EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
among
INTERMAGNETICS GENERAL CORPORATION,
MAGIC SUBSIDIARY CORPORATION
and
INVIVO CORPORATION
Dated as of December 17, 2003
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions........................................................................... 1
ARTICLE II
THE OFFER
SECTION 2.01 The Offer............................................................................. 6
SECTION 2.02 Company Action........................................................................ 8
ARTICLE III
THE MERGER
SECTION 3.01 The Merger............................................................................ 9
SECTION 3.02 Effective Time; Closing............................................................... 9
SECTION 3.03 Effect of the Merger.................................................................. 9
SECTION 3.04 Certificate of Incorporation; By-laws................................................. 9
SECTION 3.05 Directors and Officers................................................................ 10
SECTION 3.06 Conversion of Securities.............................................................. 10
SECTION 3.07 Employee Stock Options................................................................ 10
SECTION 3.08 Dissenting Shares..................................................................... 11
SECTION 3.09 Surrender of Shares; Stock Transfer Books............................................. 11
SECTION 3.10 Withholding Rights.................................................................... 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01 Organization and Qualification; Subsidiaries.......................................... 13
SECTION 4.02 Certificate of Incorporation and By-laws.............................................. 13
SECTION 4.03 Capitalization........................................................................ 13
SECTION 4.04 Authority Relative to This Agreement.................................................. 14
SECTION 4.05 No Conflict; Required Filings and Consents............................................ 15
SECTION 4.06 Permits; Compliance................................................................... 15
SECTION 4.07 SEC Filings; Financial Statements..................................................... 16
SECTION 4.08 Absence of Certain Changes or Events.................................................. 18
SECTION 4.09 Absence of Litigation................................................................. 19
SECTION 4.10 Employee Benefit Plans................................................................ 19
SECTION 4.11 Labor and Employment Matters.......................................................... 21
SECTION 4.12 Offer Documents; Schedule 14D-9; Proxy Statement...................................... 21
SECTION 4.13 Real Property; Title to Assets........................................................ 22
SECTION 4.14 Intellectual Property................................................................. 23
SECTION 4.15 Taxes................................................................................. 25
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SECTION 4.16 Environmental Matters................................................................. 26
SECTION 4.17 No Rights Agreement................................................................... 26
SECTION 4.18 Material Contracts.................................................................... 26
SECTION 4.19 Customers and Suppliers............................................................... 28
SECTION 4.20 Inventory............................................................................. 28
SECTION 4.21 Company Products and Services......................................................... 29
SECTION 4.22 Insurance............................................................................. 29
SECTION 4.23 Certain Business Practices............................................................ 29
SECTION 4.24 Government Regulation................................................................. 29
SECTION 4.25 Brokers............................................................................... 30
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 5.01 Corporate Organization................................................................ 30
SECTION 5.02 Authority Relative to This Agreement.................................................. 30
SECTION 5.03 No Conflict; Required Filings and Consents............................................ 31
SECTION 5.04 Financing............................................................................. 31
SECTION 5.05 Offer Documents; Proxy Statement...................................................... 31
SECTION 5.06 Absence of Litigation................................................................. 32
SECTION 5.07 Brokers............................................................................... 32
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01 Conduct of Business by the Company Pending the Merger................................. 32
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Stockholders' Meeting................................................................. 35
SECTION 7.02 Proxy Statement....................................................................... 35
SECTION 7.03 Company Board Representation; Section 14(f)........................................... 35
SECTION 7.04 Access to Information; Confidentiality................................................ 36
SECTION 7.05 No Solicitation of Transactions....................................................... 37
SECTION 7.06 Directors' and Officers' Indemnification and Insurance................................ 38
SECTION 7.07 Notification of Certain Matters....................................................... 39
SECTION 7.08 Further Action; Reasonable Best Efforts............................................... 39
SECTION 7.09 Subsequent Financial Statements....................................................... 40
SECTION 7.10 Public Announcements.................................................................. 40
SECTION 7.11 Tax Certificate....................................................................... 40
SECTION 7.12 Confidentiality Agreement............................................................. 40
SECTION 7.13 Employee Benefit Matters.............................................................. 40
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Merger.............................................................. 41
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination........................................................................... 41
SECTION 9.02 Effect of Termination................................................................. 42
SECTION 9.03 Fees.................................................................................. 42
SECTION 9.04 Amendment............................................................................. 43
SECTION 9.05 Waiver................................................................................ 43
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Notices............................................................................... 43
SECTION 10.02 Severability.......................................................................... 44
SECTION 10.03 Entire Agreement; Assignment.......................................................... 45
SECTION 10.04 Parties in Interest................................................................... 45
SECTION 10.05 Specific Performance.................................................................. 45
SECTION 10.06 Governing Law......................................................................... 45
SECTION 10.07 Waiver of Jury Trial.................................................................. 45
SECTION 10.08 Headings.............................................................................. 46
SECTION 10.09 Counterparts.......................................................................... 46
ANNEX A Conditions to the Offer
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AGREEMENT AND PLAN OF MERGER, dated as of December 17, 2003
(this "Agreement"), among Intermagnetics General Corporation, a New York
corporation ("Parent"), Magic Subsidiary Corporation, a Delaware corporation and
a wholly owned subsidiary of Parent ("Purchaser"), and Invivo Corporation, a
Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Purchaser and the
Company have each determined that it is in the best interests of their
respective stockholders for Parent to acquire the Company upon the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, it is proposed
that Purchaser shall make a cash tender offer to acquire all the issued and
outstanding shares of common stock, par value $0.01 per share, of the Company
("Shares") for $22.00 per Share (such amount, or any greater amount per Share
paid pursuant to the Offer, being the "Per Share Amount"), net to the seller in
cash, upon the terms and subject to the conditions of this Agreement (such cash
tender offer, as it may be amended from time to time in accordance with this
Agreement, the "Offer");
WHEREAS, the Board of Directors of the Company (the "Board")
has unanimously approved the making of the Offer and resolved to recommend that
holders of Shares tender their Shares pursuant to the Offer; and
WHEREAS, also in furtherance of such acquisition, the Boards
of Directors of Parent, Purchaser and the Company have each approved this
Agreement and declared its advisability and approved the merger (the "Merger")
of Purchaser with and into the Company in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), following the
consummation of the Offer and upon the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. i) For purposes of this Agreement:
"affiliate" of a specified person means a person who, directly
or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified person.
"beneficial owner", with respect to any Shares, has the
meaning ascribed to such term under Rule 13d-3(a) of the Exchange Act.
"business day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case
of determining a date when any payment is due, any day (other than a
Saturday or Sunday) on which banks are not required or authorized to
close in the City of New York.
"Company IT Systems" means all IT Systems used in, intended to
be used in, or held for use in connection with the business of the
Company or any Subsidiary.
"Competing Transaction" means any of the following (other than
the Transactions): (i) any merger, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution or
other similar transaction involving the Company or any Subsidiary; (ii)
any sale, lease, exchange, transfer or other disposition of all or a
substantial part of the assets of the Company or of any Subsidiary;
(iii) any sale, exchange, transfer or other disposition of any class of
equity securities of the Company or of any Subsidiary that results in
any person (other than the Company in the case of a Subsidiary)
acquiring 20% or more of any class of equity securities of the Company
or of any Subsidiary; (iv) any tender offer or exchange offer that, if
consummated, would result in any person beneficially owning 15% or more
of any class of equity securities of the Company or of any Subsidiary;
or (v) any other transaction the consummation of which would reasonably
be expected to impede, interfere with, prevent or materially delay any
of the Transactions.
"control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, or
as trustee or executor, of the power to direct or cause the direction
of the management and policies of a person, whether through the
ownership of voting securities, as trustee or executor, by contract or
credit arrangement or otherwise;
"Environmental Laws" means any United States federal, state,
local or non-United States laws, statutes, ordinances, regulations,
rules, codes, orders, other requirements of law and common law relating
to (i) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances; (ii) exposure or alleged
exposure to Hazardous Substances; (iii) the manufacture, handling,
transport, recycling, reclamation, use, treatment, storage or disposal
of Hazardous Substances or materials containing Hazardous Substances;
or (iv) pollution, natural resource damages or protection of the
environment, health or safety.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company or any Subsidiary
and which, together with the Company or any Subsidiary, is treated as a
single employer within the meaning of Section 414(b), (c), (m) or (o)
of the Code.
"Fully Diluted Basis" means after taking into account all
Shares and assuming the exercise, conversion or exchange of all
options, warrants, convertible or exchangeable securities and similar
rights and the issuance of all shares of Company common stock that the
Company is obligated to issue thereunder.
"Hazardous Substances" means (i) those substances defined in
or regulated under the following United States federal statutes and
their state and local counterparts, as each may be amended from time to
time, and all regulations thereunder: the Hazardous Materials
Transportation Act, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act,
the Clean
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Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide, and Rodenticide Act and the Clean Air
Act; (ii) petroleum and petroleum products, including crude oil and any
fractions thereof; (iii) natural gas, synthetic gas, and any mixtures
thereof; (iv) polychlorinated biphenyls, asbestos, mold and radon; and
(v) any other contaminant, substance, material or waste regulated by
any Governmental Authority pursuant to any Environmental Law.
"Healthcare Law" means the following laws or regulations
relating to the regulation of the healthcare industry (as such laws are
currently enforced or as interpreted at the Effective Time by existing,
publicly available judicial and administrative decisions and
regulations): (i) Sections 1877, 1128, 1128A or 1128B of the Social
Security Act (the "SSA"); (ii) the licensure, certification or
registration requirements of healthcare facilities, services or
equipment; (iii) any state certificate of need or similar law governing
the establishment of healthcare facilities or services or the making of
healthcare capital expenditures; (iv) any state law relating to
fee-splitting or the corporate practice of medicine; (v) any state
physician self-referral prohibition or state anti-kickback law; (vi)
any criminal offense relating to the delivery of, or claim for payment
for, a healthcare item or service under any federal or state healthcare
program; and (vii) any federal or state law relating to the
interference with or obstruction of any investigation into any criminal
offense.
"Intellectual Property" means (i) patents, patent
applications, and statutory invention registrations, (ii) trademarks,
service marks, domain names, trade dress, logos, trade names, corporate
names, and other identifiers of source or goodwill, including
registrations and applications for registration thereof, (iii) mask
works and copyrights, including copyrights in Software, and
registrations and applications for registration thereof, and (iv) trade
secrets, know-how, invention rights, and other confidential or
proprietary technical, business and other information, including
manufacturing and production processes and techniques, research and
development information, technology, drawings, specifications, designs,
plans, proposals, technical data, financial, marketing and business
data, pricing and cost information, business and marketing plans,
customer and supplier lists and information, and all rights in any
jurisdiction to limit the use or disclosure thereof.
"IT Systems" means computer systems, networks, hardware and
Software, used to process, store, maintain and operate data,
information and functions.
"knowledge of the Company" means the actual knowledge of any
director or executive officer of the Company and such knowledge that
any such individual would obtain after the exercise of reasonable
investigation.
"Licensed Intellectual Property" means Intellectual Property
licensed to the Company or any Subsidiary pursuant to the Licenses.
"Licenses" means (i) licenses of Intellectual Property or IT
Systems by the Company or any Subsidiary to any third party, (ii)
licenses of Intellectual Property or IT Systems by any third party to
the Company or any Subsidiary, (iii) agreements between
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the Company or any Subsidiary and any third party relating to the
development or use of Intellectual Property or IT Systems, the
development or transmission of data, or the use, modification, framing,
linking, advertisement, or other practices with respect to Internet web
sites, and (iv) consents, settlements, decrees, orders, injunctions,
judgments or rulings governing the use, validity or enforceability of
Owned Intellectual Property or any other Intellectual Property used in
or held for use in connection with its business by the Company or any
Subsidiary.
"Material Adverse Effect" means, when used in connection with
the Company or any Subsidiary, any event, circumstance, change or
effect that, individually or in the aggregate with any other events,
circumstances, changes and effects occurring after the date hereof, is
or is reasonably likely to be materially adverse to (i) the business,
condition (financial or otherwise), assets, liabilities or results of
operations of the Company and the Subsidiaries taken as a whole or (ii)
the ability of the Company to consummate the Transactions, other than
(A) any of the foregoing resulting from events, facts or circumstances
relating to the economy in general or to the Company's industry in
general and not specifically relating to the Company or any Subsidiary,
or (B) any of the foregoing resulting from the announcement or
consummation of this Agreement or the Transactions.
"NASDAQ" means the Nasdaq Stock Market, Inc.
"Owned Intellectual Property" means Intellectual Property
owned by the Company or any Subsidiary.
"person" means an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, person
(including a "person" as defined in Section 13(d)(3) of the Exchange
Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government.
"Software" means computer software, programs and databases in
any form, including Internet web sites, web content and links, all
versions, updates, corrections, enhancements, and modifications
thereof, and all related documentation.
"subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled
by such person, directly or indirectly, through one or more
intermediaries.
"Superior Proposal" means an unsolicited written bona fide
offer made by a third party to consummate any Competing Transaction on
terms that the Board determines, in its good faith judgment (after
having received the advice of a financial advisor of nationally
recognized reputation), to be more favorable to the Company's
stockholders than the Offer and Merger; provided that, for purposes of
this definition, the percentage referred to in clauses (iii) and (iv)
of the definition of "Competing Transaction" shall be 50%.
"Taxes" shall mean any and all taxes, fees, levies, duties,
tariffs, imposts and other similar charges of any kind (together with
any and all interest, penalties, additions
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to tax and additional amounts imposed with respect thereto) imposed by
any Governmental Authority or taxing authority, including, without
limitation: taxes or other charges on or with respect to income,
franchise, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value-added or gains taxes; license, registration and
documentation fees; and customers' duties, tariffs and similar charges.
"Tax Return" means any return, report, schedule, declaration,
estimate or election (including attachments to any of the foregoing)
filed or required to be filed with any Governmental Authority or taxing
authority with respect to Taxes.
(a) The following terms have the meaning set forth in the
Sections set forth below:
Defined Term Location of Definition
------------ ----------------------
Action............................................................. Section 4.09
Agreement.......................................................... Preamble
Blue Sky Laws...................................................... Section 4.05(b)
Board.............................................................. Recitals
Certificate of Merger.............................................. Section 3.02
Certificates....................................................... Section 3.09(b)
Change in the Company Recommendation............................... Section 7.05(c)
Code............................................................... Section 4.10(a)
Company............................................................ Preamble
Company Preferred Stock............................................ Section 4.03(a)
Company Stock Awards............................................... Section 4.03(a)
Company Stock Option............................................... Section 3.07
Company Stock Option Plans......................................... Section 3.07
Confidentiality Agreement.......................................... Section 7.04(b)
DGCL............................................................... Recitals
Disclosure Schedule................................................ Article IV
Dissenting Shares.................................................. Section 3.08(a)
Effective Time..................................................... Section 3.02
Environmental Permits.............................................. Section 4.16
ERISA.............................................................. Section 4.10(a)
Exchange Act....................................................... Section 2.01(a)
Expenses........................................................... Section 9.03(b)
Fairness Opinion................................................... Section 2.02(a)
FDA................................................................ Section 4.24(d)
Fee................................................................ Section 9.03(a)
Form 10-Q.......................................................... Section 4.07(a)
GAAP............................................................... Section 4.07(b)
Governmental Authority............................................. Section 4.05(b)
HIPAA.............................................................. Section 4.24(f)
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Defined Term Location of Definition
------------ ----------------------
HSR Act............................................................ Section 4.05(b)
Initial Expiration Date............................................ Section 2.01(a)
IRS................................................................ Section 4.10(a)
Law................................................................ Section 4.05(a)
Lease Documents.................................................... Section 4.13(b)
Liens.............................................................. Section 4.13(a)
Material Contracts................................................. Section 4.18(a)
Merger............................................................. Recitals
Merger Consideration............................................... Section 3.06(a)
Minimum Condition.................................................. Section 2.01(a)
Notice of Superior Proposal........................................ Section 7.05(c)
Offer.............................................................. Recitals
Offer Documents.................................................... Section 2.01(b)
Offer to Purchase.................................................. Section 2.01(b)
Option Payment..................................................... Section 3.07
Parent............................................................. Preamble
Paying Agent....................................................... Section 3.09(a)
Permits............................................................ Section 4.06(a)
Permitted Liens.................................................... Section 4.13(a)
Per Share Amount................................................... Recitals
Plans.............................................................. Section 4.10(a)
Proxy Statement.................................................... Section 4.12
Purchaser.......................................................... Preamble
Schedule 14D-9..................................................... Section 2.02(b)
Schedule TO........................................................ Section 2.01(b)
SEC................................................................ Section 2.01(a)
SEC Reports........................................................ Section 4.07(a)
Securities Act..................................................... Section 4.07(a)
Shares............................................................. Recitals
SSA................................................................ Section 1.01(a)
Stockholders' Meeting.............................................. Section 7.01(a)
Subsidiary......................................................... Section 4.01(a)
Surviving Corporation.............................................. Section 3.03
Transactions....................................................... Section 2.02(a)
2003 Balance Sheet................................................. Section 4.07(c)
ARTICLE II
THE OFFER
SECTION 2.01 The Offer. ii) Provided that none of the events
set forth in Annex A hereto shall have occurred or be continuing, Purchaser
shall commence (within the meaning of Rule 14d-2 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) the Offer as promptly as
reasonably practicable after the date hereof, but in no event later than ten
business days after the execution of this Agreement. The obligation of Purchaser
to accept for payment Shares tendered pursuant to the Offer shall be subject to
(i) the condition (the
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"Minimum Condition") that at least the number of Shares that shall, when added
to the Shares already owned by Parent or Purchaser, constitute a majority of the
then outstanding Shares on a Fully Diluted Basis shall have been validly
tendered and not withdrawn prior to the expiration of the Offer and (ii) the
satisfaction of each of the other conditions set forth in Annex A hereto.
Purchaser expressly reserves the right to waive any such condition, to increase
the price per Share payable in the Offer, and to make any other changes in the
terms and conditions of the Offer; provided, however, that no change or waiver
may be made (1) that decreases the price per Share, or changes the form of
consideration, payable in the Offer, iii) that reduces the maximum number of
Shares to be purchased in the Offer, iv) that imposes conditions to the Offer in
addition to those set forth in Annex A hereto, v) that changes or waives the
Minimum Condition, vi) except as provided in the next sentence, that extends the
Offer beyond the Initial Expiration Date (as defined herein), and vii) amends
any term of the Offer in a manner adverse to the holders of the Shares.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (i) extend the Offer beyond the scheduled expiration date, which
initially shall be twenty business days following the commencement of the Offer
(the "Initial Expiration Date"), if, at any scheduled expiration of the Offer,
any of the conditions to Purchaser's obligation to accept for payment Shares as
set forth on Annex A, shall not be satisfied or waived, (ii) extend the Offer
for any period required by any rule, regulation or interpretation of the
Securities and Exchange Commission (the "SEC"), or the staff thereof, applicable
to the Offer, (iii) extend the Offer for a period of up to ten business days
beyond the scheduled expiration date if as of such date all of the conditions of
the Offer are satisfied or have been waived but the aggregate number of Shares
tendered and not withdrawn, together with Shares then owned by Parent and
Purchaser, is not at least 90% of the then outstanding Shares or (iv) extend the
Offer in accordance with Rule 14d-11 promulgated under the Exchange Act. Parent
and Purchaser agree that if, at any scheduled expiration of the Offer, any of
the conditions to Purchaser's obligation to accept for payment any of the Shares
shall not be satisfied or waived, and such condition is of a nature that it
could reasonably be expected to be satisfied within ninety days of the
commencement of the Offer, Purchaser shall extend the Offer for the shortest
time period that it believes is necessary to satisfy any such condition. The Per
Share Amount shall, subject to applicable withholding of taxes, be net to the
seller in cash, upon the terms and subject to the conditions of the Offer.
Purchaser shall pay for all Shares validly tendered and not withdrawn promptly
following the acceptance of Shares for payment pursuant to the Offer.
Notwithstanding the immediately preceding sentence and subject to the applicable
rules of the SEC and the terms and conditions of the Offer, Purchaser expressly
reserves the right to delay payment for Shares in order to comply in whole or in
part with applicable Laws (as hereinafter defined). Any such delay shall be
effected in compliance with Rule 14e-1(c) under the Exchange Act. If the payment
equal to the Per Share Amount in cash is to be made to a person other than the
person in whose name the surrendered certificate formerly evidencing Shares is
registered on the stock transfer books of the Company, it shall be a condition
of payment that the certificate so surrendered shall be endorsed properly or
otherwise be in proper form for transfer and that the person requesting such
payment shall have paid all transfer and other taxes required by reason of the
payment of the Per Share Amount to a person other than the registered holder of
the certificate surrendered, or shall have established to the satisfaction of
Purchaser that such taxes either have been paid or are not applicable.
(a) As promptly as reasonably practicable on the date of
commencement of the Offer, Purchaser shall file with the SEC a Tender Offer
Statement on Schedule TO (together with
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all amendments and supplements thereto, the "Schedule TO") with respect to the
Offer. The Schedule TO shall contain or shall incorporate by reference an offer
to purchase (the "Offer to Purchase") and forms of the related letter of
transmittal and any related summary advertisement (the Schedule TO, the Offer to
Purchase and such other documents, together with all supplements and amendments
thereto, being referred to herein collectively as the "Offer Documents"). Each
of Parent, Purchaser and the Company agrees to correct promptly any information
provided by it for use in the Offer Documents that shall have become false or
misleading in any material respect, and Parent and Purchaser further agree to
take all steps necessary to cause the Schedule TO, as so corrected, to be filed
with the SEC, and the other Offer Documents, as so corrected, to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws.
SECTION 2.02 Company Action. viii) The Company hereby approves
of and consents to the Offer and represents that the Board, at a meeting duly
called and held on December 17, 2003, has unanimously (i) determined that this
Agreement and the transactions contemplated hereby, including each of the Offer
and the Merger (collectively, the "Transactions"), are fair to, and in the best
interests of, the holders of Shares, (ii) approved, adopted and declared
advisable this Agreement and the Transactions (such approval and adoption having
been made in accordance with the DGCL, including, without limitation, Section
203 thereof) and (iii) resolved to recommend that the holders of Shares accept
the Offer and tender their Shares pursuant to the Offer, and adopt this
Agreement. The Company further represents that Xxxxx Fargo Securities, LLC has
delivered to the Board an opinion, which will be confirmed promptly in writing,
that, as of the date of this Agreement, the consideration to be received by the
holders of Shares pursuant to each of the Offer and the Merger is fair to the
holders of Shares from a financial point of view (the "Fairness Opinion").
Except as provided in Section 7.05ix), the Company hereby consents to the
inclusion in the Offer Documents of the recommendation of the Board described in
this Section 2.02(a), and the Company shall not withdraw or modify such
recommendation in any manner adverse to Purchaser or Parent. The Company has
been advised by its directors and executive officers that they intend to tender
all Shares beneficially owned by them to Purchaser pursuant to the Offer.
(a) As promptly as reasonably practicable on the date of
commencement of the Offer, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing the
Fairness Opinion and, except as provided in Section 7.05(b), the recommendation
of the Board described in Section 2.02(a), and shall disseminate the Schedule
14D-9 to the extent required by Rule 14d-9 promulgated under the Exchange Act,
and any other applicable federal securities laws. Each of the Company, Parent
and Purchaser agrees to correct promptly any information provided by it for use
in the Schedule 14D-9 that 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 disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws.
(b) The Company shall promptly furnish Parent and Purchaser
with mailing labels containing the names and addresses of all record holders of
Shares and with security position listings of Shares held in stock depositories,
each as of a recent date, together with all other available listings and
computer files containing names, addresses and security position listings of
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record holders and beneficial owners of Shares. The Company shall promptly
furnish Parent and Purchaser with such additional information, including,
without limitation, updated listings and computer files of stockholders, mailing
labels and security position listings, and such other assistance in
disseminating the Offer Documents to holders of Shares as Parent or Purchaser
may reasonably request. 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 Offer or the Merger, Parent and
Purchaser shall hold in confidence the information contained in such labels,
listings and files, shall use such information only in connection with the
Transactions, and, if this Agreement shall be terminated in accordance with
Section 9.01, shall deliver to the Company all copies of such information then
in their possession.
ARTICLE III
THE MERGER
SECTION 3.01 The Merger. Upon the terms of this Agreement and
subject to the conditions set forth in Article VIII, and in accordance with the
DGCL, Purchaser shall be merged with and into the Company.
SECTION 3.02 Effective Time; Closing. As promptly as
practicable after the conditions to the Merger set forth in Article VIII have
been satisfied, the parties hereto shall cause the Merger to be consummated by
filing this Agreement or a certificate of merger or certificate of ownership and
merger (in either case, the "Certificate of Merger") with the Secretary of State
of the State of Delaware, in such form as is required by, and executed in
accordance with, the relevant provisions of the DGCL (the date and time of such
filing of the Certificate of Merger (or such later time as may be agreed by each
of the parties hereto and specified in the Certificate of Merger) being the
"Effective Time"). Immediately prior to such filing of the Certificate of
Merger, a closing shall be held at the offices of Shearman & Sterling LLP, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other place as the parties
shall agree, for the purpose of confirming the satisfaction or waiver, as the
case may be, of the conditions set forth in Article VIII.
SECTION 3.03 Effect of the Merger. As a result of the Merger,
the separate corporate existence of Purchaser shall cease and the Company shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation"). At the Effective Time, the effect of the Merger shall be as
provided in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company and Purchaser
shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and Purchaser
shall become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation.
SECTION 3.04 Certificate of Incorporation; By-laws. x) At the
Effective Time, the Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation.
9
(a) Unless otherwise determined by Parent prior to the
Effective Time, at the Effective Time, the By-laws of the Company, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by law, the Certificate of
Incorporation of the Surviving Corporation and such By-laws.
SECTION 3.05 Directors and Officers. The directors of
Purchaser immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-laws of the Surviving Corporation, and the
individuals set forth in Annex B hereto shall be the initial officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified or until their earlier death, resignation or
removal.
SECTION 3.06 Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to
Section 3.06(b) and any Dissenting Shares (as hereinafter defined))
shall be canceled and shall be converted automatically into the right
to receive an amount equal to the Per Share Amount (the "Merger
Consideration") payable, without interest, to the holder of such Share,
upon surrender, in the manner provided in Section 3.10, of the
certificate that formerly evidenced such Share;
(b) Each Share held in the treasury of the Company and each
Share owned by Purchaser, Parent or any direct or indirect wholly owned
subsidiary of Parent or of the Company immediately prior to the
Effective Time shall be canceled without any conversion thereof and no
payment or distribution shall be made with respect thereto; and
(c) Each share of common stock, par value $.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation.
SECTION 3.07 Employee Stock Options. Effective as of the
Effective Time, the Company shall take all necessary action to provide that each
outstanding option to purchase shares of Company common stock granted under the
Company's 1986 Stock Option Plan and 1986 Non-Statutory Stock Option Plan and
the 1994 Stock Option Plan, each as amended through the date of this Agreement
(the "Company Stock Option Plans"), and each outstanding option to purchase
Shares that was not granted under a Company Stock Option Plan (each such option
to purchase Shares, a "Company Stock Option") that is outstanding and
unexercised, whether or not vested or exercisable, as of such date shall
represent the right to receive the cash payment provided in this Section 3.07.
Each holder of a Company Stock Option that is outstanding and unexercised
immediately prior to the Effective Time shall be entitled (subject to the
provisions of this Section 3.07) to be paid by the Surviving Corporation, with
respect to each share of Company common stock subject to the Company Stock
Option, an amount in cash (subject to any applicable withholding taxes) equal to
the excess, if any, of the
10
Per Share Amount over the applicable per share exercise price of such Company
Stock Option (the "Option Payment"). The Surviving Corporation shall make such
Option Payment as promptly as practicable after the Effective Time. Any such
payment shall be subject to all applicable federal, state and local tax
withholding requirements. The Company shall take all necessary action to approve
the disposition of the Company Stock Options in connection with the transactions
contemplated by this Agreement to the extent necessary to exempt such
dispositions and acquisitions under Rule 16b-3 of the Exchange Act. At the
Effective Time, if necessary, Parent shall provide the Surviving Corporation
with sufficient cash to make the payments required to holders of Company Stock
Options under this Section 3.07.
SECTION 3.08 Dissenting Shares. xi) Notwithstanding any
provision of this Agreement to the contrary, Shares that are outstanding
immediately prior to the Effective Time and that are held by stockholders who
shall have neither voted in favor of the Merger nor consented thereto in writing
and who shall have demanded properly in writing appraisal for such Shares in
accordance with Section 262 of the DGCL (collectively, the "Dissenting Shares")
shall not be converted into, or represent the right to receive, the Merger
Consideration. Such stockholders shall be entitled to receive payment of the
appraised value of such Shares held by them in accordance with the provisions of
such Section 262, except that all Dissenting Shares held by stockholders who
shall have failed to perfect or who effectively shall have withdrawn or lost
their rights to appraisal of such Shares under such Section 262 shall thereupon
be deemed to have been converted into, and to have become exchangeable for, as
of the Effective Time, the right to receive the Merger Consideration, without
any interest thereon, upon surrender, in the manner provided in Section 3.10, of
the certificate or certificates that formerly evidenced such Shares.
(a) The Company shall give Parent (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such demands, and
any other instruments served pursuant to the DGCL and received by the Company
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under the DGCL. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any demands
for appraisal or offer to settle or settle any such demands.
SECTION 3.09 Surrender of Shares; Stock Transfer Books. xii)
Prior to the Effective Time, Purchaser shall designate a bank or trust company
reasonably acceptable to the Company to act as agent (the "Paying Agent") for
the holders of Shares to receive the funds to which holders of Shares shall
become entitled pursuant to Section 3.06(a), and at or prior to the Effective
Time, Parent shall deposit with the Paying Agent sufficient cash for this
purpose. Such funds shall be invested by the Paying Agent as directed by the
Surviving Corporation.
(a) Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each person who was, at the Effective
Time, a holder of record of Shares entitled to receive the Merger Consideration
pursuant to Section 3.06(a) a form of letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in
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accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration for each Share
formerly evidenced by such Certificate, and such Certificate shall then be
canceled. No interest shall accrue or be paid on the Merger Consideration
payable upon the surrender of any Certificate for the benefit of the holder of
such Certificate. If the payment equal to the Merger Consideration is to be made
to a person other than the person in whose name the surrendered certificate
formerly evidencing Shares is registered on the stock transfer books of the
Company, it shall be a condition of payment that the certificate so surrendered
shall be endorsed properly or otherwise be in proper form for transfer and that
the person requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder of the certificate surrendered, or shall have
established to the satisfaction of Purchaser that such taxes either have been
paid or are not applicable.
(b) At any time following the sixth month after the Effective
Time, the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds which had been made available to the Paying Agent and
not disbursed to holders of Shares (including, without limitation, all interest
and other income received by the Paying Agent in respect of all funds made
available to it), and, thereafter, such holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat and other similar
laws) only as general creditors thereof with respect to any Merger Consideration
that may be payable upon due surrender of the Certificates held by them.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Share for any Merger Consideration
delivered in respect of such Share to a public official pursuant to any
abandoned property, escheat or other similar law.
(c) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if reasonably
required by Parent, the posting by such person of a bond in such amount as
Parent reasonably determines is necessary as indemnity against any claim that
may be made against it with respect to such Certificate, the Paying Agent shall
issue in exchange for such lost, stolen or destroyed Certificate, the Merger
Consideration such holder has a right to receive.
(d) At the close of business on the day of the Effective Time,
the stock transfer books of the Company shall be closed and thereafter there
shall be no further registration of transfers of Shares on the records of the
Company. From and after the Effective Time, the holders of Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided herein or by applicable law.
SECTION 3.10 Withholding Rights. Each of Parent, Purchaser,
the Surviving Corporation and the Paying Agent shall be entitled to deduct and
withhold from any amounts otherwise payable pursuant to this Agreement in
respect of Shares such amount as it is required to deduct and withhold with
respect to the making of such payment under the Code or any Law. To the extent
that amounts are so withheld, such withheld amounts shall be treated for
purposes of this Agreement as having been paid to the holder of the Shares in
respect of which such deduction and withholding was made.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Parent and Purchaser to enter into this
Agreement, and except as disclosed in the disclosure schedule prepared by the
Company and delivered by the Company to Parent and Purchaser prior to the
execution and delivery of this Agreement (the "Disclosure Schedule"), the
Company hereby represents and warrants to Parent and Purchaser that:
SECTION 4.01 Organization and Qualification; Subsidiaries.
xiii) Each of the Company and each subsidiary of the Company (each a
"Subsidiary") is a corporation duly organized, validly existing and in good
standing, except as set forth in Section 4.01(1) of the Disclosure Schedule,
under the laws of the jurisdiction of its incorporation and has the requisite
corporate power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals would not
prevent or materially delay consummation of any of the Transactions and would
not have a Material Adverse Effect. The Company and each Subsidiary is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that would not prevent or materially delay consummation of
any of the Transactions and would not have a Material Adverse Effect.
(a) A true and complete list of all the Subsidiaries, together
with the jurisdiction of incorporation of each Subsidiary, the percentage of the
outstanding capital stock of each Subsidiary owned by the Company and each other
Subsidiary, and the names of the directors and officers of each Subsidiary, is
set forth in Section 4.01(b) of the Disclosure Schedule. Except as disclosed in
Section 4.01(b) of the Disclosure Schedule, the Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
SECTION 4.02 Certificate of Incorporation and By-laws. The
Company has heretofore made available to Parent a complete and correct copy of
the Certificate of Incorporation and the By-laws or equivalent organizational
documents, each as amended to date, of the Company and each Subsidiary. Such
Certificates of Incorporation, By-laws or equivalent organizational documents
are in full force and effect. Neither the Company nor any Subsidiary is in
violation of any of the provisions of its Certificate of Incorporation, By-laws
or equivalent organizational documents.
SECTION 4.03 Capitalization. xiv) The authorized capital stock
of the Company consists of 20,000,000 Shares and 1,000,000 shares of preferred
stock, par value $0.01 per share ("Company Preferred Stock"). As of the date of
this Agreement, (i) 5,907,156 Shares are issued and outstanding, all of which
are validly issued, fully paid and nonassessable, (ii) no Shares are held in the
treasury of the Company, (iii) no Shares are held by the Subsidiaries, and (iv)
1,444,912 Shares are reserved for future issuance pursuant to outstanding
Company Stock
13
Options and other purchase rights (the "Company Stock Awards"). As of the date
of this Agreement, no shares of Company Preferred Stock are issued and
outstanding. Except as set forth in this Section 4.03, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Company or any
Subsidiary or obligating the Company or any Subsidiary to issue or sell any
shares of capital stock of, or other equity interests in, the Company or any
Subsidiary. Section 4.03 of the Disclosure Schedule sets forth the following
information with respect to each Company Stock Award outstanding on the date of
this Agreement: (i) the name and address of the Company Stock Award recipient;
(ii) the particular plan pursuant to which such Company Stock Award was granted;
(iii) the number of shares of Company common stock subject to such Company Stock
Award; (iv) the exercise or purchase price of such Company Stock Award; (v) the
date on which such Company Stock Award was granted; (vi) the applicable vesting
schedule; (vi) the date on which such Company Stock Award expires; and (vii)
whether the exercisability of or right to repurchase of such Company Stock Award
will be accelerated in any way by the transactions contemplated by this
Agreement. The Company has made available to Parent accurate and complete copies
of all Company Stock Option Plans pursuant to which the Company has granted the
Company Stock Awards that are currently outstanding and the form of all stock
award agreements evidencing such Company Stock Awards. All Shares subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any Shares or any capital stock of any Subsidiary or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any Subsidiary or any other person. Except as set
forth in Section 4.03(a) of the Disclosure Schedule, there are no commitments or
agreements of any character to which the Company is bound obligating the Company
to accelerate the vesting of any Company Stock Option as a result of the Offer
or the Merger. All outstanding shares of Company common stock, all outstanding
Company Stock Options and all outstanding shares of capital stock of each
Subsidiary have been issued and granted in compliance with (i) all applicable
securities laws and other applicable Laws and (ii) all requirements set forth in
applicable contracts.
(a) Each outstanding share of capital stock of each Subsidiary
is duly authorized, validly issued, fully paid and nonassessable, and each such
share is owned by the Company or another Subsidiary free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or any Subsidiary's voting rights,
charges and other encumbrances of any nature whatsoever.
SECTION 4.04 Authority Relative to This Agreement. The Company
has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action on the part of the Company, and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the Transactions (other than, with
respect to the Merger, the adoption of this Agreement by the holders of a
majority of the then-outstanding Shares, if and to the extent required by
applicable law, and the filing and recordation of appropriate merger documents
as required by the DGCL). This Agreement has been duly and validly executed and
14
delivered by the Company and, assuming the due authorization, execution and
delivery by Parent and Purchaser, constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. The Board has unanimously approved this Agreement and the
Transactions and such approvals are sufficient so that the restrictions on
business combinations set forth in Section 203(a) of the DGCL shall not apply to
the Merger. To the knowledge of the Company, no other state takeover statute is
applicable to any of the Transactions.
SECTION 4.05 No Conflict; Required Filings and Consents. xv)
The execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, and the consummation of
the Transactions by the Company will not, (i) conflict with or violate the
Certificate of Incorporation, By-laws or any resolution, currently in effect,
adopted by the Board or the stockholders of the Company or any equivalent
organizational documents of the Company or any Subsidiary, (ii) assuming that
all consents, approvals and other authorizations described in Section 4.05(b)
have been obtained and that all filings and other actions described in Section
4.05(b) have been made or taken, conflict with or violate any United States or
non-United States national, state, provincial, municipal or local statute, law,
ordinance, regulation, rule, code, executive order, injunction, judgment, decree
or other order ("Law") applicable to the Company or any Subsidiary or by which
any property or asset of the Company or any Subsidiary is bound or affected, or
(iii) result in any breach of or constitute a default (or an event which, with
notice or lapse of time or both, would become a default) under, or give to
others any right of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or other encumbrance on any property or asset
of the Company or any Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Subsidiary is a party or by
which the Company or a Subsidiary or any property or asset of the Company or any
Subsidiary is bound or affected , except, with respect to clauses (ii) and
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not prevent or materially delay consummation of any of
the Transactions and would not have a Material Adverse Effect.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any United States or non-United States national, state,
provincial, municipal or local government, governmental, regulatory or
administrative authority, agency, instrumentality or commission or any court,
tribunal, or judicial or arbitral body (a "Governmental Authority"), except for
(i) applicable requirements, if any, of the Exchange Act, state securities or
"blue sky" laws ("Blue Sky Laws") and state takeover laws, (ii) the pre-merger
notification requirements of the Xxxx-Xxxxx Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the filing and recordation of appropriate
merger documents and as required by the DGCL, and (iii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or materially delay consummation of
any of the Transactions and would not have a Material Adverse Effect.
SECTION 4.06 Permits; Compliance. xvi) Except as set forth in
Section 4.13 (Real Property), Section 4.14 (Intellectual Property) and Section
4.16
15
(Environmental Matters), Section 4.06 of the Disclosure Schedule contains a
complete and accurate list of all material franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Authority necessary for each of the
Company or the Subsidiaries to own, lease and operate its properties or to carry
on its business as it is now being conducted (the "Permits"). Each of the
Company and the Subsidiaries is in possession of all Permits. No suspension or
cancellation of any of the Permits is pending or, to the knowledge of the
Company, threatened. Neither the Company nor any Subsidiary is, in any material
respect, in conflict with, or in default, breach or violation of, (a) any Law
applicable to the Company or any Subsidiary or by which any property or asset of
the Company or any Subsidiary is bound or affected, including, without
limitation, with respect to design, labeling, testing and inspection of the
Company's or any Subsidiaries' products, and any Law of the United States Food
and Drug Administration, or (b) any note, bond, mortgage, indenture, contract,
agreement, lease, license, Permit, franchise or other instrument or obligation
to which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any property or asset of the Company or any Subsidiary is bound.
(a) Except as set forth in Section 4.06 of the Disclosure
Schedule and except for matters which would not have a Material Adverse Effect,
(i) the Company has not received, at any time since January 1, 1999, any formal
notice or other formal communication from any Governmental Authority or any
other person regarding (A) any actual, alleged, possible, or potential violation
of or failure to comply with any term or requirement of any Permit, or (B) any
actual, proposed, possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Permit, and (ii) all
applications required to have been filed for the renewal of any Permit have been
duly filed on a timely basis with the appropriate Governmental Authority, and
all other filings required to have been made with respect to any such Permit
have been duly made on a timely basis with the appropriate Governmental
Authority.
SECTION 4.07 SEC Filings; Financial Statements. xvii) The
Company has filed all forms, reports and documents required to be filed by it
with the SEC since December 31, 2000, including (i) its Annual Reports on Form
10-K for the fiscal years ended June 30, 2000, 2001 and 2002, respectively (ii)
its Quarterly Reports on Form 10-Q for the period ended September 30, 2003 (the
"Form 10-Q"), (iii) all proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since December 31, 2000 and (iv)
all other forms, reports and other registration statements (other than Quarterly
Reports on Form 10-Q not referred to in clause (ii) above) filed by the Company
with the SEC since December 31, 2002 (the forms, reports and other documents
referred to in clauses (i), (ii), (iii) and (iv) above, as amended, where
applicable, being, collectively, the "SEC Reports"). The SEC Reports (i) were
prepared in all material respects in accordance with either the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act, as the case may be, and the rules and regulations promulgated thereunder,
and (ii) did not, at the time they were filed, or, if amended, as of the date of
such amendment, contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. No Subsidiary is required to file any form, report or
other document with the SEC.
16
(a) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the SEC Reports was prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each fairly presents, in all material
respects, the consolidated financial position, results of operations and cash
flows of the Company and its consolidated Subsidiaries as at the respective
dates thereof and for the respective periods covered thereby (subject, in the
case of unaudited statements, to normal and recurring year-end adjustments, the
effect of which are not, individually or in the aggregate, material).
(b) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the consolidated Subsidiaries as at June 30,
2003, including the notes thereto (the "2003 Balance Sheet"), neither the
Company nor any Subsidiary has any material liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise), except for
liabilities and obligations, incurred in the ordinary course of business
consistent with past practice since June 30, 2003, and liabilities and
obligations reflected on the Company's balance sheet included in the Form 10-Q.
(c) The Company has heretofore made available to Parent
complete and correct copies of all amendments and modifications that have not
been filed by the Company with the SEC to all agreements, documents and other
instruments that previously had been filed by the Company with the SEC and are
currently in effect.
(d) To the knowledge of the Company, each director and
executive officer of the Company has filed with the SEC on a timely basis all
statements required by Section 16(a) of the Exchange Act and the rules and
regulations thereunder since June 30, 2003.
(e) The Company has timely filed and made available to Parent
all certifications and statements required by (x) Rule 13a-14 or Rule 15d-14
under the Exchange Act or (y) 18 U.S.C. Section 1350 (Section 906 of the
Xxxxxxxx-Xxxxx Act of 2002) with respect to any Company SEC Report. The Company
maintains disclosure controls and procedures required by Rule 13a-15 or Rule
15d-15 under the Exchange Act; such controls and procedures are effective to
ensure that all material information concerning the Company and its Subsidiaries
is made known on a timely basis to the individuals responsible for the
preparation of the Company's SEC filings and other public disclosure documents.
Section 4.07(f) of the Disclosure Schedule lists, and the Company has made
available to Parent, complete and correct copies of, all written descriptions
of, and all policies, manuals and other documents promulgating, such disclosure
controls and procedures. As used in this Section 4.07, the term "file" shall be
broadly construed to include any manner in which a document or information is
furnished, supplied or otherwise made available to the SEC.
(f) The Company maintains and will continue to maintain a
standard system of accounting established and administered in accordance with
GAAP. The Company and its Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is
17
permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Section 4.07(g) of the Disclosure Schedule lists,
and the Company has made available to Parent complete and correct copies of, all
written descriptions of, and all policies, manuals and other documents
promulgating, such internal accounting controls.
(g) Since December 31, 2000, neither the Company nor any
Subsidiary nor, to the knowledge of the Company, any director, officer, auditor
or accountant of the Company or any Subsidiary, has received or otherwise had or
obtained knowledge of any material complaint, allegation, assertion or claim,
whether written or oral, regarding the accounting or auditing practices,
procedures, methodologies or methods of the Company or any Subsidiary or their
respective internal accounting controls, including any complaint, allegation,
assertion or claim that the Company or any Subsidiary has engaged in
questionable accounting or auditing practices. No attorney representing the
Company or any Subsidiary, whether or not employed by the Company or any
Subsidiary, has reported evidence of a material violation of securities laws,
breach of fiduciary duty or similar violation by the Company or any of its
officers, directors, employees or agents to the Company Board or any committee
thereof or to any director or officer of the Company. Since December 31, 2000,
there have been no internal investigations regarding accounting or revenue
recognition discussed with, reviewed by or initiated at the direction of the
chief executive officer, chief financial officer, general counsel, the Board or
any committee thereof.
(h) All accounts receivable of the Company and its
Subsidiaries reflected on the 2003 Balance Sheet or arising thereafter have
arisen from bona fide transactions in the ordinary course of business consistent
with past practices and in accordance with SEC regulations and GAAP applied on a
consistent basis and, except to the extent the subject of a reserve made in
accordance with GAAP, are not subject to valid defenses, setoffs or
counterclaims. The Company's reserve for contractual allowances and doubtful
accounts has been calculated in accordance with GAAP in a manner consistent with
past practices. Since the date of the 2003 Balance Sheet, neither the Company
nor any of its Subsidiaries has modified or changed in any material respect its
sales practices or methods including, without limitation, such practices or
methods in accordance with which the Company or any of its Subsidiaries sell
goods, fill orders or record sales.
(i) All accounts payable of the Company and its Subsidiaries
reflected on the 2003 Balance Sheet or arising thereafter are the result of bona
fide transactions in the ordinary course of business and have been paid or are
not yet due or payable. Since the date of the 2003 Balance Sheet, the Company
and its Subsidiaries have not altered in any material respects their practices
for the payment of such accounts payable, including the timing of such payment.
SECTION 4.08 Absence of Certain Changes or Events. Since June
30, 2003, except as set forth in Section 4.08 of the Disclosure Schedule, or as
expressly contemplated by this Agreement, (a) the Company and the Subsidiaries
have conducted their businesses only in the ordinary course and in a manner
consistent with past practice, (b) there has not been any Material Adverse
Effect, and (c) none of the Company or any Subsidiary has taken
18
any action that, if taken after the date of this Agreement, would constitute a
breach of any of the covenants set forth in Section 6.01.
SECTION 4.09 Absence of Litigation. Except as set forth in
Section 4.09 of the Disclosure Schedule, there is no litigation, suit, claim,
action, proceeding or investigation (an "Action") pending or, to the knowledge
of the Company, threatened against the Company or any Subsidiary, or any
property or asset of the Company or any Subsidiary, before any Governmental
Authority that (a) has had or would have a Material Adverse Effect or (b) seeks
to materially delay or prevent the consummation of any Transaction. Neither the
Company nor any Subsidiary nor any property or asset of the Company or any
Subsidiary is subject to any continuing order of, consent decree, settlement
agreement or similar written agreement with, or, to the knowledge of the
Company, continuing investigation by, any Governmental Authority, or any order,
writ, judgment, injunction, decree, determination or award of any Governmental
Authority that would prevent or materially delay consummation of any of the
Transactions or would have a Material Adverse Effect.
SECTION 4.10 Employee Benefit Plans. xviii) Section 4.10(a) of
the Disclosure Schedule lists (i) all employee benefit plans (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and all bonus, stock option, stock purchase, restricted stock,
incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts or
agreements, whether legally enforceable or not, to which the Company or any
Subsidiary is a party, with respect to which the Company or any Subsidiary has
any obligation or which are maintained, contributed to or sponsored by the
Company or any Subsidiary for the benefit of any current or former employee,
officer or director of, or any current or former consultant to, the Company or
any Subsidiary, (ii) each employee benefit plan for which the Company or any
Subsidiary could incur liability under Section 4069 of ERISA in the event such
plan has been or were to be terminated, (iii) any plan in respect of which the
Company or any Subsidiary could incur liability under Section 4212(c) of ERISA,
and (iv) any contracts (including loan agreements), arrangements or
understandings between the Company or any Subsidiary and any employee of the
Company or any Subsidiary including, without limitation, any contracts,
arrangements or understandings relating in any way to a sale of the Company or
any Subsidiary (collectively, the "Plans"). Each Plan is in writing and the
Company has furnished to Parent a true and complete copy of each Plan and has
delivered to Parent a true and complete copy of each material document, if any,
prepared in connection with each such Plan, including, without limitation, (i) a
copy of each trust or other funding arrangement, (ii) each summary plan
description and summary of material modifications, (iii) the most recently filed
Internal Revenue Service ("IRS") Form 5500, (iv) the most recently received IRS
determination letter for each such Plan, and (v) the most recently prepared
actuarial report and financial statement in connection with each such Plan.
Neither the Company nor any Subsidiary has any express or implied commitment,
whether legally enforceable or not, (i) to create, incur liability with respect
to or cause to exist any other employee benefit plan, program or arrangement,
(ii) to enter into any contract or agreement to provide compensation or benefits
to any individual, or (iii) to modify, change or terminate any Plan, other than
with respect to a modification, change or termination required by ERISA or the
Internal Revenue Code of 1986, as amended (the "Code").
19
(a) Except as described in Section 4.10(b) of the Disclosure
Schedule, none of the Plans (i) provides for the payment of separation,
severance, termination or similar-type benefits to any person, (ii) obligates
the Company or any Subsidiary to pay separation, severance, termination or
similar-type benefits solely or partially as a result of any transaction
contemplated by this Agreement, or (iii) obligates the Company or any Subsidiary
to make any payment or provide any benefit as a result of a "change in control",
within the meaning of such term under Section 280G of the Code. None of the
Plans provides for or promises retiree medical, disability or life insurance
benefits to any current or former employee, officer or director of the Company
or any Subsidiary except as may be required by Law. None of the Plans provides
for the lending of money to any director or officer of the Company or any
Subsidiary or otherwise violates, or could reasonably be expected to violate,
Section 402 of the Xxxxxxxx-Xxxxx Act of 2002. Each of the Plans is subject only
to the Laws of the United States or a political subdivision thereof.
(b) Each Plan is now and always has been operated in all
material respects in accordance with its terms and the requirements of all
applicable Laws including, without limitation, ERISA and the Code. The Company
and the Subsidiaries have performed all obligations required to be performed by
them under, are not in any respect in material default under or in violation of,
and have no knowledge of any default or violation by any party to, any Plan. No
Action is pending or, to the knowledge of the Company, threatened with respect
to any Plan (other than claims for benefits in the ordinary course) and no fact
or event exists that could reasonably be expected to give rise to any such
Action.
(c) Each Plan that is intended to be qualified under Section
401(a) of the Code or Section 401(k) of the Code has timely received a favorable
determination letter from the IRS covering all of the provisions applicable to
the Plan for which determination letters are currently available that the Plan
is so qualified and each trust established in connection with any Plan which is
intended to be exempt from federal income taxation under Section 501(a) of the
Code has received a determination letter from the IRS that it is so exempt, and
no fact or event has occurred since the date of such determination letter or
letters from the IRS to adversely affect the qualified status of any such Plan
or the exempt status of any such trust.
(d) There has not been any prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
Plan. None of the Plans is subject to Title IV of ERISA and neither the Company
nor any Subsidiary has incurred, or could reasonably be expected to incur, any
liability under, arising out of or by operation of Title IV of ERISA.
(e) All contributions, premiums or payments required to be
made with respect to any Plan have been made on or before their due dates or
have been accrued on the Company's financial statements. All such contributions
have been fully deducted for income tax purposes and no such deduction has been
challenged or disallowed by any Governmental Authority and no fact or event
exists which could give rise to any such challenge or disallowance.
(f) The directors, officers, management employees, and
technical and professional employees of the Company and the Subsidiaries set
forth in Section 4.10(g) of the Disclosure Schedule are under written obligation
to the Company and the Subsidiaries to maintain in confidence all confidential
or proprietary information acquired by them in the course
20
of their employment and to assign to the Company and the Subsidiaries all
inventions made by them within the scope of their employment during such
employment and for a reasonable period thereafter.
(g) Except as set forth in Section 4.10(h) of the Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not, either alone or in combination with another event, (i) entitle any
current or former employee, officer or director of the Company or any Subsidiary
to severance pay, unemployment compensation or any other payment, (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee, officer or director (except as required
under Code Section 411(d)(3)), or (iii) fail to be deductible for federal income
tax purposes by virtue of Section 280G of the Code.
SECTION 4.11 Labor and Employment Matters. xix) Except as set
forth in Section 4.11(a) of the Disclosure Schedule, (i) there are no
controversies pending or, to the knowledge of the Company, threatened between
the Company or any Subsidiary and any of their respective employees and (ii)
neither the Company nor any Subsidiary is a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by the
Company or any Subsidiary, nor, to the knowledge of the Company, are there any
activities or proceedings of any labor union to organize any such employees.
(a) The Company and the Subsidiaries are in compliance in all
material respects with all applicable laws relating to the employment of labor,
including those related to wages, hours, immigration and naturalization,
collective bargaining and the payment and withholding of taxes and other sums as
required by the appropriate Governmental Authority and have withheld and paid to
the appropriate Governmental Authority or are holding for payment not yet due to
such Governmental Authority all amounts required to be withheld from employees
of the Company or any Subsidiary and are not liable for any arrears of wages,
taxes, penalties or other sums for failure to comply with any of the foregoing.
The Company and the Subsidiaries have paid in full to all employees or
adequately accrued for in accordance with GAAP consistently applied all wages,
salaries, commissions, bonuses, benefits and other compensation due to or on
behalf of such employees and there is no claim with respect to payment of wages,
salary or overtime pay that has been asserted or is now pending or threatened
before any Governmental Authority with respect to any persons currently or
formerly employed by the Company or any Subsidiary. Neither the Company nor any
Subsidiary is a party to, or otherwise bound by, any consent decree with, or
citation by, any Governmental Authority relating to employees or employment
practices. There is no charge or proceeding with respect to a violation of any
occupational safety or health standards that has been asserted or is now pending
or threatened with respect to the Company. There is no charge of discrimination
in employment or employment practices with respect to the Company, for any
reason, including, without limitation, age, gender, race, religion or other
legally protected category, which has been asserted or is now pending or, to the
knowledge of the Company, threatened before the United States Equal Employment
Opportunity Commission, or any other Governmental Authority in any jurisdiction
in which the Company or any Subsidiary has employed, employs or has been alleged
to employ any person.
SECTION 4.12 Offer Documents; Schedule 14D-9; Proxy Statement.
Neither the Schedule 14D-9 nor any information supplied by the Company for
inclusion in the
21
Offer Documents shall, at the times the Schedule 14D-9, the Offer Documents or
any amendments or supplements thereto are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading. In
the event the Stockholders' Meeting is held, neither the proxy statement to be
sent to the stockholders of the Company in connection with the Stockholders'
Meeting (as defined in Section 7.01), nor the information statement to be sent
to such stockholders, as appropriate (such proxy statement or information
statement, as amended or supplemented, being referred to herein as the "Proxy
Statement"), shall, at the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of the Company, and at the
time of the Stockholders' Meeting contain any untrue statement of material fact,
or omit to state any material fact necessary in order to make the statements
therein, in light of the circumstance under which they were made, not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Stockholders' Meeting which
shall have become false or misleading. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to any information
supplied in writing by Parent, Purchaser or any of Parent's or Purchaser's
representatives expressly for inclusion in the foregoing documents. The Schedule
14D-9 and the Proxy Statement shall comply in all material respects as to form
with the requirements of the Exchange Act and the rules and regulations
thereunder.
SECTION 4.13 Real Property; Title to Assets. xx) Section
4.13(a) of the Disclosure Schedule lists each parcel of real property currently
owned, or owned in the time period between December 31, 1998 and the date
hereof, by the Company or any Subsidiary. Each parcel of real property owned by
the Company or any Subsidiary (i) is owned free and clear of all mortgages,
pledges, liens, security interests, conditional and installment sale agreements,
encumbrances, charges or other claims of third parties of any kind, including,
without limitation, any easement, right of way or other encumbrance to title, or
any option, right of first refusal, or right of first offer (collectively,
"Liens"), other than (A) Liens for current Taxes and assessments not yet past
due, (B) inchoate mechanics' and materialmen's Liens for construction in
progress, (C) workmen's, repairmen's, warehousemen's and carriers' Liens arising
in the ordinary course of business of the Company or such Subsidiary consistent
with past practice, and (D) all matters of record, Liens and other imperfections
of title and encumbrances that, would not, individually or in the aggregate,
have a Material Adverse Effect (collectively, "Permitted Liens"), and (ii) is
neither subject to any governmental decree or order to be sold nor is being
condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor, to the knowledge of the Company,
has any such condemnation, expropriation or taking been proposed.
(a) Section 4.13(b) of the Disclosure Schedule lists each
parcel of real property currently leased or subleased by the Company or any
Subsidiary, with the name of the lessor and the date of the lease, sublease,
assignment of the lease, any guaranty given or leasing commissions payable by
the Company or any Subsidiary in connection therewith and each amendment to any
of the foregoing (collectively, the "Lease Documents"). True, correct and
complete copies of all Lease Documents have been delivered to Parent. All such
current leases and subleases are in full force and effect, are valid and
effective in accordance with their
22
respective terms, and there is not, under any of such leases, any existing
material default or event of default (or event which, with notice or lapse of
time, or both, would constitute a default) by the Company or any Subsidiary or,
to the knowledge of the Company, by the other party to such lease or sublease,
or person in the chain of title to such leased premises.
(b) There are no contractual or, to the knowledge of the
Company, legal restrictions that preclude or restrict the ability to use any
real property owned or leased by the Company or any Subsidiary for the purposes
for which it is currently being used. To the knowledge of the Company, there are
no material latent defects or material adverse physical conditions affecting the
real property, and improvements thereon, owned or leased by the Company or any
Subsidiary.
(c) Each of the Company and the Subsidiaries has good and
valid title to, or, in the case of leased properties and assets, valid leasehold
or subleasehold interests in, all of its tangible properties and assets, real,
personal and mixed, used or held for use in its business, free and clear of any
Liens, except for such imperfections of title, if any, that do not materially
interfere with the present value of the subject property.
SECTION 4.14 Intellectual Property. xxi) Section 4.14(a) of
the Disclosure Schedule sets forth a true and complete list of (i) all patents
and patent applications, trademark and copyright registrations and applications,
common law trademarks, and domain names and URLs included in the Owned
Intellectual Property, (ii) all Licenses (other than licenses of commercially
available off-the-shelf Software licensed pursuant to shrink-wrap or click-wrap
licenses), and (iii) Company IT Systems and other Owned Intellectual Property
that are material to the business of the Company or any Subsidiary.
(a) The conduct of the business of the Company and the
Subsidiaries as currently conducted and as currently contemplated to be
conducted, the use of the Owned Intellectual Property, Licensed Intellectual
Property and Company IT Systems in connection therewith and the transmission,
use, linking and other practices of the Company and the Subsidiaries related to
their web sites, the content thereof and the advertisements contained therein,
do not conflict with, infringe upon, misappropriate or otherwise violate the
Intellectual Property rights of any third party (the foregoing being true to the
knowledge of the Company with respect to any third party patent rights), and no
Actions are pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary alleging any of the foregoing. To the knowledge of the
Company, no person is engaging in any activity that infringes upon,
misappropriates or otherwise violates the Owned Intellectual Property or
Licensed Intellectual Property.
(b) The Company or a Subsidiary is the exclusive owner of the
entire and unencumbered right, title and interest in and to the Owned
Intellectual Property. The Company and the Subsidiaries have the right to use
the Owned Intellectual Property and Licensed Intellectual Property, and access
and use the Company IT Systems, in the continued operation of their respective
businesses as presently conducted or as currently contemplated to be conducted.
(c) No Owned Intellectual Property or, to the knowledge of the
Company, any Licensed Intellectual Property (other than commercially available
off-the-shelf Software licensed pursuant to shrink-wrap or click-wrap licenses),
is subject to any outstanding decree, order,
23
injunction, judgment or ruling restricting the use of such Intellectual Property
or that would impair the validity or enforceability of such Intellectual
Property. The Owned Intellectual Property and, to the knowledge of the Company,
the Licensed Intellectual Property (other than commercially available
off-the-shelf Software licensed pursuant to shrink-wrap or click-wrap licenses),
are subsisting, valid and enforceable, and have not been adjudged invalid or
unenforceable in whole or part.
(d) The Owned Intellectual Property and the Licensed
Intellectual Property include all of the Intellectual Property used in the
operation of the business of the Company and the Subsidiaries, and there are no
other items of Intellectual Property that are material to the operation of the
business of the Company or any Subsidiary. The Company IT Systems include all of
the IT Systems used in the operation of the business of the Company and the
Subsidiaries, and there are no other IT Systems that are material to the
operation of the business of the Company or any Subsidiary.
(e) To the knowledge of the Company, (i) each License is valid
and enforceable, is binding on all parties thereto, and is in full force and
effect; (ii) no party to any License is in material breach thereof or default
thereunder; and (iii) neither the execution of this Agreement nor the
consummation of any Transaction shall (x) adversely affect any of the rights of
the Company or any Subsidiary with respect to the Owned Intellectual Property or
Licensed Intellectual Property, or (y) impair or interrupt the Company's or any
Subsidiary's access and use of, or their right to access and use, the Company IT
Systems or, to the extent applicable, their customers' access and use of, or
their right to access and use, the Company IT Systems.
(f) The Company and the Subsidiaries have taken commercially
reasonable steps to maintain the confidentiality of the trade secrets and other
confidential Intellectual Property used in connection with the business of the
Company or any Subsidiary. To the knowledge of the Company, (i) there has been
no misappropriation by any person of any material trade secrets or other
material confidential Intellectual Property used in connection with the business
of the Company or any Subsidiary; (ii) no employee, former employee, independent
contractor or agent of the Company or any Subsidiary has misappropriated any
trade secrets of any other person in the course of performance as an employee,
independent contractor or agent of the Company or any Subsidiary; and (iii) no
employee, former employee, independent contractor or agent of the Company or any
Subsidiary is in default or material breach of any term of any employment
agreement, nondisclosure agreement, assignment of invention agreement or similar
agreement or contract relating in any way to the protection, ownership,
development, use or transfer of Intellectual Property.
(g) To the knowledge of the Company, the Company IT Systems
are free of all viruses, worms, trojan horses and other known contaminants, and
do not contain any material errors or problems, that would (i) disrupt the
ordinary operation of such IT Systems in the conduct of the business of the
Company or any Subsidiary as presently conducted or as currently contemplated to
be conducted, or (ii) have an adverse impact on the operation of other Software
or operating systems. The Company IT Systems do not incorporate any GNU or
"open" source code or object code under which the Company IT Systems are subject
to the GNU general public license, GNU lesser general public license and other
"copyleft" license. The Company and the Subsidiaries have taken all commercially
reasonable steps to secure the Company IT Systems
24
from unauthorized access or use by any person, and to enable the continued and
uninterrupted operation of the Company IT Systems subject to down-time
associated with planned maintenance and upgrading of the Company IT Systems. The
access and use of the Company IT Systems by the Company, the Subsidiaries and
any customer thereof (to the extent applicable) in connection with the operation
of the business of the Company and the Subsidiaries as currently conducted and
as currently contemplated to be conducted do not violate any applicable Laws in
any material respect.
SECTION 4.15 Taxes. Except as specifically disclosed in
Section 4.15 of the Disclosure Schedule:
(a) The Company and its Subsidiaries have filed all Tax
Returns required to be filed by them and have paid and discharged all
Taxes required to be paid or discharged, other than such payments as
are being contested in good faith by appropriate proceedings. All such
Tax Returns are true, accurate and complete. Neither the IRS nor any
other United States or non-United States taxing authority or agency is
now asserting or, to the knowledge of the Company, threatening to
assert against the Company or any of its Subsidiaries any deficiency or
claim for any Taxes or interest thereon or penalties in connection
therewith. Neither the Company nor any of its Subsidiaries has granted
any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax. The accruals and
reserves for Taxes reflected in the financial statements in the Company
SEC Reports are adequate to cover all Taxes accruable through the date
thereof (including interest and penalties, if any, thereon) in
accordance with GAAP. There are no Tax liens upon any property or
assets of the Company or its Subsidiaries except liens for current
Taxes not yet due.
(b) Neither the Company nor any of its Subsidiaries (i) has
liability for the Taxes of any other person (other than the Company and
its Subsidiaries) by reason of having joined in the filing of a
consolidated, combined or unitary Tax Return, by contract, by
transferee liability or otherwise, (ii) has been required to include in
income any adjustment pursuant to Section 481 of the Code by reason of
a voluntary change in accounting method initiated by the Company or a
Subsidiary (and the IRS has not initiated or proposed any such
adjustment or change in accounting method), (iii) has entered into a
transaction being reported as an installment sale under Section 453 of
the Code, (iv) has been a "distributing corporation" or a "controlled
corporation" in a distribution intended to qualify under Section 355(e)
of the Code within the past five years, (v) has received a notice from
a taxing authority for a jurisdiction in which a Tax Return has not
been filed asserting that the filing of such a Tax Return may be
required and (vi) has been at any time a member of any partnership or
joint venture or the holder of a beneficial interest in any trust for
any period for which the statute of limitations for any Tax has not
expired.
(c) The Company is not, and has not been at any time during
the past five years, a United States real property holding corporation
within the meaning of Section 897 of the Code.
25
SECTION 4.16 Environmental Matters. Except as described in
Section 4.16 of the Disclosure Schedule or as would not, individually or in the
aggregate, prevent or materially delay consummation of any of the Transactions
and would not, individually or in the aggregate, have a Material Adverse Effect,
(a) none of the Company nor any of the Subsidiaries has violated or is in
violation of, or has liability under, any Environmental Law; (b) none of the
properties (including associated soils and surface and ground waters and
building materials) currently or formerly owned, leased, used, occupied or
operated by the Company or any Subsidiary are contaminated with any Hazardous
Substance; (c) none of the Company or any of the Subsidiaries is actually,
potentially or allegedly liable for any off-site contamination by Hazardous
Substances; (d) none of the Company or any of the Subsidiaries is actually,
potentially or allegedly liable under any Environmental Law, or under any
contract that allocates or assigns liability or responsibility with respect to
Environmental Laws or Hazardous Substances (including with respect to pending or
threatened liens or claims for damages, penalties, fines or contribution) and
none of the Company or any of the Subsidiaries has received any notice of such
liability; (e) each of the Company and each Subsidiary has all permits, licenses
and other authorizations required under any Environmental Law ("Environmental
Permits"); (f) each of the Company and each Subsidiary has always been and is in
compliance with its Environmental Permits; and (g) neither the execution of this
Agreement nor the consummation of the Transactions will require any
investigation, remediation or other action with respect to Hazardous Substances,
or any notice to or consent of Governmental Authorities or third parties,
pursuant to any applicable Environmental Law or Environmental Permit, including,
without limitation, the Connecticut Transfer Act or the New Jersey Industrial
Site Recovery Act.
SECTION 4.17 No Rights Agreement. The Company has not adopted
any stockholders' rights plan or comparable arrangement.
SECTION 4.18 Material Contracts. xxii) Subsections (i) through
(xviii) of Section 4.18(a) of the Disclosure Schedule lists the following types
of contracts and agreements to which the Company or any Subsidiary is a party
(such contracts and agreements as are required to be set forth in Section
4.18(a) of the Disclosure Schedule being the "Material Contracts"):
(i) each "material contract" (as such term is defined in
Item 601(b)(10) of Regulation S-K of the SEC) with respect to the
Company and its Subsidiaries;
(ii) each contract and agreement, whether or not made in
the ordinary course of business (other than purchase orders made or
accepted in the ordinary course of business), that contemplates an
exchange of consideration with a value of more than $50,000, in the
aggregate, over the term of such contract or agreement;
(iii) each purchase order made or accepted in the ordinary
course of business that contemplates an exchange of consideration with
a value of more than $50,000;
(iv) all contracts and agreements evidencing indebtedness
for borrowed money;
26
(v) all joint venture, partnership, strategic alliance
and business acquisition or divestiture agreements (and all letters of
intent and term sheets relating to any such pending transactions);
(vi) all agreements relating to issuances of securities of
the Company or any Subsidiary (and all letters of intent and term
sheets relating to any such pending transactions) other than those
evidencing a Company Stock Option;
(vii) all agreements between the Company, any Subsidiary or
any affiliate of the Company or any Subsidiary, on the one hand, and
the Company, any Subsidiary or any affiliate of the Company or any
Subsidiary, on the other hand;
(viii) all exclusive distribution contracts to which the
Company or any Subsidiary is a party;
(ix) all broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion, market research,
marketing consulting and advertising contracts and agreements to which
the Company or any Subsidiary is a party and any other contract that
compensates any person based on any sales by the Company or a
Subsidiary;
(x) all management contracts (excluding contracts for
employment) and contracts with other consultants, including any
contracts involving the payment of royalties or other amounts
calculated based upon the revenues or income of the Company or any
Subsidiary or income or revenues related to any product of the Company
or any Subsidiary to which the Company or any Subsidiary is a party;
(xi) all contracts and agreements with any Governmental
Authority to which the Company or any Subsidiary is a party;
(xii) all Licenses (other than licenses of commercially
available off-the-shelf Software licensed pursuant to a shrink-wrap or
click-wrap license that is not material to the business of the Company
or any Subsidiary);
(xiii) all contracts and agreements that limit, or purport
to limit, the ability of the Company or any Subsidiary to compete in
any line of business or with any person or entity or in any geographic
area or during any period of time;
(xiv) all material contracts or arrangements that result in
any person or entity holding a power of attorney from the Company or
any Subsidiary that relates to the Company, any Subsidiary or their
respective businesses;
(xv) all agreements related to professional services
rendered to the Company or any Subsidiary in connection with the Offer,
the Merger and this Agreement;
(xvi) each warranty, guaranty or other similar undertaking
with respect to any contractual performance extended by the Company or
any Subsidiary;
27
(xvii) all contracts containing a provision of the type
commonly referred to as a "most favored nation" provision; and
(xviii) all other contracts and agreements, whether or not
made in the ordinary course of business, which are material to the
Company, any Subsidiary and the Subsidiaries, taken as a whole, or the
conduct of their respective businesses, or the absence of which would
have a Material Adverse Effect.
(b) (i) Each Material Contract is a legal, valid and binding
agreement; (ii) none of the Company or any Subsidiary has received any claim of
material default under or cancellation of any Material Contract and none of the
Company or any Subsidiary is, in any material respect, in breach or violation
of, or default under, any Material Contract; (iii) to the knowledge of the
Company, no other party is, in any material respect, in breach or violation of,
or default under, any Material Contract; and (iv) neither the execution of this
Agreement nor the consummation of any Transaction shall constitute a material
default under, give rise to cancellation rights under, or otherwise adversely
affect any of the material rights of the Company or any Subsidiary under any
Material Contract. The Company has furnished or made available to Parent true
and complete copies of all Material Contracts, including any amendments thereto.
SECTION 4.19 Customers and Suppliers. Section 4.19 of the
Disclosure Schedule sets forth a true and complete list of the Company's top ten
customers (based on the revenue from such customer during the 12-month period
beginning on September 30, 2002 and ending on September 30, 2003). As of the
date of this Agreement, none of the Company's customers listed in Section 4.19
of the Disclosure Schedule and no material supplier of the Company and its
Subsidiaries, (i) has cancelled or otherwise terminated any contract with the
Company or any Subsidiary prior to the expiration of the contract term, or (ii)
to the knowledge of the Company, has threatened, or indicated its intention, to
cancel or otherwise terminate its relationship with the Company or its
Subsidiaries or to reduce substantially its purchase from or sale to the Company
or any Subsidiary of any products, equipment, goods or services.
SECTION 4.20 Inventory. All inventory of the Company and any
Subsidiary, including consigned inventory, whether or not reflected in the 2003
Balance Sheet, consists of a quality and quantity usable and salable in the
ordinary course of business and is sufficient for the operation of the business
of the Company and each Subsidiary in the ordinary course and consistent with
past practice, except for obsolete items and items of below-standard quality,
which have been written off or written down to net realizable value on the 2003
Balance Sheet or on the accounting records of the Company as of the Effective
Time, as the case may be. All inventories not written off have been priced at
the lower of cost or net realizable value on a first in, first out basis. The
quantities of each item of inventory (whether raw materials, work-in-process, or
finished goods) are not excessive, but are reasonable in the present
circumstances of the Company and each Subsidiary. Schedule 4.20 sets forth the
location of all items of the Company's and each Subsidiary's inventory,
including consigned inventory, as of June 30, 2003 and the Company's procedures
for tracking and controlling consigned inventory, and such procedures are
adequate for such purposes and have been followed by the Company and each
Subsidiary consistent with past practice.
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SECTION 4.21 Company Products and Services. xxiii) Each
product manufactured, sold, leased or delivered by the Company or any Subsidiary
has been in conformity in all material respects with all applicable contractual
commitments, any applicable Law and all express and implied warranties, and
neither the Company nor any Subsidiary has any material liabilities or
obligations for replacement or repair thereof or other damages in connection
therewith. Neither the Company nor any Subsidiary has been required to file any
notice or other report with, or provide information to, any product safety
agency, commission, board or other Governmental Authority concerning actual or
potential hazards with respect to any product manufactured by the Company or any
Subsidiary other than routine filings required of all manufacturers similarly
situated. Except as set forth in the SEC Reports filed prior to the date of this
Agreement, neither the Company nor any Subsidiary has any material liabilities
or obligations arising out of any injury to persons or property as a result of
the ownership, possession or use of any product manufactured, sold, leased or
delivered by the Company or any Subsidiary.
(a) Since January 1, 2002 there have been no (i) recalls
related to any product manufactured sold, leased or delivered by the Company or
any Subsidiary, or (ii) withdrawals of any product manufactured sold, leased or
delivered by the Company or any Subsidiary due to quality or safety issues.
SECTION 4.22 Insurance. The Company and the Subsidiaries
maintain insurance policies, the types and amounts of coverage of which are
usual and customary in the context of the businesses and operations of the
Company and the Subsidiaries.
SECTION 4.23 Certain Business Practices. None of the Company,
any Subsidiary or, to the knowledge of the Company, any directors or officers,
agents or employees of the Company or any Subsidiary, 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
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; or (iii) made any payment in the nature of criminal bribery.
SECTION 4.24 Government Regulation. (a) None of the Company,
its Subsidiaries, or any of their managers or employees (as defined in 42 C.F.R.
Part 420 Subpart C and 42 C.F.R. Section 1001.1001(a)(2)) has been, or is being
investigated with respect to, any activity that materially contravenes or could
contravene, or constitutes or could constitute, a material violation of any
Healthcare Law.
(a) None of the Company, any of its Subsidiaries or their
managers or employees has engaged in any activity that contravenes or
constitutes a violation of any Healthcare Law during their employment or
association with the Company or its Subsidiaries.
(b) Neither the Company nor its Subsidiaries has: (i) had a
material civil monetary penalty assessed against it under Section 1128A of the
SSA or any regulations promulgated thereunder; or (ii) been convicted (as that
term is defined in 42 C.F.R. Section 1001.2) of any of the following categories
of offenses as described in SSA Section 1128(a) and (b)(1), (2), (3), or any
regulations promulgated thereunder: (A) criminal offenses relating to the
29
delivery of an item or service under any state or federal healthcare program;
(B) criminal offenses under federal or state law for misconduct in connection
with the delivery of a healthcare item or service or with respect to any act or
omission in a program operated by or financed in whole or in part by any
federal, state or local government agency; or (C) federal or state laws relating
to the interference with or obstruction of any investigation into any criminal
offense described in this clause.
(c) Since January 1, 2002, neither the Company nor any of its
Subsidiaries have received or been subject to: (i) any United States Food and
Drug Administration ("FDA") Form 483's relating to any product manufactured,
sold, leased or delivered by the Company or any Subsidiary; (ii) any FDA Notices
of Adverse Findings relating to any product manufactured, sold, leased or
delivered by the Company or any Subsidiary; or (iii) any warning letters or
other written correspondence from the FDA or any other Governmental Authority
concerning any product manufactured, sold, leased or delivered by the Company or
any Subsidiary in which the FDA or such other Governmental Authority asserted
that the operations of the Company or any Subsidiary were not in compliance with
applicable Law, regulations, rules or guidelines with respect to any product
manufactured, sold, leased or delivered by the Company or any Subsidiary.
SECTION 4.25 Brokers. No broker, finder or investment banker
(other than Xxxxx Fargo Securities, LLC) is entitled to any brokerage, finder's
or other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Company. The Company has heretofore
furnished to Parent a complete and correct copy of all agreements between the
Company and Xxxxx Fargo Securities, LLC pursuant to which such firm would be
entitled to any payment relating to the Transactions.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
As an inducement to the Company to enter into this Agreement,
Parent and Purchaser hereby, jointly and severally, represent and warrant to the
Company that:
SECTION 5.01 Corporate Organization. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the requisite
corporate power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals would not,
individually or in the aggregate, prevent or materially delay consummation of
any of the Transactions.
SECTION 5.02 Authority Relative to This Agreement . Each of
Parent and Purchaser has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by
Parent and Purchaser and the consummation by Parent and Purchaser of the
Transactions have been duly and validly authorized by all necessary corporate
action on the part of
30
Parent and Purchaser, and no other corporate proceedings on the part of Parent
or Purchaser are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the filing and recordation
of appropriate merger documents as required by the DGCL). This Agreement has
been duly and validly executed and delivered by Parent and Purchaser and,
assuming due authorization, execution and delivery by the Company, constitutes
the legal, valid and binding obligation of each of Parent and Purchaser
enforceable against each of Parent and Purchaser in accordance with its terms.
SECTION 5.03 No Conflict; Required Filings and Consents. xxiv)
The execution and delivery of this Agreement by Parent and Purchaser do not, and
the performance of this Agreement by Parent and Purchaser will not, and the
consummation of the Transactions by Parent and Purchaser will not, (i) conflict
with or violate the Certificate of Incorporation or By-laws of either Parent or
Purchaser, (ii) assuming that all consents, approvals and other authorizations
described in Section 5.03(b) have been obtained and that all filings and other
actions described in Section 5.03(b) have been made or taken, conflict with or
violate any Law applicable to Parent or Purchaser or by which any property or
asset of either of them is bound or affected, or (iii) result in any breach of,
or constitute a default (or an event which, with notice or lapse of time or
both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Parent or
Purchaser pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or Purchaser is a party or by which Parent or Purchaser or any property
or asset of either of them is bound or affected, except, with respect to clauses
(ii) and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, prevent or
materially delay consummation of any of the Transactions.
(a) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority, except for (i) applicable
requirements, if any, of the Exchange Act, Blue Sky Laws and state takeover
laws, (ii) the pre-merger notification requirements of the HSR Act, (iii) the
filing and recordation of appropriate merger documents as required by the DGCL,
and (iv) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or
materially delay consummation of any of the Transactions.
SECTION 5.04 Financing. Parent has, or has binding commitments
from reputable financial institutions to enable it to borrow, sufficient funds
to permit Purchaser to consummate all the Transactions, including, without
limitation, acquiring all the outstanding Shares in the Offer and the Merger.
SECTION 5.05 Offer Documents; Proxy Statement. The Offer
Documents shall not, at the time the Offer Documents are filed with the SEC or
are first published, sent or given to stockholders of the Company, as the case
may be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. None of the information supplied in writing by Parent or
Purchaser expressly for inclusion in the Schedule 14D-9 shall contain any untrue
statement of a material
31
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. In the event a Stockholders' Meeting
is held, the information supplied by Parent for inclusion in the Proxy Statement
shall not, at the date the Proxy Statement (or any amendment or supplement
thereto) is first mailed to stockholders of the Company, at the time of the
Stockholders' Meeting, contain any untrue statement of a material fact, or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not false or misleading, or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Stockholders' Meeting which shall have become false or misleading.
Notwithstanding the foregoing, Parent and Purchaser make no representation or
warranty with respect to any information supplied in writing by the Company or
any of its representatives expressly for inclusion in any of the foregoing
documents or the Offer Documents. The Offer Documents shall comply in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations thereunder.
SECTION 5.06 Absence of Litigation. There is no Action pending
or, to the knowledge of Parent or Purchaser, threatened against Parent or
Purchaser, or any property or asset of Parent or Purchaser, before any
Governmental Authority that seeks to materially delay or prevent the
consummation of any Transaction. Neither Parent nor Purchaser nor any property
or asset of Parent or Purchaser is subject to any order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority that
would prevent or materially delay consummation of any of the Transactions.
SECTION 5.07 Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Parent or
Purchaser, other than any broker, finder or investment banker the fees of which
will be payable solely by Parent or Purchaser.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01 Conduct of Business by the Company Pending the
Merger. The Company agrees that, between the date of this Agreement and the
Effective Time, unless Parent shall otherwise agree in writing, the businesses
of the Company and the Subsidiaries shall be conducted only in, and the Company
and the Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use its reasonable best efforts to preserve substantially intact the business
organization of the Company and the Subsidiaries, to keep available the services
of the current officers, employees and consultants of the Company and the
Subsidiaries and to preserve the current relationships of the Company and the
Subsidiaries with customers, suppliers and other persons with which the Company
or any Subsidiary has significant business relations. By way of amplification
and not limitation, except as expressly contemplated by this Agreement and
Section 6.01 of the Disclosure Schedule, neither the Company nor any Subsidiary
shall, between the date of this Agreement and the Effective Time, directly or
indirectly, do, or propose to do, any of the following without the prior written
consent of Parent:
32
(a) amend or otherwise change its Certificate of Incorporation
or By-laws;
(b) issue, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance
of, (i) any shares of any class of capital stock of the Company or any
Subsidiary, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of the Company or any Subsidiary (except for the issuance of
a maximum of 1,448,662 Shares issuable pursuant to employee stock
options outstanding on the date hereof) or (ii) any assets of the
Company or any Subsidiary, except in the ordinary course of business
and in a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except for dividends by any direct
or indirect wholly owned Subsidiary to the Company or any other
Subsidiary;
(d) reclassify, combine, split, subdivide or redeem, or
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization
or any division thereof or any amount of assets other than the
acquisition of supplies or inventory in the ordinary course of business
and consistent with past practice; (ii) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse, or otherwise become responsible for, the obligations of any
person, or make any loans or advances, or grant any security interest
in any of its assets except in each case in the ordinary course of
business and consistent with past practice; (iii) enter into any
contract or agreement other than in the ordinary course of business and
consistent with past practice; (iv) authorize, or make any commitment
with respect to, any single capital expenditure which is in excess of
$25,000 or capital expenditures which are, in the aggregate, in excess
of $75,000 for the Company and the Subsidiaries taken as a whole; or
(v) enter into or amend any contract, agreement, commitment or
arrangement with respect to any matter set forth in this Section
6.01(e);
(f) hire additional employees or increase the compensation
payable or to become payable or the benefits provided to its directors,
officers or employees, except for increases in the ordinary course of
business and consistent with past practice in salaries, wages, bonuses,
incentives or benefits of employees of the Company or any Subsidiary
who are not directors or officers of the Company or any Subsidiary, or
grant any severance or termination pay to, or enter into any employment
or severance agreement with, any director, officer or other employee of
the Company or of any Subsidiary, or establish, adopt, enter into or
amend any collective bargaining, bonus, profit-sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of
any director, officer or employee;
33
(g) take any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice,
with respect to accounting policies or procedures;
(h) make, revoke or change any Tax election or method of Tax
accounting or settle or compromise any material Tax liability;
(i) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the 2003 Balance Sheet or
subsequently incurred in the ordinary course of business and consistent
with past practice;
(j) amend, modify or consent to the termination of any
Material Contract, or amend, waive, modify or consent to the
termination of any material rights of the Company or any Subsidiary
thereunder, other than in the ordinary course of business and
consistent with past practice;
(k) commence or settle any Action;
(l) engage in any new line of business or abandon any existing
line of business;
(m) (i) permit any Owned Intellectual Property to lapse or to
be abandoned, dedicated, or disclaimed, fail to perform or make any
applicable filings, recordings or other similar actions or filings, or
fail to pay all required fees and taxes required or advisable to
maintain and protect its interest in any Owned Intellectual Property,
Licensed Intellectual Property, License or Company IT Systems, (ii)
sell, assign, or grant any security interest in or to any Owned
Intellectual Property, Licensed Intellectual Property, License or
Company IT Systems, (iii) grant to any third party any license with
respect to any Owned Intellectual Property, Licensed Intellectual
Property or Company IT Systems, (iv) develop, create or invent any
Intellectual Property jointly with any third party (other than such
joint development, creation or invention with a third party that is in
progress prior to the date of this Agreement), (v) disclose, or allow
to be disclosed, any confidential Intellectual Property, unless such
Intellectual Property is subject to a confidentiality or non-disclosure
covenant protecting against disclosure thereof, or (vi) execute or
enter into any License or any other agreement relating to Intellectual
Property or IT Systems;
(n) fail to make in a timely manner any filings with the SEC
required under the Securities Act or the Exchange Act or the rules and
regulations promulgated thereunder; or
(o) announce an intention, enter into any formal or informal
agreement or otherwise make a commitment, to do any of the foregoing.
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ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Stockholders' Meeting. xxv) If required by
applicable law in order to consummate the Merger, the Company, acting through
the Board as then constituted, shall, in accordance with applicable law and the
Company's Certificate of Incorporation and By-laws, (i) duly call, give notice
of, convene and hold an annual or special meeting of its stockholders as
promptly as practicable following consummation of the Offer for the purpose of
considering and taking action on this Agreement and the Transactions (the
"Stockholders' Meeting") and (ii) (A) include in the Proxy Statement, and not
subsequently withdraw or modify in any manner adverse to Purchaser or Parent,
the unanimous recommendation of the Board that the stockholders of the Company
adopt this Agreement and (B) use its reasonable best efforts to obtain such
adoption. At the Stockholders' Meeting, Parent and Purchaser shall cause all
Shares then owned by them and their subsidiaries to be voted in favor of the
adoption of this Agreement.
(a) Notwithstanding the foregoing, in the event that Purchaser
shall acquire at least 90% of the then outstanding Shares, the parties shall
take all necessary and appropriate action to cause the Merger to become
effective, in accordance with Section 253 of the DGCL, as promptly as reasonably
practicable after such acquisition, without a meeting of the stockholders of the
Company.
SECTION 7.02 Proxy Statement. If approval of the Company's
stockholders is required by applicable law to consummate the Merger, promptly
following consummation of the Offer, the Company shall file the Proxy Statement
with the SEC under the Exchange Act, and shall use its reasonable best efforts
to have the Proxy Statement cleared by the SEC as promptly as practicable. Each
of the Company, Parent and Purchaser agrees to use its reasonable best efforts,
after consultation with the other parties hereto, to respond promptly to all
such comments of and requests by the SEC and to cause the Proxy Statement and
all required amendments and supplements thereto to be mailed to the holders of
Shares entitled to vote at the Stockholders' Meeting at the earliest practicable
time.
SECTION 7.03 Company Board Representation; Section 14(f).
xxvi) Promptly upon the purchase by Purchaser of Shares pursuant to the Offer
and from time to time thereafter, Purchaser shall be entitled to designate up to
such number of directors, rounded up to the next whole number, on the Board as
shall give Purchaser representation on the Board equal to the product of the
total number of directors on the Board (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Purchaser or any affiliate of Purchaser
following such purchase bears to the total number of Shares then outstanding,
and the Company shall, at such time, promptly take all actions necessary to
cause Purchaser's designees to be elected or appointed as directors of the
Company, including increasing the size of the Board or securing the resignations
of incumbent directors, or both. At such times, the Company shall use its best
efforts to cause persons designated by Purchaser to constitute the same
percentage as persons designated by Purchaser shall constitute of the Board of
(i) each committee of the Board, (ii) each board of directors of each
Subsidiary, and (iii) each committee of each such board, in each case only to
the extent permitted by applicable law. Notwithstanding the foregoing, until the
Effective Time, the Company shall use its reasonable best efforts to ensure that
at least three members of the Board
35
and each committee of the Board and such boards and committees of the
Subsidiaries, as of the date hereof, who are not employees of the Company shall
remain members of the Board and of such boards and committees and (y) such
number of members of the Board shall be independent as required by the relevant
rules of NASDAQ.
(a) The Company shall promptly take all actions required
pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder to fulfill its obligations under this Section 7.03, and shall include
in the Schedule 14D-9 such information with respect to the Company and its
officers and directors as is required under Section 14(f) and Rule 14f-1 to
fulfill such obligations. Parent or Purchaser shall supply to the Company, and
be solely responsible for, any information with respect to either of them and
their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1.
(b) Following the election of designees of Purchaser pursuant
to this Section 7.03, prior to the Effective Time, any amendment of this
Agreement or the Certificate of Incorporation or By-laws of the Company, any
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent
or Purchaser, or waiver of any of the Company's rights hereunder, or any other
consent or action of the Company with respect to this Agreement shall require
the concurrence of a majority of the directors of the Company then in office who
neither were designated by Purchaser nor are employees of the Company or any
Subsidiary.
SECTION 7.04 Access to Information; Confidentiality. xxvii)
From the date hereof until the Effective Time, the Company shall, and shall
cause the Subsidiaries and the officers, directors, employees, auditors and
agents of the Company and the Subsidiaries to, afford the officers, employees,
agents and financing sources of Parent and Purchaser access on a reasonable
basis at all reasonable times to the officers, employees, agents, properties,
offices, plants and other facilities, books and records of the Company and each
Subsidiary and shall furnish Parent and Purchaser and the financing sources of
Parent or Purchaser with such financial, operating and other data and
information as Parent or Purchaser, through its officers, employees or agents,
may reasonably request.
(a) All information obtained by Parent or Purchaser pursuant
to this Section 7.04 shall be kept confidential in accordance with the letter
agreement, dated November 21, 2003 (the "Confidentiality Agreement"), between
Parent and the Company.
(b) No investigation pursuant to this Section 7.04 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto or any condition to the
Offer.
(c) Notwithstanding anything in this agreement to the
contrary, each party (and its representatives, agents and employees) may consult
any tax advisor regarding the U.S. federal tax treatment and U.S. federal tax
structure of the transactions contemplated hereby and may disclose to any
person, without limitation of any kind, the U.S. federal tax treatment and U.S.
federal tax structure of the transactions contemplated hereby and all materials
(including opinions or other tax analyses) that are provided relating to such
treatment or structure.
36
SECTION 7.05 No Solicitation of Transactions. xxviii) The
Company agrees that neither it nor any Subsidiary nor any of the directors,
officers or employees of it or any Subsidiary will, and that it will cause its
and its Subsidiaries' agents, advisors and other representatives (including,
without limitation, any investment banker, attorney or accountant retained by it
or any Subsidiary) not to, directly or indirectly, (i) solicit, initiate or
knowingly encourage (including by way of furnishing nonpublic information), the
making of any proposal or offer (including, without limitation, any proposal or
offer to its stockholders) that constitutes, or may reasonably be expected to
lead to, any Competing Transaction, or (ii) enter into or maintain or continue
discussions or negotiations with any person or entity in furtherance of such
inquiries or to obtain a proposal or offer for a Competing Transaction, or (iii)
agree to, approve, endorse or recommend any Competing Transaction or enter into
any letter of intent or other contract, agreement or commitment contemplating or
otherwise relating to any Competing Transaction, or (iv) authorize or permit any
of the officers, directors or employees of the Company or any of its
Subsidiaries, or any investment banker, financial advisor, attorney, accountant
or other representative retained by the Company or any of its Subsidiaries, to
take any such action. The Company shall notify Parent as promptly as practicable
(and in any event within one day after the Company attains knowledge thereof),
orally and in writing, if any proposal or offer, or any inquiry or contact with
any person with respect thereto, regarding a Competing Transaction is made,
specifying the material terms and conditions thereof and the identity of the
party making such proposal or offer or inquiry or contact (including material
amendments or proposed material amendments). The Company shall, and shall direct
or cause its and its Subsidiaries' directors, officers, employees,
representatives and agents to, immediately cease and cause to be terminated any
discussions or negotiations with any parties that may have been conducted
heretofore with respect to a Competing Transaction. The Company shall not
release any third party from, or waive any provision of, any confidentiality or
standstill agreement to which it is a party; provided that the Company may waive
the confidentiality provisions of any such agreement to the extent such a waiver
is in the ordinary course of its business consistent with past practice.
(b) Notwithstanding anything to the contrary in this Section
7.05, the Board may furnish information to, and enter into discussions with, a
person who has made an unsolicited, written, bona fide proposal or offer
regarding a Competing Transaction, and the Board has (i) determined, in its good
faith judgment (after having received the advice of a financial advisor of
nationally recognized reputation), that such proposal or offer constitutes a
Superior Proposal, (ii) determined, in its good faith judgment after
consultation with independent legal counsel (who may be the Company's regularly
engaged independent legal counsel), that, in light of such Superior Proposal,
the furnishing of such information or entering into discussions is required to
comply with its fiduciary obligations to the Company and its stockholders under
applicable Law, (iii) provided written notice to Parent of its intent to furnish
information or enter into discussions with such person at least two business
days prior to taking any such action, and (iv) obtained from such person an
executed confidentiality agreement on terms no less favorable to the Company
than those contained in the Confidentiality Agreement (it being understood that
such confidentiality agreement and any related agreements shall not include any
provision calling for any exclusive right to negotiate with such party or having
the effect of prohibiting the Company from satisfying its obligations under this
Agreement).
37
(c) Except as set forth in this Section 7.05(c), neither the
Board nor any committee thereof shall withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation by the Board or any such committee of this Agreement, the Offer,
the Merger or any other Transaction (a "Change in the Company Recommendation")
or approve or recommend, or cause or permit the Company to enter into any letter
of intent, agreement or obligation with respect to, any Competing Transaction.
Notwithstanding the foregoing, if the Board determines, in its good faith
judgment prior to the time of acceptance for payment of Shares pursuant to the
Offer and after consultation with independent legal counsel (who may be the
Company's regularly engaged independent legal counsel), that it is required to
make a Change in the Company Recommendation to comply with its fiduciary
obligations to the Company and its stockholders under applicable Law, the Board
may make a Change in the Company Recommendation, but only (i) after providing
written notice to Parent (a "Notice of Superior Proposal") advising Parent that
the Board has received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal and indicating that the Board intends to effect a Change in
the Company Recommendation and the manner in which it intends (or may intend) to
do so, (ii) if Parent does not, within three business days of Parent's receipt
of the Notice of Superior Proposal, make an offer that the Board determines, in
its good faith judgment (after having received the advice of a financial advisor
of nationally recognized reputation) to be at least as favorable to the
Company's stockholders as such Superior Proposal and (iii) to terminate this
Agreement in accordance with Section 9.01(d)(ii).
SECTION 7.06 Directors' and Officers' Indemnification and
Insurance. xxix) The Certificate of Incorporation of the Surviving Corporation
shall contain provisions no less favorable with respect to indemnification than
are set forth in the Certificate of Incorporation of the Company, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would affect adversely the
rights thereunder of individuals who, at or prior to the Effective Time, were
directors, officers, employees, fiduciaries or agents of the Company, unless
such modification shall be required by law. Parent shall cause the Surviving
Corporation to indemnify, defend and hold harmless, the current and former
officers, directors, employees and agents of the Company or any of its
Subsidiaries in their capacities as such in accordance with the Certificate of
Incorporation and By-laws, or other charter documents, of the Company and its
Subsidiaries and any agreements or plans maintained by the Company and its
Subsidiaries, to the fullest extent permitted by the terms thereof against all
losses, expenses, claims, damages and liabilities arising out of actions or
omissions occurring on or prior to the Effective Time.
(a) The Surviving Corporation shall use its reasonable best
efforts to maintain in effect for six years from the Effective Time the current
directors' and officers' liability insurance policies maintained by the Company
covering each person covered thereby immediately prior to the consummation of
the Offer (provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions that are
not materially less favorable) with respect to matters occurring prior to the
Effective Time; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 7.06(b) more than an
amount per year equal to 175% of current annual premiums paid by the Company for
such insurance (which premiums the Company represents and warrants to be $90,000
in the aggregate), and if the Surviving Corporation is unable to obtain the full
amount of
38
insurance that is required by this paragraph, it shall obtain as much comparable
insurance for such covered persons as possible for an annual premium equal to
such maximum amount.
(b) In the event Parent or the Surviving Corporation 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 all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 7.06.
SECTION 7.07 Notification of Certain Matters. The Company
shall give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (a) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which reasonably could be expected to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, (b) any failure of the Company, Parent or
Purchaser, as the case may be, to comply in all material respects with or
satisfy any covenant or agreement to be complied with or satisfied by it
hereunder and (c) any other material development relating to the business,
prospects, financial condition or results of operations of the Company and the
Subsidiaries; provided, however, that the delivery of any notice pursuant to
this Section 7.07 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 7.08 Further Action; Reasonable Best Efforts. xxx)
Upon the terms and subject to the conditions of this Agreement, each of the
parties hereto shall (i) make its respective initial filing under the HSR Act
with respect to the Transactions within five business days of the date of this
Agreement, and thereafter make any other required submissions promptly, and (ii)
use its reasonable best efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws to consummate and make effective the
Transactions, including, without limitation, using its reasonable best efforts
to obtain all Permits, consents, approvals, authorizations, qualifications and
orders of Governmental Authorities and parties to contracts with the Company and
the Subsidiaries as are necessary for the consummation of the Transactions and
to fulfill the conditions to the Offer and the Merger; provided that neither
Purchaser nor Parent will be required by this Section 7.08 to take any action,
including entering into any consent decree, hold separate orders or other
arrangements, that (A) requires the divestiture of any assets of any of
Purchaser, Parent, the Company or any of their respective subsidiaries or (B)
limits Parent's freedom of action with respect to, or its ability to retain, the
Company and the Subsidiaries or any portion thereof or any of Parent's or its
affiliates' other assets or businesses. In case, at any time after the Effective
Time, any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of each party to this
Agreement shall use their reasonable best efforts to take all such action.
(a) Each of the parties hereto agrees to cooperate and use its
reasonable best efforts to vigorously contest and resist any Action, including
administrative or judicial Action, and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and that restricts, prevents
39
or prohibits consummation of the Transactions, including, without limitation, by
vigorously pursuing all available avenues of administrative and judicial appeal.
SECTION 7.09 Subsequent Financial Statements. The Company
shall, if practicable, consult with Parent prior to making publicly available
its financial results for any period after the date of this Agreement and prior
to filing any report or document with the SEC after the date of this Agreement,
it being understood that Parent shall have no liability by reason of such
consultation.
SECTION 7.10 Public Announcements. Parent and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or any Transaction
and shall not issue any such press release or make any such public statement
prior to such consultation, except as may be required by Law or the rules or
regulations of any United States or non-United States securities exchange. The
parties have agreed upon the form of a joint press release announcing the Offer
and the execution of this Agreement.
SECTION 7.11 Tax Certificate. The Company shall provide the
Parent and Purchaser, on or not more than thirty days prior to the Effective
Time, a certificate (in a form reasonably satisfactory to Parent and Purchaser)
meeting the requirements of Treasury regulation sections 1.897-2(h) and
1.1445.5(b)(4)(iii).
SECTION 7.12 Confidentiality Agreement. The Company hereby
waives the provisions of the Confidentiality Agreement as and to the extent
necessary to permit the consummation of each Transaction. Upon the acceptance
for payment of Shares pursuant to the Offer, the Confidentiality Agreement shall
be deemed to have terminated without further action by the parties thereto.
SECTION 7.13 Employee Benefit Matters. If, after the Effective
Time, Parent elects to maintain in effect all or any part of the Company's
existing employee benefit plans, the employees shall continue to participate in
such surviving plans or plan, as applicable. Parent shall also have the ability,
in its discretion, to cancel any existing employee benefit plan or plans and to
enroll those persons who were employees of Company or its subsidiaries
immediately prior to the Effective Time and who remain employees of the
Surviving Corporation or its subsidiaries or become employees of Parent
following the Effective Time in Parent's employee benefit plans for which such
employees are eligible and, to the extent relevant for the application of any
such plan, shall recognize the prior service with the Company of each of such
employees. Notwithstanding anything in this Section 7.13 to the contrary, this
section shall not operate to (a) duplicate any benefit provided to any employee,
(b) require Parent to continue to maintain any employee benefit plan in effect
following the Effective Time or (c) be construed to mean the employment of any
such employees is not terminable by Parent at will at any time, with or without
cause, for any reason or no reason.
40
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Merger. The obligations of each
party to effect the Merger shall be subject to the satisfaction, at or prior to
the Effective Time, of the following conditions:
(a) Stockholder Approval. If and to the extent required by the
DGCL and the Certificate of Incorporation of the Company, this
Agreement shall have been adopted by the affirmative vote of the
stockholders of the Company;
(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated;
(c) No Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) which is then in effect and has the effect of
making the acquisition of Shares by Parent or Purchaser or any
affiliate of either of them illegal or otherwise restricting,
preventing or prohibiting consummation of the Transactions; and
(d) Offer. Purchaser or its permitted assignee shall have
purchased all Shares validly tendered and not withdrawn pursuant to the
Offer.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination. This Agreement may be terminated and
the Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite adoption of this Agreement by the
stockholders of the Company:
(a) By mutual written consent of each of Parent, Purchaser and
the Company duly authorized by the Boards of Directors of Parent,
Purchaser and the Company; or
(b) By either Parent, Purchaser or the Company if (i) the
Effective Time shall not have occurred on or before June 30, 2004;
provided, however, that the right to terminate this Agreement under
this Section 9.01(b) shall not be available to any party whose failure
to fulfill any obligation under this Agreement has been the cause of,
or resulted in, the failure of the Effective Time to occur on or before
such date or (ii) any Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any injunction, order, decree
or ruling (whether temporary, preliminary or permanent) which has
become final and nonappealable and has the effect of making
consummation of the Offer or the Merger illegal or otherwise preventing
or prohibiting consummation of the Offer or the Merger; or
(c) By Parent if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any condition set forth in Annex A
hereto, Purchaser shall have (A) failed to commence the Offer within
thirty days following the date of this Agreement, (B) terminated the
Offer without having accepted any Shares for payment thereunder or
41
(C) failed to accept Shares for payment pursuant to the Offer within
ninety days following the commencement of the Offer, unless such action
or inaction under (A), (B) or (C) shall have been caused by or resulted
from the failure of Parent or Purchaser to perform, in any material
respect, any of their material covenants or agreements contained in
this Agreement, or the material breach by Parent or Purchaser of any of
their material representations or warranties contained in this
Agreement or (ii) prior to the purchase of Shares pursuant to the
Offer, the Board or any committee thereof shall have withdrawn or
modified in a manner adverse to Purchaser or Parent its approval or
recommendation of this Agreement, the Offer, the Merger or any other
Transaction, or shall have recommended or approved any Competing
Transaction, or shall have resolved to do any of the foregoing; or
(d) By the Company, upon approval of the Board, if (i)
Purchaser shall have (A) failed to commence the Offer within thirty
days following the date of this Agreement, (B) terminated the Offer
without having accepted any Shares for payment thereunder or (C) failed
to accept Shares for payment pursuant to the Offer within ninety days
following the commencement of the Offer, unless such action or inaction
under (A), (B) or (C) shall have been caused by or resulted from the
failure of the Company to perform, in any material respect, any of its
material covenants or agreements contained in this Agreement or the
material breach by the Company of any of its material representations
or warranties contained in this Agreement or (ii) prior to the purchase
of Shares pursuant to the Offer, the Board determines, in its good
faith judgment after consultation with independent legal counsel (who
may be the Company's regularly engaged independent legal counsel), that
it is required to do so to comply with its fiduciary obligations to the
Company and its stockholders under applicable Law in order to enter
into a definitive agreement with respect to a Superior Proposal, upon
three business days' prior written notice to Parent, setting forth in
reasonable detail the identity of the person making, and the final
terms and conditions of, the Superior Proposal and after duly
considering any proposals that may be made by Parent during such three
business day period (which three business day period shall be
coincident with the three business day period provided for in Section
7.05(c)(ii)); provided, however, that any termination of this Agreement
pursuant to this Section 9.01(d)(ii) shall not be effective until the
Company has made full payment of all amounts provided under Section
9.03.
SECTION 9.02 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 9.01, this Agreement shall
forthwith become void, and there shall be no liability on the part of any party
hereto, except (a) as set forth in Section 9.03 and (b) nothing herein shall
relieve any party from liability for any wilful breach hereof prior to the date
of such termination; provided, however, that the Confidentiality Agreement shall
survive any termination of this Agreement.
SECTION 9.03 Fees. xxxi) In the event that
(i) (x) this Agreement is terminated pursuant to Section
9.01(c)(i) because of the failure of the condition contained in
paragraph (h) of Annex A to be satisfied or (y) any person shall have
commenced, publicly proposed or communicated to the Company a proposal
or offer for a Competing Transaction that is publicly disclosed prior
to the
42
termination of the Offer and (A) the Offer shall have remained open for
at least 20 business days; (B) the Minimum Condition shall not have
been satisfied as of the latest scheduled expiration of the Offer; and
(C) this Agreement shall have been terminated pursuant to Section
9.01(a), 9.01(b)(i), or 9.01(c)(i); and, in the case of either (x) or
(y), within twelve months after the date of such termination, the
Company enters into an agreement with respect to a Competing
Transaction, or a Competing Transaction is consummated, provided that,
for purposes of this provision, the percentage referred to in clauses
(iii) and (iv) of the definition of "Competing Transaction" shall be
50%; or
(ii) this Agreement is terminated pursuant to Section
9.01(c)(ii) or 9.01(d)(ii);
then, in any such event, the Company shall pay Parent promptly (but in no event
later than one business day after the first of such events shall have occurred)
a fee of $5 million (the "Fee"), which amount shall be payable in immediately
available funds.
(b) Except as set forth in this Section 9.03, all costs and
expenses incurred in connection with this Agreement and the Transactions shall
be paid by the party incurring such expenses, whether or not any Transaction is
consummated.
(c) In the event that the Company shall fail to pay the Fee
when due, the term "Fee" shall be deemed to include the costs and expenses
actually incurred or accrued by Parent and Purchaser (including, without
limitation, fees and expenses of counsel) in connection with the collection
under and enforcement of this Section 9.03, together with interest on such
unpaid Fee, commencing on the date that the Fee became due, at a rate equal to
the rate of interest publicly announced by Citibank, N.A., from time to time, in
the City of New York, as such bank's Base Rate plus 2%.
SECTION 9.04 Amendment. Subject to Section 7.03, this
Agreement may be amended by the parties hereto by action taken by or on behalf
of their respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after the adoption of this Agreement and the
Transactions by the stockholders of the Company, no amendment may be made that
would reduce the amount or change the type of consideration into which each
Share shall be converted upon consummation of the Merger. This Agreement may not
be amended except by an instrument in writing signed by each of the parties
hereto.
SECTION 9.05 Waiver. Subject to Section 7.03, at any time
prior to the Effective Time, any party hereto may (a) extend the time for the
performance of any obligation or other act of any other party hereto, (b) waive
any inaccuracy in the representations and warranties of any other party
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any agreement of any other party or any condition to its own
obligations contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have
43
been duly given upon receipt) by delivery in person, by overnight courier, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 10.01):
if to Parent or Purchaser:
Intermagnetics General Corporation
000 Xxx Xxxxxxxxx Xxxx
X.X. Xxx 000 Xxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
with a copy to:
Shearman & Sterling LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx X'Xxxxx, Esq.
if to the Company:
Invivo Corporation
0000 Xxxxxxx Xx., Xxx. 000
Xxxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
with a copy to:
Fenwick & West LLP
Silicon Valley Center
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
SECTION 10.02 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
44
SECTION 10.03 Entire Agreement; Assignment. This Agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes, except as set forth in Sections 7.04(b), all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof. This Agreement shall not be
assigned (whether pursuant to a merger, by operation of law or otherwise),
except that Parent and Purchaser may assign all or any of their rights and
obligations hereunder to any affiliate of Parent, provided that no such
assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform such obligations.
SECTION 10.04 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, other than the last sentence of Section 3.07 (which is
intended to be for the benefit of holders of Company Stock Options and may be
enforced by such persons) and Section 7.06 (which is intended to be for the
benefit of the persons covered thereby and may be enforced by such persons).
SECTION 10.05 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
were not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or equity.
SECTION 10.06 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed in that State (other
than those provisions set forth herein that are required to be governed by the
DGCL). All actions and proceedings arising out of or relating to this Agreement
shall be heard and determined exclusively in any New York state or federal court
sitting in the Borough of Manhattan of The City of New York. The parties hereto
hereby (a) submit to the exclusive jurisdiction of any state or federal court
sitting in the Borough of Manhattan of The City of New York for the purpose of
any Action arising out of or relating to this Agreement brought by any party
hereto, and (b) irrevocably waive, and agree not to assert by way of motion,
defense, or otherwise, in any such Action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the Transactions may not be enforced in or by any of the
above-named courts.
SECTION 10.07 Waiver of Jury Trial. Each of the parties hereto
hereby waives to the fullest extent permitted by applicable law any right it may
have to a trial by jury with respect to any litigation directly or indirectly
arising out of, under or in connection with this Agreement or the Transactions.
Each of the parties hereto (a) certifies that 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 that
foregoing waiver and (b) acknowledges that it and the other hereto have been
induced to enter into this Agreement and the Transactions, as applicable, by,
among other things, the mutual waivers and certifications in this Section 10.07.
45
SECTION 10.08 Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 10.09 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
46
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
INTERMAGNETICS GENERAL CORPORATION
By /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman and Chief Executive Officer
MAGIC SUBSIDIARY CORPORATION
By /s/ Xxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
INVIVO CORPORATION
By /s/ Xxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President and Chief Executive
Officer
47
ANNEX A
Conditions to the Offer
Notwithstanding any other provision of the Offer, Purchaser
shall not be required to accept for payment any Shares tendered pursuant to the
Offer, and may extend, terminate or amend the Offer, if (i) immediately prior to
the expiration of the Offer, the Minimum Condition shall not have been satisfied
or (ii) any applicable waiting period under the HSR Act shall not have expired
or been terminated prior to the expiration of the Offer, or (iii) at any time on
or after the date of this Agreement and prior to the expiration of the Offer,
any of the following conditions shall exist:
(a) there shall have been instituted or be pending any Action
before any Governmental Authority (i) challenging or seeking to make
illegal, materially delay, or otherwise, directly or indirectly,
restrain or prohibit or make materially more costly, the making of the
Offer, the acceptance for payment of any Shares by Parent, Purchaser or
any other affiliate of Parent, or the consummation of any other
Transaction, or seeking to obtain material damages in connection with
any Transaction; (ii) seeking to prohibit or limit materially the
ownership or operation by the Company, Parent or any of their
subsidiaries of all or any of the business or assets of the Company,
Parent or any of their subsidiaries or to compel the Company, Parent or
any of their subsidiaries, as a result of the Transactions, to dispose
of or to hold separate all or any portion of the business or assets of
the Company, Parent or any of their subsidiaries; (iii) seeking to
impose or confirm any material limitation on the ability of Parent,
Purchaser or any other affiliate of Parent to exercise effectively full
rights of ownership of any Shares, including, without limitation, the
right to vote any Shares acquired by Purchaser pursuant to the Offer or
otherwise on all matters properly presented to the Company's
stockholders, including, without limitation, the adoption of this
Agreement and the Transactions; (iv) seeking to require divestiture by
Parent, Purchaser or any other affiliate of Parent of any Shares; or
(v) which otherwise would prevent or materially delay consummation of
the Offer or the Merger or would have a Material Adverse Effect;
(b) any Governmental Authority or court of competent
jurisdiction shall have issued an order, decree, injunction or ruling
or taken any other action permanently restraining, enjoining or
otherwise prohibiting or materially delaying or preventing the
Transactions and such order, decree, injunction, ruling or other action
shall have become final and non-appealable;
(c) there shall have been any statute, rule, regulation,
legislation or interpretation enacted, promulgated, amended, issued or
deemed applicable to (A) Parent, the Company or any subsidiary or
affiliate of Parent or the Company or (B) any Transaction, by any
United States or non-United States legislative body or Governmental
Authority with appropriate jurisdiction, other than the routine
application of the waiting period provisions of the HSR Act to the
Offer or the Merger, that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i)
through (v) of paragraph (a) above;
A-1
(d) any Material Adverse Effect shall have occurred;
(e) there shall have occurred (i) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States or (ii) any limitation by any United States Governmental
Authority, on the extension of credit by banks or other lending
institutions, that, in either case, would materially impair Parent's
and Purchaser's ability to obtain any financing required to consummate
the Transactions or to operate the business of the Company and Parent
following the consummation of the Offer;
(f) (i) the Board, or any committee thereof, shall have
withdrawn or modified, in a manner adverse to Parent or Purchaser, the
approval or recommendation of the Offer, the Merger, the Agreement or
approved or recommended any Competing Transaction or (ii) the Board, or
any committee thereof, shall have resolved to do any of the foregoing;
(g) any representation or warranty of the Company in the
Agreement that is qualified as to materiality or Material Adverse
Effect shall not be true and correct, or any such representation or
warranty that is not so qualified shall not be true and correct in any
material respect, in each case as if such representation or warranty
was made as of such time on or after the date of this Agreement (except
for any such representation or warranty made as of another date, which
shall be true and correct as of such other date), except to the extent
that failure of any such representation or warranty to be true and
correct would not, individually or in the aggregate, have a Material
Adverse Effect;
(h) the Company shall have failed to perform, in any material
respect, any obligation or to comply, in any material respect, with any
agreement or covenant of the Company to be performed or complied with
by it under the Agreement; provided that, if such failure is curable,
the condition contained in this clause (h) shall be satisfied if the
Company has cured such failure prior to the then scheduled expiration
date of the Offer;
(i) the Agreement shall have been terminated in accordance
with its terms; or
(j) Purchaser and the Company shall have agreed that Purchaser
shall terminate the Offer or postpone the acceptance for payment of
Shares thereunder;
which, in the sole judgment of Purchaser in any such case, and regardless of the
circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment.
The foregoing conditions are for the sole benefit of Purchaser
and Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
A-2
ANNEX B
Officers of the Surviving Corporation:
Xxxxx X. Xxxxxxx - President
Xxxxxxx X. Xxxxx - Treasurer
Xxxxxxxxx X. Xxxxxxx - Secretary
B-1
