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration into which the shares of Company Common Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
3.01, and the Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of Company Common Stock which is not registered
in the transfer records of the Company, payment may be made to a Person other
than the Person in whose name the Certificate so surrendered is registered, if
such Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the Person requesting such payment shall (A) pay any transfer or
16
other Taxes required by reason of the payment to a Person other than the
registered holder of such Certificate, or (B) establish to the satisfaction of
the Surviving Corporation that such Tax has been paid or is otherwise not
applicable. Until surrendered as contemplated by this Section 3.02, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration, without
interest, into which the shares of Company Common Stock theretofore represented
by such Certificate shall have been converted pursuant to Section 3.01(c). No
interest shall be paid or shall accrue on any Merger Consideration payable upon
the surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. The Merger
Consideration paid in accordance with the terms of this Article III upon
conversion of any shares of Company Common Stock shall be deemed to have been
paid in full satisfaction of all rights pertaining to such shares, and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time, any
certificates formerly representing shares of Company Common Stock are presented
to the Surviving Corporation or the Paying Agent for any reason, they shall be
canceled and exchanged as provided in this Article III.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of Company Common Stock six months after
the Effective Time shall be delivered to the Surviving Corporation and any
holder of Company Common Stock who has not theretofore complied with this
Article III shall thereafter look only to the Surviving Corporation for payment
of its claim for Merger Consideration.
(e) No Liability. None of Parent, Sub, the Company, the Surviving
Corporation or the Paying Agent shall be liable to any Person in respect of any
cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Applicable Law. If any
Certificate has not been surrendered prior to the date that is five years after
the Effective Time (or immediately prior to such earlier date on which Merger
Consideration in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity), any such shares, cash,
dividends or distributions in respect of such Certificate shall, to the extent
permitted by Applicable Law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any Person previously entitled
thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
(g) Withholding Rights. The Surviving Corporation shall be entitled to
deduct and withhold from the consideration otherwise payable to any holder of
Company Common Stock pursuant to this Agreement such amounts as may be required
to be deducted and withheld with respect to the making of such payment under the
Code, or under any provision of state, local or foreign tax law. To the
17
extent that amounts are so withheld and paid over to the appropriate Tax
Authority, the Surviving Corporation will be treated as though it withheld an
appropriate amount of the type of consideration otherwise payable pursuant to
this Agreement to any holder of Company Common Stock, sold such consideration
for an amount of cash equal to the fair market value of such consideration at
the time of such deemed sale and paid such cash proceeds to the appropriate Tax
Authority.
(h) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed, the Paying Agent shall issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration deliverable in respect
thereof as determined in accordance with Section 3.01 hereof, provided that the
Person to whom the Merger Consideration is paid shall, as a condition precedent
to the payment thereof, indemnify the Surviving Corporation in a manner
satisfactory to it (including, without limitation, the posting by such Person of
such bond and security as the Surviving Corporation may reasonably request)
against any claim that may be made against the Surviving Corporation with
respect to the Certificate claimed to have been lost, stolen or destroyed.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
SECTION 4.01 Organization, Standing and Power. The Company and each of
the Company Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and has
full power and authority and possesses all Permits necessary to enable it to
own, lease or otherwise hold its properties and assets and to conduct its
business as presently conducted, other than such Permits the lack of which,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Company Material Adverse Effect. The Company and each Company
Subsidiary is duly qualified to do business in each jurisdiction (i) listed in
Section 4.01 of the Company Disclosure Letter and (ii) where the nature of its
business or its ownership of its properties make such qualification necessary or
beneficial, except in such jurisdictions where the failure to be so qualified,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Company Material Adverse Effect. True and complete copies of
the Company Charter, the Company By-laws and the charter documents, by-laws,
organizational documents and partnership, limited liability company and joint
venture agreements (and in each case all amendments thereto) of each of the
Company Subsidiaries as in effect immediately prior to the date hereof have been
delivered to Parent. Neither the Company nor any of the Company Subsidiaries is
in violation of any term of its respective certificate of incorporation or
by-laws (or other organizational documents).
18
SECTION 4.02 Company Subsidiaries; Equity Interests. (a) The Company
owns directly or indirectly each of the outstanding shares of capital stock or a
100% ownership interest, as applicable, of each of the Company Subsidiaries free
and clear of all Liens. Each of the outstanding shares of capital stock of each
of the Company Subsidiaries having corporate form is duly authorized, validly
issued, fully paid and nonassessable. The following information for each Company
Subsidiary is set forth in Section 4.02 of the Company Disclosure Letter: (i)
its name and jurisdiction of incorporation or organization; (ii) its authorized
capital stock or share capital; and (iii) the name of each stockholder or owner
and the number of issued and outstanding shares of capital stock or share
capital held by it or the type and amount of any ownership interest.
(b) Except for its interests in the Company Subsidiaries, neither the
Company nor any Company Subsidiary (i) owns, has any right to, or is involved in
negotiations to, acquire, directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or other equity interest
in any Person or (ii) has the ability to control (whether through the ownership
of voting securities or otherwise) any other Person.
SECTION 4.03 Capital Structure. The authorized capital stock of the
Company consists of 15,000,000 shares of Company Common Stock and 500,000 shares
of preferred stock, par value $0.01 per share (the "Company Preferred Stock" and
collectively with the Company Common Stock, "Company Capital Stock"). As of the
date hereof, (i) 8,092,572 shares of Company Common Stock and no shares of
Company Preferred Stock were issued and outstanding, (ii) 39,200 shares of
Company Common Stock and no shares of Company Preferred Stock were held by the
Company in its treasury, and (iii) 1,189,414 shares of Company Common Stock were
subject to outstanding Company Employee Stock Options and the weighted average
exercise price of such options was $4.73 per share. Section 4.03 of the Company
Disclosure Letter sets forth a full list of all outstanding Company Employee
Stock Options, including the name of the Person to whom such options have been
granted, the number of shares subject to each option, the per share exercise
price for each option, the vesting schedule for each option and whether such
option automatically terminates in the event of a change in control of the
Company. Except as set forth above, and except for the ESPP, as of the date
hereof, no shares of capital stock or other voting securities of the Company
were issued, reserved for issuance or outstanding. All outstanding shares of
Company Capital Stock are, and all such shares that may be issued prior to the
Effective Time will be when issued, duly authorized, validly issued, fully paid
and nonassessable and not subject to or issued in violation of any purchase
option, call option, right of first refusal, preemptive right, subscription
right or any similar right under any provision of the DGCL, the Company Charter,
the Company By-laws or any Contract to which the Company is a party or otherwise
bound. There are no Voting Company Debts, Company Warrants or Company SARs
issued or outstanding and the only rights outstanding under any Company Option
Plan are Employee Stock Options. Except as set forth above, as of the date of
this Agreement, there are no options, warrants, rights, convertible or
exchangeable securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, commitments, contracts, arrangements or
undertakings of any kind to which the Company or any Company Subsidiary is a
party or by which any of them is bound (A) obligating the Company
19
or any Company Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other equity interests
in, or any security convertible or exercisable for or exchangeable into any
capital stock of or other equity interest in, the Company or of any Company
Subsidiary or any Voting Company Debt or (B) obligating the Company or any
Company Subsidiary to issue, grant, extend or enter into any such option,
warrant, call, right, security, commitment, Contract, arrangement or
undertaking. Except as set forth in Section 4.03 of the Company Disclosure
Letter, there are not any (1) outstanding contractual obligations of the Company
or any Company Subsidiary to repurchase, redeem or otherwise acquire any shares
of capital stock of the Company or any Company Subsidiary, or (2) voting trusts
or other agreements or understandings to which the Company or any of the Company
Subsidiaries is a party with respect to the voting or transfer of capital stock
of the Company or any of the Company Subsidiaries.
SECTION 4.04 Authorization; Validity of Agreement; Necessary Action.
(a) The Company has full corporate power and authority to execute and deliver
each Transaction Agreement to which it is a party and each agreement, document
and instrument to be executed and delivered by or on behalf of it pursuant to,
or in connection with or as contemplated by the Transaction Agreements and to
consummate the Transactions. The execution, delivery and performance by the
Company of each Transaction Agreement to which it is a party and the
consummation by the Company of the Transactions have been duly authorized by all
necessary corporate action on the part of the Company, and except for the
Company Stockholder Approval in the case of the Merger, no other corporate
action on the part of the Company is necessary to authorize the consummation of
the Transactions. The Transaction Agreements to which the Company is a party
have been duly executed and delivered by the Company and constitute (assuming
the due authorization, execution and delivery by Parent and Sub), valid and
binding obligations of the Company enforceable against the Company in accordance
with their respective terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and subject to general
principles of equity.
(b) The Company Board, at a meeting duly called and held prior to
execution of any of the Transaction Agreements, duly adopted resolutions by a
unanimous vote of those directors present at the meeting (i) approving and
declaring advisable this Agreement and the other Transaction Agreements to which
the Company is a party, the Merger and the other Transactions, (ii) determining
that the terms of the Offer, the Merger and the other Transactions are fair to
and in the best interests of the Company and its stockholders, (iii)
recommending that the holders of Company Common Stock accept the Offer and
tender their shares of Company Common Stock pursuant to the Offer, (iv)
recommending that the Company's stockholders approve and adopt this Agreement
and (v) adopting this Agreement and the other Transaction Agreements to which
the Company is a party. Such resolutions are sufficient to render inapplicable
to Parent and Sub and this Agreement and the other Transaction Agreements to
which the Company is a party, the Offer, the Merger and the other Transactions
the provisions of Section 203 of the DGCL. The Company has been advised by each
of its directors and officers that each such Person intends to tender all shares
of Company Common
20
Stock owned by such Person pursuant to the Offer, except to the extent of any
restrictions created by Section 16(b) of the Exchange Act.
(c) The only vote of holders of any class or series of Company Capital
Stock necessary to approve and adopt this Agreement and the Merger is the
approval of this Agreement by the holders of a majority of the outstanding
shares of Company Common Stock (the "Company Stockholder Approval"). No vote or
approval of any holder of Company Capital Stock is necessary to approve any
Transaction Agreement other than this Agreement or to consummate the Offer or
any Transaction other than the Merger.
SECTION 4.05 No Conflicts; Consents. Except as set forth in Section
4.05 of the Company Disclosure Letter, the execution and delivery by the Company
of each Transaction Agreement to which it is a party do not, and the
consummation of the Offer, the Merger and the other Transactions and compliance
with the terms hereof and thereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation under, or to increased, additional, accelerated or guaranteed
rights or entitlements of any Person under, or result in the creation of any
Lien (other than Permitted Liens) upon any of the properties or assets of the
Company or any Company Subsidiary under, any provision of (i) the Company
Charter, the Company By-laws or the comparable charter or organizational
documents of any Company Subsidiary, (ii) any Material Contract or (iii) subject
to the filings and other matters referred to in the following sentence, any
provision of any Order or Applicable Law applicable to the Company or any
Company Subsidiary or their respective properties or assets, other than, in the
cases of clause (ii) or (iii) above, any such items that, individually or in the
aggregate, have not had and could not reasonably be expected to have a Company
Material Adverse Effect. Except as set forth in Section 4.05 of the Company
Disclosure Letter, no Consent of, or registration, declaration or filing with,
any Governmental Entity is required to be obtained or made by or with respect to
the Company or any Company Subsidiary in connection with the execution, delivery
and performance of any Transaction Agreement to which it is a party or the
consummation of the Transactions, other than (A) compliance with and filings
under the HSR Act, (B) the filing with the SEC of (1) the Schedule 14D-9, (2) a
Proxy Statement, if such approval is required by Applicable Law, and (3) such
reports under Section 13 of the Exchange Act, as may be required in connection
with this Agreement and the other Transaction Agreements, the Offer, the Merger
and the other Transactions, (C) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with the
relevant authorities of the other jurisdictions in which the Company is
qualified to do business, (D) such filings as may be required in connection with
the Taxes described in Section 7.07, and (E) such other items as are set forth
in Section 4.05 of the Company Disclosure Letter.
SECTION 4.06 SEC Documents; Financial Statements; Undisclosed
Liabilities. (a) The Company has timely filed with the SEC all Company SEC
Documents. As of its respective date, each Company SEC Document, including,
without limitation, any financial statements or schedules included therein,
complied in all material respects with the requirements of the Securities Act
and
21
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Company SEC Documents, and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any Company SEC
Document has been revised or superseded by a later filed Filed Company SEC
Document, none of the Company SEC Documents contains any untrue statement of a
material fact or omits 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.
(b) The Financial Statements comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(c) The Company and the Company Subsidiaries have no liabilities or
obligations of any nature, whether accrued, absolute, contingent or otherwise,
asserted or unasserted, due or to become due, known or unknown, and whether or
not required to be disclosed on a balance sheet prepared in accordance with
GAAP, except liabilities (i) stated or adequately reserved against in the
Financial Statements of the Company included in the Filed Company SEC Documents
or disclosed in Section 4.06(b) of the Company Disclosure Letter, or (ii)
incurred in the ordinary and usual course of business since December 31, 2000.
SECTION 4.07 Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in (i)
the Offer Documents or the Schedule 14D-9 will, at the time such document is
filed with the SEC, at any time it is amended or supplemented or at the time it
is first published, sent or given to the Company's stockholders, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
or (ii) the Proxy Statement will, at the date it is first mailed to the
Company's stockholders or at the time of the Company Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-9 and the Proxy Statement will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder, except that no representation is made by
the Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Sub for inclusion or incorporation by
reference therein.
22
SECTION 4.08 Absence of Certain Changes or Events. Except as disclosed
in the Filed Company SEC Documents or in Section 4.08 of the Company Disclosure
Letter, from the date of the most recent audited financial statements included
in the Filed Company SEC Documents to the date of this Agreement, the Company
has conducted its business only in the ordinary and usual course of business,
and during such period there has not been (a) any Company Material Adverse
Effect, (b) any change by the Company in its accounting or tax principles or
practices, (c) any declaration, payment or setting aside for payment of any
dividends, or any redemption, purchase or other acquisition of any of its
capital stock, or (d) any revaluation by the Company of any of its assets other
than in the ordinary and usual course of business.
SECTION 4.09 Taxes. (a) Each of the Company and the Company
Subsidiaries has filed all Tax Returns required to be filed through the date
hereof, and has paid or caused to be paid all material Taxes required to be paid
through the date hereof as shown on any Tax Return, except Taxes which have not
yet accrued or otherwise become due or accrued Taxes which are in dispute, for
which adequate provision has been made in the most recent audited financial
statements included in the Filed Company SEC Documents. All such Tax Returns
were correct and complete in all material respects. The provisions for Taxes on
the Financial Statements is sufficient for the payment of all accrued and unpaid
Taxes of any nature of the Company and the Company Subsidiaries, whether or not
assessed or disputed. All material Taxes and other material assessments and
levies which the Company or any of the Company Subsidiaries is required to
withhold or collect have been withheld and collected and have been paid over to
the proper Governmental Entities. Except as set forth in Section 4.09 of the
Company Disclosure Letter, there is no pending dispute or claim concerning any
Tax liability of the Company or any of the Company Subsidiaries either (A)
claimed or raised by any Tax Authority or (B) as to which the Company has
Knowledge based upon personal contact with any agent of or other Person acting
on behalf of or for such Tax Authority. Except as set forth in Section 4.09 of
the Company Disclosure Letter, neither the Company nor any of the Company
Subsidiaries has received notice of any audit of any Tax Return filed by such
Person. Except as set forth in Section 4.09 of the Company Disclosure Letter,
(A) neither the Company nor any of the Company Subsidiaries has received written
notice of any claim made by any authority in a jurisdiction where the Company or
such Company Subsidiary does not file Tax Returns that the Company or such
Company Subsidiary is or may be subject to taxation by that jurisdiction, and
(B) there is no such claim as to which the Company has Knowledge based upon
personal contact with any agent of or other Person acting on behalf of or for
such Tax Authority. There are no Liens recorded or asserted on any of the assets
or properties of the Company or any of the Company Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax.
(b) The Company has made available to Parent correct and complete
copies of all Tax Returns, examination reports, statements of deficiencies
assessed against or agreed to by the Company or any of the Company Subsidiaries
and all other communications relating thereto since December 31, 1997.
23
(c) Neither the Company nor any of the Company Subsidiaries has waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency. Except as set forth in
Section 4.09 of the Company Disclosure Letter, neither the Company nor any of
the Company Subsidiaries currently is the beneficiary of any extension of time
within which to file any Tax Return.
(d) Neither the Company nor any of the Company Subsidiaries has filed a
consent under Section 341(f) of the Code concerning collapsible corporations or
agreed to have Section 341(f)(2) of the Code apply. Except as set forth in
Section 4.09 of the Company Disclosure Letter, neither the Company nor any of
the Company Subsidiaries has made any payments, is obligated to make any
payments, or is party to any agreement that would obligate it to make any
payments that will not be deductible under Section 280G or Section 162(m) of the
Code. Neither the Company nor any of the Company Subsidiaries has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code. Each of the Company and the Company Subsidiaries has disclosed on
its respective federal income Tax returns all positions taken therein that could
give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code. Neither the Company nor any of the Company
Subsidiaries is a party to any Tax allocation or sharing agreement. Neither the
Company nor any of the Company Subsidiaries (A) has been a member of an
affiliated group filing a consolidated federal income Tax return or (B) has any
liability for the Taxes of any Person under Treasury Regulation ss.1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor, by contract or agreement. Neither the Company nor any of the Company
Subsidiaries is or will be required to include in income any adjustment pursuant
to Section 481(a) of the Code by reason of a voluntary change in accounting
method initiated by the Company or a Company Subsidiary (nor does the Company
have any Knowledge that the Internal Revenue Service has proposed any such
adjustment or change of accounting method). There are no requests for rulings or
determinations in respect of any Tax or Tax matter pending between the Company
or any of the Company Subsidiaries and any Tax Authority.
(e) Each Affiliated Group has filed all income Tax Returns that it was
required to file for each Tax Period during which any of the Company and the
Company Subsidiaries was a member of the group. All such Tax Returns were
correct and complete (A) in all respects insofar as they relate to any of the
Company and the Company Subsidiaries and (B) in all material respects insofar as
they do not relate to the Company and the Company Subsidiaries. All income Taxes
owed by any Affiliated Group (whether or not shown on any Tax Return) have been
paid for each taxable period during which any of the Company and the Company
Subsidiaries was a member of the group.
(f) To the Knowledge of the Company there is no dispute or claim
concerning any income Tax liability of any Affiliated Group for any taxable
period during which any of the Company and the Company Subsidiaries was a member
of the group either (A) claimed or raised by any authority in writing or (B) as
to which the Company has Knowledge based upon personal contact with any agent of
such authority. No Affiliated Group has waived any statute of limitations in
respect of any
24
income Taxes or agreed to any extension of time with respect to an income Tax
assessment or deficiency for any taxable period during which any of the Company
and Company Subsidiaries was a member of the group.
SECTION 4.10 Benefit Plans; ERISA Compliance; Excess Parachute
Payments. (a) Section 4.10 of the Company Disclosure Letter contains a true and
complete list of each "employee benefit plan" (within the meaning of section
3(3) of ERISA, including, without limitation, multiemployer plans within the
meaning of ERISA section 3(37)), stock purchase, stock option, severance,
employment, change-in-control, fringe benefit, collective bargaining, bonus,
incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in the
future as a result of any Transaction, including the Offer or the Merger or
otherwise), whether formal or informal, oral or written, under which any
employee or former employee of the Company, the Company Subsidiaries or any of
their respective ERISA Affiliates has any present or future right to benefits or
under which the Company, the Company Subsidiaries or any of their respective
ERISA Affiliates has any present or contingent liability. All such plans,
agreements, programs, policies and arrangements shall be collectively referred
to as the "Company Plans".
(b) With respect to each Company Plan, the Company has delivered to
Parent a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) thereof and, to the extent applicable: (i) any
related trust agreement or other funding instrument; (ii) the most recent IRS
determination or opinion letter, if applicable; (iii) any summary plan
description and other written communications or a description of any oral
communications by the Company, the Company Subsidiaries or any of their ERISA
Affiliates concerning the extent or nature of the benefits provided under a
Company Plan; and (iv) for the three most recent years (A) the Form 5500 and
attached schedules, (B) audited financial statements, and (C) actuarial
valuation reports.
(c) (i) Each Company Plan has been established and complies and has
been administered in form and operation in, in all material respects, accordance
with its terms and with the applicable provisions of ERISA, the Code and other
applicable laws, rules and regulations; (ii) to the Knowledge of the Company,
each Company Plan which is intended to be qualified within the meaning of Code
section 401(a) is so qualified and has received a favorable determination letter
or, in the case of a prototype plan, opinion letter from the IRS as to its
qualification under section 401(a) of the Code and the tax-exempt status of any
trust which forms a part of such plan under section 501(a) of the Code, which
favorable determination letter or, in the case of a prototype plan, opinion
letter covers all amendments to the plan for which the remedial amendment period
(within the meaning of section 401(b) of the Code and applicable regulations)
has expired, and to the Knowledge of the Company nothing has occurred, whether
by action or failure to act, that could reasonably be expected to cause the loss
of such qualification; (iii) to the Knowledge of the Company no event has
occurred and no condition exists that would subject the Company, the Company
Subsidiaries or any of their respective ERISA Affiliates, either directly or
indirectly, to
25
any material Tax, fine, Lien, penalty or other liability imposed by ERISA, the
Code or other applicable laws, rules and regulations; (iv) for each Company Plan
with respect to which a Form 5500 has been filed, no material adverse change has
occurred with respect to the matters covered by the most recent Form since the
date thereof; (v) no "prohibited transaction" (as such term is defined in ERISA
section 406 and Code section 4975) has occurred with respect to any Company
Plan; and (vi) other than continuation coverage benefits required by Applicable
Law, no Company Plan provides post-termination welfare benefits (except as
required by section 4980B of the Code) and none of the Company or any Company
Subsidiaries has any obligations to provide any post-termination welfare
benefits.
(d) With respect to any Company Plan (or the assets thereof), (i) no
actions, suits or claims (other than routine claims for benefits in the ordinary
and usual course of business) are pending or, to the Knowledge of the Company,
threatened and to the Knowledge of the Company no facts or circumstances exist
that could give rise to any such actions, suits or claims and (ii) none of the
assets of any Company Plan subject to Part IV of Title I of ERISA are invested
in employer securities or employer real property.
(e) Except as set forth in Section 4.10 of the Company Disclosure
Letter, no Company Plan exists that could result in the payment to any present
or former employee of the Company or the Company Subsidiaries of any money or
other property or accelerate or provide any other rights or benefits to any
present or former employee of the Company or any Company Subsidiary as a result
of the Transactions, including the Offer and the Merger, whether or not such
payment would constitute a parachute payment within the meaning of Code section
280G. Except as set forth in Section 4.10 of the Company Disclosure Letter, no
Company Plan exists that could give rise to the payment of any amount that would
not be deductible by the Company or the Company Subsidiaries under Section
162(m) of the Code.
(f) With respect to each Company Plan that is subject to Title IV of
ERISA, (i) there has been no reportable event (as described in section 4043 of
ERISA), (ii) no steps have been taken to terminate any such plan, (iii) there
has been no withdrawal (within the meaning of section 4063 of ERISA) of a
"substantial employer" (as defined in section 4001(a)(2) of ERISA), (iv) no
event or condition has occurred which might constitute grounds under section
4042 of ERISA for the termination of or the appointment of a trustee to
administer any such plan; and (v) if each such plan were terminated immediately
after the Closing, there would be no unfunded liabilities with respect to any
such plan, its participants or beneficiaries or the Pension Benefit Guaranty
Corporation.
(g) None of the Company Plans are multiemployer plans.
SECTION 4.11 Litigation. Except as set forth in Section 4.11 of the
Company Disclosure Letter, there are (i) no continuing Orders, to which the
Company or any Company Subsidiary is a party or by which any of their respective
properties or assets are bound or, to the Knowledge of the Company, to which any
of their respective directors, officers or employees, in such capacities, is a
26
party or by which any of their respective properties or assets are bound, and
(ii) no Proceedings pending and for which service of process has been made
against the Company or any Company Subsidiary or, to the Knowledge of the
Company, against any of their respective directors, officers or employees, in
such capacities or, to the Knowledge of the Company, threatened or pending
against the Company or any Company Subsidiary, or, to the Knowledge of the
Company, against any of their respective directors, officers or employees, at
law or in equity, or before or by any Governmental Entity. There are no
Proceedings pending or, to the Knowledge of the Company, threatened against the
Company or any Company Subsidiary which may call into question the validity or
hinder the enforceability or performance of this Agreement or any of the
Transaction Agreements.
SECTION 4.12 Compliance with Applicable Laws. (a) The business of the
Company and each Company Subsidiary has been and is being conducted in
compliance in all material respects with all Applicable Laws and Orders,
including, without limitation, all Applicable Laws and Orders relating to
antitrust or trade regulation, employment practices and procedures and the
health and safety of employees. Except as set forth in Section 4.12(a) of the
Company Disclosure Letter, none of the Company or the Company Subsidiaries has,
since June 30, 1997, been subject to any Order with respect to any of the
foregoing or received any notice, demand letter, federal or state administrative
inquiry, or formal complaint or claim with respect to any of the foregoing or
the enforcement of any of the foregoing, nor has the Company or any Company
Subsidiary been the subject of any criminal Proceedings or convicted of any
felony or misdemeanor, except for such Orders, inquiries, complaints or claims
which would not result in a Company Material Adverse Effect. In particular, and
without limiting the foregoing, to the Knowledge of the Company: (i) neither any
director, officer, agent, employee, nor other Person associated with or acting
on behalf of the Company or any Company Subsidiary has, directly or indirectly,
used any corporate funds of the Company or any Company Subsidiary for unlawful
contributions, gifts, entertainment, or other unlawful expenses relating to
political activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns
from corporate funds; (ii) violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; (iii) established or maintained any unlawful
or unrecorded fund of corporate moneys or other assets or properties of the
Company or any Company Subsidiary; made any false or fictitious entry on the
book or records of the Company or any Company Subsidiary; made any bribe,
rebate, payoff, influence payment, kickback, or other unlawful payment; or (iv)
made any bribe, kickback or other payment of a similar or comparable nature,
whether lawful or not, to any Person, regardless of form, whether in money,
property, or services, to obtain favorable treatment in securing business or to
obtain special concessions, or to pay for favorable treatment for business
secured or for special concessions already obtained. The Company and each
Company Subsidiary has adequate financial controls as necessary to comply with
applicable financial auditing standards under GAAP.
(b) The Company and the Company Subsidiaries employ the number of
full-time and part-time employees as are indicated in Section 4.12(b) of the
Company Disclosure Letter. Except as set forth in Section 4.12(b) of the Company
Disclosure Letter: (i) none of the Company or any of the Company Subsidiaries is
delinquent in payments to any of its employees for any wages, salaries,
27
commissions, fees, bonuses or other direct compensation for any services
performed for it to the date hereof or amounts required to be reimbursed to such
employees; (ii) there are no charges of employment discrimination, retaliation,
or unfair labor practices or strikes, slowdowns, stoppages of work, or any other
concerted interference with normal operations existing, pending or, to the
Knowledge of the Company, threatened against or involving the Company or any of
the Company Subsidiaries; (iii) there are no attempts pending or, to the
Knowledge of the Company, threatened, to organize for purposes of collective
bargaining any employees of the Company or the Company Subsidiaries; (iv) there
are no demands to recognize any Person as the exclusive representative of any
such employees; (v) no question concerning representation exists respecting any
group of employees of the Company or any of the Company Subsidiaries; and (vi)
there are no claims or charges relating to or alleging violations of any
Applicable Laws, including, without limitation, laws relating to discrimination,
harassment, health and safety, family leave or wage payments, existing, pending
or, to the Knowledge of the Company, threatened against the Company or any of
the Company Subsidiaries nor, to the Knowledge of the Company, has there
occurred any event or does there exist any condition on the basis of which any
such claim is reasonably likely to be asserted.
SECTION 4.13 Contracts; Debt Instruments. (a) Except as disclosed in
Section 4.13(a) of the Company Disclosure Letter, there are no Material
Contracts. Neither the Company nor any of the Company Subsidiaries is in
violation of or in default under (nor, to the Knowledge of the Company, does
there exist any condition which with the passage of time or the giving of notice
or both would cause such a violation of or default under) any Material Contract
to which it is a party or by which it or any of its properties or assets is
bound, except for violations or defaults that have not and could not,
individually or in the aggregate, reasonably be expected to result in a Company
Material Adverse Effect. Each Material Contract is in full force and effect, and
is a legal, valid and binding obligation of the Company or a Company Subsidiary
and, to the Knowledge of the Company, each of the other parties thereto,
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and
general principles of equity (regardless of whether considered in a proceeding
in equity or at law). To the Knowledge of the Company, no condition exists or
event has occurred which (whether with or without notice or lapse of time or
both) would constitute a default by the Company or a Company Subsidiary or any
other party thereto under any Material Contract or result (other than due to
consummation of the Offer or the Merger) in a right of termination of any
Material Contract.
(b) Set forth in Section 4.13(b) of the Company Disclosure Letter is
(i) a list of all loan or credit agreements, notes, bonds, mortgages, indentures
and other agreements and instruments pursuant to which any Indebtedness of the
Company or the Company Subsidiaries in an aggregate principal amount in excess
of $100,000 is outstanding or may be incurred, and (ii) the respective principal
amounts currently outstanding thereunder.
SECTION 4.14 Guarantees. Except as otherwise noted in Section 4.14 of
the Company Disclosure Letter, none of the material obligations or liabilities
of the Company or the Company
28
Subsidiaries is guaranteed by any Person. Section 4.14 of the Company Disclosure
Letter sets forth a correct and complete list of all guarantees by, or other
contingent obligations of, the Company or the Company Subsidiaries showing the
parties and amounts involved and the expiration dates thereof.
SECTION 4.15 Intellectual Property. (a) The Company and the Company
Subsidiaries own, or are validly licensed or otherwise have the enforceable
right to use, all Material Intellectual Property Rights which are used in the
conduct of the business of the Company and the Company Subsidiaries, as
presently conducted. Section 4.15 of the Company Disclosure Letter sets forth a
list of all patents, patent applications, registrations and applications for
registration of trademarks, service marks, copyrights and domain names owned by
the Company and the Company Subsidiaries.
(b) Except as set forth in Section 4.15 of the Company Disclosure
Letter, no claims with respect to any Material Intellectual Property Rights
owned or used by the Company and the Company Subsidiaries are currently being
asserted or have been threatened in writing in the last three (3) years by any
Person against the Company or any of the Company Subsidiaries (i) to the effect
that the manufacture, sale, licensing or use of any of the products or services
of the Company or any of the Company Subsidiaries as now manufactured, sold or
licensed or used or proposed for manufacture, use, sale or licensing by the
Company or any of the Company Subsidiaries infringes on any Intellectual
Property Rights of another Person, (ii) against the use by the Company or any of
the Company Subsidiaries of any Intellectual Property Rights of another Person,
or (iii) challenging the ownership by the Company or any of the Company
Subsidiaries or the validity of any of the Intellectual Property Rights owned or
used by the Company and the Company Subsidiaries, except claims which have not
had and could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Except as set forth in Section
4.15 of the Company Disclosure Letter, registrations of trademarks, service
marks, and copyrights held by the Company are active and subsisting, except to
the extent any failure has not had and could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Except as
set forth in Section 4.15 of the Company Disclosure Letter, to the Knowledge of
the Company, there is no unauthorized use, infringement or misappropriation of
any of the Intellectual Property Rights owned or used by the Company and the
Company Subsidiaries by any third party, including any employee or former
employee of the Company or any of the Company Subsidiaries, which has had or
could reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. Except as set forth in Section 4.15 of the
Company Disclosure Letter, no Material Intellectual Property Rights owned or
used by the Company and the Company Subsidiaries or product of the Company or
any of the Company Subsidiaries is subject to any outstanding Order restricting
in any manner the licensing thereof by the Company or any of the Company
Subsidiaries, except to the extent any such restriction has not had and could
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Neither the Company nor any of the Company Subsidiaries
has entered into any Contract that is currently in effect under which the
Company or any of the Company Subsidiaries is restricted from selling, licensing
or otherwise
29
distributing any of its current products to any class of customers, in any
geographic area, during any period of time or in any segment of the market.
SECTION 4.16 Takeover Laws. The Company's Board of Directors has taken
all action necessary to ensure that Section 203 of the DGCL will not impose any
additional procedural, voting, approval, fairness or other restrictions on the
timely consummation of the Transactions or restrict, impair or delay the ability
of Parent to engage in any transaction with the Company or to vote or otherwise
exercise all rights as a stockholder of the Company. No other "fair price,"
"moratorium," "control share acquisition" or other anti-takeover statute or
regulation of any Governmental Entity is applicable to the Company or the
Transactions.
SECTION 4.17 Affiliate Transactions. Except as set forth in Section
4.17 of the Company Disclosure Letter, there are no loans, leases or other
continuing transactions between the Company or any of the Company Subsidiaries
and any present or former stockholder, director or officer thereof or any member
of such officer's, director's or stockholder's family, or any Person controlled
by such executive officer, director or stockholder or his or her family,
including, without limitation, any transaction that would be disclosable
pursuant to Item 404 of SEC Regulation S-K. To the Knowledge of the Company, no
director or officer of the Company or any of the Company Subsidiaries nor any of
their respective spouses or family members, owns directly or indirectly on an
individual or joint basis any interest in, or serves as an officer or director
or in another similar capacity of, any supplier or other independent contractor
of the Company or any of the Company Subsidiaries, or any organization which has
a Contract or arrangement with the Company or any of the Company Subsidiaries.
SECTION 4.18 Environmental, Health, and Safety. Except as set forth in
Section 4.18 of the Company Disclosure Letter, (a) The Company, the Company
Subsidiaries, and their respective predecessors and Affiliates have complied
with all Environmental, Health, and Safety Laws, and no action, suit,
Proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed, commenced or to the Company's Knowledge, threatened against any
of them alleging any failure so to comply, except in each case where the effect
thereof would not result in a Company Material Adverse Effect. Without limiting
the generalit y of the preceding sentence, t he Company, the Company
Subsidiaries and their respective predecessors and Affiliates have obtained and
been in compliance with all of the terms and conditions of all Permits,
licenses, and other authorizations which are required under, and have complied
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are contained in, all
Environmental, Health, and Safety Laws, except in each case where the effect
thereof would not result in a Company Material Adverse Effect.
(b) None of the Company or any Company Subsidiary has received written
notice that it has any liability (and neither the Company, the Company
Subsidiaries nor their respective predecessors and Affiliates has disposed of
any Hazardous Substance, arranged for the disposal of any Hazardous Substance,
exposed any employee or other individual to any Hazardous Substance or
condition, or
30
owned or operated any property or facility in any manner that, could form the
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the Company or any
Company Subsidiary giving rise to any liability) for damage to any site,
location, or body of water (surface or subsurface), for any illness of or
personal injury to any employee or other individual, or for any reason under any
Environmental, Health, and Safety Law.
SECTION 4.19 Real and Personal Property.
(a) Real Property. Schedule 4.19(a) of the Company Disclosure Letter
sets forth a complete list of all real properties that are owned by the Company
or any of the Company Subsidiaries (the "Company Owned Real Property"). The
Company and each Company Subsidiary has good and marketable title to, or valid
leasehold interests in, all real properties owned, used or occupied by them
except for such as are no longer used or useful in the conduct of its businesses
or as have been disposed of in the ordinary and usual course of business and
except for defects in title, easements, restrictive covenants and similar
encumbrances or impediments that, in the aggregate, do not and will not
materially interfere with its ability to conduct its business as currently
conducted. Except as set forth in Section 4.19(a) of the Company Disclosure
Letter, all such properties, other than properties in which the Company or the
Company Subsidiaries has leasehold interests, are free and clear of all Liens
and except for (i) statutory Liens of carriers, warehousemen, mechanics,
repairmen, workmen and materialmen incurred in the ordinary and usual course of
business for amounts not yet overdue or being contested in good faith, (ii)
Liens for Taxes not yet due and payable or being contested in good faith in
appropriate proceedings during which collection or enforcement is stayed and
(iii) Liens that, in the aggregate, do not and will not materially interfere
with the ability of the Company and the Company Subsidiaries to conduct business
as currently conducted (any or all of such liens under clauses (i), (ii) or
(iii), "Permitted Liens"). Neither the Company nor any Company Subsidiary has an
option to purchase any real property. All of the real property leased by the
Company and each of the Company Subsidiaries is identified in Section 4.19(a) of
the Company Disclosure Letter (herein referred to as the "Company Leased Real
Property").
(i) Status of Leases. All leases of the Company Leased Real
Property are identified in Section 4.19(a)(i) of the Company Disclosure
Letter, and true and complete copies thereof have been delivered to
Parent. Each of said leases has been duly authorized and executed by
the Company or the Company Subsidiary party thereto, is in full force
and effect and constitutes the legal, valid and binding obligation of
the Company or the Company Subsidiary party thereto, and is enforceable
in accordance with its respective terms, except to the extent that the
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and subject to general principles of
equity. The Company or the Company Subsidiary party thereto has not
received notice of any default under any of said leases, nor, to the
Knowledge of the Company, has any event occurred which, with notice or
the passage of time, or both, would give rise to such a default. To the
Knowledge of the Company, the other party to each
31
of said leases is not in default under any of said leases and there is no event
which, with notice or the passage of time, or both, would give rise to such a
default.
(ii) Condition of Real Property. Except as set forth in
Section 4.19(a)(ii) of the Company Disclosure Letter, all premises
constituting a part of the Company Owned Real Property or the Company
Leased Real Property are in good operating condition and repair, and
there are no material defects in the physical condition of any
buildings or improvements constituting part of the Company Owned Real
Property or the Company Leased Real Property that, individually or in
the aggregate, would materially impair the usefulness of the Company
Owned Real Property or the Company Leased Real Property for its current
purposes.
(iii) Compliance with the Law. None of the Company or any of
the Company Subsidiaries has received any notice from any Governmental
Entity of any violation of any Applicable Law, Order or Permit issued
with respect to any Company Owned Real Property or Company Leased Real
Property that has not been heretofore corrected and no such violation
exists which could have a material adverse effect on the operation of
any Company Owned Real Property or Company Leased Real Property. All
improvements located on or constituting part of any Company Owned Real
Property or Company Leased Real Property and the use and operation
thereof by Company or any of the Company Subsidiaries are in compliance
in all material respects with all Applicable Laws or Permits. None of
the Company or any of the Company Subsidiaries has received any notice
of any real estate Tax deficiency or assessment and, to the Knowledge
of the Company, there is no proposed deficiency, claim or assessment
with respect to any of the Company Owned Real Property or the Company
Leased Real Property, or any pending or threatened condemnation
thereof.
(iv) Other Matters. Neither the Company nor any Company
Subsidiary leases or subleases any real or personal property as lessor
or sublessor.
(b) Personal Property. The Financial Statements reflect all of the
assets and properties, real and personal, used by the Company and the Company
Subsidiaries in their business or otherwise held by the Company or a Company
Subsidiary. Except as set forth in Section 4.19(b) of the Company Disclosure
Letter, the Company or one of the Company Subsidiaries has good and valid title
to all assets and properties included in the Financial Statements or thereafter
acquired, in each case free and clear of any Lien.
SECTION 4.20 Insurance. The physical properties, assets, business,
operations, employees, officers and directors of the Company and the Company
Subsidiaries are insured to the extent disclosed in Section 4.20 of the Company
Disclosure Letter. There is no claim by the Company or any of the Company
Subsidiaries pending under any such policies as to which coverage has been
questioned, denied or disputed by the insurer. Said insurance policies and
arrangements are in full force and effect, all premiums with respect thereto are
currently paid, and the Company and the
32
Company Subsidiaries are in compliance with the terms thereof. Section 4.20 of
the Company Disclosure Letter also sets forth a list of insurance policies to
which other parties (including Affiliates of the Company) are named insureds
which relate to the properties, assets or operations of the Company or any
Company Subsidiary and the names of such other parties. No notice of
cancellation or termination has been received by the Company or any Company
Subsidiary with respect to any insurance policy described in Section 4.20 of the
Company Disclosure Letter. The Company and each Company Subsidiary carry
insurance in amounts and types of coverage which are adequate and customary in
the industry and against risks and losses which are usually insured against by
Persons holding or operating similar properties and similar businesses. No
claims have been asserted by the Company or any Company Subsidiary under any of
the insurance policies of the Company or any Company Subsidiary or relating to
their properties, assets or operations. Each such insurance policy shall
continue to be in full force and effect following consummation of the
Transactions.
SECTION 4.21 Compensation. Section 4.21 of the Company Disclosure
Letter constitutes a full and complete list of each director, officer or
employee of the Company or any Company Subsidiary whose total compensation from
the Company or the Company Subsidiaries on an annualized basis exceeds $100,000
specifying their names and job designations, the total amount paid or payable,
the basis of such compensation, whether fixed or commission or a combination
thereof, and their current rate of pay. Except as otherwise disclosed in Section
4.21 of the Company Disclosure Letter, since June 30, 2000 there has been no
material change in compensation, by means of wages, salaries, bonuses,
gratuities or otherwise, to any such director, officer or employee of the
Company or any Company Subsidiary or any change in compensation, either material
in amount or other than in the ordinary and usual course of business, to any
other director, officer or employee of the Company or any Company Subsidiary.
SECTION 4.22 Certain Advances. Except for agreements set forth in
Section 4.17 of the Company Disclosure Letter, there are no loans or advances
that individually or in the aggregate are in excess of $100,000 of the Company
or any Company Subsidiary owing by directors, officers, employees, consultants
or shareholders of the Company or any Company Subsidiary, or owing by any
Affiliate of any director or officer of the Company or any Company Subsidiary,
other than advances in the ordinary and usual course of business to officers and
employees for reimbursable business expenses.
SECTION 4.23 Licenses and Permits. The Company and each Company
Subsidiary have obtained, and are in compliance in all material aspects with,
all necessary licenses, franchises, permits, consents, approvals, Orders,
certificates, authorizations, declarations and filings (collectively, "Permits")
required by all Governmental Entities for the conduct of the business and
operations of the Company and each Company Subsidiary as now conducted. There
are no proceedings pending or, to the Knowledge of the Company, threatened which
may result in the revocation, cancellation or suspension, or any adverse
modification of any such Permits. There are no disciplinary actions under any
such Permits pending or, to the Knowledge of the Company,
33
threatened, against the Company, any Company Subsidiary or any of their
respective officers, directors or employees. No such prior proceeding or
disciplinary action has during the preceding twenty-four (24) months resulted in
any materially adverse action against the Company or any Company Subsidiary and,
to the Knowledge of the Company, there are no facts which may give rise to such
Proceedings or disciplinary actions. Section 4.23 of the Company Disclosure
Letter contains a correct and complete list of all such Permits required under
any Environmental, Health and Safety Laws.
SECTION 4.24 Copies of Certain Documents. The Company has heretofore
made available to the Parent true and complete copies of: (i) all agreements
entered into by the Company or any Company Subsidiary, if any, providing for the
acquisition or disposition of businesses or product or service lines since
January 1, 1998; and (ii) a complete list of all investments of the Company and
the Company Subsidiaries, if any, in marketable or other securities (whether
debt or equity) for investments made in the twelve (12) months prior to the date
hereof.
SECTION 4.25 Underlying Documents. All documents listed or described in
the Company Disclosure Letter and furnished to Parent are true and complete
copies, and there are no amendments or modifications thereto, except as
expressly noted in the Company Disclosure Letter in which such documents are
listed or described. The minute books of the Company and each Company Subsidiary
contain accurate records of all corporate actions taken by the directors and
shareholders of the Company and each Company Subsidiary.
SECTION 4.26 Risk Management Instruments. There are no interest rate
swaps, caps, floors, option agreements, futures and forward contracts and other
similar risk management arrangements, whether entered into for the Company's own
account, or for the account of any of the Company Subsidiaries or their
customers.
SECTION 4.27 Brokers; Fees and Expenses. (a) Except for the fees
payable by the Company to JPMorgan Securities Inc., that are quantitatively
disclosed in Section 4.27 of the Company Disclosure Letter, no broker,
investment banker, financial advisor or other Persons are entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the Offer, the Merger and or any other Transaction based upon
arrangements made by or on behalf of the Company.
(b) No valid claim against the Company or the Surviving Corporation or,
to the Company's Knowledge, against Parent or Sub exists or will exist for
payment of any "topping," "break-up," "bust-up" or "termination" fee or any
similar compensation or payment arrangement as a result of the transactions
contemplated hereby, including the Offer and the Merger except as provided by
the Transaction Agreements.
SECTION 4.28 Opinion of Financial Advisor. The Company has received the
opinion of JPMorgan Securities Inc., the Company's financial advisor dated the
date of this Agreement, that,
34
as of such date, the consideration to be received in the Offer and the Merger by
the Company's stockholders is, in the opinion of such advisor, fair to the
Company's stockholders from a financial point of view, a signed copy of which
opinion has been delivered to Parent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the
Company as follows:
SECTION 5.01 Organization, Standing and Power. (a) Each of Parent and
Sub is duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized and has all requisite corporate power
and authority to conduct its businesses as presently conducted, other than such
franchises, licenses, Permits, authorizations and approvals the lack of which,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Parent Material Adverse Effect.
SECTION 5.02 Sub. Sub is a wholly owned Subsidiary of Parent and, since
the date of its incorporation, Sub has not carried on any business or conducted
any operations other than the execution of the Transaction Agreements to which
it is a party, the performance of its obligations hereunder and thereunder and
matters ancillary thereto.
SECTION 5.03 Financing. Parent has or has available to it, and will
make available to Sub all funds necessary to consummate all the Transactions and
pay the related fees and expenses of Parent and Sub.
SECTION 5.04 Ownership of Company Common Stock. Except for the
transactions contemplated by the Stock Option and Tender Agreements, as of the
date of this Agreement, neither Parent nor Sub beneficially owns any Company
Common Stock.
SECTION 5.05 Authorization; Validity of Agreement; Necessary Action.
Each of Parent and Sub has full corporate power and authority to execute and
deliver each Transaction Agreement to which it is a party and each agreement,
document and instrument to be executed and delivered by or on behalf of Parent
and/or Sub, as the case may be, pursuant to or in connection with the
Transaction Agreements and to consummate the Transactions. The Board of
Directors of Sub (the "Sub Board") has adopted a resolution approving this
Agreement. The execution, delivery and performance by Parent and Sub of this
Agreement and the Transaction Agreements to which either is a party and the
consummation of the Transactions have been duly authorized by the Board of
Directors of Parent (the "Parent Board") and the Sub Board and by Parent as the
sole stockholder of Sub and, except as set forth in the Section 5.05 of the
Parent Disclosure Letter, no other corporate action on the part of Parent or Sub
or any other Person is necessary to authorize the execution and
35
delivery by Parent and Sub of this Agreement, any Transaction Agreement or the
consummation of the Transactions. This Agreement, assuming due and valid
authorization, execution and delivery thereof by the Company, constitutes, and
when executed and delivered by the Parent and/or Sub, as the case may be, each
other Transaction Agreement will constitute, legal, valid and binding
obligations of each of Parent and Sub, as the case may be, enforceable against
each of them in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and subject to general principles of equity.
SECTION 5.06 No Conflicts; Consents. The execution and delivery by each
of Parent and Sub of each Transaction Agreement to which it is a party, do not,
and the consummation of the Offer, the Merger and the other Transactions and
compliance with the terms hereof and thereof will not, conflict with, or result
in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation under, or to increased, additional, accelerated
or guaranteed rights or entitlements of any Person under, or result in the
creation of any Lien (other than Permitted Liens) upon any of the properties or
assets of the Parent or Sub, any provision of (i) the charter or organizational
documents of Parent or Sub, (ii) any material Contract to which Parent or Sub is
a party or by which any of their respective properties or assets is bound or
(iii) subject to the filings and other matters referred to in the following
sentence, any Order or Applicable Law applicable to Parent or Sub or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii) above, any such items that, individually or in the aggregate, have not had
and could not reasonably be expected to have a Parent Material Adverse Effect.
No Consent of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to Parent or Sub in
connection with the execution, delivery and performance of any Transaction
Agreement to which Parent or Sub is a party or the consummation of the
Transactions, other than (A) compliance with and filings under the HSR Act, (B)
the filing with the SEC of (x) the Offer Documents and (y) such reports under
Sections 13 and 16 of the Exchange Act, as may be required in connection with
this Agreement and the other Transaction Agreements, the Offer, the Merger and
the other Transactions, (C) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, (D) such filings as may be required
in connection with the taxes described in Section 7.08, (E) Consents,
registrations, declarations or filings required to be made solely by reason of
the Company's participation in the Transactions and (F) such other items as are
set forth in Section 5.06 of the Parent Disclosure Letter.
SECTION 5.07 Information Supplied. None of the information supplied or
to be supplied in writing by Parent or Sub for inclusion or incorporation by
reference in (i) Offer Documents or the Schedule 14D-9 will, at the time such
document is filed with the SEC, at any time it is amended or supplemented or at
the time it is first published, sent or given to the Company's stockholders,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading, or (ii)
the Proxy Statement will, at the date it is first mailed to the Company's
stockholders or at the time of the Company Stockholders Meeting, contain any
untrue
36
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Offer Documents
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied by the Company
for inclusion or incorporation by reference therein.
SECTION 5.08 Brokers. Neither Parent nor Sub has entered into any
contract, agreement, arrangement or understanding with any Person which may
result in the obligation of Parent or Sub to pay any finder's fees, brokerage or
agent's commission or other like payments in connection with the negotiations
leading to the Transaction Agreements or consummation of the Transactions.
Parent is not aware of any claim for payment of any finder's fees, brokerage or
agent's commissions or other like payments against Parent or Sub in connection
with the negotiations leading to the Transaction Agreements or consummation of
the Transactions.
SECTION 5.09 Litigation. As of the date of this Agreement, there are no
Proceedings pending or, to the Knowledge of Parent, threatened against Parent or
Sub which may call into question the validity or hinder the enforceability or
performance of this Agreement or any of the Transaction Agreements.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 6.01 Conduct of Business.
(a) Conduct of Business by the Company. Except for matters expressly
permitt ed by the Transaction Agreements, from the date of this Agreement to the
Effective Time the Company shall, and shall cause each Company Subsidiary to,
conduct its business in the ordinary and usual course of business and use its
reasonable best efforts to preserve intact its current business organization,
keep available the services of its officers and employees and maintain its
relationships with customers, suppliers, vendors, licensors, licensees,
distributors and agents and others having business dealings with them. In
addition, and without limiting the generality of the foregoing, except for
matters expressly permitted by this Agreement, and except as set forth in
Section 6.01 of the Company Disclosure Letter, from the date of this Agreement
to the Effective Time, the Company shall not, and shall not permit any Company
Subsidiary to, do any of the following without the prior written consent of
Parent (which consent shall not be unreasonably withheld or delayed):
(i) (A) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other
than dividends and distributions by a direct or
37
indirect wholly owned subsidiary of the Company to its parent, (B)
split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, (C) purchase,
redeem or otherwise acquire any shares of capital stock of the Company
or any Company Subsidiary or any other securities thereof or any
rights, warrants or options to acquire any such shares or other
securities or (D) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or
reorganization of the Company or any of the Company Subsidiaries;
(ii) authorize for issuance, issue, deliver, sell or grant (A)
any shares of its capital stock, (B) any Voting Company Debt or other
voting securities, (C) any securities convertible into or exchangeable
for, or any options, warrants or rights to acquire, any such shares,
voting securities or convertible or exchangeable securities or (D) any
"phantom" stock, "phantom" stock rights, stock appreciation rights or
stock-based performance units, other than the issuance of Company
Common Stock upon the exercise of Company Employee Stock Options
outstanding on the date of this Agreement and in accordance with their
present terms;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any Person or
division thereof or (B) any assets outside the ordinary and usual
course of business;
(v) (A) grant to any present or former employee, officer or
director of the Company or any Company Subsidiary any increase in
compensation or fringe benefits, except for increases in salary for
non-officer employees in the ordinary and usual course of business, (B)
grant to any present or former employee, officer or director of the
Company or any Company Subsidiary any increase in severance or
termination pay, (C) other than entering into employment agreements
with employees of the Company approved in advance by Parent, enter into
or amend any employment, consulting, indemnification, severance or
termination agreement with any such present or former employee, officer
or director, (D) establish, adopt, enter into or amend in any material
respect any collective bargaining agreement or Company Plan, (E) except
as permitted or required under Section 7.04, take any action to
accelerate any rights or benefits, or make any material determinations
not in the ordinary and usual course of business, under any collective
bargaining agreement or Company Plan, (F) loan or advance money or
other property in excess of $25,000 in the aggregate, to all present or
former employees, officers or directors of the Company or any Company
Subsidiary or (G) except as permitted or required under Section 7.04,
grant any
38
new, or amend any existing, Company Employee Stock Option or enter into
any agreement under which any Company Employee Stock Option would be
required to be issued;
(vi) make any change in accounting methods, principles or
practices affecting the reported consolidated assets, liabilities or
results of operations of the Company, except insofar as may have been
required by a change in GAAP;
(vii) sell, lease, license or otherwise dispose of or permit
to become subject to any Lien, other than a Permitted Lien, any
properties or assets, tangible or intangible, except sales of inventory
and excess or obsolete assets in the ordinary and usual course of
business;
(viii) except as disclosed in Section 6.01(a)(viii) of the
Company Disclosure Letter, (A) incur any indebtedness for borrowed
money or guarantee any such indebtedness of another Person, issue or
sell any debt securities or warrants or other rights to acquire any
debt securities of the Company or any Company Subsidiary, guarantee any
debt securities of another Person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
Person or enter into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowings incurred in the
ordinary and usual course of business, or (B) make any loans, advances
or capital contributions to, or investments in, any other Person, other
than to or in the Company or any direct or indirect wholly owned
subsidiary of the Company or to customers of the Company or a Company
Subsidiary in the ordinary and usual course of business;
(ix) make or agree to make any new capital expenditure or
expenditures that, in the aggregate, are in excess of $250,000;
(x) make any Tax election or settle or compromise any Tax
liability or refund;
(xi) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary and usual course of business or in accordance with their
terms, of liabilities reflected or reserved against in the most recent
consolidated financial statements of the Company included in the Filed
SEC Documents or incurred in the ordinary and usual course of business,
(B) cancel any material indebtedness (individually or in the aggregate)
or waive any claims or rights of substantial value or (C) waive the
benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which the Company or any Company
Subsidiary is a party;
(xii) amend any Material Contract providing for payments or
otherwise involving amounts in excess of $100,000 or, except in the
ordinary and usual course of business, enter into any Material
Contract; and
39
(xiii) authorize any of, or commit or agree to take any of,
the foregoing actions.
(b) Other Actions. The Company shall not, and shall not permit any
Company Subsidiary to, take any action that would, or that could reasonably be
expected to, result in (i) any of the representations and warranties of the
Company set forth in any Transaction Agreement becoming untrue or (ii) any
condition to the Offer set forth in Exhibit A or any condition to the Merger set
forth in Article VIII not being satisfied in all material respects.
(c) Advice of Changes. (i) The Company shall promptly advise Parent in
writing of any change or event having, or which, insofar as can reasonably be
foreseen, would have, a Company Material Adverse Effect.
(ii) After the date hereof, the Company shall have the
continuing obligation promptly to inform Parent in writing with respect
to any matter hereafter arising or discovered which would have been
required to be set forth or described in the Company Disclosure Letter
or would have been required to be taken as an exception to any
representation or warranty of the Company in order for the
representations and warranties of the Company to be true and correct at
and as of the times such representations and warranties are required to
be true and correct in accordance with this Agreement; provided,
however, that no such information supplied to Parent shall be deemed to
amend or supplement the Company Disclosure Letter or to correct or cure
any breach of or inaccuracy in any representation or warranty of the
Company made in this Agreement.
SECTION 6.02 No Solicitation. (a) From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, the
Company and the Company Subsidiaries shall not (and the Company will use its
best efforts to cause each of its and each of its Company Subsidiaries'
officers, directors or management employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its Subsidiaries not to) directly or indirectly (i) solicit, encourage, engage
in discussions or negotiate with any Person (whether such discussions or
negotiations are initiated by the Company or otherwise) or take any other action
intended or designed to facilitate any inquiry or effort of any Person (other
than Parent) relating to any possible business combination with or any possible
acquisition of the Company (whether by way of merger, purchase of capital stock,
purchase of assets or otherwise) or any material portion of its capital stock or
assets (with any such efforts by any such Person, including a firm proposal to
make such an acquisition, to be referred to as an "Alternative Acquisition"),
(ii) provide information with respect to the Company to any Person, other than
Parent, relating to a possible Alternative Acquisition by any Person, other than
Parent, (iii) enter into an agreement with any Person, other than Parent,
providing for a possible Alternative Acquisition, or (iv) make or authorize any
statement, recommendation or solicitation in support of any possible Alternative
Acquisition by any Person, other than by Parent. Notwithstanding the foregoing,
prior to the acceptance for payment of Company Common Stock equal to at least
the Minimum Tender Condition pursuant to, and subject to the conditions of, the
Offer, the Company Board (or any
40
committee thereof) may, to the extent required by the fiduciary obligations of
the Company Board under Delaware law, as determined in good faith by the Company
Board (or any committee thereof), in response to a proposal for an Alternative
Acquisition ("Alternative Acquisition Proposal") that the Company Board (or any
committee thereof) determines, in good faith after consultation with independent
counsel and an independent financial advisor, is or is reasonably likely to
result in a Superior Company Proposal (as defined in Section 6.02(e)), that was
not solicited by the Company and that did not otherwise result from a breach of
this Section 6.02(a) and subject to providing prior written notice of its
decision to take such action to Parent, (x) furnish information with respect to
the Company to the Person or group making such Alternative Acquisition Proposal
and its representatives pursuant to a confidentiality agreement with terms not
materially more favorable to the Person making the Alternative Acquisition
Proposal than those applicable to Parent under the Confidentiality Agreement
(except that such confidentiality agreement need not contain any standstill
provisions) and (y) participate in discussions and negotiations with such Person
or group and its representatives to the extent required by the fiduciary duties
of the Company Board regarding such Alternative Acquisition Proposal. The
Company shall, and shall cause its representatives to, cease immediately all
discussions and negotiations that may have occurred prior to the date of this
Agreement regarding any proposal that constitutes, or may reasonably be expected
to lead to, an Alternative Acquisition Proposal. For purposes of this Section
6.02 and Section 9.02(b)(ii), the term "Person" shall include any group as
defined in the Exchange Act. Without limiting the foregoing, it is understood
that any violation of the restrictions set forth in this Section 6.02 by any
director, officer or employee of the Company or any of its subsidiaries or any
investment banker, financial advisor, attorney, accountant or other
representative of the Company or any Company Subsidiary shall be deemed to be a
breach of this Section by the Company.
(b) Neither the Company Board nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or Sub, the approval or recommendation by the Company Board or any such
committee of this Agreement, the Offer or the Merger, (ii) approve or cause or
permit the Company to enter into any letter of intent, agreement in principle,
definitive agreement or similar agreement constituting or relating to, or which
is intended to or is reasonably likely to lead to any Alternative Acquisition
Proposal, (iii) approve or recommend, or propose to approve or recommend, any
Alternative Acquisition Proposal or (iv) agree or resolve to take actions set
forth in clauses (i), (ii) or (iii) of this sentence. Notwithstanding the
foregoing, if, during the period prior to the acceptance for payment of the
Company Common Stock equal to the Minimum Tender Condition pursuant to the
Offer, the Company Board receives a Superior Company Proposal and the Company
Board determines in good faith, that it is necessary to do so in order to comply
with its fiduciary obligations under Delaware law, the Company Board may, during
such period, in response to a Superior Company Proposal that was unsolicited and
did not otherwise result from a breach of Section 6.02(a), withdraw or modify
its approval or recommendation of the Offer, the Merger and this Agreement and,
in connection therewith, approve or recommend such Superior Company Proposal.
41
(c) The Company promptly, and in any event within 24 hours, shall
advise Parent in writing of any Alternative Acquisition Proposal or any inquiry
with respect to or that could lead to any Alternative Acquisition Proposal, the
identity of the Person or group making any such Alternative Acquisition Proposal
or inquiry and the material terms of any such Alternative Acquisition Proposal
or inquiry. The Company shall (i) keep Parent reasonably informed of the status,
including any change to the details, of any such Alternative Acquisition
Proposal or inquiry and (ii) provide to Parent as soon as practicable after
receipt or delivery thereof with copies of all material correspondence and other
written material sent or provided to the Company from any third party in
connection with any Alternative Acquisition Proposal or sent or provided by the
Company to any third party in connection with any Alternative Acquisition
Proposal. The Company cannot terminate this Agreement pursuant to Section
9.01(e) until at least seventy-two (72) hours have expired since the Company
provided Parent with written notice advising Parent (i) that the Company has
received a Superior Company Proposal, (ii) of the material terms and conditions
(including, without limitation, price, sources of financing and any material
contingencies) of such Superior Company Proposal and of the identity of the
Person making such Superior Company Proposal and (iii) that the Company intends
to accept such Superior Company Proposal.
(d) Nothing contained in this Section 6.02 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any required
disclosure to the Company's stockholders if, in the good faith judgment of the
Company Board, after consultation with independent counsel, failure so to
disclose could be inconsistent with its obligations under Applicable Law;
provided, however, that except as set forth in Section 6.02(b), in no event
shall the Company Board or any committee thereof withdraw or modify, or propose
to withdraw or modify its position with respect to this Agreement, the Offer or
the Merger or adopt, approve or recommend, or propose to adopt, approve or
recommend any Alternative Acquisition Proposal.
(e) For purposes of this Agreement, "Superior Company Proposal" means
any proposal made by a third party to acquire all or substantially all the
equity securities or assets of the Company, or other transaction for the
acquisition of all or substantially all the equity securities or assets of the
Company through a tender or exchange offer, a merger, a consolidation, a
liquidation or dissolution, a recapitalization, a sale or a joint venture, that
is on terms which the Company Board determines in its good faith judgment (after
consultation with a financial adviser, with only customary qualifications, and
independent legal counsel) to be superior for the holders of the Company Common
Stock, from a financial point of view, to the Offer and the Merger, taking into
account all the terms and conditions of such proposal and this Agreement
(including any proposal theretofore made by Parent to amend the terms of this
Agreement, the Offer and the Merger) taking into account the likelihood of
consummation in light of all financial, regulatory, legal and other aspects of
such proposal (including, without limitation, any antitrust or competition law
approvals or non-objections).
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ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Preparation of Proxy Statement; Stockholders Meeting. (a)
If the approval of this Agreement by the Company's stockholders is required by
Applicable Law, the Company shall, as soon as practicable following the
expiration of the Offer, prepare in accordance with the rules and regulations of
the SEC and file with the SEC the Proxy Statement in preliminary form, and each
of the Company and Parent shall use its reasonable best efforts to respond as
promptly as practicable to any comments of the SEC with respect thereto. The
Company shall notify Parent promptly of the receipt of any comments from the SEC
or its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and shall
supply Parent with copies of all correspondence between the Company or any of
its representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Proxy Statement. If at any time prior to receipt of
Company Stockholder Approval there shall occur any event that should be set
forth in an amendment or supplement to the Proxy Statement, the Company shall
promptly prepare and mail to its stockholders such an amendment or supplement.
The Company shall not mail any Proxy Statement, or any amendment or supplement
thereto, to which Parent reasonably objects. The Company shall use its
reasonable best efforts to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after filing with the SEC.
(b) If the approval of this Agreement by the Company's stockholders is
required by Applicable Law, the Company shall, as soon as practicable following
the expiration of the Offer, duly call, give notice of, convene and hold the
Company Stockholders Meeting for the purpose of seeking Company Stockholder
Approval. The Company shall, through the Company Board, recommend to its
stockholders that they approve this Agreement and the Merger, except to the
extent that the Company Board shall have withdrawn or modified its approval or
recommendation of this Agreement, the Offer or the Merger as permitted by
Section 6.02(b). Notwithstanding the foregoing, if Sub or any other Subsidiary
of Parent shall acquire at least 90% of the outstanding shares of Company Common
Stock, the parties shall, at the request of Parent, 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 stockholders meeting in
accordance with Section 253 of the DGCL.
(c) Parent shall cause all shares of Company Common Stock purchased
pursuant to the Offer and all other shares of Company Common Stock owned by Sub
or any other Subsidiary of Parent to be voted in favor of the approval of this
Agreement and the Merger.
SECTION 7.02 Access to Information; Confidentiality. The Company shall,
and shall cause each of the Company Subsidiaries to, afford to Parent, and to
Parent's officers, employees,
43
accountants, counsel, financial advisers and other representatives, reasonable
access during normal business hours during the period prior to the Effective
Time to all their respective properties, books, Contracts, commitments,
personnel and records and, during such period, the Company shall, and shall
cause each of the Company Subsidiaries to, furnish promptly to Parent (i) a copy
of each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of Federal or state securities
laws and (ii) all other information concerning its business, properties and
personnel as Parent may reasonably request. Without limiting the generality of
the foregoing, the Company shall, within two business days of request therefor,
provide to Parent the information described in Rule 14a-7(a)(2)(ii) under the
Exchange Act and any information to which a holder of Company Common Stock would
be entitled under Section 220 of the DGCL (assuming such holder met the
requirements of such section). All information exchanged pursuant to this
Section 7.02 shall be subject to the Confidentiality Agreement and the
Confidentiality Agreement shall remain in full force and effect in accordance
with its terms except that the seventh and eighth paragraphs thereof (regarding
standstill) are hereby terminated and of no further force and effect.
SECTION 7.03 Reasonable Best Efforts; Notification. (a) Upon the terms
and subject to the conditions set forth in this Agreement each of the parties
shall use their respective reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Offer, the Merger and the other Transactions, including (i) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities, including, without limitation, the execution of any
documents required to be filed in accordance with the New Jersey Industrial Site
Recovery Act, and the making of all necessary registrations and filings and the
taking of all reasonable steps as may be necessary to obtain any necessary
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, including under the HSR Act, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the defending
of any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or any other Transaction Agreement or the
consummation of the Transactions, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (iv) the execution and delivery of any additional
instruments necessary to consummate the Transactions and to fully carry out the
purposes of the Transaction Agreements. In connection with and without limiting
the foregoing, the Company and the Company Board shall (A) take all commercially
reasonable action necessary to ensure that no state takeover statute or similar
statute or regulation is or becomes applicable to any Transaction or this
Agreement or any other Transaction Agreement, and (B) if any state takeover
statute or similar statute or regulation becomes applicable to this Agreement or
any other Transaction Agreement, take all commercially reasonable action
necessary to ensure that the Offer, the Merger and the other Transactions may be
consummated as promptly as practicable on the terms contemplated by the
Transaction Agreements and otherwise to minimize the effect of such statute or
regulation on the Offer, the Merger and the other Transactions.
44
(b) Notwithstanding anything to the contrary in this Agreement, (i) the
Company shall not, without Parent's prior written consent, commit to any
divestitures, licenses, hold separate arrangements or similar matters, including
covenants affecting business operating practices (or allow its Subsidiaries to
commit to any divestitures, licenses, hold separate arrangements or similar
matters), and the Company shall commit to, and shall use its reasonable best
efforts to effect (and shall cause its Subsidiaries to commit to and use their
reasonable best efforts to effect), any such divestitures, licenses, hold
separate arrangements or similar matters as Parent shall request, but solely if
such divestitures, licenses, hold separate arrangements or similar matters are
contingent on consummation of the Offer and (ii) neither Parent nor any of its
Subsidiaries shall be required to agree (with respect to (A) Parent or its
Subsidiaries or (B) the Company or its Subsidiaries) to any divestitures,
licenses, hold separate arrangements or similar matters, including covenants
affecting business operating practices, if such divestitures, licenses,
arrangements or similar matters, individually or in the aggregate, would
reasonably be expected to have a Parent Material Adverse Effect or a Company
Material Adverse Effect.
(c) Except as provided below, nothing in this Section 7.03 or any other
part of this Agreement shall require Parent to refrain from entering into any
agreement with respect to, or issuing Parent common stock or other consideration
in connection with, a business combination with, or an acquisition of, another
Person or any businesses or assets of another Person after the date of this
Agreement and prior to the Effective Time (a "Subsequent Transaction"). In the
event of a Subsequent Transaction, Parent shall agree to any divestitures,
licenses, hold separate arrangements or similar matters (including covenants
affecting business operating practices) on a timely basis that are necessary in
order to obtain approval of the transactions contemplated by this Agreement
under applicable competition laws that would not otherwise have been required in
order to obtain such approval but for the Subsequent Transaction. Parent will
promptly advise the Company in writing if it enters into an agreement relating
to a Subsequent Transaction that is reasonably likely to have a material adverse
impact under applicable competition law on the timely completion of the
Transactions and thereafter keep the Company apprised of the status of such
Subsequent Transaction.
(d) The Company and Parent each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated by the
Transaction Agreements, including promptly furnishing the other with copies of
notice or other communications received by Parent or the Company, as the case
may be, or any of its Subsidiaries, from any Governmental Entity with respect to
Transactions.
(e) The Company shall give prompt notice to Parent, and Parent or Sub
shall give prompt notice to the Company, of, and such party shall use its
reasonable best efforts to prevent, or promptly remedy (i) any representation or
warranty made by it contained in any Transaction Agreement that is qualified as
to becoming untrue or inaccurate in any respect or any such representation or
warranty that is not so qualified becoming untrue or inaccurate in any material
respect or (ii) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under any Transaction Agreement; provided, however, that no such
45
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under any other Transaction Agreement.
SECTION 7.04 Stock Options. (a) Except as described in Section 7.04(b)
below, as soon as practicable following the date of this Agreement, the Company
Board (or, if appropriate, any committee administering the Company Option Plans)
shall adopt, or shall cause to be adopted, such resolutions or take, or cause to
be taken, such other actions as are required to adjust the terms of all
outstanding Company Employee Stock Options (other than the Individual Options)
heretofore granted under any Company Option Plan or otherwise, to provide that
each Company Employee Stock Option outstanding immediately prior to the
Effective Time (whether or not then vested) shall be canceled as of the
Effective Time in exchange for a cash payment by the Company to be made on the
date following the Effective Time (or as soon as practicable thereafter) of an
amount equal to (i) the excess, if any, of (A) the price per share of Company
Common Stock to be paid pursuant to the Offer over (B) the exercise price per
share of Company Common Stock subject to such Company Employee Stock Option,
multiplied by (ii) the number of shares of Company Common Stock for which such
Company Employee Stock Option shall not theretofore have been exercised.
(b) With respect to the Individual Options granted to each of the
individuals identified in Section 7.04(b) of the Company Disclosure Schedule,
the Company shall take the actions specified on Schedule 7.04(b) of the Company
Disclosure Schedule.
(c) All amounts payable pursuant to this Section 7.04 shall be subject
to any required withholding of Taxes and shall be paid without interest. The
Company shall use its reasonable best efforts to obtain all consents of the
holders of the Company Employee Stock Options as shall be necessary to
effectuate the foregoing. Notwithstanding anything to the contrary contained in
this Agreement, payment shall, at Parent's request, be withheld in respect of
any Company Employee Stock Option until all necessary consents are obtained.
(d) The Company Board shall adopt, or shall cause to be adopted, such
resolutions or take such other actions as are required so that the Company
Option Plans and the Individual Options shall terminate as of the Effective
Time, and the provisions in any other Company Plan providing for the issuance,
transfer or grant of any capital stock of the Company or any interest in respect
of any capital stock of the Company shall be deleted as of the Effective Time,
and to ensure that following the Effective Time no holder of a Company Employee
Stock Option or any participant in any Company Option Plan or other Company Plan
shall have any right thereunder to acquire any capital stock of the Company or
the Surviving Corporation.
SECTION 7.05 ESPP. (a) The Company Board shall take such action as may
be necessary or desirable in the reasonable judgment of Parent under the Amended
and Restated Foilmark, Inc. Employee Stock Purchase Plan dated as of January 31,
1995, as the same may be amended (the "ESPP"), to cause the Offering Period (as
defined in the ESPP) that is pending at the date of this Agreement to be
extended pursuant to Section 18(b) of the ESPP until such time as this Agreement
46
may be terminated in accordance with its terms without the Offer or the Merger
being consummated (as so extended, the "Pending Offering Period") such that
there shall be no Exercise Date (as defined in the ESPP) during the term of this
Agreement. Notwithstanding the foregoing, for purposes of participant
contributions under Sections 5 and 6 of the ESPP, the Pending Offering Period
shall end as originally scheduled.
(b) Prior to the first acceptance by Sub of shares of Company Common
Stock for payment pursuant to the Offer, the Company Board shall take all
actions as may be necessary or desirable in the reasonable judgment of Parent to
cause (i) the Pending Offering Period to be canceled without any further
purchase of shares of Company Common Stock as contemplated by Section 17(a) of
the ESPP, (ii) all amounts contributed to the ESPP during the Pending Offering
Period to be refunded to the participants, and (iii) the ESPP to be terminated
effective no later than the date of the first acceptance by Sub of shares of
Company Common Stock for purchase pursuant to the Offer. Without limiting the
generality of the foregoing, the Company Board shall make a determination under
Section 17(c) of the ESPP that the consummation of the Offer constitutes a
"change-in-control event" within the meaning of the ESPP.
SECTION 7.06 Indemnification; D&O Insurance. (a) Parent and Sub agree
that all rights to indemnification for acts or omissions occurring prior to the
Effective Time now existing in favor of the current or former directors,
officers or employees of the Company and the Company Subsidiaries (each, an
"Indemnified Party") as provided in their respective certificates of
incorporation or by-laws or in any indemnification agreement between the Company
and any Indemnified Party as in effect immediately prior to the date of this
Agreement shall survive the Merger and shall continue in full force and effect
in accordance with their terms for a period of not less than six years from the
Effective Time.
(b) Parent shall cause to be maintained for a period of six years from
the Effective Time the Company's current D&O Insurance policy to the extent that
it provides coverage for events occurring prior to the Effective Time for all
persons who are directors and officers of the Company on the date of this
Agreement, so long as the annual premium therefor would not be in excess of 150%
of the last annual premium paid prior to the date of this Agreement (such
amount, the "Maximum Premium"). Upon request by Parent, the Company shall use
its reasonable best efforts to extend coverage under the Company's D&O Insurance
by obtaining a six-year "tail" policy on terms and conditions no less
advantageous than the existing D&O Insurance (provided that the lump sum payment
to purchase such coverage does not exceed three times the Maximum Premium) and
such "tail" policy shall satisfy Parent's obligations under this Section
7.06(b). Parent's obligations under this Section 7.06(b) shall also be satisfied
if Parent's D&O Insurance provides (or is amended to provide) substantially
similar coverage for events occurring prior to the Effective Time for persons
who are directors and officers of the Company on the date of this Agreement. If
the Company's existing D&O Insurance expires, is terminated or canceled during
such six-year period or a "tail" policy cannot be purchased on the terms set
forth above and Parent cannot or determines not to satisfy its obligations under
this Section 7.06(b) pursuant to the preceding sentence, Parent shall use
47
reasonable best efforts to cause to be obtained as much D&O Insurance as can be
obtained for the remainder of such period for an annualized premium not in
excess of the Maximum Premium, on terms and conditions no less advantageous than
the existing D&O Insurance. The Company represents to Parent that the last
annual premium paid prior to the date of this Agreement is not greater than
$100,000.
(c) In the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Surviving
Corporation assume the obligations set forth in this Section 7.06.
(d) In the event any claim is made against any Indemnified Party that
is covered or potentially covered by D&O Insurance, neither the Surviving
Corporation nor Parent shall take any action or fail to take any action that
would forfeit, jeopardize, restrict or limit the insurance coverage available
for such claim until the final disposition thereof. The provisions of this
Section 7.06 (i) shall survive the closing of the Transactions, are intended to
benefit the Company, the Surviving Corporation and each Indemnified Party (each
of whom and their heirs and legal representatives shall be entitled to enforce
this Section 7.06 against Parent or the Surviving Corporation, and Parent shall
cause Sub to pay all reasonable legal fees and disbursements (if any) incurred
by or on behalf of any such person in successfully enforcing its rights under
this Section 7.06) and (ii) are in addition to, and not in substitution for, any
other rights to indemnification or contribution that any such person may have by
contract or otherwise.
SECTION 7.07 Public Announcements. Parent and Sub, on the one hand, and
the Company, on the other hand, shall consult with each other before issuing,
and provide each other the opportunity to review and comment upon, any press
release or other public statements with respect to the Offer, the Merger and the
other Transactions and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by
Applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange.
SECTION 7.08 Transfer Taxes. Either Sub or the Surviving Corporation
shall pay all Transfer Taxes, if any, and any penalties or interest with respect
to the Transfer Taxes, payable in connection with the consummation of the Offer
or the Merger, and all Stock Transfer Taxes, if any, and any penalties or
interest with respect to any such Stock Transfer Taxes.
SECTION 7.09 Potential Litigation. The Company shall give Parent the
opportunity to participate fully in the conduct of the defense or the settlement
of any litigation against the Company and its directors relating to any
Transaction. No settlement of any such litigation shall be agreed to without
Parent's prior written consent.
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SECTION 7.10 Certain Employee Matters. Parent will cause the Surviving
Corporation to maintain each Company Plan as in effect on the date of this
Agreement (other than the Company Option Plans and the ESPP), or provide plans
with benefits no less favorable than those provided under each Company Plan for
a period of one (1) year after the Effective Time. In the event any employees of
the Surviving Corporation become participants in any substitute for a Company
Plan, Parent will cause the Surviving Corporation to give credit under such Plan
to such employees for all service with the Surviving Corporation and with the
Company (and any predecessor employer) prior to the Effective Time for purpose
of determining eligibility to participate under such plan but not for any other
purpose for which length of service may be taken into account or recognized by
the Company in the administration of the replaced Company Plan.
SECTION 7.11 Parent Guarantee of Bradford Agreement; Shareholder Notes.
(a) Parent will, and will cause the Surviving Corporation to absolutely
and unconditionally pay, all amounts due under that certain Amended and Restated
Consulting Agreement, dated as of October 1, 1991, as amended ( the "Consulting
Agreement") by and among HoloPak Technologies, Inc. ("HoloPak"), Transfer Print
Foils, Inc. and Bradford Associates, a New Jersey general partnership
("Bradford") in accordance with its terms, and Parent does hereby, and will
cause the Surviving Corporation to absolutely and unconditionally guarantee
payment on a timely basis of all amounts payable pursuant to the Consulting
Agreement. Parent will cause the Surviving Corporation to pay all shareholder
notes described on Section 4.17 of the Company Disclosure Letter when due in
accordance with their respective terms.
(b) In the event (i) Parent or the Surviving Corporation consolidates
with or merges into any other Person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or, as a result
of such merger or consolidation, the board of directors of Parent shall consist
of a majority of directors who were not directors of Parent immediately prior to
such merger, (ii) Parent transfers or conveys all or substantially all of its
properties and assets to any Person, or (iii) any Person (other than any direct
or indirect Subsidiary of Parent) acquires all or substantially all of the
outstanding stock or assets of the Surviving Corporation or HoloPak, then, and
in each such case, all amounts due under the Consulting Agreement and the
shareholder notes described on Section 4.17 of the Company Disclosure Letter
shall accelerate and become automatically due and payable in full at such time
(together with interest at 8% per annum from the date such payment accelerates
and becomes due to the date of payment).
(c) The provisions of this Section 7.11 shall survive the closing of
the Transactions and are for the benefit of, and shall be enforceable severally
by, Bradford and its successors and assigns, and Bradford and the holders of the
shareholder notes described on Section 4.17 of the Company Disclosure Letter
shall each individually be entitled to enforce this Section 7.11 against Parent
or the Surviving Corporation and all successors and assigns thereof, and Parent
shall cause Sub to pay all
49
reasonable legal fees and disbursements (if any) incurred by or on behalf of any
such person in successfully enforcing its rights under this Section 7.11.
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. If required by Applicable Law, the Company
shall have obtained Company Stockholder Approval.
(b) Antitrust. The waiting period (and any extension thereof)
applicable to any of the Transactions under the HSR Act shall have been
terminated or shall have expired and any consents, approvals and filings under
any foreign antitrust law, the absence of which would prohibit the consummation
of Merger, shall have been obtained or made.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other Order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing or
imposing any conditions or limitations on the consummation of any of the
Transactions shall be in effect; provided, however, that each of the parties
shall have used its reasonable best efforts to prevent the entry of any such
injunction or other Order and to appeal as promptly as possible any such
injunction or other order that may be entered.
(d) Acceptance of Shares. Sub shall have accepted shares of Company
Common Stock for payment pursuant to the Offer; provided, however, that this
condition shall not be applicable to the obligations of Parent or Sub if, in
breach of this Agreement or the terms of the Offer, Sub fails to purchase any
Shares validly tendered and not withdrawn pursuant to the Offer.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after Company Stockholder
Approval:
(a) by mutual written consent of Parent, Sub and the Company;
50
(b) by either Parent or the Company:
(i) if the Merger is not consummated on or before August 31,
2001 (the "Outside Date"), unless the failure to consummate the Merger
is the result of a breach of this Agreement by the party seeking to
terminate this Agreement; provided, however, that this Agreement may
not be terminated pursuant to this clause (i) if Sub has accepted
shares of Company Common Stock for payment pursuant to the Offer;
(ii) if any Governmental Entity issues an Order or takes any
other action permanently enjoining, restraining or otherwise
prohibiting the Merger and such Order or other action shall have become
final and nonappealable;
(iii) (A) Sub shall have failed to commence the Offer within
ten (10) business days following the date of this Agreement or (B) the
Offer shall have terminated or expired in accordance with its terms
without Sub having purchased any shares of Company Common Stock
pursuant to the Offer; provided, however, that the right to terminate
this Agreement pursuant to this clause (iii) shall not be available to
any party whose failure to fulfill any of its obligations under this
Agreement or the failure of whose representations and warranties to be
true results in the failure of any such condition; or
(iv) if, upon a vote at a duly held stockholders meeting to
obtain Company Stockholder Approval, Company Stockholder Approval is
not obtained.
(c) by Parent, if the Company breaches or fails to perform in any
material respect any of its representations, warranties, covenants or agreements
contained in this Agreement, which breach or failure to perform (i) would give
rise to the failure of a condition set forth in Exhibit A, and (ii) cannot be or
has not been cured within 30 days after the giving of written notice to the
Company of such breach (provided that Parent is not then in material breach of
any representation, warranty or covenant contained in this Agreement); provided,
however, that this Agreement may not be terminated pursuant to this clause (c)
if Sub has accepted shares of Company Common Stock representing at least the
Minimum Tender Condition for payment pursuant to the Offer;
(d) by Parent:
(i) if the Company Board or any committee thereof withdraws or
modifies in a manner adverse to Parent its approval or recommendation
of the Offer, the Merger or this Agreement or fails to recommend to the
Company's stockholders that they accept the Offer or give Company
Stockholder Approval, or the Company Board or any committee thereof
resolves to take any of the foregoing actions; or
(ii) if the Company Board fails to reaffirm publicly and
unconditionally its recommendation to the Company's stockholders that
they accept the Offer and give
51
Company Stockholder Approval within 10 business days of Parent's
written request to do so (which request may be made at any time
following public disclosure of an Alternative Acquisition Proposal),
which public reaffirmation must also include the unconditional
rejection of such Alternative Acquisition Proposal;
(e) by the Company prior to the acceptance of shares of Company Common
Stock representing at least the Minimum Tender Condition for payment pursuant to
the Offer if, the Company Board shall have finally determined to approve,
endorse or recommend an Alternative Acquisition Proposal that constitutes a
Superior Company Proposal; provided, however, that the Company may not terminate
this Agreement pursuant to this Section 9.01(e) unless (i) the Company has
complied in all material respects with all of its obligations under Section 6.02
(including, without limitation, Section 6.02(c)) in accordance with the terms
thereof, and (ii) the Company has paid to (or concurrently pays to) Parent the
Termination Fee in accordance with this Section 9.01(e) and Section 9.02; or
(f) by the Company, if Parent or Sub breaches or fails to perform in
any material respect any of its representations, warranties, covenants or
agreements contained in this Agreement, which breach or failure to perform (i)
would give rise to the failure of a condition set forth in Article VIII and (ii)
cannot be cured or has not been cured within 30 days after the giving of written
notice to Parent of such breach (provided that the Company is not then in
material breach of any representation, warranty or covenant contained in this
Agreement); provided, however, that this Agreement may not be terminated
pursuant to this clause (f) if Sub has accepted shares of Company Common Stock
representing at least the Minimum Tender Condition for payment pursuant to the
Offer.
SECTION 9.02 Effect of Termination; Fees and Expenses. (a) In the event
of termination of this Agreement by either the Company or Parent as provided in
Section 9.01, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, Sub or the Company,
other than Section 4.27, Section 5.08, the last sentence of Section 7.02, this
Section 9.02 and Article X and except to the extent that such termination
results from the breach by a party of any representation, warranty or covenant
set forth in this Agreement.
(b) The Company shall pay to Parent a fee in an amount equal to
$2,000,000 (the "Termination Fee") if:
(i) the Company terminates this Agreement pursuant to Section
9.01(e); or
(ii) Parent terminates this Agreement pursuant to Section
9.01(c) (but only with respect to a breach of Section 6.02) or Section
9.01(d).
Any fee due under this Section 9.02 shall be paid by wire transfer of
same-day funds on the date of termination of this Agreement.
52
(c) Except as provided below, all fees and expenses incurred in
connection with the Merger and the other Transactions shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated;
provided, however, that Parent and the Company shall share equally the filing
fees in connection with the HSR Act and the filing fees in connection with the
Offer Documents.
(d) If the Company shall become obligated to pay to Parent the
Termination Fee pursuant to Section 9.02(b), such Termination Fee shall
constitute the exclusive remedy for any breach by the Company of any of the
representations, warranties or covenants contained in this Agreement.
Notwithstanding the foregoing, nothing in this Section 9.02(d) shall limit
Parent's ability to pursue any remedy it may have available to it in law or
equity for any breach by the Company of any of the representations, warranties
or covenants contained in this Agreement to the extent Parent is not entitled to
receive the Termination Fee pursuant to Section 9.02(b).
SECTION 9.03 Amendment. This Agreement may be amended by the parties at
any time before or after receipt of Company Stockholder Approval; provided,
however, that after receipt of Company Stockholder Approval, there shall be made
no amendment that by law requires further approval by such stockholders without
the further approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
SECTION 9.04 Extension; Waiver. At any time prior to the Effective
Time, the parties may (i) extend the time for the performance of any of the
obligations or other acts of the other parties, (ii) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (iii) subject to the proviso of
Section 9.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
SECTION 9.05 Procedure for Termination, Amendment, Extension or Waiver.
A termination of this Agreement pursuant to Section 9.01, an amendment of this
Agreement pursuant to Section 9.03 or an extension or waiver pursuant to Section
9.04 shall, in order to be effective, be in writing and require in the case of
Parent, Sub or the Company, action by its Board of Directors or the duly
authorized designee of its Board of Directors.
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ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement shall survive the Effective
Time. This Section 10.01 shall not limit any covenant or agreement contained in
any Transaction Agreement which by its terms contemplates performance after the
Effective Time.
SECTION 10.02 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given upon receipt by the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Illinois Tool Works Inc.
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Executive Vice President
Tel: (000) 000-0000
Fax: (000) 000-0000
and
---
Illinois Tool Works Inc.
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Senior Vice President,
General Counsel and Secretary
Tel: (000) 000-0000
Fax: (000) 000-0000
54
with a copy to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
(b) if to the Company, to
Foilmark, Inc.
0 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Xx.
President and Chief Executive Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
55
with a copy to:
Bradford Ventures Limited
0 Xxxxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
and
---
Xxxxxxxx, Xxxxx & Xxxxxx LLP
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
and
---
Dechert
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. xx Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
SECTION 10.03 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
SECTION 10.04 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this
56
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
SECTION 10.05 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties. Delivery of an executed
counterpart of this Agreement by facsimile shall be effective to the fullest
extent permitted by applicable law.
SECTION 10.06 Entire Agreement; No Third-Party Beneficiaries. The
Transaction Agreements, the Company Disclosure Letter, the Parent Disclosure
Letter and all exhibits and schedules hereto and the Confidentiality Agreement,
taken together, (i) constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the Transactions and (ii) except for Section 7.05 and, from and after
the Effective Time, Section 3.01(c)(i), Section 7.04(a), Section 7.06, Section
7.11 and Section 9.02(c) are not intended to confer upon any Person other than
the parties any rights or remedies.
SECTION 10.07 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 10.08 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations under
this Agreement. Any purported assignment without such consent shall be void.
Subject to the preceding sentences, this Agreement will be binding upon, inure
to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
SECTION 10.09 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of any Transaction Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of any Transaction Agreement and
to enforce specifically the terms and provisions of each Transaction Agreement
in any Delaware state court or any Federal court located in the State of
Delaware, this being in addition to any other remedy to which they are entitled
at law or in equity. In addition, each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any Delaware state court or any
Federal court located in the State of Delaware in the event any dispute arises
out of any Transaction Agreement or any Transaction, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, (c) agrees that it will not bring any action
relating to
57
any Transaction Agreement or any Transaction in any court other than any
Delaware state court or any Federal court sitting in the State of Delaware and
(d) waives any right to trial by jury with respect to any action related to or
arising out of any Transaction Agreement or any Transaction.
[Intentionally left blank]
58
IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed this
Agreement, all as of the date first written above.
ILLINOIS TOOL WORKS INC.
by /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
XXXXXX ACQUISITION INC.
by /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
FOILMARK, INC.
by /s/ Xxxxx X. Xxxxx, Xx.
---------------------------------------
Name: Xxxxx X. Xxxxx, Xx.
Title: Chief Executive Officer & President
59
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered shares of Company
Common Stock promptly after the termination or withdrawal of the Offer), to pay
for any shares of Company Common Stock tendered pursuant to the Offer unless (i)
there shall have been validly tendered and not withdrawn prior to the expiration
of the Offer that number of shares of Company Common Stock which would represent
at least a majority of the Fully Diluted Shares (the "Minimum Tender Condition")
and (ii) the waiting period (and any extension thereof) applicable to the
purchase of shares of Company Common Stock pursuant to the Offer under the HSR
Act shall have been terminated or shall have expired and any consents, approvals
and filings under any foreign antitrust law, the absence of which would prohibit
the purchase of all shares of Company Common Stock tendered pursuant to the
Offer, shall have been obtained or made prior to the acceptance of shares of
Company Common Stock pursuant to the Offer. The term "Fully Diluted Shares"
means all outstanding securities entitled generally to vote in the election of
directors of the Company on a fully diluted basis, after giving effect to the
exercise, conversion or termination of all options, warrants, rights and
securities exercisable or convertible into such voting securities. Furthermore,
notwithstanding any other term of the Offer or this Agreement, Sub shall not be
required to accept for payment or, subject as aforesaid, to pay for any shares
of Company Common Stock not theretofore accepted for payment or paid for, and
may terminate or amend the Offer, with the consent of the Company or if, at any
time on or after the date of this Agreement and before the acceptance of such
shares for payment or the payment therefor, any of the following conditions
exists:
(a) there shall have been instituted or pending any suit,
action or proceeding that has a reasonable likelihood of success, (i)
challenging the acquisition by Parent or Sub of any Company Common
Stock, seeking to restrain or prohibit the making or consummation of
the Offer or the Merger or any other Transaction, or seeking to obtain
from the Company, Parent or Sub any damages that are material in
relation to the Company and its subsidiaries taken as a whole, (ii)
seeking to prohibit or limit t he ownership or operation by the
Company, Parent or any of their respective subsidiaries of any material
portion of the business or assets of the Company, Parent or any of
their respective subsidiaries, or to compel the Company, Parent or any
of their respective subsidiaries to dispose of or hold separate any
material portion of the business or assets of the Company, Parent or
any of their respective subsidiaries, as a result of the Offer, the
Merger or any of the other Transactions, (iii) seeking to impose
limitations on the ability of Parent or Sub to acquire or hold, or
exercise full rights of ownership of, any shares of Company Common
Stock, including the right to vote the Company Common Stock purchased
by it on all matters properly presented to the
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stockholders of the Company, (iv) seeking to prohibit Parent or any of
its subsidiaries from effectively controlling in any material respect
the business or operations of the Company and the Company Subsidiaries,
or (v) which otherwise is reasonably likely to have a Parent Material
Adverse Effect or a Company Material Adverse Effect;
(b) any statute, rule, regulation, legislation,
interpretation, judgment, Order or injunction shall be enacted,
entered, enforced, promulgated, amended or issued with respect to, or
deemed applicable to, or any consent or approval withheld with respect
to the Offer, the Merger or any of the other Transactions, by any
Governmental Entity that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in paragraph (a)
above;
(c) except as disclosed in the Filed Company SEC Documents or
the Company Disclosure Letter, since the date of the most recent
audited financial statements included in the Filed Company SEC
Documents there shall have occurred any event, change, effect or
development that, individually or in the aggregate, has had or is
reasonably likely to have, a Company Material Adverse Effect, except
where such event results, directly or indirectly, from (i) changes
affecting the economy generally, (ii) changes affecting the industry in
which the Company operates generally, (iii) the public announcement or
pendency of the Offer, the Merger or the Transactions, or (iv)
compliance by the Company with any of the terms hereof;
(d) (i) it shall have been publicly disclosed or Parent shall
have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under
the Exchange Act) of more than 15% of the outstanding shares of the
Company Common Stock has been acquired by another Person (including any
group as defined in the Exchange Act) or (ii) the Company Board or any
committee thereof shall have withdrawn or modified in a manner adverse
to Parent its approval or recommendation of the Offer and this
Agreement or the Company Board or any committee thereof shall have
resolved to take any of the foregoing actions;
(e) any of the representations and warranties of the Company
in this Agreement shall not be true and correct as of the date of this
Agreement and as of such time as though made at such time, except (i)
to the extent such representation and warranty expressly relates to a
specific date (in which case on and as of such specific date), (ii) to
the extent Parent had consented in writing to any supplement or
amendment to the Company Disclosure Letter delivered to Parent pursuant
to Section 6.01(c)(ii) of the Merger Agreement, or (iii) where the
failure to be so true and correct would not, individually or in the
aggregate, result in a Company Material Adverse Effect;
(f) the Company shall have failed to perform in any respect
any obligation or to comply in any respect with any agreement or
covenant of the Company to be performed or
A-2
complied with by it under this Agreement; except for such failures
which would not, individually or in the aggregate, result in a Company
Material Adverse Effect; or
(g) this Agreement shall have been terminated in accordance
with its terms.
which, in the reasonable judgment of Sub or Parent, in any such case, and
regardless of the circumstances giving rise to any such condition (including any
action or inaction by Parent or any of its Affiliates), makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Parent and
may be asserted by Sub or Parent regardless of the circumstances giving rise to
such condition or may be waived by Sub and Parent in whole or in part at any
time and from time to time in their sole discretion. The failure by Parent, Sub
or any other Affiliate of Parent at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right, the waiver of any such
right with respect to particular facts and circumstances shall not be deemed a
waiver with respect to any other facts and circumstances and each such right
shall be deemed an ongoing right that may be asserted at any time and from time
to time.
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