Exhibit 99(c)(1)
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AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 27, 1999
BY AND AMONG
XXXX VII, INC.,
MSAS GLOBAL LOGISTICS INC.
AND
MSAS ACQUISITION CORPORATION
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TABLE OF CONTENTS
Page
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ARTICLE 1
THE OFFER
Section 1.1. The Offer.....................................................................................1
Section 1.2. Company Actions...............................................................................3
Section 1.3. Boards of Directors and Committees; Section 14(f) of Exchange Act.............................5
ARTICLE 2
THE MERGER
Section 2.1. The Merger....................................................................................6
Section 2.2. Effective Time................................................................................6
Section 2.3. Closing of the Merger.........................................................................6
Section 2.4. Effects of the Merger.........................................................................6
Section 2.5. Certificate of Incorporation and Bylaws.......................................................7
Section 2.6. Directors.....................................................................................7
Section 2.7. Officers......................................................................................7
Section 2.8. Conversion of Shares..........................................................................7
Section 2.9. Appraisal Rights..............................................................................7
Section 2.10. Exchange of Certificates......................................................................8
Section 2.11. Stock Options; SARs...........................................................................9
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1. Organization and Qualification; Subsidiaries; Investments....................................10
Section 3.2. Capitalization of the Company and Its Subsidiaries...........................................11
Section 3.3. Authority Relative to This Agreement.........................................................12
Section 3.4. SEC Reports; Financial Statements............................................................13
Section 3.5. Consents and Approvals; No Violations........................................................13
Section 3.6. No Default...................................................................................14
Section 3.7. No Undisclosed Liabilities; Absence of Changes...............................................14
Section 3.8. Litigation...................................................................................15
Section 3.9. Compliance with Applicable Law...............................................................15
Section 3.10. Employee Benefits............................................................................16
Section 3.11. Labor and Employment Matters.................................................................18
Section 3.12. Environmental Laws and Regulations...........................................................19
Section 3.13. Taxes........................................................................................20
Section 3.14. Intellectual Property........................................................................22
Section 3.15. Insurance....................................................................................22
Section 3.16. Certain Business Practices...................................................................22
Section 3.17. Suppliers and Customers......................................................................23
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Section 3.18. Vote Required................................................................................23
Section 3.19. Brokers......................................................................................23
Section 3.20. Takeover Statutes............................................................................23
Section 3.21. Year 2000 Capability.........................................................................23
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Section 4.1. Organization.................................................................................24
Section 4.2. Authority Relative to This Agreement.........................................................24
Section 4.3. Consents and Approvals; No Violations........................................................24
Section 4.4. Litigation...................................................................................25
Section 4.5. Brokers......................................................................................25
Section 4.6. Financing....................................................................................25
Section 4.7. Operations of Acquisition....................................................................25
ARTICLE 5
COVENANTS
Section 5.1. Conduct of Business of the Company...........................................................26
Section 5.2. No Solicitation or Negotiation...............................................................28
Section 5.3. Meeting of Stockholders......................................................................30
Section 5.4. Access to Information; Confidentiality.......................................................31
Section 5.5. Certain Filings; Reasonable Efforts..........................................................31
Section 5.6. Public Announcements.........................................................................32
Section 5.7. Indemnification and Directors' and Officers' Insurance.......................................32
Section 5.8. Notification of Certain Matters..............................................................34
Section 5.9. Takeover Statutes............................................................................34
Section 5.10. Company Stock Options........................................................................34
Section 5.11. Company Information Supplied.................................................................35
Section 5.12. Parent and Acquisition Information Supplied..................................................35
Section 5.13. Support Letter...............................................................................35
Section 5.14. Employees and Employee Benefits..............................................................36
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1. Conditions to Each Party's Obligations to Effect the Merger..................................36
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER
Section 7.1. Termination..................................................................................37
Section 7.2. Effect of Termination........................................................................38
Section 7.3. Fees and Expenses............................................................................40
Section 7.4. Amendment....................................................................................40
Section 7.5. Extension; Waiver............................................................................40
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ARTICLE 8
MISCELLANEOUS
Section 8.1. Nonsurvival of Representations and Warranties................................................40
Section 8.2. Entire Agreement; Assignment.................................................................40
Section 8.3. Validity.....................................................................................40
Section 8.4. Notices......................................................................................41
Section 8.5. Governing Law and Venue; Waiver of Jury Trial................................................42
Section 8.6. Descriptive Headings; Article and Section References.........................................42
Section 8.7. Parties in Interest..........................................................................43
Section 8.8. Certain Definitions..........................................................................43
Section 8.9. Personal Liability...........................................................................44
Section 8.10. Specific Performance.........................................................................44
Section 8.11. Counterparts.................................................................................44
Annex A Conditions of the Offer.....................................................................A-1
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COMPANY DISCLOSURE SCHEDULE
Section 1.3(a).............Exceptions Relating to Subsidiary Boards
Section 3.1(a).............Subsidiaries
Section 3.2(a).............Company Securities
Section 3.2(b).............Certain Capitalization and Other Matters
Section 3.4(a).............Company SEC Reports
Section 3.5................Consents and Approvals
Section 3.6................Defaults
Section 3.7................Undisclosed Liabilities; Absence of Changes
Section 3.8................Litigation
Section 3.9................Compliance with Law
Section 3.10(a)............Compensation and Benefit Plans
Section 3.10(b)............Performance and Compliance Under Compensation and Benefit Plans
Section 3.10(c)............Pension Plans
Section 3.10(e)............Employee Matters
Section 3.10(g)............Reportable Events, Prohibited Transactions and Additional Liabilities or Benefits
Section 3.10(h)............Stock Options
Section 3.10(j)............Events Under Compensation and Benefit Plans
Section 3.10(k)............Foreign Plans
Section 3.10(l)............Termination of Compensation and Benefit Plans
Section 3.11(d)............Names and Compensation of Officers
Section 3.13(b)............Delinquent or Inaccurate Tax Returns
Section 3.13(c)............Unpaid Taxes
Section 3.13(d)............Tax Claims
Section 3.13(e)............Excess Parachute Payments
Section 3.13(f)............Tax Sharing Agreements
Section 3.13(g)............Limitations on Use of NOLs
Section 3.13(h)............Section 481 Adjustments
Section 3.15...............Insurance
Section 3.17...............Customers
Section 5.1................Conduct of Business
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TABLE OF DEFINED TERMS
Cross Reference
Term in Agreement Page
---- ------------ ----
Acquisition............................................................Preamble...................................1
affiliate..............................................................Section 8.8(a)............................43
Agreement..............................................................Preamble...................................1
Applicable Law.........................................................Section 8.8(b)............................43
Appraisal Rights.......................................................Section 2.9................................7
business day...........................................................Section 8.8(c)............................43
capital stock..........................................................Section 8.8(d)............................43
Certificate of Merger..................................................Section 2.2................................6
Certificates...........................................................Section 2.10(b)............................8
Closing................................................................Section 2.3................................6
Closing Date...........................................................Section 2.3................................6
Code...................................................................Section 3.13(a)(i)........................20
Commonly Controlled Entity.............................................Section 3.10(a)...........................16
Company................................................................Preamble...................................1
Company Board..........................................................Section 1.1(b).............................2
Company Common Stock...................................................Recitals...................................1
Company Disclosure Schedule............................................Article 3.................................10
Company Employees......................................................Section 5.14(a)...........................36
Company Permits........................................................Section 3.9...............................15
Company Plans..........................................................Section 5.14(a)...........................36
Company SEC Reports....................................................Section 3.4(a)............................13
Company Securities.....................................................Section 3.2(a)............................11
Company Stock Option...................................................Section 3.2(a)............................11
Company Stock Plans....................................................Section 2.11(b)............................9
Compensation and Benefit Plans.........................................Section 3.10(a)...........................16
Continuing Directors...................................................Section 1.3(a).............................5
DGCL...................................................................Section 1.2(a).............................3
Dissenting Share.......................................................Section 2.9................................7
Effective Time.........................................................Section 2.2................................6
Environmental Laws.....................................................Section 3.12(a)...........................19
ERISA..................................................................Section 3.10(a)...........................16
Exchange Act...........................................................Section 1.1(a).............................1
Exchange Agent.........................................................Section 2.10(a)............................8
Exchange Fund..........................................................Section 2.10(a)............................8
Fairness Opinion.......................................................Section 1.2(a).............................4
Final Date.............................................................Section 7.1(b)............................37
Financial Advisor......................................................Section 1.2(a).............................4
Foreign Plans..........................................................Section 3.10(k)...........................18
Governmental Entity....................................................Section 3.5...............................13
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Hazardous Material.....................................................Section 3.12(a)...........................19
HSR Act................................................................Section 3.5...............................13
include or including...................................................Section 8.8(f)............................43
Indemnified Liabilities................................................Section 5.7(a)............................33
Indemnified Persons....................................................Section 5.7(a)............................33
Insurance Policies.....................................................Section 3.15..............................22
Insured Parties........................................................Section 5.7(c)............................33
Intellectual Property..................................................Section 3.14..............................22
knowledge or known.....................................................Section 8.8(e)............................43
Lien...................................................................Section 3.2(b)............................12
Material Adverse Effect on Parent......................................Section 4.1(b)............................24
Material Adverse Effect on the Company.................................Section 3.1(b)............................10
Maximum Premium........................................................Section 5.7(c)............................33
Meeting................................................................Section 5.3(a)............................30
Merger.................................................................Section 2.1................................6
Merger Consideration...................................................Section 2.8(a).............................7
Minimum Condition......................................................Section 1.1(a).............................2
Notice of Superior Proposal............................................Section 5.2(b)............................29
Ocean Group............................................................Section 5.13..............................36
Offer..................................................................Recitals...................................1
Offer Documents........................................................Section 1.1(c).............................3
Offer Price............................................................Recitals...................................1
Parent.................................................................Preamble...................................1
Parent Plans...........................................................Section 5.14(a)...........................36
Pension Plans..........................................................Section 3.10(a)...........................16
person.................................................................Section 8.8(g)............................43
Proxy Statement........................................................Section 5.11..............................35
Representatives........................................................Section 5.4(b)............................31
SAR....................................................................Section 2.11(a)............................9
Schedule 14D-1.........................................................Section 1.1(c).............................2
Schedule 14D-9.........................................................Section 1.2(b).............................4
SEC....................................................................Section 1.1(b).............................2
Secretary of State.....................................................Section 2.2................................6
Securities Act.........................................................Section 3.4(a)............................13
Shares.................................................................Recitals...................................1
subsidiary or subsidiaries.............................................Section 8.8(i)............................43
Superior Proposal......................................................Section 5.2(c)............................30
Surviving Corporation..................................................Section 2.1................................6
Takeover Statute.......................................................Section 3.20..............................23
Tax or Taxes...........................................................Section 3.13(a)(ii).......................20
Tax Return.............................................................Section 3.13(a)(iii)......................20
Termination Fee Event..................................................Section 7.3(a)............................38
Third Party............................................................Section 5.2(c)............................30
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Third Party Acquisition................................................Section 5.2(c)............................30
Year 2000 Compliant....................................................Section 3.21..............................23
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of July
27, 1999, is by and among Xxxx VII, Inc., a Delaware corporation (the
"COMPANY"), MSAS Global Logistics Inc., a New York corporation ("PARENT"), and
MSAS Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of Parent ("ACQUISITION"). Initially capitalized and certain other
terms not otherwise defined herein shall have the meanings ascribed to such
terms in Section 8.8 of this Agreement.
RECITALS
A. The Boards of Directors of the Company, Parent and Acquisition have
each (i) determined that the Merger (as defined below) is advisable and fair and
in the best interests of their respective stockholders and (ii) approved the
Merger upon the terms and subject to the conditions set forth in this Agreement.
B. In furtherance thereof, it is proposed that Acquisition, within five
business days after the public announcement hereof, will commence a tender offer
(the "OFFER") to acquire all of the outstanding shares (the "SHARES") of common
stock, $0.05 par value, of the Company (the "COMPANY COMMON STOCK"), at a price
of $23 per Share, net to the seller in cash, less any required withholding taxes
(such amount, or any greater amount per share paid pursuant to the Offer, being
hereinafter referred to as the "OFFER PRICE"), in accordance with the terms and
subject to the conditions provided herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Acquisition hereby
agree as follows:
ARTICLE 1
THE OFFER
Section 1.1. THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 7.1 and subject to the terms hereof, as
promptly as practicable, but in no event later than five business days after the
public announcement of the execution hereof by the parties, Acquisition shall
(and Parent shall cause Acquisition to) commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT")), the Offer for any and all of the Shares, at the Offer Price. The
obligation of Acquisition to accept for payment and to pay for any Shares
tendered (and the obligation of Parent to cause Acquisition to accept for
payment and to pay for any Shares tendered) shall be subject only to (i) the
condition that there shall have been validly tendered a number of Shares which,
together with any Shares owned by Parent or Acquisition, constitute at least a
majority of Shares on a fully-diluted basis
(including for purposes of such calculation all Shares issuable upon exercise of
all vested Company Stock Options (as defined in Section 3.2(a)) and unvested
Company Stock Options that vest prior to the Final Date, but excluding any
Shares held by the Company or any of its subsidiaries) (the "MINIMUM
CONDITION"), and (ii) the other conditions set forth in Annex A. Acquisition
expressly reserves the right to increase the Offer Price or to make any other
changes in the terms and conditions of the Offer; PROVIDED, HOWEVER, that unless
previously approved by the Company in writing, no change may be made that (i)
decreases the Offer Price, (ii) changes the form of consideration to be paid in
the Offer, (iii) reduces the maximum number of Shares to be purchased in the
Offer, (iv) imposes conditions to the Offer in addition to those set forth in
Annex A, (v) amends the conditions set forth in Annex A to broaden the scope of
such conditions, (vi) extends the Offer except as provided in Section 1.1(b),
(vii) amends the Minimum Condition or (viii) makes other changes to the Offer
that are adverse to the holders of Company Common Stock. The conditions set
forth in Annex A are for the sole benefit of Parent and Acquisition and may be
waived by Parent and Acquisition, in whole or in part at any time and from time
to time, in their sole discretion, other than the Minimum Condition, as to which
prior written Company approval is required. The failure by Parent and
Acquisition at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, and each such right shall be deemed an
ongoing right that may be asserted at any time and from time to time. No Shares
held by the Company or any of its subsidiaries will be tendered in the Offer.
(b) Subject to the terms and conditions thereof, the Offer
will expire at midnight, New York City time, on the date that is 20 business
days after the date the Offer is commenced; PROVIDED, HOWEVER, that without the
consent of the Company's Board of Directors (the "COMPANY BOARD"), Acquisition
may: (i) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC")
or the staff thereof applicable to the Offer; or (ii) extend the Offer on one
occasion for an aggregate period of not more than 20 business days beyond the
latest expiration date that would otherwise be permitted under clause (i) of
this sentence if on such expiration date the Minimum Condition shall have been
satisfied and there shall not have been tendered at least 90% of the outstanding
Shares. Parent and Acquisition agree that, if any one or more of the conditions
to the Offer set forth on Annex A are not satisfied by the time of any scheduled
expiration date of the Offer, then, provided, that such conditions are
reasonably capable of being satisfied on or prior to October 7, 1999,
Acquisition shall extend the Offer from time to time unless any such condition
is no longer reasonably capable of being satisfied; PROVIDED, HOWEVER, that in
no event shall Acquisition be required to extend the Offer beyond October 7,
1999. Subject to the terms and conditions of the Offer and this Agreement,
Acquisition shall (and Parent shall cause Acquisition to) accept for payment,
and pay for, all Shares validly tendered and not withdrawn pursuant to the
Offer, as promptly as practicable after the expiration of the Offer.
(c) As soon as practicable on the date the Offer is
commenced, Parent and Acquisition will file with the SEC a Tender Offer
Statement on Schedule 14D-1 (together with all amendments and supplements
thereto, and including all exhibits thereto, the "SCHEDULE 14D-1") with respect
to the Offer. The Schedule 14D-1 will contain as an exhibit or incorporate by
reference the Offer to Purchase (or portions thereof) and forms of the related
letter of transmittal and summary advertisement. Parent and Acquisition will
cause the
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Schedule 14D-1, the Offer to Purchase and all amendments or supplements thereto
(which together constitute the "OFFER DOCUMENTS") to comply in all material
respects with the Exchange Act and the rules and regulations thereunder and
other Applicable Law. Parent and Acquisition represent that the Offer Documents,
on the date first published, sent or given to the Company's stockholders, will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by Parent or Acquisition
with respect to information supplied by the Company or any of its stockholders
in writing specifically for inclusion or incorporation by reference in the Offer
Documents. The Company represents that the information provided by the Company
in writing specifically for inclusion or incorporation by reference in the Offer
Documents will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Each of Parent, Acquisition and the Company agrees
promptly to 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 Parent and Acquisition further agree to
take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed
with the SEC and the other Offer Documents as so corrected to be disseminated to
the Company's stockholders, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel will be given
reasonable opportunity to review and comment on the Offer Documents prior to the
filing thereof with the SEC. Parent and Acquisition will provide the Company and
its counsel with any comments Parent, Acquisition or their counsel may receive
from the SEC or its staff with respect to the Offer Documents promptly after
receipt of such comments.
(d) In the event that this Agreement has been terminated
pursuant to Section 7.1 prior to the purchase of any Shares pursuant to the
Offer, Acquisition shall (and Parent shall cause Acquisition to) promptly
terminate the Offer without accepting any Shares for payment.
Section 1.2. COMPANY ACTIONS.
(a) The Company approves of and consents to the Offer and
represents that the Company Board, at a meeting duly called and held, has: (i)
determined that this Agreement, and the transactions contemplated hereby,
including the Offer and the Merger, taken together, are in the best interests of
the Company and its stockholders; (ii) approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, in all
respects and such approval constitutes approval of the Offer, this Agreement and
the Merger for purposes of Section 203 of the Delaware General Corporation Law
(the "DGCL"); and (iii) resolved to recommend that the stockholders of the
Company accept the Offer, tender their Shares thereunder to Acquisition and
approve and adopt this Agreement and the Merger subject to the provisions of
Section 5.2(b). The Company consents to the inclusion of such recommendation and
approval in the Offer Documents. The Company also represents that the Company
Board has received the opinion of Deutsche Bank Securities, Inc., financial
advisor to the Company Board (the "FINANCIAL ADVISOR"), that, as of the date of
this Agreement, the consideration to be
3
received by the holders of Company Common Stock (other than Parent and its
Affiliates) pursuant to this Agreement is fair to such holders from a financial
point of view (the "FAIRNESS OPINION"), a copy of the written opinion of which
will be delivered to Parent after receipt thereof by the Company. The Company
has been authorized by the Financial Advisor to permit, subject to the prior
review and consent by the Financial Advisor (such consent not to be unreasonably
withheld), the inclusion of the Fairness Opinion (or a reference thereto) in the
Offer to Purchase, the Schedule 14D-9 and the Proxy Statement.
(b) The Company will file with the SEC, concurrently with the
filing of the Schedule 14D-1, a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, and
including all exhibits thereto, the "SCHEDULE 14D-9") containing the
recommendations described in Section 1.2(a) and will mail the Schedule 14D-9 to
the stockholders of the Company promptly after the commencement of the Offer.
The Company will cause the Schedule 14D-9 to comply in all material respects
with the Exchange Act and the rules and regulations thereunder and other
Applicable Laws. The Company represents that the Schedule 14D-9, on the date
first published, sent or given to the Company's stockholders, will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied by Parent or Acquisition in writing specifically for
inclusion or incorporation by reference in the Schedule 14D-9. Parent and
Acquisition represent that the information provided by them specifically in
writing for inclusion or incorporation by reference in the Schedule 14D-9 will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the Company, Parent and Acquisition agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 or the
Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and be disseminated to the Company's stockholders, in each case as
and to the extent required by applicable federal securities laws. Parent and its
counsel will be given reasonable opportunity to review and comment on the
Schedule 14D-9 prior to the filing thereof with the SEC. The Company will
provide to Parent and its counsel any comments the Company or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after receipt of such comments.
(c) In connection with the Offer, the Company will, or will
cause its transfer agent, promptly following a request by Parent, to furnish
Parent with such information, including updated lists of the stockholders of the
Company, mailing labels and updated lists of security positions, and such
assistance as Parent or its agents reasonably may request in communicating the
Offer to the record and beneficial holders of Shares. Subject to the
requirements of Applicable Law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Merger, Parent and Acquisition and their affiliates, associates, agents and
advisors will hold in confidence the information contained in any such labels,
listings and files, will use such information only in connection with the Offer
4
and the Merger and, if this Agreement shall be terminated, will promptly
deliver, and will cause their agents to deliver, to the Company all copies and
any extracts or summaries from such information then in their possession or
control.
(d) Solely in connection with the tender and purchase of
Shares pursuant to the Offer and the consummation of the Merger, the Company
hereby waives any and all rights of first refusal it may have with respect to
Shares owned by, or issuable to, any person.
Section 1.3. BOARDS OF DIRECTORS AND COMMITTEES; SECTION 14(f) OF
EXCHANGE ACT.
(a) Promptly upon the purchase by Acquisition of Shares
pursuant to the Offer and from time to time thereafter, if the Minimum Condition
has been met, and subject to the second to last sentence of this Section 1.3(a):
(i) Parent will be entitled to designate up to such number of directors, rounded
up to the next whole number, on the Company Board as will give Parent
representation on the Company Board equal to the product of the number of
directors on the Company Board (giving effect to any increase in the number of
directors pursuant to this Section 1.3) and the percentage that such number of
Shares so purchased bears to the total number of outstanding Shares on a
fully-diluted basis; and (ii) the Company, promptly upon request by Parent, will
use reasonable efforts, at the Company's election, either to increase the size
of the Company Board or secure the resignation of such number of directors as is
necessary to enable Parent's designees to be elected to the Company Board and to
cause Parent's designees to be so elected. At such times, and subject to the
second to last sentence of this Section 1.3(a), the Company will use reasonable
efforts to cause the individuals designated by Parent to constitute the same
percentage as is on the Company Board of (i) each committee of the Company
Board, (ii) each Board of Directors of each subsidiary of the Company (subject
to Applicable Law and except to the extent described in Section 1.3(a) of the
Company Disclosure Schedule) and (iii) each committee of each such Board of
Directors. Notwithstanding the foregoing, the Company shall ensure that three of
the members of the Company Board as of the date hereof (the "CONTINUING
DIRECTORS") who are neither officers of the Company or any of its subsidiaries
nor officers or directors of Acquisition or any of its affiliates shall remain
members of such Board until the Effective Time. If a Continuing Director resigns
from the Company Board, Parent, Acquisition and the Company will permit the
remaining Continuing Director or Directors to appoint the resigning Director's
successor who shall be deemed to be a Continuing Director.
(b) The Company's obligation to appoint designees to the
Company Board shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. Parent will supply to the Company in writing and
be solely responsible for any information with respect to itself and its
nominees, officers, directors and affiliates required by such Section and Rule.
Subject to the foregoing, the Company promptly will take all action reasonably
required pursuant to such Section and Rule in order to fulfill its obligations
under this Section 1.3 and shall include in the Schedule 14D-9 such information
with respect to the Company and its officers and directors as is required under
such Section and Rule in order to fulfill its obligations under this Section
1.3.
5
(c) Following the election or appointment of Parent's
designees to the Company Board pursuant to this Section 1.3 and prior to the
Effective Time, the following shall require the written concurrence of a
majority of the Continuing Directors: (i) any amendment or waiver of any term or
condition of this Agreement or the Certificate of Incorporation or bylaws of the
Company, (ii) any termination of this Agreement by the Company, (iii) any
extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or Acquisition, (iv) any exercise or waiver
of any of the Company's rights or remedies hereunder or (v) any other
determination with respect to any action to be taken or not to be taken by the
Company relating to this Agreement.
ARTICLE 2
THE MERGER
Section 2.1. THE MERGER. At the Effective Time and upon the terms and
subject to the conditions of this Agreement and in accordance with the DGCL,
Acquisition shall be merged with and into the Company (the "MERGER"). Following
the Merger, the Company shall continue as the surviving corporation (the
"SURVIVING CORPORATION") and the separate corporate existence of Acquisition
shall cease. Parent, as the sole stockholder of Acquisition, hereby approves the
Merger and this Agreement.
Section 2.2. EFFECTIVE TIME. Subject to the terms and conditions set
forth in this Agreement, on the Closing Date, (a) a Certificate of Merger (the
"CERTIFICATE OF MERGER") shall be duly executed and acknowledged by Acquisition
and the Company and thereafter delivered for filing to the Secretary of State of
the State of Delaware (the "SECRETARY OF STATE") in such form and manner as
required by the DGCL; and (b) the parties shall make such other filings with any
government office of the State of Delaware as shall be necessary to effect the
Merger. The Merger shall become effective at such time as a properly executed
copy of the Certificate of Merger is duly filed with the Secretary of State in
accordance with the DGCL, or such later time as Parent and the Company may agree
upon and as may be set forth in the Certificate of Merger (the time the Merger
becomes effective being referred to herein as the "EFFECTIVE TIME").
Section 2.3. CLOSING OF THE MERGER. The closing of the Merger (the
"CLOSING") will take place at a time and on a date (the "CLOSING DATE") to be
specified by the parties, which shall be no later than the second business day
after satisfaction (or waiver) of the latest to occur of the conditions set
forth in Article 6, at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another time, date or place is agreed
to in writing by the parties hereto.
Section 2.4. EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in the DGCL. Without limiting the generality of the foregoing and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of the Company and Acquisition shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
6
Section 2.5. CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate
of Incorporation of Acquisition in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation
until amended in accordance with the provisions thereof and Applicable Law. The
bylaws of Acquisition in effect at the Effective Time shall be the bylaws of the
Surviving Corporation until amended in accordance with the provisions thereof
and Applicable Law.
Section 2.6. DIRECTORS. The directors of Acquisition at the Effective
Time shall be the initial directors of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and bylaws of the
Surviving Corporation until such director's successor is duly elected or
appointed and qualified.
Section 2.7. OFFICERS. The officers of the Company at the Effective
Time shall be the initial officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and bylaws of the
Surviving Corporation until such officer's successor is duly elected or
appointed and qualified.
Section 2.8. CONVERSION OF SHARES. At the Effective Time, by virtue of
the Merger and without any action on the part of the Acquisition, the Company or
the holder of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than (i) Shares held in the Company's treasury or by any
of the Company's subsidiaries, (ii) Shares held by Parent, Acquisition or any
other subsidiary of Parent and (iii) any Dissenting Shares (as defined in
Section 2.9) shall be canceled and extinguished and be converted into and shall
become the right to receive an amount in cash equal to the Offer Price, payable
to the holder thereof without interest (the "MERGER CONSIDERATION") upon
surrender of the certificate formerly representing such Share.
(b) Each issued and outstanding share of the common stock, par
value $0.01 per share, of Acquisition shall be converted into one fully paid and
non-assessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
(c) Each Share held in the treasury of the Company and each
Share held by Parent, Acquisition or any subsidiary of Parent, Acquisition or
the Company (other than by Benefit Plans) immediately prior to the Effective
Time shall, be canceled, retired and cease to exist, and no payment or
consideration shall be delivered with respect thereto.
Section 2.9. APPRAISAL RIGHTS. Notwithstanding any provision of this
Agreement to the contrary, each outstanding share of Company Common Stock held
by a holder exercising appraisal rights ("APPRAISAL RIGHTS") with respect to
such shares pursuant to Section 262 of the DGCL, who has not effectively
withdrawn or lost such rights (a "DISSENTING SHARE"), shall not be converted
into or represent a right to receive the Merger Consideration pursuant to this
Article 2, but the holder thereof shall be entitled only to such rights as are
granted by Section 262 of the DGCL; PROVIDED, HOWEVER, that each Dissenting
Share held by a person at the Effective Time who shall, after the Effective
Time, effectively lose such Appraisal Rights or effectively
7
withdraw such demand for appraisal or payment of fair market value pursuant to
the DGCL, shall be deemed to be converted, as of the Effective Time, into the
right to receive the Merger Consideration pursuant to this Article 2. The
Company shall give Parent (i) prompt notice and copies of all notices of
dissent, demands for appraisal or payment of fair market value, withdrawals of
demands for appraisal or payment of fair market value, and other instruments
received by the Company relating to the exercise of Appraisal Rights received by
the Company and (ii) the opportunity to direct all negotiations and proceedings
with respect thereto under the DGCL. The Company will not voluntarily make any
payment with respect to any demands for appraisal or payment of fair market
value or settle or offer to settle any such demands.
Section 2.10 EXCHANGE OF CERTIFICATES.
(a) Prior to the Effective Time, Parent shall designate a
bank or trust company of recognized standing and reasonably acceptable to the
Company, to act as paying agent for the holder of Shares (the "EXCHANGE AGENT")
to receive the funds necessary to make the payments contemplated by Section 2.8.
At the Effective Time, Parent shall deliver to the Exchange Agent for the
benefit of the holders of Shares for exchange in accordance with this Article 2,
an amount of cash equal to the aggregate Merger Consideration then payable
pursuant to Section 2.8 (such amount of cash is hereinafter referred to as the
"EXCHANGE FUND"), in exchange for outstanding Shares.
(b) Promptly after the Effective Time, the Exchange Agent
shall mail to each holder of record of a certificate or certificates that
immediately prior to the Effective Time represented outstanding Shares (the
"CERTIFICATES") and whose shares were converted into the right to receive Merger
Consideration pursuant to Section 2.8: (i) a letter of transmittal (which shall
specify that delivery shall be effected and risk of loss and title to the
Certificates shall pass only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Parent and the
Company may reasonably specify); and (ii) instructions for use in effecting
surrender of the Certificates in exchange for Merger Consideration. Such letter
of transmittal shall be substantially in the form and substance of a letter of
transmittal and instructions approved by the Company at or before the Closing,
such approval not to be unreasonably withheld. Upon surrender of a Certificate
for cancellation to the Exchange Agent, together with such letter of transmittal
duly executed, the Parent shall cause the Exchange Agent to, as soon as
practicable, pay the holder of such Certificate the Merger Consideration
multiplied by the number of Shares formerly represented by such Certificate, in
consideration therefor, and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Shares that is not
registered in the transfer records of the Company, the proper amount of Merger
Consideration shall be paid to a transferee if the Certificate representing such
Shares is presented to the Exchange Agent accompanied by all documents required
to evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.10, 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.
8
(c) In the event that any Certificate for Shares shall have
been lost, stolen or destroyed, the Exchange Agent shall pay in exchange
therefor upon the making of an affidavit of that fact by the holder thereof the
Merger Consideration; PROVIDED, HOWEVER, that Parent or the Exchange Agent may,
in its discretion, require the delivery of a suitable bond or indemnity.
(d) If, after the Effective Time, Certificates are presented
to the Surviving Corporation for any reason, they shall be canceled in return
for the payment of the aggregate Merger Consideration relating thereto as
provided in this Article 2.
(e) Any portion of the Exchange Fund that remains
undistributed to the stockholders of the Company upon the expiration of 180 days
after the Effective Time shall be delivered to Parent upon demand and any
stockholders of the Company who have not theretofore complied with this Article
2 shall thereafter look only to Parent as general creditors for payment of their
claims for Merger Consideration.
(f) Neither Parent nor Acquisition nor the Company shall be
liable to any holder of Shares for any amount of cash from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar Applicable Law.
Section 2.11. STOCK OPTIONS; SARS.
(a) At or immediately prior to the Effective Time, each then
outstanding Company Stock Option (as defined in Section 3.2) and each then
outstanding stock appreciation right with respect to shares of capital stock of
the Company (in each case, an "SAR"), whether or not then vested or exercisable,
shall be canceled by the Company. In consideration of such cancellation of
Company Stock Options and SARs with an exercise price of less than the Offer
Price, the Company (or, at Parent's option, Acquisition) shall pay to such
holders of Company Stock Options and SARs an amount in respect thereof equal to
the product of (i) the excess of the Offer Price over the exercise price of each
such Company Stock Option or SAR, as applicable, and (ii) the number of Shares
previously subject to such Company Stock Option or SAR, as applicable,
immediately prior to its cancellation (such payment to be net of withholding
taxes and without interest). The amounts payable pursuant to this Section 2.11
shall be paid as soon as practicable following the Closing Date.
(b) The Company shall take all actions necessary or
appropriate so that all stock option, stock appreciation right or other equity
based plans maintained with respect to the Shares (the "COMPANY STOCK PLANS"),
including the Xxxx VII 1995 Omnibus Stock Incentive Plan, the MNX Incorporated
Amended and Restated 1986 Stock Option Plan, the MNX Incorporated 1992
Non-Qualified Stock Option Plan and the MNX Incorporated Stock Appreciation
Rights Program, shall terminate as of the Effective Time and the provisions in
any other Compensation and Benefit Plan (as defined in Section 3.11(a))
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 the Company shall use its reasonable best
efforts to ensure that following the Effective Time no holder of a Company Stock
Option or any participant in any Company Stock Plan shall have any right
thereunder to acquire any capital stock of the Company, Parent, Acquisition or
the Surviving Corporation.
9
(c) Prior to the Effective Time, the Company shall use its
reasonable best efforts to (i) obtain all necessary consents from, and provide
(in a form reasonably acceptable to Parent) any required notices to, holders of
Company Stock Options and SARs and (ii) take all lawful action, as is necessary
to give effect to the provisions of paragraphs (a) and (b) of this Section 2.11.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of Parent and Acquisition,
subject to the exceptions set forth in the Disclosure Schedule (the "COMPANY
DISCLOSURE SCHEDULE") delivered by the Company to Parent (which exceptions shall
specifically identify a Section or subsection, as applicable, to which such
exception relates) that:
Section 3.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES; INVESTMENTS.
(a) Section 3.1(a) of the Company Disclosure Schedule sets
forth a true and complete list of all the Company's directly and indirectly
owned subsidiaries together with the jurisdiction of incorporation of each
subsidiary. The Company or another subsidiary of the Company owns 100% of each
subsidiary's outstanding capital stock or other equity interests. Each of the
Company and its subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its businesses as now being conducted. The
Company has heretofore made available to Parent accurate and complete copies of
the Certificate of Incorporation and bylaws (or similar governing documents), as
currently in full force and effect, of the Company and each of its subsidiaries.
Except as set forth in Section 3.1(a) of the Company Disclosure Schedule, the
Company has no operating subsidiaries other than those incorporated in a state
of the United States.
(b) The Company and its subsidiaries are duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by them or the nature of the business
conducted by them makes such qualification or licensing necessary, except in
such jurisdictions where the failure to be so duly qualified or licensed and in
good standing would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. When used in connection with the Company or its
subsidiaries, the term "MATERIAL ADVERSE EFFECT ON THE COMPANY" means any
circumstance, change in, or effect on the Company and its subsidiaries, taken as
a whole, that is, or is reasonably likely in the foreseeable future to be,
materially adverse to the business, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole, provided that none of the
following shall be deemed, either alone or in combination, to constitute a
Material Adverse Effect on the Company: (i) a change in financial market
conditions generally or in the market price or trading volume of the Company
Common Stock; (ii) any change in general economic conditions or conditions
affecting the transportation services industry as a whole; (iii) events
resulting from the public announcement or consummation of the transactions
contemplated by this Agreement; (iv) any
10
effect resulting from any change in Applicable Law or generally accepted
accounting principles; or (v) any effect resulting from compliance by the
Company with the terms of this Agreement.
(c) Neither the Company nor any of its subsidiaries has made
an equity investment in an amount of $100,000 or more or that represents a 5% or
greater ownership interest in the subject of such investment in any person other
than the Company's subsidiaries.
Section 3.2. CAPITALIZATION OF THE COMPANY AND ITS SUBSIDIARIES.
(a) The authorized capital stock of the Company consists of
20,000,000 Shares, of which, as of the close of business on July 21, 1999,
10,119,265 Shares were issued and outstanding, including 1,123,750 treasury
Shares. All of the outstanding Shares have been validly issued and are fully
paid, nonassessable and free of preemptive rights. As of the close of business
on July 21, 1999, approximately 2,005,225 Shares were reserved for issuance and,
as of the close of business on July 21, 1999, 1,499,557 were issuable upon or
otherwise deliverable in connection with the exercise of outstanding Company
Stock Options. For purposes hereof, "COMPANY STOCK OPTION" means any option,
warrant or other right to purchase Shares. Between the close of business on July
21, 1999 and the date hereof, no shares of the Company's capital stock have been
issued other than pursuant to Company Stock Options already in existence on such
date and, between the close of business on January 2, 1999 and the date hereof,
no stock options have been granted, except as set forth in Section 3.2(a) of the
Company Disclosure Schedule. Except as set forth above or in Section 3.2(a) of
the Company Disclosure Schedule, as of the date hereof, there are outstanding:
(i) no shares of capital stock or other voting securities of the Company; (ii)
no securities of the Company or any of its subsidiaries convertible into or
exchangeable or exercisable for shares of capital stock or other securities of
the Company; (iii) no options, preemptive or other rights to acquire from the
Company or any of its subsidiaries, and, except as described in the Company SEC
Reports (as defined below), no obligations of the Company or any of its
subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock or other
securities of the Company; and (iv) no equity equivalent interests in the
ownership or earnings of the Company or its subsidiaries or other similar rights
(collectively "COMPANY SECURITIES"). As of the date hereof, there are no
outstanding rights or obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any Company Securities. Except as set
forth in Section 3.2(a) of the Company Disclosure Schedule, there are no
stockholder agreements, voting trusts or other agreements or understandings to
which the Company is a party or by which it is bound relating to the voting or
registration of any shares of capital stock of the Company. Pursuant to their
terms, all outstanding Company Stock Options and SARs will automatically vest as
a result of the Offer or the Merger or any other change in control of the
Company.
(b) Except as set forth in Section 3.2(b) of the Company
Disclosure Schedule, all of the outstanding capital stock of the Company's
subsidiaries is owned by the Company, directly or indirectly, free and clear of
any Lien or any other limitation or restriction (including any restriction on
the right to vote or sell the same except as a matter of Applicable Law). Except
as set forth in Section 3.2(b) of the Company Disclosure Schedule, any directors
11
qualifying shares issued by a foreign subsidiary of the Company to any director
of such subsidiary are beneficially owned by the Company or another subsidiary
of the Company. Except as set forth in Section 3.2(b) of the Company Disclosure
Schedule, there are no securities of the Company or any of its subsidiaries
convertible into or exchangeable or exercisable for, or other rights to acquire
from the Company or any of its subsidiaries, any capital stock or other
ownership interests in or any other securities of any subsidiary of the Company,
and there exists no other contract, understanding, arrangement or obligation
(whether or not contingent) providing for the issuance or sale, directly or
indirectly, of any such capital stock. Except as set forth in Section 3.2(b) of
the Company Disclosure Schedule, there are no outstanding contractual
obligations of the Company or its subsidiaries to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock or other ownership
interests in any subsidiary of the Company. For purposes of this Agreement,
"LIEN" means, with respect to any asset (including any security), any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such asset; PROVIDED, HOWEVER, that the term "Lien" shall not include (i)
statutory liens for Taxes that are not yet due and payable or are being
contested in good faith by appropriate proceedings and are disclosed in Section
3.13 of the Company Disclosure Schedule, (ii) statutory or common law liens to
secure obligations to landlords, lessors or renters under leases or rental
agreements confined to the premises rented, (iii) deposits or pledges made in
connection with, or to secure payment of, workers' compensation, unemployment
insurance, old age pension or other social security programs mandated by
Applicable Law, (iv) statutory or common law liens in favor of carriers,
warehousemen, mechanics and materialmen, to secure claims for labor, materials
or supplies and other like liens, (v) restrictions on transfer of securities
imposed by applicable state and federal securities laws and (vi) liens,
limitations or restrictions that would not have a Material Adverse Effect on the
Company.
(c) The Shares constitute the only class of equity securities
of the Company or its subsidiaries registered or required to be registered under
the Exchange Act.
Section 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) The Company has the requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly and validly authorized by the
Company Board, and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement, or to consummate the transactions
contemplated hereby, except the approval of this Agreement by the holders of a
majority of the outstanding Shares. This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Acquisition, constitute the valid, legal
and binding agreements of the Company, enforceable against the Company in
accordance with their terms, subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditors' rights generally or to general principles of equity.
12
(b) Without limiting the generality of the foregoing, the
Board of Directors of the Company has unanimously (i) approved this Agreement,
the Offer, the Merger and the other transactions contemplated hereby and (ii)
resolved to recommend approval and adoption of this Agreement, the Merger and
the other transactions contemplated hereby by the Company's stockholders. The
Board of Directors of the Company has not withdrawn or modified such approval or
resolution to recommend.
Section 3.4. SEC REPORTS; FINANCIAL STATEMENTS.
(a) The Company has filed all required forms, reports and
documents (the "COMPANY SEC REPORTS") with the SEC since January 1, 1997, each
of which complied at the time of filing (except to the extent revised or
superseded by a subsequent filing with the SEC prior to the date hereof) in all
material respects with all applicable requirements of the Securities Act of
1933, as amended (the "SECURITIES ACT"), and the Exchange Act except as set
forth in Section 3.4(a) of the Company Disclosure Schedule, such compliance to
be determined, to the extent applicable, in accordance with the standards
applied to the Company SEC Reports in the following two sentences. None of such
Company SEC Reports contained when filed any untrue statement of a material fact
or omitted to state a material fact required to be stated or incorporated by
reference 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 superseded by a Company SEC Report filed subsequently and prior to the
date hereof. The audited consolidated financial statements of the Company
included in the Company SEC Reports fairly present, in conformity in all
material respects with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto), the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and their consolidated results
of operations and changes in financial position for the periods then ended.
(b) The Company has made, and hereafter will make, available
to Acquisition or Parent a complete and correct copy of any amendments or
modifications that are required to be filed with the SEC but have not yet been
filed with the SEC to agreements, documents or other instruments that previously
had been filed by the Company with the SEC pursuant to the Exchange Act.
Section 3.5. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings,
permits, authorizations, consents and approvals as set forth in Section 3.5 of
the Company Disclosure Schedule or as may be required under applicable
requirements of the Securities Act, the Exchange Act, state securities or blue
sky laws, and the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR ACT") and any filings under similar merger notification laws
or regulations of foreign Governmental Entities and the filing and recordation
of the Certificate of Merger as required by the DGCL, no material filing with or
notice to and no permit, authorization, consent or approval of any United States
(federal, state or local) or foreign court or tribunal, or administrative,
governmental or regulatory body, agency or authority (a "GOVERNMENTAL ENTITY")
is necessary for the execution and delivery by the Company of this Agreement or
the consummation by the Company of the transactions contemplated hereby.
13
Neither the execution, delivery and performance of this Agreement by the
Company, nor the consummation by the Company of the transactions contemplated
hereby, will: (a) conflict with or result in any breach of any provision of the
respective Certificate of Incorporation or bylaws (or similar governing
documents) of the Company or any of its subsidiaries; (b) except as set forth in
Section 3.5 of the Company Disclosure Schedule, result in a material violation
or breach of or constitute (with or without due notice or lapse of time or both)
a material default (or give rise to any material right of termination,
amendment, cancellation or acceleration or Lien) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, material agreement or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which any of them or any of
their respective properties and assets is bound; or (c) except as set forth in
Section 3.5 of the Company Disclosure Schedule, violate any material order,
writ, injunction, decree, law, statute, rule or regulation applicable to the
Company or any of its subsidiaries or any of their respective properties or
assets. Section 3.5 of the Company Disclosure Schedule lists all material
consents, waivers and approvals under any of the Company's or any of its
subsidiaries' material agreements, contracts, licenses or leases required to be
obtained in connection with the execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby.
Section 3.6. NO DEFAULT. Except as set forth in Section 3.6 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries is
in material breach, default or violation (and no event has occurred that with
notice or the lapse of time or both would constitute a material breach, default
or violation) of any term, condition or provision of (i) its Certificate of
Incorporation or bylaws (or similar governing documents), (ii) any note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument or
obligation to which the Company or any of its subsidiaries is now a party or by
which it or any of its properties and assets is bound or (iii) any order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company
or any of its subsidiaries or any of its properties or assets, except, in the
case of clauses (ii) and (iii), such breaches, defaults or violations that would
not have a Material Adverse Effect on the Company.
Section 3.7. NO UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES. Except as
disclosed in the Company SEC Reports or as set forth in Section 3.7 of the
Company Disclosure Schedule, neither the Company nor any of its subsidiaries has
any material liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, that would be required by generally accepted accounting
principles to be reflected on a consolidated balance sheet of the Company
(including the notes thereto), other than liabilities or obligations incurred
after January 2, 1999 in the ordinary course of business no one or group of
which taken together constitutes a Material Adverse Effect on the Company.
Except as disclosed in the Company SEC Reports or as set forth in Section 3.7 of
the Company Disclosure Schedule, since January 2, 1999, there have been no
events, changes or effects with respect to the Company or its subsidiaries that,
individually or in the aggregate, constitute a Material Adverse Effect on the
Company. Without limiting the generality of the foregoing, except as and to the
extent publicly disclosed in the Company SEC Reports or as set forth in Section
3.7 of the Company Disclosure Schedule, since January 2, 1999 the Company and
its subsidiaries have conducted their respective businesses in all material
14
respects only in, and have not engaged in any material transaction other than
according to, the ordinary and usual course of such businesses consistent with
past practices, and there has not been any: (i) declaration, setting aside or
payment of any dividend or other distribution in respect of the capital stock of
the Company or any of its subsidiaries (other than wholly-owned subsidiaries) or
any repurchase, redemption or other acquisition by the Company or any of its
subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or any of its subsidiaries; (ii)
incurrence, assumption or guarantee by the Company or any of its subsidiaries of
any indebtedness for borrowed money other than in the ordinary course of
business and in amounts and on terms consistent with past practices; (iii) loan,
advance or capital contributions made by the Company or any of its subsidiaries
to, or investment in, any person other than (x) loans or advances to employees
in connection with business-related expenses incurred in the ordinary course of
business consistent with past practices and (y) loans made to employees
consistent with past practices that are not in the aggregate in excess of
$100,000; or (iv) change by the Company or any of its subsidiaries in any of its
accounting principles, practices or methods. Since January 2, 1999, except as
disclosed in the Company SEC Reports filed prior to the date hereof or in
Section 3.7 of the Company Disclosure Schedule or increases in the ordinary
course of business consistent with past practices, there has not been any
material increase in the compensation payable or that could become payable by
the Company or any of its subsidiaries to officers of the Company or any of its
subsidiaries or any employee of the Company or any of its subsidiaries whose
aggregate annual cash compensation is $100,000 or more.
Section 3.8. LITIGATION. Except as disclosed in the Company SEC Reports
or as set forth in Section 3.8 of the Company Disclosure Schedule, there is no
suit, claim, action, proceeding or investigation pending or, to the knowledge of
the Company, threatened against the Company or any of its subsidiaries or any of
their respective properties or assets before any Governmental Entity which would
reasonably be expected to result in a Material Adverse Effect on the Company or
prevent or delay the consummation of the transactions contemplated by this
Agreement beyond the Final Date. Except as disclosed in the Company SEC Reports,
neither the Company nor any of its subsidiaries is subject to any outstanding
order, writ, injunction or decree which would reasonably be expected to result
in a Material Adverse Effect on the Company or prevent or delay the consummation
of the transactions contemplated hereby.
Section 3.9. COMPLIANCE WITH APPLICABLE LAW. Except as disclosed in the
Company SEC Reports or as set forth in Section 3.9 of the Company Disclosure
Schedule, the Company and its subsidiaries hold and are in compliance with all
material permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (the "COMPANY PERMITS"), except where the failure to hold or comply
with such Company Permits would not have a Material Adverse Effect on the
Company. Except as disclosed in Section 3.9 of the Company Disclosure Schedule
or in the Company SEC Reports, the businesses of the Company and its
subsidiaries are being conducted in compliance with all Applicable Laws, except
where the failure to so comply would not have a Material Adverse Effect on the
Company. Except as disclosed in the Company SEC Reports, or Section 3.9 of the
Company Disclosure Schedule, to the knowledge of the Company, no investigation
by
15
any Governmental Entity with respect to the Company or any of its subsidiaries
is pending or, to the knowledge of the Company, threatened.
Section 3.10. EMPLOYEE BENEFITS.
(a) For purposes of this Agreement, "COMPENSATION AND BENEFIT
PLANS" means, collectively, each written bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, employment, termination,
severance, compensation, medical, health, or other plan, agreement, policy or
arrangement sponsored, maintained or contributed to by the Company, any of its
subsidiaries or any person that together with the Company and its subsidiaries
is treated as a single employer under Section 414(b), (c), (m) or (o) of the
Code (the Company, its subsidiaries and each such person, a "COMMONLY CONTROLLED
ENTITY"), that covers employees or directors of the Company or any Commonly
Controlled Entity, or pursuant to which former employees or directors of the
Company or any Commonly Controlled Entity are entitled to current or future
benefits. To the knowledge of the Company, except as provided in Section 3.10(a)
and Item 8 of 3.10(j) of the Company Disclosure Schedule, there are no oral
Compensation and Benefit Plans to which the Company or any Commonly Controlled
Entity is a party. The Company has made available to Parent copies of all
Compensation and Benefit Plans, including those that are "employee pension
benefit plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (sometimes referred to herein as
"PENSION PLANS") and "employee welfare benefit plans" (as defined in Section
3(l) of ERISA). The Company has also made available to Parent true, complete and
correct copies of (i) the most recent annual report on Form 5500 filed with the
Internal Revenue Service with respect to each Compensation and Benefit Plan (if
any such report was required), (ii) the most recent summary plan description for
each Compensation and Benefit Plan for which such summary plan description is
required and (iii) each trust agreement and group annuity contract related to
any Compensation and Benefit Plan. Neither the Company nor any Commonly
Controlled Entity maintains or contributes to or has any liability, contingent,
unasserted or otherwise, with respect to a "defined benefit plan" (as defined in
Section 414(j) of the Code). Section 3.10(a) of the Company Disclosure Schedule
sets forth a complete and correct list of all Compensation and Benefit Plans.
(b) Except as otherwise provided in Section 3.10(b) of the
Company Disclosure Schedule and except as would not have a Material Adverse
Effect on the Company, the Company and each Commonly Controlled Entity has
performed in all respects its obligations under each Compensation and Benefit
Plan; each Compensation and Benefit Plan and each trust or other funding medium,
if any, established in connection therewith has at all times been established,
maintained and operated in compliance with its terms and the requirements
prescribed by Applicable Law, including ERISA and the Code.
(c) With respect to those Pension Plans that are intended to
be qualified under Section 401(a) of the Code, except as set forth in Section
3.10(c) of the Company Disclosure Schedule, each such Pension Plan has been the
subject of a determination letter from the Internal Revenue Service to the
effect that such Pension Plans are qualified and exempt from Federal
16
income taxes under Sections 401(a) and 501(a), respectively, of the Code, and no
such determination letter has been revoked nor, to the knowledge of the Company,
has any event occurred since the date of its most recent determination letter or
application therefor that would materially adversely affect its qualification or
materially increase its costs.
(d) Neither the Company nor any of its subsidiaries nor any
entity which is under "common control" with the Company (within the meaning of
Section 4001 of ERISA) sponsors, maintains, contributes to or has any liability
with respect to any "multiemployer plan" (as defined in Section 3(37) of ERISA).
(e) Except as disclosed in Section 3.10(e) of the Company
Disclosure Schedule, there are no suits, actions, disputes, claims (other than
routine claims for benefits), arbitrations, administrative or other proceedings
pending or, to the knowledge of Company, threatened, anticipated or expected to
be asserted with respect to any Compensation and Benefits Plan or any related
trust or other funding medium thereunder or with respect to Company or any
Commonly Controlled Entity, as the sponsor or fiduciary thereof or with respect
to any other fiduciary thereof, except as would not have a Material Adverse
Effect on the Company.
(f) No Compensation and Benefit Plan or any related trust or
other funding medium thereunder or any fiduciary thereof is, to the knowledge of
Company, the subject of an audit, investigation or examination by governmental
or quasi-governmental agency, except as would not have a Material Adverse Effect
on the Company.
(g) Except as provided in Section 3.10(g) of the Company
Disclosure Schedule: (i) no "prohibited transaction" (as such term is used in
Section 4975 of the Code and/or Section 406 of ERISA), has occurred with respect
to any Compensation and Benefit Plan primarily for the benefit of participants
employed within the United States; (ii) neither Company nor any Commonly
Controlled Entity has any commitment, intention or understanding to create,
terminate or adopt any Compensation and Benefit Plan that would result in any
additional liability to Parent, the Company or any Commonly Controlled Entity;
and (iii) since the beginning of the current fiscal year of any Compensation and
Benefit Plan, to the knowledge of the Company, no event has occurred and no
condition or circumstance has existed that could result in a material increase
in the benefits under or the expense of maintaining such Compensation and
Benefit Plan maintained by Company and its subsidiaries from the level of
benefits or expense incurred for the most recently completed fiscal year of such
Compensation and Benefit Plan.
(h) Section 3.10(h) of the Company Disclosure Schedule lists
all outstanding Stock Options and SARs, as of the date hereof, identifying for
each such option or SAR: (i) the number of shares subject to such option or SAR,
(ii) the vesting terms, (iii) the date of expiration and (iv) the exercise
price.
(i) All contributions required to be made under the terms of
any Compensation and Benefit Plan as of the date hereof have been timely made or
have been accounted for on the financial statements of the Company or its
subsidiaries in accordance with GAAP.
17
(j) Except as provided in Section 3.10(j) of the Company
Disclosure Schedule, the execution of, and performance of the transactions
contemplated by, this Agreement will not (either alone with or upon the
occurrence of any additional or subsequent events) constitute an event under any
Compensation and Benefit Plan or agreement that will or may reasonably be
expected to result in any payment (whether severance pay or otherwise),
acceleration, vesting or increase in benefits with respect to any employee,
former employee or director of the Company, or any Commonly Controlled Entity,
whether or not any such payment would be an "excess parachute payment" (within
the meaning of Section 280G of the Code).
(k) Except as provided in Section 3.10(k) of the Company
Disclosure Schedule, neither the Company nor any Commonly Controlled Entity
sponsors, maintains, contributes to or has any liability, contingent, unasserted
or otherwise with respect to a Compensation and Benefit Plan required to be
maintained or contributed to by the law or applicable custom or rule of the
relevant jurisdiction outside of the United States (the "FOREIGN PLANS").
(l) Except as set forth on Section 3.10(l) of the Company
Disclosure Schedule, Parent, the Surviving Corporation, the Company and any
Commonly Controlled Entity may terminate or amend any Compensation and Benefit
Plan or may cease contributions to any such Compensation and Benefit Plans
without incurring any material liability other than a benefit liability accrued
in accordance with the terms of such Compensation and Benefit Plan immediately
prior to such amendment, termination or ceasing of contributions.
(m) Except as would not have a Material Adverse Effect on
the Company, neither the Company nor any of its subsidiaries has incurred any
liability for any tax, excise tax, penalty or fee with respect to any
Compensation and Benefit Plan, including taxes arising under Sections 4971,
4977, 4978, 4878B, 4979, 4980 or 4980B of the Code, and, to the knowledge of the
Company, no event or circumstance has existed that could give rise to any such
liability.
Section 3.11. LABOR AND EMPLOYMENT MATTERS.
(a) No collective bargaining agreement exists that is binding
on the Company or any of its subsidiaries, and the Company has not been
officially apprised that any petition has been filed or proceeding instituted by
an employee or group of employees of the Company, or any of its subsidiaries,
with the National Labor Relations Board seeking recognition of a bargaining
representative.
(b) To the Company's knowledge, there is no labor strike,
dispute, slow down or stoppage pending or threatened against the Company or any
of its subsidiaries. Neither the Company nor any of its subsidiaries has
received any demand letters, civil rights charges, suits or drafts of suits with
respect to claims made by any of their respective employees.
(c) Except as would not have a Material Adverse Effect on the
Company, all individuals who are performing consulting or other services for the
Company or any of its subsidiaries are or were correctly classified by the
Company as either "independent contractors" or "employees" as the case may be,
and, at the Closing Date, will qualify for such classification.
18
(d) Section 3.11(d) of the Company Disclosure Schedule
contains a list of the name of each officer and employee of the Company or any
of the Company's subsidiaries, together with such person's annual base salary or
wages. As of the date hereof, the Company has not received any information that
would lead it to believe that any executive officers will or may cease to be
engaged by the Company or such subsidiary for any reason, including because of
the consummation of the transactions contemplated by this Agreement.
(e) The Company and each of its subsidiaries is in compliance
in all material respects with all applicable foreign, federal, state and local
laws, rules and regulations respecting employment, employment practices, terms
and conditions of employment and wages and hours, in each case, with respect to
employees, except as would not have a Material Adverse Effect on the Company.
(f) The Company and each of its subsidiaries has in all
material respects withheld and reported all amounts required by law or by
agreement to be withheld and reported with respect to wages, salaries and other
payments to employees, except as would not have a Material Adverse Effect on the
Company.
(g) To the Company's knowledge, there are no pending or
threatened claims or actions against the Company or any of its subsidiaries
under any worker's compensation policy or long-term disability policy, except as
would not have a Material Adverse Effect on the Company.
Section 3.12. ENVIRONMENTAL LAWS AND REGULATIONS.
(a) The term "ENVIRONMENTAL LAWS" means any federal, state,
local or foreign law, statute, treaty, ordinance, rule, regulation, permit,
consent, approval, license, judgment, order, decree or injunction, each as
currently in effect and applicable, relating to: (i) Releases (as defined in 42
U.S.C. sec. 9601(22)) or threatened Releases of Hazardous Material (as
hereinafter defined) into the environment; (ii) the generation, treatment,
storage, disposal, use, handling, manufacturing, transportation or shipment of
Hazardous Material; (iii) the health or safety of employees in the workplace;
(iv) protecting or restoring natural resources; or (e) the environment. The term
"HAZARDOUS MATERIAL" means: (1) hazardous substances (as defined in 42 U.S.C.
sec. 9601(14)), including "hazardous waste" as defined in 42 U.S.C. sec. 6903;
(2) petroleum, including crude oil and any fractions thereof; (3) natural gas,
synthetic gas and any mixtures thereof; (4) asbestos and/or asbestos containing
materials; (5) PCBs or materials containing PCBs; (6) any material regulated as
a medical waste; (7) radioactive materials; and (8) "Hazardous Substance" or
"Hazardous Material" as those terms are defined in any indemnification provision
in any contract, lease, or agreement to which the Company or any of its
subsidiaries is a party.
(b) Except as disclosed in Schedule 3.12(b), during the
period of ownership or operation by the Company and its subsidiaries of any of
their current or previously owned or leased properties, there have been no
Releases of Hazardous Material by the Company or any of its subsidiaries in, on,
under or affecting such properties or any surrounding site, and neither the
Company nor any of its subsidiaries has disposed of any Hazardous Material in a
manner that has
19
led, or could reasonably be expected to lead, to a Release, except in each case
for those Releases which, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect on the Company. Except as
disclosed in Schedule 3.12(b), there have been no Releases of Hazardous Material
by the Company or any of its subsidiaries in, on, under or affecting their
current or previously owned or leased properties or any surrounding site at
times outside of such periods of ownership, operation or lease, except in each
case for those Releases which, individually on in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company. Except
as disclosed in Schedule 3.12(b), since January 1, 1995, neither the Company nor
any of its subsidiaries has received any written notice of, or entered into any
order, settlement or decree relating to: (i) any violation of any Environmental
Laws by the Company or any of its subsidiaries or the institution or pendency of
any suit, action, claim, proceeding or investigation by any Governmental Entity
or any third party against the Company or any of its subsidiaries in connection
with any alleged violation of Environmental Laws by the Company of any of its
subsidiaries; or (ii) the response to or remediation of Hazardous Material at or
arising from any of the Company's properties or any subsidiary's properties
except for such notices, orders, settlements, decrees, violations or responses
to or remediations of Hazardous Materials as would not reasonably be expected to
have a Material Adverse Effect on the Company. Except as disclosed on Schedule
3.12(b), there have been no violations of any Environmental Laws by the Company
or any subsidiary which, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company.
Section 3.13. TAXES.
(a) DEFINITIONS. For purposes of this Agreement:
(i) the term "CODE" means the Internal Revenue Code
of 1986, as amended;
(ii) the term "TAX" (including "TAXES") means: (1)
all federal, state, local, foreign and other net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, lease, service, service use, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, windfall
profits, customs, duties or other taxes, fees, assessments or charges
of any similar kind imposed by a taxing authority, whether disputed or
not, together with any interest and any penalties, additions to tax or
additional amounts with respect thereto; (2) any liability for payment
of amounts described in clause (1) whether as a result of transferee
liability, of being a member of an affiliated, consolidated, combined
or unitary group for any period, or otherwise through operation of law;
and (3) any liability for the payment of amounts described in clauses
(1) or (2) as a result of any tax sharing, tax indemnity or tax
allocation agreement or any other express or implied agreement to
indemnify any other person; and
(iii) the term "TAX RETURN" means any return,
declaration, report, statement, information statement or other document
filed or required to be filed with respect to Taxes.
20
(b) Except as set forth in Section 3.13(b) of the Company
Disclosure Schedule, the Company and its subsidiaries have timely filed all
material Tax Returns required to be filed and such Tax Returns are complete and
accurate in all material respects. Such Tax Returns do not contain a disclosure
statement under Section 6662 of the Code (or any predecessor provision or
comparable provision of state, local or foreign law).
(c) Except as set forth in Section 3.13(c) of the Company
Disclosure Schedule, the Company and its subsidiaries have paid or adequately
provided in the financial statements included in the SEC Reports for all
material Taxes accrued through the date of such Company SEC Reports. All
material Taxes the Company and its subsidiaries accrued since January 2, 1999
have been accrued in the ordinary course of business of the Company and each
such subsidiary and have been paid when due in the ordinary course of business.
No material election has been made with respect to Taxes of the Company or its
subsidiaries in any Tax Returns filed since January 1, 1995 that has not been
made available to Parent.
(d) Except as set forth in Section 3.13(d) of the Company
Disclosure Schedule, no material claim for assessment or collection of Taxes is
being asserted against the Company or its subsidiaries and neither the Company
nor any of its subsidiaries is a party to any pending action, proceeding or
investigation by any governmental taxing authority nor does the Company have
knowledge of any such threatened action, proceeding or investigation.
(e) Except as set forth in Section 3.13(e) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is a party
to any agreement, contract, arrangement or plan that has resulted or would
result, individually or in the aggregate, in connection with this Agreement or
any change of control of the Company or any of its subsidiaries, in the payment
of any "excess parachute payments" within the meaning of Section 280G of the
Code.
(f) Except as set forth in Section 3.13(f) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is a party
to or bound by any obligation under any Tax sharing, Tax allocation, Tax
indemnity or similar agreement or arrangement.
(g) Except as set forth in Section 3.13(g) of the Company
Disclosure Schedule, there is currently no limitation on the utilization of net
operating losses, built-in losses, tax credits or other similar items of the
Company or its subsidiaries under Section 382, 383, 384 or 1502 of the Code and
the Treasury Regulations thereunder.
(h) Except as set forth in Section 3.13(h) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries has agreed
to, or is required to make, any adjustment under Section 481 of the Code by
reason of a change in accounting method.
(i) Neither the Company nor any of its subsidiaries are
"consenting corporations" within the meaning of Section 341(f)(1) of the Code.
21
Section 3.14. INTELLECTUAL PROPERTY.
(a) The Company and its subsidiaries own, license or
otherwise have the right to use all (i) patents, trademarks and copyrights, (ii)
applications or registrations for patents, trademarks and copyrights, and (iii)
trade secrets including but not limited to know-how, processes, methods,
technology, software and databases, that are necessary to conduct the business
of the Company and its subsidiaries as currently conducted (collectively, the
"INTELLECTUAL PROPERTY"), except where the failure to own or license such
Intellectual Property would not have a Material Adverse Effect on the Company.
(b) Neither the Company nor any of its subsidiaries is, or
will as a result of the execution and delivery of this Agreement or the
performance of the Company's obligations under this Agreement be, in breach of
or default under any license, sublicense or other agreement or arrangement
relating to the Intellectual Property, or any licenses, sublicenses or other
agreements or arrangements to which the Company or any of its subsidiaries is a
party and is authorized to use any patents, trademarks, copyrights or trade
secrets of any other party, except where such breach or default would not
reasonably be expected to have a Material Adverse Effect on the Company.
(c) Neither the Company nor its subsidiaries has been named in
any suit, action or proceeding which involves a claim of infringement of any
rights relating to any patent, trademark or copyright of any party or the
misappropriation of any party's trade secrets, nor to the Company's knowledge,
has any such suit, action or proceeding been threatened. To the Company's
knowledge, the services of the Company and its subsidiaries do not infringe any
patent, trademark or copyright of any party or misappropriate the trade secrets
of any party.
Section 3.15. INSURANCE. Except as set forth in Section 3.15 of the
Company Disclosure Schedule, all material insurance policies (the "INSURANCE
POLICIES") maintained by the Company and its Subsidiaries are in full force and
effect, and all premiums due thereon have been paid in full. Each of the Company
and its subsidiaries has complied in all material respects with the provisions
of each Insurance Policy under which it is the insured party. Except as set
forth in Section 3.15 of the Company Disclosure Schedule, no insurer under any
Insurance Policy has canceled or generally disclaimed liability under any such
policy or, to the Company's knowledge, indicated any intent to do so or not to
renew any such policy. All material claims under the Insurance Policies have
been filed in a timely fashion. In the judgment of the Company, such Insurance
Policies, with respect to their amounts and types of coverage, are adequate to
insure against risks to which the Company and its Subsidiaries are normally
exposed in the operation of their business.
Section 3.16. CERTAIN BUSINESS PRACTICES. None of the Company, any of
its subsidiaries or, to the Company's knowledge, any directors, officers or
employees of the Company or any of its subsidiaries has (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related
to political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
22
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (iii) made any other unlawful payment.
Section 3.17. SUPPLIERS AND CUSTOMERS. Section 3.17 of the Company
Disclosure Schedule sets forth the names of the 20 largest customers of the
Company and its subsidiaries during the six month period ended July 3, 1999.
Since April 3, 1999, the Company has received no notices of termination or
written threats of termination from any of such customers of the Company and its
subsidiaries.
Section 3.18. VOTE REQUIRED. The affirmative vote of the holders of
a majority of the votes cast by the holders of Shares at a duly constituted
meeting with a quorum present is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve and adopt this
Agreement and the Merger.
Section 3.19. BROKERS. No broker, finder or investment banker
(other than the Financial Advisor, a true and correct copy of whose engagement
agreement has been provided to Parent) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
Section 3.20. TAKEOVER STATUTES. No "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
under the laws of the State of Delaware (each a "TAKEOVER STATUTE") is
applicable to the Company, the Shares, the Offer, the Merger or any of the other
transactions contemplated by this Agreement. The Company Board has approved the
Offer, the Merger, this Agreement, and such approval is sufficient to render
inapplicable to the Offer, the Merger, this Agreement and the transactions
contemplated by this Agreement and the provisions of Section 203 of the DGCL to
the extent, if any, such Section is applicable to the Offer, the Merger, this
Agreement or any of the transactions contemplated by this Agreement. The Company
does not have any shareholder rights plan or "poison pill" arrangement in
effect.
Section 3.21. YEAR 2000 CAPABILITY. To the knowledge of the Company,
the software, operations, systems and processes (including, to the knowledge of
the Company, software, operations, systems and processes obtained from third
parties) which, in whole or in part, are used, operated, relied upon, or
integral to, the Company's or any of its Subsidiaries, conduct of their
business, are Year 2000 Compliant (as hereinafter defined), except as disclosed
in the Company SEC Reports filed and publicly available prior to the date of
this Agreement or where the failure to be Year 2000 Compliant would not,
individually or in the aggregate, have a Material Adverse Effect. For purposes
of this Agreement, "YEAR 2000 COMPLIANT" means the ability to process (including
calculate, compare, sequence, display or store), transmit or receive data or
data/time data from, into and between the twentieth and twenty-first centuries,
and the years 1999 and 2000, and leap year calculations without error or
malfunction.
23
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION
Parent and Acquisition, jointly and severally, hereby represent and
warrant to the Company as follows:
Section 4.1. ORGANIZATION.
(a) Each of Parent and Acquisition is duly organized,
validly existing and in good standing under the laws of the State of New York
and the State of Delaware, respectively, and has all requisite power and
authority and any necessary governmental authority and approvals to own, lease
and operate its properties and to carry on its business as now being conducted.
Parent has heretofore made available to the Company accurate and complete copies
of the Certificates of Incorporation and bylaws, as currently in full force and
effect, of Parent and Acquisition. Parent owns all of the issued and outstanding
capital stock of Acquisition.
(b) Each of Parent and Acquisition is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect on Parent. When used in
connection with Parent or Acquisition the term "MATERIAL ADVERSE EFFECT ON
PARENT" means any circumstance, change in or effect on (or circumstance, change
in, or effect involving a prospective change on) Parent and its subsidiaries,
taken as a whole, that will, or is reasonably likely in the foreseeable future
to materially and adversely affect the ability of Parent and Acquisition to
consummate the Offer or the Merger.
Section 4.2. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent
and Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the boards of directors of Parent and
Acquisition and by Parent as the sole stockholder of Acquisition, and no other
corporate proceedings on the part of Parent or Acquisition are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each of
Parent and Acquisition and constitutes, assuming the due authorization,
execution and delivery hereof by the Company, a valid, legal and binding
agreement of each of Parent and Acquisition enforceable against each of Parent
and Acquisition in accordance with its terms, subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally or to general
principles of equity.
Section 4.3. CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
filings, permits, authorizations, consents and approvals as may be required
under and other applicable
24
requirements of the Securities Act, the Exchange Act, state securities or blue
sky laws, the HSR Act, and any filings under similar merger notification laws or
regulations of foreign Governmental Entities and the filing and recordation of
the Certificate of Merger as required by the DGCL, no filing with or notice to,
and no permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery by Parent or Acquisition of this
Agreement or the consummation by Parent or Acquisition of the transactions
contemplated hereby. Neither the execution, delivery and performance of this
Agreement by Parent or Acquisition nor the consummation by Parent or Acquisition
of the transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the respective Certificates of Incorporation or
bylaws (or similar governing documents) of Parent or Acquisition, (b) result in
a violation or breach of or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Parent or Acquisition or
any of Parent's other subsidiaries is a party or by which any of them or any of
their respective properties and assets is bound or (c) violate any material
order, writ, injunction, decree, law, statute, rule or regulation applicable to
Parent or Acquisition or any of Parent's other subsidiaries or any of their
respective properties or assets.
Section 4.4. LITIGATION. There is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Parent threatened, against Parent
or any of its subsidiaries or any of their respective properties or assets
before any Governmental Entity that could reasonably be expected to prevent or
delay the consummation of the transactions contemplated by this Agreement beyond
the Final Date. Neither Parent nor any of its subsidiaries is subject to any
outstanding order, writ, injunction or decree that could reasonably be expected
to prevent or delay the consummation of the transactions contemplated hereby.
Section 4.5. BROKERS. No broker finder or investment banker, other
xxxx Xxxxxxx Xxxxx & Co., is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or Acquisition.
Section 4.6. FINANCING. At the expiration of the Offer and at the
Effective Time, Parent and Acquisition will have available all the funds
necessary for the acquisition of all Shares and to perform their respective
obligations under this Agreement, including the payment in full for all Shares
validly tendered or outstanding as of the Effective Time.
Section 4.7. OPERATIONS OF ACQUISITION. Acquisition has been
formed solely for the purpose of engaging in the transactions contemplated
hereby and prior to the Effective Time will have engaged in no other business
activities and will have incurred no liabilities or obligations other than as
contemplated hereby.
25
ARTICLE 5
COVENANTS
Section 5.1. CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement or as described in Section 5.1 of the Company
Disclosure Schedule, during the period from the date hereof until the date
Parent's designees constitute a majority of the Company Board, the Company will
and will cause each of its subsidiaries to use commercially reasonable efforts
to (a) conduct its operations in the ordinary course of business consistent with
past practice and with no less diligence and effort than would be applied in the
absence of this Agreement and (b) preserve intact its current business
organizations, keep available the service of its current key officers and
employees and preserve its relationships with key customers, suppliers, lessors,
creditors, employees, contractors and others having business dealings with it
with the intention that its goodwill and ongoing businesses shall not be
materially adversely impaired at the Effective Time. Without limiting the
generality of the foregoing, except as otherwise expressly provided in this
Agreement or in Section 5.1 of the Company Disclosure Schedule, prior to the
date Parent's designees constitute a majority of the Company Board, neither the
Company nor any of its subsidiaries, without the prior written consent of Parent
(which consent shall not be unreasonably withheld), will:
(a) amend its Certificate of Incorporation or bylaws (or other
similar governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree
or commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any stock of any class or any other debt or equity securities or equity
equivalents (including any stock options or stock appreciation rights) except
for the issuance and sale of Shares pursuant to Company Stock Options
outstanding on the date hereof;
(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect of
its capital stock or otherwise make any payment to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities or any
securities of any of its subsidiaries, except as may be required on the date
hereof under the terms of any Company Stock Option or SAR;
(d) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries (other than the
Merger);
(e) alter through merger, liquidation, reorganization,
restructuring or any other fashion the corporate structure of any material
subsidiary (other than as a result of the transactions contemplated by this
Agreement);
26
(f) (i) incur or assume any long-term or short-term debt or
issue any debt securities except, in each case, for borrowings under existing
lines of credit in the ordinary course of business consistent with past
practice, or modify or agree to any material amendment of the terms of any of
the foregoing; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person except for obligations of subsidiaries of the Company incurred
in the ordinary course of business consistent with past practice, other than
third-party guarantees and lease agreements not to exceed $250,000 in the
aggregate; (iii) make any loans, advances or capital contributions to or
investments in any other person (other than to subsidiaries of the Company or
customary loans or advances to employees in each case in the ordinary course of
business consistent with past practice); (iv) pledge or otherwise subject to any
Lien shares of capital stock of the Company or any of its subsidiaries; or (v)
mortgage or pledge any of its material assets, tangible or intangible, or create
or suffer to exist any material Lien thereupon;
(g) except as may be required by Applicable Law or any
policy, plan, agreement or arrangement in effect as of the date hereof, enter
into, adopt or amend or terminate any bonus, special remuneration, profit
sharing, compensation, severance, termination, stock option, stock appreciation
right, restricted stock, performance unit, stock equivalent, stock purchase
agreement, pension, retirement, deferred compensation, employment, health, life
or disability insurance, dependent care, severance or other employee benefit
plan, agreement, trust, fund or other arrangement for the benefit or welfare of
any director, officer, employee or consultant or materially increase the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any plan and arrangement as in effect as of the date
hereof (including the granting of stock appreciation rights or performance
units);
(h) except as may be required by Applicable Law, grant any
severance or termination pay to any director, officer, employee or consultant,
except payments made pursuant to written agreements outstanding on the date
hereof or the current severance policies of the Company described on Section
3.10(a) of the Company Disclosure Schedule;
(i) except as provided in any policy, plan, agreement or other
arrangement in effect as of the date hereof, accelerate the vesting of any
Company Stock Option as a result of the Merger, any other "change in control" of
the Company or otherwise;
(j) (i) sell, lease, license, transfer or otherwise dispose of
any material assets in any single transaction or series of related transactions
(including in any transaction or series of related transactions having a fair
market value in excess of $250,000 in the aggregate) or (ii) enter into any
exclusive license, distribution, marketing, sales or other agreement other than
in the ordinary course of business;
(k) except as may be required as a result of a change in law
or in generally accepted accounting principles, change any of the accounting
principles, practices or methods used by it;
27
(l) revalue in any material respect any of its assets,
including writing-off notes or accounts receivable, other than in the ordinary
course of business consistent with past practice or as required by generally
accepted accounting principles;
(m) (i) acquire (by merger, consolidation or acquisition
of stock or assets) any corporation, partnership or other person or division
thereof or any material equity interest therein; (ii) enter into any contract or
agreement that would be material to the Company and its subsidiaries, taken as a
whole; (iii) amend, modify or waive any material right under any material
contract of the Company or any of its subsidiaries; (iv) modify its standard
warranty or contract terms for its services or amend or modify any warranties or
contract terms in effect as of the date hereof in any material manner that is
adverse to the Company or any of its subsidiaries; (v) authorize any new capital
expenditure or expenditures that in the aggregate are in excess of $250,000; or
(vi) acquire any asset or related group of assets, or make any investment, in a
single transaction or series of related transactions, with a cost in excess of
$250,000;
(n) make any material tax election or settle or compromise any
material income tax liability or permit any insurance policy naming it as a
beneficiary or loss-payee to expire, or to be canceled or terminated, unless a
comparable insurance policy reasonably acceptable to Parent is obtained and in
effect;
(o) fail to file any material Tax Returns when due (or,
alternatively, fail to file for available extensions) or fail to cause such Tax
Returns when filed to be complete and accurate in all material respects;
(p) fail to pay any material Taxes or other material debts
when due;
(q) settle or compromise any pending or threatened suit,
action or claim that (i) relates to the transactions contemplated hereby or (ii)
the settlement or compromise of which would involve more than $250,000 or that
would otherwise have a Material Adverse Effect on the Company; or
(r) take or agree in writing or otherwise to take any of
the actions described in Sections 5.1(a) through 5.1(q) or any action that would
make any of the representations or warranties of the Company contained in this
Agreement to be untrue or incorrect in any material respect.
Section 5.2. NO SOLICITATION OR NEGOTIATION.
(a) The Company, its subsidiaries and other affiliates and
heir respective officers and other employees, directors, representatives
(including the Financial Advisor or any other investment banker and any
attorneys and accountants) and agents shall immediately cease any discussions or
negotiations with any other persons with respect to any Third Party Acquisition.
Neither the Company nor any of its subsidiaries and other affiliates shall, nor
shall the Company authorize or permit any of its or their respective officers,
directors, employees, representatives or agents to, directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations with
or provide any information to any person or group (other than
28
Parent and Acquisition or any designees of Parent and Acquisition) concerning
any Third Party Acquisition; PROVIDED, HOWEVER, that if the Company Board
determines in good faith, after consultation with outside legal counsel of
national reputation, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable Delaware law,
the Company may, in response to a proposal or offer for a Third Party
Acquisition that was not solicited and that the Company Board determines, after
consultation with the Company Financial Advisor, is from a Third Party that is
capable of consummating a Superior Proposal and only for so long as the Company
Board so determines that its actions are likely to lead to a Superior Proposal,
(i) furnish information with respect to the Company to any such person pursuant
to a customary confidentiality agreement so long as any information so provided
which has not previously been provided by the Company to Parent will be promptly
delivered to Parent and (ii) participate in the discussions and negotiations
regarding such proposal or offer. The Company promptly (and in any event within
one business day after becoming aware thereof) will (i) notify Parent in the
event the Company or any of its subsidiaries and other affiliates or any of
their respective officers, directors, employees and agents receives any proposal
or inquiry concerning a Third Party Acquisition, including the material terms
and conditions thereof, and any request for confidential information in
connection with a potential Third Party Acquisition, (ii) provide a copy of any
written agreements, proposals or other materials the Company receives from any
such person or group (or its representatives), and (iii) advise Parent of the
status, at any time upon Parent's request, and from time to time promptly
following any material developments concerning the same.
(b) Except as set forth in this Section 5.2(b), the Company
Board shall not withdraw or modify its recommendation of the transactions
contemplated hereby or approve or recommend, or cause or permit the Company to
enter into any agreement or obligation with respect to, any Third Party
Acquisition. Notwithstanding the foregoing, if the Company Board by a majority
vote determines in its good faith judgment, after consultation with and after
receiving the advice of outside legal counsel of national reputation, that it is
required to do so in order to comply with its fiduciary duties, the Company
Board may withdraw its recommendation of the transactions contemplated hereby or
approve or recommend a Superior Proposal, but in each case only (i) after
providing written notice to Parent (a "NOTICE OF SUPERIOR PROPOSAL") advising
Parent that the Company Board has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person or group making such Superior Proposal and (ii) if Parent does not,
within 48 hours after Parent's receipt of the Notice of Superior Proposal, make
an offer that the Company Board by a majority vote determines in its good faith
judgment (after consultation with the Financial Advisor or another financial
advisor of nationally recognized reputation) to be at least as favorable to the
Company's stockholders as such Superior Proposal; PROVIDED, HOWEVER, that the
Company shall not be entitled to enter into any agreement with respect to a
Superior Proposal unless and until this Agreement is terminated pursuant to
Section 7.1 and the Company has paid any amounts due to Parent pursuant to
Section 7.3. Any disclosure that the Company Board may be compelled to make with
respect to the receipt of a proposal for a Third Party Acquisition or otherwise
in order to comply with its fiduciary duties or Rule 14d-9 or 14e-2 will not
constitute a violation of this Agreement; PROVIDED, HOWEVER, that such
disclosure states that no action will be taken by the Company Board in violation
of this Section 5.2(b).
29
(c) For purposes of this Agreement, "THIRD PARTY ACQUISITION"
means the occurrence of any of the following events: (i) the acquisition of the
Company by merger or otherwise by any person (which includes a "person" as such
term is defined in Section 13(d)(3) of the Exchange Act) other than Parent,
Acquisition or any affiliate thereof (a "THIRD PARTY"); (ii) the acquisition by
a Third Party of any material portion (which shall include 20% or more) of the
assets of the Company and its subsidiaries, taken as a whole; or (iii) the
acquisition by a Third Party who beneficially owns 20% or more of the
outstanding Shares as of the date of this Agreement of an additional 5% or more
of the outstanding Shares or the acquisition by any other Third Party of 20% or
more of the outstanding Shares. For purposes of this Agreement, a "SUPERIOR
PROPOSAL" means any BONA FIDE proposal (1) to acquire, directly or indirectly,
for consideration consisting solely of cash and/or securities, all of the Shares
then outstanding, or all or substantially all the assets, of the Company; (2)
for which there is no financing contingency and which contains terms that the
Company Board determines in its good faith judgment (after consultation with, as
to the financial terms, the Financial Advisor or another financial advisor of
nationally recognized reputation to be more favorable to the Company's
stockholders than the Offer and the Merger; (3) that the Company Board
determines in its good faith judgment (following consultation with the Financial
Advisor or another financial advisor of nationally recognized reputation and its
legal and other advisors) to be likely to be completed (taking into account all
legal, financial, regulatory and other aspects of the proposal; (4) that does
not contain a "right of first refusal" or "right of first offer" with respect to
any counter-proposal that Parent might make; and (5) that is not subject to
satisfactory diligence by the person making the proposal.
(d) Nothing contained in this Section 5.2 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rules 14d-9 and 14e-2 promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith judgment of the
Company Board, after consultation with outside counsel, such disclosure is
required to comply with its fiduciary duties to the Company's stockholders under
applicable Delaware law.
Section 5.3. MEETING OF STOCKHOLDERS.
(a) In the event that Parent acquires less than 90% of the
outstanding Shares, the Company, following the acceptance for payment of Shares
by Acquisition pursuant to the Offer, will take all actions necessary in
accordance with the DGCL and its Certificate of Incorporation and bylaws to
call, give notice of, convene and hold a meeting of its stockholders as promptly
as practicable to consider and vote upon the adoption and approval of this
Agreement and the transactions contemplated hereby (the "MEETING"). The
stockholder vote required for the adoption and approval of the transactions
contemplated by this Agreement shall be the vote required by the DGCL and the
Company's Certificate of Incorporation and bylaws. The Company, through the
Company Board, will recommend to its stockholders approval of such matters
subject to the provisions of Section 5.2(b). The Company, as promptly as
reasonably practicable after payment for the tendered Shares by Acquisition
pursuant to the Offer, will prepare and file with the SEC the Proxy Statement
for the solicitation of a vote of the holders of Shares approving the Merger,
which, subject to the provisions of Section 5.2(b), shall
30
include the recommendation of the Company Board that stockholders of the Company
vote in favor of the approval and adoption of this Agreement and the written
opinion of the Financial Advisor referred to in Section 1.2. The Company shall
use all reasonable efforts to have the Proxy Statement cleared by the SEC as
promptly as practicable after such filing, and promptly thereafter mail the
Proxy Statement to the stockholders of the Company. Whenever any event occurs
which is required to be set forth in an amendment or supplement to the Proxy
Statement, the Company will promptly inform Parent of such occurrence and
cooperate in filing with the SEC or its staff or any other government officials,
and/or mailing to stockholders of the Company, such amendment or supplement. The
Company may adjourn or postpone (i) the Meeting to the extent necessary to
ensure that any necessary supplement or amendment to the Proxy Statement is
provided to the Company's stockholders in advance of a vote on the Merger and
this Agreement or (ii) the time for which the Meeting is originally scheduled
(as set forth in the Proxy Statement), if there are insufficient Shares
represented, either in person or by proxy, to constitute a quorum necessary to
conduct the business of the Meeting. Notwithstanding the foregoing, if Parent,
Acquisition and/or any other subsidiary of Parent shall acquire at least 90% of
the outstanding Shares, the parties shall take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after the
expiration of the Offer without a Meeting in accordance with Section 253 of the
DGCL.
(b) Each of Parent and Acquisition agrees to vote in favor of
the Merger all Shares purchased pursuant to the Offer and all other Shares owned
by Parent or any other subsidiary of Parent.
Section 5.4. ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Between the date hereof and the Effective Time, upon
reasonable notice and subject in each instance to the requirements of Applicable
Law, the Company will give Parent and its authorized representatives reasonable
access to all employees, plants, offices, warehouses and other facilities and to
all books and records and personnel files of current employees of the Company
and its subsidiaries as Parent reasonably may require, and will cause its
officers and those of its subsidiaries to furnish Parent with such financial and
operating data and other information with respect to the business and properties
of the Company and its subsidiaries as Parent may from time to time reasonably
request.
(b) Each of Parent and Acquisition will hold and treat, and
will cause their respective officers, employees, auditors and other agents and
representatives ("REPRESENTATIVES") to hold and treat, in confidence all
information concerning the Company and its subsidiaries furnished to Parent,
Acquisition or such Representatives in connection with the transactions
contemplated by this Agreement in accordance with the Confidentiality Agreement,
dated July 8, 1999, between the Company and Parent, which Confidentiality
Agreement shall remain in full force and effect in accordance with its terms.
Section 5.5. CERTAIN FILINGS; REASONABLE EFFORTS.
(a) Subject to the terms and conditions hereof, including
Section 5.2(b), the parties will use all reasonable efforts to take or cause to
be taken all action and to do or cause to
31
be done all things reasonably necessary, proper or advisable under Applicable
Law to consummate and make effective the transactions contemplated by this
Agreement, including using all reasonable efforts to do the following: (i)
cooperate in the preparation and filing of the Proxy Statement and any
amendments thereto, any filings that may be required under the HSR Act and any
filings under similar merger notification laws or regulations of foreign
Governmental Entities; (ii) obtain consents of all third parties and
Governmental Entities necessary, proper, advisable or reasonably requested by
Parent or the Company, for the consummation of the transactions contemplated by
this Agreement; (iii) contest any legal proceeding relating to the Merger; and
(iv) execute any additional instruments necessary to consummate the transactions
contemplated hereby. Subject to the terms and conditions of this Agreement,
Parent and Acquisition will use all reasonable efforts to cause the Effective
Time to occur as soon as practicable after the Company stockholder vote with
respect to the Merger or the purchase by Acquisition of 90% or more of the
outstanding Shares pursuant to the Offer. If at any time after the Effective
Time any further action is necessary to carry out the purposes of this Agreement
the proper officers and directors of each party will take all such action as may
be reasonably required.
(b) Parent and the Company will consult and cooperate with one
another, and consider in good faith the views of one another, in connection with
any analyses, appearances, presentations, letters, white papers, memoranda,
briefs, arguments, opinions or proposals made or submitted by or on behalf of
any party hereto in connection with proceedings under or relating to the HSR Act
or any other foreign, federal, or state antitrust, competition, or fair trade
law. In this regard, each party hereto shall promptly inform the other of any
material communication between such party and the Federal Trade Commission, the
Antitrust Division of the United States Department of Justice, or any other
federal, foreign or state antitrust or competition Governmental Entity regarding
the transactions contemplated herein.
Section 5.6. PUBLIC ANNOUNCEMENTS. None of Parent, Acquisition or the
Company will issue any press release or otherwise make any public statements
with respect to the transactions contemplated by this Agreement, including the
Merger, or any Third Party Acquisition, without the prior consent of Parent and
Acquisition (in the case of the Company) or the Company (in the case of Parent
or Acquisition) which in either case will not unreasonably be withheld, except:
(i) as may be required by Applicable Law or by the rules and regulations of, or
pursuant to any agreement with, the Nasdaq National Market; or (ii) following a
change, if any, of the Company Board's recommendation of the Merger (in
accordance with Section 5.2(b)); or (iii) only in the case of a release or
statement relating to a Third Party Acquisition, if the Company Board has been
advised by outside legal counsel that a press release or other public statement
is required by Applicable Law.
Section 5.7. INDEMNIFICATION AND DIRECTORS' AND OFFICERS' INSURANCE.
(a) From and after the Effective Time, Parent shall cause
the Surviving Corporation to indemnify, defend and hold harmless (and to advance
expenses as incurred to the fullest extent permitted under Applicable Law to)
each person who is now or has been prior to the date hereof or who becomes prior
to the Effective Time an officer or director of the Company
32
or any of the Company's subsidiaries (the "INDEMNIFIED PERSONS") against: (i)
all losses, claims, damages, costs, expenses (including counsel fees and
expenses), settlement, payments or liabilities arising out of or in connection
with any claim, demand, action, suit, proceeding or investigation based in whole
or in part on or arising in whole or in part out of the fact that such person is
or was an officer or director of the Company or any of its subsidiaries, whether
or not pertaining to any matter existing or occurring at or prior to the
Effective Time and whether or not asserted or claimed prior to or at or after
the Effective Time ("INDEMNIFIED LIABILITIES"); and (ii) all Indemnified
Liabilities based in whole or in part on or arising in whole or in part out of
or pertaining to this Agreement or the transactions contemplated hereby, in each
case to the fullest extent required or permitted under Applicable Law. Nothing
contained herein shall make Parent, Acquisition, the Company or the Surviving
Corporation, an insurer, a co-insurer or an excess insurer in respect of any
insurance policies which may provide coverage for Indemnified Liabilities, nor
shall this Section 5.7 relieve the obligations of any insurer in respect
thereto. The parties hereto intend, to the extent not prohibited by Applicable
Law, that the indemnification provided for in this Section 5.7 shall apply
without limitation to negligent acts or omissions by an Indemnified Person. This
Section 5.7 shall not limit or otherwise adversely affect any rights any
Indemnified Person may have under any agreement with the Company or under the
Company's Certificate of Incorporation or bylaws as currently in effect.
(b) From and after the Effective Time, Parent will cause the
Surviving Corporation to fulfill the obligations of the Company pursuant to any
indemnification agreements between the Company and its directors and officers as
of or prior to the date hereof and to keep in effect any indemnification
provisions under the Company's certificate of incorporation or bylaws as in
effect immediately prior to the Effective Time.
(c) For a period of six years after the Effective Time,
Parent will maintain or cause the Surviving Corporation to maintain in effect,
at no expense to the beneficiaries, directors' and officers' liability insurance
covering those persons who, as of immediately prior to the Effective Time, are
covered by the Company's directors' and officers' liability insurance policy
(the "INSURED PARTIES") on terms no less favorable to the Insured Parties than
those of the Company's current directors' and officers' liability insurance
policy; PROVIDED, HOWEVER, that in no event shall Parent or the Company be
required to expend on an annual basis in excess of 150% of the annual premium
currently paid by the Company for such coverage (the "MAXIMUM PREMIUM"). If the
Surviving Corporation is unable to obtain the insurance required by this Section
5.7(c) for the Maximum Premium, it shall obtain as much comparable insurance as
possible for an annual premium equal to the Maximum Premium. In lieu of
maintaining such existing insurance, Parent, at its election, may cause coverage
to be provided under any policy maintained for the benefit of Parent or any of
its subsidiaries, so long as the terms are not materially less advantageous to
the intended beneficiaries thereof than such existing insurance. In the event
any claim is made against present or former directors, officers or employees of
the Company that is covered or potentially covered by insurance, neither the
Surviving Corporation nor Parent shall do anything that would forfeit,
jeopardize, restrict or limit the insurance coverage available for that claim
until final disposition thereof.
33
(d) Notwithstanding anything herein to the contrary, if any
claim, action, suit, proceeding or investigation (whether arising before, at or
after the Effective Time) is made against any Indemnified Persons, on or prior
to the sixth anniversary of the Effective Time, the provisions of this Section
5.7 shall continue in effect until the final disposition of such claim, action,
suit, proceeding or investigation.
(e) This covenant is intended to be for the benefit of, and
shall be enforceable by, each of the Indemnified Persons and their respective
heirs and legal representatives. The indemnification provided for herein shall
not be deemed exclusive of any other rights to which an Indemnified Person is
entitled, whether pursuant to law, contract or otherwise. Parent shall pay all
reasonable expenses, including attorneys' fees, that may be incurred by any
Indemnified Person in enforcing the indemnity and other obligations provided for
in this Section 5.7.
(f) In the event that the Surviving Corporation or Parent or
any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then, and in each
such case, to the extent necessary to effectuate the purposes of this Section
5.7, proper provision shall be made so that the successors and assigns of the
Surviving Corporation or Parent shall succeed to the obligations set forth in
this Section 5.7 and none of the actions described in clauses (i) or (ii) shall
be taken until such provision is made.
Section 5.8. NOTIFICATION OF CERTAIN MATTERS. The Company will give
prompt notice to Parent, and Parent will give prompt notice to the Company, of
(i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence
of which has caused or would be likely to cause any representation or warranty
contained in this Agreement by such party to be untrue or inaccurate in any
material respect at or prior to the Effective Time and (ii) any material failure
by such party to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it hereunder. The
delivery of any notice pursuant to this Section 5.8 shall not cure such breach
or non-compliance or limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
Section 5.9. TAKEOVER STATUTES. If any Takeover Statute or any similar
statute, law, rule or regulation in any State of the United States (including
under the DGCL or any other law of the State of Delaware) is or becomes
applicable to the Offer, the Merger or any of the other transactions
contemplated by this Agreement, Parent, the Company and the Company Board
promptly will grant such approvals and use all reasonable efforts to take such
lawful actions as are necessary so that such transactions may be consummated as
promptly as practicable on the terms contemplated by this Agreement or by the
Offer or the Merger, as the case may be, and use all reasonable efforts to take
such lawful actions to eliminate or minimize the effects of such statute, law,
rule or regulation, on such transactions.
Section 5.10. COMPANY STOCK OPTIONS.
(a) From and after the date hereof, the Company will not take
any action that would prevent or is inconsistent with the provisions of Section
2.11.
34
(b) From and after the date hereof, the Company will not
include in any restricted stock grant or grant of a Company Stock Option in
connection with an offer of employment for a new employee any change of control
provisions and any such grant will not be in an amount of shares in excess of
such grants made to new employees in the ordinary course of business, consistent
with past practice.
(c) From and after the date hereof, the Company will not
include in any restricted stock grant or grant of a Company Stock Option granted
to a continuing employee after July 27, 1999 any change in control provisions,
will not be in an amount of shares in excess of such grants made to continuing
employees in the ordinary course of business, consistent with past practice. The
aggregate number of shares covered by all such grants will not exceed 50,000.
(d) The Company agrees to cause the Company Board to adopt all
resolutions reasonably necessary or appropriate to further the purposes of
Sections 5.13(a), (b) and (c) and provide that all options outstanding under
each Company Stock Plan can be canceled by Parent.
Section 5.11. COMPANY INFORMATION SUPPLIED. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in the proxy statement relating to the meeting of the Company's
stockholders to be held in connection with the Merger (the "PROXY STATEMENT")
will, at the date mailed to stockholders of the Company and at the time of the
meeting of stockholders of the Company to be held in connection with the Merger,
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 Proxy Statement insofar as it relates to the meeting of the Company's
stockholders to vote on the Merger will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, the Company makes no representation,
warranty or covenant with respect to any information supplied or required to be
supplied by Parent or Acquisition that is contained in or omitted from the Proxy
Statement.
Section 5.12. PARENT AND ACQUISITION INFORMATION SUPPLIED. None of the
information supplied or to be supplied by Parent or Acquisition for inclusion or
incorporation by reference in the Offer Documents and the Proxy Statement will
at the date mailed to stockholders and at the times of the meeting or meetings
of stockholders of the Company to be held in connection with the Merger 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 Offer Documents and any amendments or supplements thereto will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder. Notwithstanding the foregoing, neither Parent
nor Acquisition makes any representation, warranty or covenant with respect to
any information supplied or required to be supplied by the Company that is
contained in or omitted from the Proxy Statement.
Section 5.13. SUPPORT LETTER. Parent will furnish the Company a
letter from Ocean Group plc, a company organized under the laws of England and
Wales ("OCEAN GROUP"), within
35
ten business days of the date hereof, which letter states that Ocean Group will
provide sufficient funds to Parent and Acquisition so that Parent and
Acquisition can (i) pay for tendered Shares, (ii) pay for Shares exchanged in
the Merger and (iii) make payments required under Section 2.11.
Section 5.14. EMPLOYEES AND EMPLOYEE BENEFITS.
(a) Effective as of the Closing, Parent shall cause the Company to
employ all persons employed by the Company immediately prior to the earlier of
the Closing or the time Parent designates directors to the Company Board
pursuant to Section 1.3(a) hereof (the "COMPANY EMPLOYEES"). For a period of two
years following the Closing, Parent shall provide or cause to be provided to the
Company Employees employee pension and welfare benefits plans (the "PARENT
PLANS") that are substantially comparable in the aggregate to the employee
pension and welfare benefit plans provided to the Company Employees immediately
prior to the earlier of the Closing or the time Parent designates directors to
the Company Board pursuant to Section 1.3(a) hereof (the "COMPANY PLANS").
(b) Following the Closing, Parent shall cause the Parent Plans (i)
to recognize all prior service of the Company Employees for purposes of
participation, eligibility and vesting of benefits (but not for benefit accrual
purposes), (ii) to take into account all expenses incurred by the Company
Employees (or their eligible dependents) prior to the Closing toward satisfying
deductible, coinsurance and out-of-pocket expense limits, and (iii) to waive any
preexisting condition limitations that would otherwise apply to the Company
Employees; PROVIDED, HOWEVER, that the foregoing shall apply only as and to the
extent such prior service or expenses incurred were recognized for a Company
Employee, or such preexisting condition limitation did not apply to a Company
Employee, under the comparable Company Plan as of the Closing Date.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE
MERGER. The respective obligations of each party hereto to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this Agreement shall have been approved and adopted by the
requisite vote of the stockholders of the Company, if required by Applicable
Law;
(b) no statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or enforced
by any United States federal or state court or United States federal or state
Governmental Entity that prohibits, restrains, enjoins or restricts the
consummation of the Merger; and
(c) Acquisition shall have purchased Shares pursuant to the
Offer.
36
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER
Section 7.1. TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time notwithstanding
approval thereof by the Company's stockholders:
(a) by mutual written consent of Parent, Acquisition and the
Company;
(b) by Parent and Acquisition or the Company if: (i) any
court of competent jurisdiction in the United States or other United States
federal or state Governmental Entity shall have issued a final order, decree or
ruling, or taken any other final action, restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action is or
shall have become nonappealable; or (ii) the Merger has not been consummated by
March 31, 2000 (the "FINAL DATE"); PROVIDED, HOWEVER, that no party may
terminate this Agreement pursuant to this clause (ii) if such party's failure to
fulfill any of its obligations under this Agreement shall have been a principal
reason that the Effective Time shall not have occurred on or before said date;
(c) by Parent and Acquisition if, due to an occurrence or
circumstance that would result in a failure to satisfy any of the conditions set
forth in Annex A, Acquisition shall have (i) terminated the Offer in accordance
with the provisions of Annex A or (ii) failed to pay for Shares pursuant to the
Offer within 120 days following the date hereof, unless such failure to pay for
Shares is a result of the failure of Parent or Acquisition to perform any of its
covenants and agreements contained in this Agreement;
(d) by the Company if: (i)(A) Acquisition fails to commence
the Offer as provided in Section 1.1 or (B) Acquisition fails to pay for Shares
pursuant to the Offer within 120 days following the date hereof, unless such
failure to pay for Shares is the result of (1) the failure of the Company to
perform any of its covenants and agreements contained in this Agreement or (2)
termination of the Offer in accordance with the provisions of Annex A; or (ii)
the Company Board has received a Superior Proposal and has complied with the
provisions of Section 5.2; or
(e) by Parent and Acquisition if (i) the Company shall have
materially breached its obligations set forth in Section 5.2, (ii) the Company
Board shall have recommended to the Company's stockholders a Superior Proposal,
(iii) the Company Board shall have withdrawn or adversely modified (including by
amendment of the Schedule 14D-9) its approval or recommendation of this
Agreement, the Offer or the Merger or (iv) the Minimum Condition shall not have
been satisfied by the expiration date of the Offer and on or prior to such date
(A) any person (other than Parent or Acquisition) shall have made and not
withdrawn a bona fide proposal or public announcement or commitment to the
Company with respect to a Third Party Acquisition or (B) any person (including
the Company or any of its affiliates or subsidiaries), other than Parent or
Acquisition shall have become the beneficial owner of 25% of the Shares.
37
Section 7.2. EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
void and have no effect without any liability on the part of any party hereto or
its affiliates, directors, officers or stockholders other than as provided in
this Section 7.2 and Sections 7.3 and 8.1; provided, however, that nothing
herein shall relieve any party from any liability for any breach hereof. Nothing
set forth herein shall limit any rights any party may have arising out of the
intentional fraudulent conduct of any other party hereto.
Section 7.3. FEES AND EXPENSES.
(a) If any of the following occur (each, a "TERMINATION FEE
EVENT"):
(i) Parent and Acquisition terminate this
Agreement pursuant to Section 7.1(e),
(ii) Parent and Acquisition terminate this
Agreement pursuant to Section 7.1(c) in
connection with a willful act or omission by
the Company which results in a failure to
satisfy any of the conditions set forth in
Annex A,
(iii) the Company terminates this Agreement
pursuant to Section 7.1(d)(ii), or
(iv) the Company terminates this Agreement
pursuant to Section 7.1(d)(i)(B) at a time
when Parent and Acquisition had a right to
terminate this Agreement pursuant to Section
7.1(e),
then:
(x) in the event of a Termination Fee Event
described inSection 7.3(a)(ii), the Company
shall pay Parent a fee of $1,000,000
immediately upon such termination,
(y) in the event of a Termination Fee Event
described in Section 7.3(a)(i), Section
7.3(a)(iii) or Section 7.3(a)(iv), the
Company will pay Parent a fee (as a
condition and prior to such Termination Fee
Event if such event is a termination by the
Company and within one business day of such
termination if such event is a termination
by Parent or Acquisition) of $2,500,000 and
an additional fee of $2,500,000 immediately
upon the signing within 12 months of such
termination of any agreement with respect to
a Third Party Acquisition or the
consummation of a Third Party Acquisition
without the signing of any such agreement
during such period, and
38
(z) in the event of a Termination Fee Event
described in Section 7.3(a)(ii), the Company
shall pay Parent a fee of $5,000,000 (which
fee shall be reduced by the amount, if any,
paid to Parent pursuant to clause (x) above)
immediately upon the signing within 12
months of such termination of any agreement
with respect to a Third Party Acquisition or
the consummation of a Third Party
Acquisition without the signing of any such
agreement during such period.
(b) The Company acknowledges that Parent and Acquisition
would suffer direct and substantial damages, which damages cannot be determined
with reasonable certainty in the event that this Agreement shall be terminated
pursuant to a Termination Fee Event. It is specifically agreed that the amount
to be paid pursuant to Section 7.3(a) represents liquidated damages and not a
penalty. The Company waives any right to set-off or counterclaim against such
amount.
(c) Upon termination of this Agreement pursuant to
Section 7.1(c), Section 7.1(d)(ii) or Section 7.1(e), in addition to any other
remedies that Parent, Acquisition or their affiliates may have as a result of
such termination (including pursuant to Section 7.3(a) or otherwise), the
Company shall reimburse Parent the amount of $500,000 as reimbursement for the
out-of-pocket costs, fees and expenses incurred by any of them or on their
behalf in connection with this Agreement, the Offer, the Merger and the
consummation of the transactions contemplated by this Agreement (including fees
payable to investment bankers, counsel to any of the foregoing and accountants).
Nothing contained in this Section 7.3(c) shall relieve any party of any
liability for breach of this Agreement.
(d) Upon termination of this Agreement pursuant to
Section 7.1(d)(i), in addition to any other remedies that the Company or its
affiliates may have as a result of such termination, Parent shall reimburse the
Company the amount of $500,000 as reimbursement for the out-of-pocket costs,
fees and expenses incurred by any of them or on their behalf in connection with
this Agreement, the Offer, the Merger and the consummation of the transactions
contemplated by this Agreement (including fees payable to investment bankers,
counsel to any of the foregoing and accountants). Nothing contained in this
Section 7.3(d) shall relieve any party of any liability for breach of this
Agreement.
(e) Except as specifically provided in this Section 7.3, each
party shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
(f) The parties acknowledge that the agreements contained in
this Article 7 (including this Section 7.3) are an integral part of the
transactions contemplated by this Agreement and that, without these agreements,
the parties would not enter into this Agreement. Accordingly, if any party fails
promptly to pay the amounts required pursuant to Section 7.3 when due (including
circumstances where, in order to obtain such payment a party commences a suit
that results in a final nonappealable judgment against another party for such
amounts), the defaulting party shall pay to the other party (i) its costs and
expenses (including attorneys' fees)
39
in connection with such suit and (ii) interest on the amount that was determined
to be due and payable hereunder at the rate announced by The Chase Manhattan
Bank as its "reference rate" in effect on the date such payment was required to
be made.
Section 7.4. AMENDMENT. This Agreement may be amended by action taken
by the Company, Parent and Acquisition at any time before or after approval of
the Merger by the stockholders of the Company, but after any such approval no
amendment may be made that requires the approval of such stockholders under
Applicable Law without such approval. This Agreement may be amended only by an
instrument in writing signed on behalf of the parties hereto.
Section 7.5. EXTENSION; WAIVER. At any time prior to the Effective
Time, each party hereto may (i) extend the time for the performance of any of
the obligations or other acts of the other party, (ii) waive any inaccuracies in
the representations and warranties of the other party contained herein or in any
document, certificate or writing delivered pursuant hereto or (iii) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of any party hereto 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 hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE 8
MISCELLANEOUS
Section 8.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made herein shall not survive beyond the
Effective Time. This Section 8.1 shall not limit any covenant or agreement of
the parties hereto that by its terms requires performance after the Effective
Time.
Section 8.2. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including
the Company Disclosure Schedule and Annex A, which are incorporated by reference
into this Agreement (a) constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and supersede all other prior
and contemporaneous agreements and understandings both written and oral between
the parties with respect to the subject matter hereof and (b) shall not be
assigned by operation of law or otherwise; PROVIDED, HOWEVER, that Acquisition
may assign any or all of its rights and obligations under this Agreement to any
wholly owned subsidiary of Parent, but no such assignment shall relieve
Acquisition of its obligations hereunder if such assignee does not perform such
obligations.
Section 8.3. VALIDITY. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
40
Section 8.4. NOTICES. All notices and other communications pursuant to
this Agreement shall be in writing and shall be deemed given if delivered
personally, telecopied, sent by nationally-recognized overnight courier or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the addresses set forth below or to such other
address as the party to whom notice is to be given may have furnished to the
other parties hereto in writing in accordance herewith. Any such notice or
communication shall be deemed to have been delivered and received (i) in the
case of personal delivery, on the date of such delivery, (ii) in the case of
telecopier, on the date sent if confirmation of receipt is received and such
notice is also promptly mailed by registered or certified mail (return receipt
requested), (iii) in the case of a nationally-recognized overnight courier in
circumstances under which such courier guarantees next business day delivery, on
the next business day after the date when sent and (iv) in the case of mailing,
on the third business day following that on which the piece of mail containing
such communication is posted:
if to Parent or Acquisition: c/o Ocean Group plc
Xxxxx Xxxxx
Xxx Xxxx
Xxxxxxxxx
Xxxxxxxxx XX00 0XX
England
Telecopier: 011 44 134 44 452222
Attention: Group Commercial Director
with a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
if to the Company to: Xxxx VII, Inc.
000 Xxxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: General Counsel
with a copy to: Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxx
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
41
Section 8.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN
ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE
WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF. The parties hereby irrevocably submit to the jurisdiction of
the courts of the State of Delaware and the Federal courts of the United States
of America located in the State of Delaware solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the transactions
contemplated hereby, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement hereof or
of any such document, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in said courts or that
the venue thereof may not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a Delaware state or Federal court. The
parties hereby consent to and grant any such court jurisdiction over the person
of such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 8.4 or in such other manner as may
be permitted by Applicable Law, shall be valid and sufficient service thereof.
(b) The parties agree that irreparable damage would occur
and that the parties would not have any adequate remedy at law in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any Federal court located in the State of Delaware or in
Delaware state court, this being in addition to any other remedy to which they
are entitled at law or in equity.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT: (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (iii)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY; AND (iv) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.5.
Section 8.6. DESCRIPTIVE HEADINGS; ARTICLE AND SECTION REFERENCES. The
descriptive headings herein are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or interpretation of
this Agreement. All Article, Section, Schedule and
42
Annex references in this Agreement are to Articles, Sections, Schedules and
Annexes, respectively, of or to this Agreement unless specified otherwise.
Section 8.7. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns and, except as expressly provided herein, nothing in this
Agreement is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 8.8. CERTAIN DEFINITIONS. For the purposes of this Agreement
the term:
(a) "AFFILIATE" means a person that, directly or indirectly,
through one or more intermediaries controls, is controlled by or is under common
control with the first-mentioned person.
(b) "APPLICABLE LAW" means, with respect to any person, any
domestic or foreign, federal, state or local statute, law, ordinance, rule,
regulation, order, writ, injunction, judgment, decree or other requirement of
any Governmental Entity existing as of the date hereof or as of the Effective
Time applicable to such Person or any of its respective properties, assets,
officers, directors, employees, consultants or agents.
(c) "BUSINESS DAY" means any day other than a day on which the
Nasdaq National Market is closed.
(d) "CAPITAL STOCK" means common stock, preferred stock,
partnership interests, limited liability company interests or other ownership
interests entitling the holder thereof to vote with respect to matters involving
the issuer thereof.
(e) "KNOWLEDGE" or "KNOWN" means, with respect to any
matter in question, the actual knowledge of such matter of any executive officer
of the Company or any of its subsidiaries, or Parent or any of its subsidiaries,
as the case may be.
(f) "INCLUDE" or "INCLUDING" means "include, without
limitation" or "including, without limitation," as the case may be, and the
language following "include" or "including" shall not be deemed to set forth an
exhaustive list.
(g) "PERSON" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization or
other legal entity including any Governmental Entity.
(h) "SUBSIDIARY" or "SUBSIDIARIES" of the Company, Parent, the
Surviving Corporation or any other person means any corporation, partnership,
limited liability company, association, trust, unincorporated association or
other legal entity of which the Company, Parent, the Surviving Corporation or
any such other person, as the case may be (either alone or through or together
with any other subsidiary), owns, directly or indirectly, 50% or more of the
capital stock the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
43
Section 8.9. PERSONAL LIABILITY. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part of
any direct or indirect stockholder of the Company or Parent or Acquisition or
any officer, director, employee, agent, representative or investor of any party
hereto.
Section 8.10. SPECIFIC PERFORMANCE. The parties hereby acknowledge that
the failure of any party to perform its agreements and covenants hereunder,
including its failure to take all actions as are necessary on its part to the
consummation of the Offer or the Merger, will cause irreparable injury to the
other parties, for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder; PROVIDED, HOWEVER, that if a party
hereto is entitled to receive any payment or reimbursement of expenses pursuant
to Section 7.3(a), (b) or (c), it shall not be entitled to specific performance
to compel the consummation of the Offer or the Merger.
Section 8.11. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which shall constitute one and the same agreement.
44
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
XXXX VII, INC.,
a Delaware corporation
By: /s/ X. X. Xxxxxx
-------------------------
Name: X. X. Xxxxxx
Title: Chairman and CEO
MSAS GLOBAL LOGISTICS INC.,
a New York corporation
By: /s/ Xxxx X. Xxxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxxx
Title: Regional Chief Executive
MSAS ACQUISITION CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Name: Xxxxxx X. Xxxxx
Title: Secretary
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER BY AND AMONG XXXX VII, INC.,
MSAS GLOBAL LOGISTICS INC. AND MSAS ACQUISITION CORPORATION]
45
ANNEX A
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer or this Agreement, and
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) relating to Acquisition's obligation to pay for or return tendered
shares promptly after termination of the Offer, Acquisition shall not be
required to accept for payment or pay for any Shares tendered pursuant to the
Offer, may delay the acceptance for payment of any Shares pursuant to Section
1.1(b) of this Agreement, may extend the Offer by one or more times, and may
terminate the Offer at any time after March 31, 2000 if (i) there shall not have
been tendered and not properly withdrawn a number of Shares which, together with
any shares owned by Parent or Acquisition, constitutes at least a majority of
the outstanding Shares on a fully-diluted basis (including for purposes of such
calculation all Shares issuable upon exercise of all vested Company Stock
Options and unvested Company Stock Options that vest prior to the Final Date,
but excluding any Shares held by the Company or any of its subsidiaries); (ii)
any applicable waiting period under the HSR Act has not expired or terminated;
(iii) all necessary consents and approvals from all Governmental Entities shall
not have been obtained on terms and conditions reasonably satisfactory to
Parent; or (iv) at any time after the date of this Agreement, and before
acceptance for payment of any Shares, any of the following events shall occur
and be continuing:
(a) there shall have been any action taken, or any statute,
rule, regulation, judgment, order or injunction promulgated, entered,
enforced, enacted, issued or deemed applicable to the Offer or the
Merger by any domestic or foreign court or other Governmental Entity
which directly or indirectly (i) prohibits, or makes illegal, the
acceptance for payment, payment for or purchase of Shares or the
consummation of the Offer, the Merger or the other transactions
contemplated by this Agreement, (ii) renders Acquisition unable to
accept for payment, pay for or purchase some or all of the Shares,
(iii) imposes material limitations on the ability of Parent effectively
to exercise full rights of ownership of the Shares, including the right
to vote the Shares purchased by it on all matters properly presented to
the Company's stockholders, or (iv) otherwise has a Material Adverse
Effect on the Company; or (2) in connection with the compliance by
Parent or Acquisition with any Applicable Law (including the HSR Act)
or obtaining the consent or approval of any Governmental Entity whose
consent or approval may be required to consummate the transactions
contemplated by this Agreement, Parent shall be (i) required, or be
construed to be required, to sell or divest any assets or business or
to restrict any business operations in order to obtain the consent or
successful termination of any review of any such Governmental Entity
regarding the transactions contemplated hereby or (ii) prohibited from
owning, or any material limitation shall be imposed on Parent's
ownership of, any material portion of the Company's business or assets.
(b) (i) the representations and warranties of the Company
contained in this Agreement at the date hereof and as of the
consummation of the Offer with the same effect as if made at and as of
the consummation of the Offer (except as to any such representation or
warranty which speaks as of a specific date) shall not be true and
correct
A-1
in any respect that is reasonably likely to have a Material Adverse
Effect (or if such representations and warranties are qualified
by reference to materiality or a Material Adverse Effect, shall not be
true and correct), (ii) the Company shall have failed to perform in all
material respects its covenants or agreements contained in this
Agreement which would have a Material Adverse Effect on the Company
(or, in the case of Section 5.2, any material breach thereof) or
materially adversely affect (or materially delay) the ability of
Acquisition to consummate the Offer or of Parent, Acquisition or the
Company to consummate the Merger, and the Company has not cured such
breach within five business days after notice by Parent or Acquisition
thereof, or (iii) there shall have occurred since January 2, 1999 any
events or changes which constitute a Material Adverse Effect on the
Company;
(c) it shall have been publicly disclosed or Parent shall have
otherwise learned that (i) any person or "group" (as defined in Section
13(d)(3) of the Exchange Act) shall have acquired or entered into a
definitive agreement or agreement in principle to acquire beneficial
ownership of more than 35% of the Shares or any other class of capital
stock of the Company, through the acquisition of stock, the formation
of a group or otherwise, or shall have been granted any option, right
or warrant, conditional or otherwise, to acquire beneficial ownership
of more than 35% of the Shares and (ii) such person or group shall not
have tendered such Shares pursuant to the Offer;
(d) the Company Board shall have withdrawn, or modified or
changed in a manner adverse to Parent and Acquisition (including by
amendment of the Schedule 14D-9), its recommendation of the Offer, this
Agreement or the Merger, or recommended another proposal or offer, or
the Company Board, shall have resolved to do any of the foregoing;
(e) this Agreement shall have terminated in accordance with
its terms; or
(f) there shall have occurred: (i) any general suspension of
trading in, or limitation on prices for, securities on the New York
Stock Exchange or the Nasdaq National Market, for a period in excess of
24 hours; (ii) the commencement of a war, armed hostilities or other
national or international calamity directly or indirectly involving the
United States that constitutes a Material Adverse Effect on the Company
or materially adversely affects or delays the consummation of the
Offer; (iii) the average of the closing prices of the Standard & Poor's
500 Index for any 20 consecutive trading days shall be 25% or more
below the closing price of such index on any trading day on or after
the date hereof that precedes the commencement of such 20-trading day
period; or (iv) in the case of any of the foregoing existing at the
time of the commencement of the Offer, a material acceleration or
worsening thereof;
which in the good faith judgment of Parent, in any such case, and regardless of
the circumstances (including any action or inaction by Parent) giving rise to
such condition makes it inadvisable to proceed with the Offer or the acceptance
for payment of or payment for the Shares.
A-2
The foregoing conditions (other than the Minimum Condition) are for the sole
benefit of Parent and Acquisition and may be waived by Parent and Acquisition,
in whole or in part at any time and from time to time, in the sole discretion of
Parent and Acquisition. The failure by Parent and Acquisition at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
A-3
