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| ARTICLE 1
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The Merger
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| 1.1
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The Merger
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| 1.2
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Effective Time
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| 1.3
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Taking of Necessary Action; Further Action
| 2
| ARTICLE 2
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Articles of Incorporation and Bylaws of the Surviving Corporation
| 2
| 2.1
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Articles of Incorporation
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| 2.2
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Bylaws
| 2
| ARTICLE 3
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Directors and Officers of the Surviving Corporation
| 2
| 3.1
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Directors
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| 3.2
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Officers
| 2
| ARTICLE 4
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Effect of the Merger; Effect of the Merger on the Capital Stock
of the Constituent Corporations
| 3
| 4.1
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Effect of the Merger
| 3
| 4.2
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Effect on Capital Stock
| 3
| 4.3
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Surrender of Shares; Stock Transfer Books
| 4
| 4.4
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No Further Ownership Rights in Target Common Stock
| 5
| 4.5
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Lost, Stolen or Destroyed Certificates
| 5
| 4.6
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Dissenters and Appraisal Rights
| 5
| ARTICLE 5
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Representations and Warranties of Target
| 6
| 5.1
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Organization, Standing and Power
| 6
| 5.2
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Capital Structure
| 7
| 5.3
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Authority
| 8
| 5.4
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Documents; Financial Statements
| 8
| 5.5
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Absence of Certain Changes
| 9
| 5.6
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Absence of Undisclosed Liabilities
| 10
| 5.7
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Litigation
| 10
| 5.8
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Restrictions on Business Activities
| 10
| 5.9
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Compliance; Governmental Authorization
| 11
| 5.10
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Certain Contracts and Arrangements
| 11
| 5.11
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Title to Property
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| 5.12
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Intellectual Property
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| 5.13
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Environmental Matters
| 14
| 5.14
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Taxes
| 14
| 5.15
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Employee Benefit Plans
| 15
| 5.16
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Certain Agreements Affected by the Merger
| 17
| 5.17
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Employee Matters
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| 5.18
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Insurance
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| 5.19
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Compliance with Laws
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| 5.20
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Minute Books
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| 5.21
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Complete Copies of Materials
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| 5.22
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Brokers’ and Finders’ Fees
| 18
| 5.23
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Proxy Statement
| 18
| 5.24
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Opinion of Financial Advisor
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| 5.25
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Vote Required
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| 5.26
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Chapter 7A and 7B of the MBCA Not Applicable
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| 5.27
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Customers and Suppliers
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| 5.28
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Year 2000 Compliance
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| 5.29
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Effect of Article
| 19
| 5.30
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Product Warranties
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| 5.31
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Disclosure
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| ARTICLE 6
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Representations and Warranties of Merger Sub
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| 6.1
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Organization, Standing and Power, Capital Structure
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| 6.2
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Authority
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| 6.3
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Governmental Authorization
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| 6.4
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Proxy Statement
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| 6.5
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Board Approval
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| 6.6
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Representations Complete
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| 6.7
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Acknowledgments
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| 6.8
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Financing
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| ARTICLE 7
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Conduct Prior to the Effective Time
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| 7.1
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Conduct of Business of Target
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| 7.2
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Restrictions on Conduct of Business of Target
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| 7.3
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Other Potential Acquirors
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| 7.4
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Conduct of Parent and Merger Sub
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| ARTICLE 8
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Additional Agreements
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| 8.1
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Special Stockholders’ Meeting
| 27
| 8.2
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Proxy Statement
| 27
| 8.3
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Access to Information
| 28
| 8.4
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Public Disclosure
| 28
| 8.5
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Consents; Cooperation
| 29
| 8.6
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Legal Requirements
| 29
| 8.7
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Indemnification
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| 8.8
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Reasonable Efforts and Further Assurances
| 30
| 8.9
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Notification of Certain Matters
| 31
| 8.10
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Additions to and Modification of Target Disclosure Schedule
| 31
| 8.11
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Regulatory Notices
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| ARTICLE 9
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Conditions to the Merger
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| 9.1
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Conditions to Obligations of Each Party to Effect the Merger
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| 9.2
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Additional Conditions to Obligations of Target
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| 9.3
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Additional Conditions to the Obligations of the Buyer Parties
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| ARTICLE 10
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Termination, Amendment and Waiver
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| 10.1
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Termination
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| 10.2
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Effect of Termination
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| 10.3
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Expenses
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| 10.4
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Termination Fees
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| 10.5
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Amendment
| 39
| 10.6
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Extension; Waiver
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| ARTICLE 11
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General Provisions
| 39
| 11.1
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Non-Survival at Effective Time
| 39
| 11.2
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Notices
| 39
| 11.3
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Interpretation
| 40
| 11.4
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Counterparts
| 40
| 11.5
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Entire Agreement; Nonassignability; Parties in Interest
| 40
| 11.6
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Severability
| 40
| 11.7
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Remedies Cumulative; No Waiver
| 40
| 11.8
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Governing Law
| 41
| 11.9
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Rules of Construction
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| 11.10
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Certain Definitions
| 41
| 11.11
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Specific Performance
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iii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated
as of November 6, 1999, by and among Titan Holdings, Inc., a
Delaware corporation (the “Parent”), Titan Acquisition
Corporation, a Michigan corporation (“Merger Sub” and
together with the Parent, the “Buyer Parties”), and
Autocam Corporation, a Michigan corporation (“Target”).
Each of Target and Merger Sub are collectively referred to
herein as the “Constituent Corporations”.
RECITALS
WHEREAS, the Board of Directors of Merger Sub has
unanimously determined that it is in the best interests of its
equity holders for Merger Sub to acquire the Target upon the
terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Target (the
“Board”), pursuant to the unanimous recommendation of a
committee of the independent directors acting separately and
appointed for the purpose of reviewing this transaction (the
“Special Committee”), has unanimously approved the
merger of Merger Sub with and into the Target (the
“Merger”) in accordance with the Business Corporation
Act of the State of Michigan (the “MBCA”) and resolved
and agreed to recommend that holders of the outstanding shares of
the common stock of Target (the “Target Common
Stock”), approve the Merger;
WHEREAS, to induce Merger Sub to enter into this
Agreement, the Buyer Parties have required that Merger Sub and
each of the stockholders of the Target listed on
Exhibit A attached hereto (the “Designated
Stockholders”) enter into a Shareholders Voting Agreement,
dated today’s date (the “Stockholder Agreements”),
pursuant to which each Designated Stockholder agrees, among
other things, to vote its Target Common Stock in favor of the
Merger, in each case subject to the terms and conditions set
forth therein;
WHEREAS, also in furtherance of such acquisition, the
Boards of Directors of Parent, Merger Sub and Target (and the
Parent as sole stockholder of Merger Sub) have each unanimously
approved the execution, delivery and performance of the
Stockholder Agreements in accordance with applicable law; and
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein, and intending to be
legally bound hereby, Parent, Merger Sub and Target hereby agree
as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Subject to the terms and conditions
of this Agreement, at the Effective Time (as defined in
Section 1.2), Merger Sub shall be merged with and into
Target in accordance with this Agreement and the separate
corporate existence of Merger Sub shall thereupon cease. Target
shall be the surviving corporation in the Merger (sometimes
hereinafter referred to as the “Surviving
Corporation”).
1.2 Effective Time. If this Agreement shall not have
been terminated as provided in Article 10.1, the parties
hereto will hold a closing (a “Closing”) at the offices
of Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000 (or such other place as the parties may
agree) as soon as practicable after the fulfillment of (or, to
the extent permitted hereunder, the waiver of) all conditions to
the Merger set forth in Article 9 (other than such
conditions that are expected to be satisfied by deliveries at the
Closing); provided that, unless otherwise agreed by the
Parties or unless the
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Termination Date has been extended pursuant to the provisos in
Section 10.1(b) of this Agreement, the Closing shall be held
not later than five days after the fulfillment (or waiver) of
such conditions; and provided further, that if the
Termination Date has been extended pursuant to the provisos in
Section 10.1(b) of this Agreement and such conditions have
been fulfilled (or waived), the Closing shall be held not later
than the Termination Date. At the Closing, the respective
designated parties hereto shall deliver the documents referred to
in Article 9. The Surviving Corporation shall also deliver
to the Paying Agent at the Closing by a wire transfer of same day
funds the aggregate Merger Consideration (as defined in
Section 4.2(a)) and the aggregate Spread (as defined in
Section 4.2(d)). Contemporaneous with the Closing, the
parties hereto shall cause the Merger to be consummated by filing
a certificate of merger, substantially in the form of
Exhibit B hereto (the “Certificate of
Merger”), as contemplated by the applicable provisions of
the MBCA, together with any required related documents, with the
appropriate administrator, as indicated in the MBCA, in such form
as required by, and executed in accordance with the relevant
provisions of, the MBCA. The Merger shall be effective upon the
filing of the Certificate of Merger (the “Effective
Time")(the date, if any, upon which the Effective Time
occurs, the “Effective Date”).
1.3 Taking of Necessary Action; Further Action. If,
at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right,
title and possession to all assets, property, rights, privileges,
powers and franchises of Target and Merger Sub, the officers and
directors of Target and Merger Sub are fully authorized in the
names of their respective corporations or otherwise to take, and
will take, all such lawful and necessary action, so long as such
action is not inconsistent with this Agreement.
ARTICLE 2
ARTICLES OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
2.1 Articles of Incorporation. The Articles of
Incorporation of Merger Sub in effect immediately prior to the
Effective Time, a copy of which (including the Certificate of
Designations with respect to the Merger Sub Preferred Stock (as
defined below)) is attached hereto as Exhibit C,
shall be the Articles of Incorporation of the Surviving
Corporation until duly amended in accordance with applicable law
except that Article 1 shall be amended to read in full as
follows: “The name of the Corporation is Autocam
Corporation.”
2.2 Bylaws. The Bylaws of Merger Sub in effect
immediately prior to the Effective Time, a copy of which is
attached hereto as Exhibit D, shall be the Bylaws of
the Surviving Corporation until duly amended in accordance with
applicable law.
ARTICLE 3
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
3.1 Directors. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation and shall serve until
their successors are duly elected or appointed.
3.2 Officers. The officers of Merger Sub immediately
prior to the Effective Time shall be the initial officers of the
Surviving Corporation and shall serve until their respective
successors are duly elected or appointed.
2
ARTICLE 4
EFFECT OF THE MERGER; EFFECT OF THE MERGER
ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS
4.1 Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in this Agreement, the
Certificate of Merger, and the applicable provisions of the
MBCA. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of Target and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and
duties of Target and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
4.2 Effect on Capital Stock. By virtue of the Merger
and without any action on the part of Merger Sub, Target or the
holders of any of the following securities:
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(a) Conversion (or Retention) of Target Common Stock.
At the Effective Time, each share of Target Common Stock
issued and outstanding immediately prior to the Effective Time
(other than (i) any shares of Target Common Stock to be
canceled pursuant to Section 4.2(b) and (ii) any shares
of Target Common Stock to remain outstanding pursuant to
Section 4.2(c)) will be canceled and extinguished and be
converted automatically into the right to receive Eighteen and
75/00 Dollars ($18.75) net in cash (the “Merger
Consideration”).
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(b) Cancellation of Target Common Stock Owned by Merger
Sub or Target. At the Effective Time, all shares of Target
Common Stock that are owned by Target as treasury stock and each
share of Target Common Stock owned by Merger Sub or any direct or
indirect wholly-owned subsidiary of Merger Sub or of Target
immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
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(c) Exchange of Portion of Target Common Stock Owned by
Principal Stockholder. An aggregate of 2,133,333 shares (the
“Contribution Shares”) of Target Common Stock
registered in the name of Xxxx X. Xxxxxxx (the “Principal
Stockholder”) shall not be converted, exchanged or canceled
as provided above. Immediately before the Effective Time and
pursuant to the Stockholder Agreements, the Principal Stockholder
will contribute the Contribution Shares to the Parent for
200,000 newly-issued shares of the Parent’s Cumulative
Preferred Stock, $.01 par value per share (the “Parent
Preferred Stock”), and 2,000,000 shares of the Parent’s
common stock, $.01 par value per share (the “Parent Common
Stock”). The Contribution Shares received by the Parent
shall not be affected by the Merger and shall remain outstanding
immediately after the Effective Time. Such contribution shall be
pursuant to an exchange which qualifies for non-recognition of
gain under Section 351 of the Internal Revenue Code of 1986,
as amended, and the regulations thereunder (the
“Code”).
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(d) Employee Stock Options. In accordance with the
terms of the Target’s 1991 Incentive Stock Option Plan, as
amended and the Target’s 1998 Key Employee Stock Option Plan
(the “Stock Option Plans”), each outstanding option to
purchase Target Common Stock granted under the Stock Option
Plans shall, as of the Effective Time, become fully vested
regardless of the vesting schedule contained in any stock option
agreement or in any of the Stock Option Plans. Each outstanding
option to purchase Target Common Stock granted under the Stock
Option Plans or otherwise shall be canceled at the Effective
Time, and each holder of a canceled option (whether issued
pursuant to a Stock Option Plan or otherwise) shall be entitled
to receive, at the Effective Time or as soon as practicable
thereafter, from the Surviving Corporation, in consideration for
the cancellation of such option, an amount in cash equal to the
product of (i) the number of shares of Target Common Stock
previously subject to such option and (ii) the excess, if
any, of the Merger Consideration over the exercise price per
share of Target Common Stock previously subject to such option
(the “Spread”). The amount of cash to be delivered to
the holder of any such options shall
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be subject to reduction to satisfy applicable withholding tax
obligations. With respect to each such option issued by the
Target, Target shall take, or cause to be taken, prior to the
Effective Time, all such action so that each such option shall be
automatically canceled as of the Effective Time and the holders
of each such option shall only be entitled to receive from the
Surviving Corporation, at the Effective Time or as soon as
practicable thereafter, an amount in cash equal to the Spread, if
any, in exchange for the cancellation of each such option,
subject in each case to applicable withholding tax obligations.
Notwithstanding the foregoing, Target may, with the consent of
Merger Sub, by separate agreement with one or more holders of
such options, agree with such holders on alternate treatment of
such options, which may provide for conversion of such options
into the right to receive options to purchase Parent Common
Stock.
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(e) Capital Stock of Merger Sub. At the Effective
Time, each share of common stock of Merger Sub (“Merger Sub
Common Stock”) issued and outstanding immediately prior to
the Effective Time shall be converted into and exchanged for one
validly issued, fully paid and non-assessable share of Surviving
Corporation Common Stock. Each stock certificate of Merger Sub
evidencing ownership of any such shares shall continue to
evidence ownership of such shares of capital stock of the
Surviving Corporation.
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(f) Adjustments to Merger Consideration. The Merger
Consideration shall be adjusted to reflect fully the effect of
any stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into Target
Common Stock), reorganization, recapitalization or other like
change with respect to Target Common Stock occurring after the
date hereof and prior to the Effective Time.
4.3 Surrender of Shares; Stock Transfer Books.
(a) Deposit. Prior to the Effective Time, Merger Sub
shall designate a bank or trust company to act as agent (the
“Paying Agent”) for the holders of shares and options
canceled in connection with the Merger to receive the funds to
which such holders shall become entitled pursuant to
Section 4. Such funds shall be invested by the Paying Agent
as directed by the Surviving Corporation, provided that such
investments shall be in obligations of or guaranteed by the
United States of America or of any agency thereof and backed by
the full faith and credit of the United States of America or in
commercial paper obligations rated A-1 or P-1 or better by
Xxxxx’x Investors Service, Inc. or Standard &
Poor’s Corporation, respectively. Any net profits resulting
from, or interest or income produced by, such investments shall
be payable to, or as directed by, Merger Sub.
(b) Notice. 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 and options entitled
to receive the Spread pursuant to Section 4 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 or the documents evidencing such Spread
(together, 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 accordance with the instructions thereto, and such other
documents as may be reasonably required pursuant to such
instructions, then, subject to applicable withholding tax
obligations, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration or Spread
payable with respect to such Certificate, and such Certificate
shall then be canceled. No interest shall accrue or be paid on
the Merger Consideration or Spread payable upon the surrender of
any Certificate for the benefit of the holder of such
Certificate. If payment is to be made to a person other than the
person in whose name the surrendered Certificate is registered on
the books of the Target, 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
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other taxes required by reason of the payment to a person other
than the registered holder of the Certificate surrendered or
shall have established to the satisfaction of the Surviving
Corporation that such taxes either have been paid or are not
applicable.
(c) Unclaimed Funds. At any time following the sixth
(6th) month after the Effective Time, the Surviving Corporation
shall be entitled to require the Paying Agent to deliver to it
any funds that had been made available to the Paying Agent and
not disbursed to holders of Certificates (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 only to the
Surviving Corporation (subject to abandoned property, escheat and
other similar laws) only as general creditors thereof with
respect to any Merger Consideration or Spread 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
Certificate for any Merger Consideration or Spread delivered in
respect of such Certificate to a public official pursuant to any
abandoned property, escheat or other similar law.
(d) Effect on Certificates. Subject to
Section 4.2(c), (i) at the close of business on the day
of the Effective Time, the stock transfer books of the Target
shall be closed and, thereafter, there shall be no further
registration of transfers of shares on the records of the Target
and (ii) from and after the Effective Time, the holders of
shares or options 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.
4.4 No Further Ownership Rights in Target Common Stock.
All amounts paid upon the surrender for the shares of Target
Common Stock or options to purchase shares of Target Common
Stock in accordance with the terms hereof shall be deemed to have
been paid in full satisfaction of all rights pertaining to such
shares or options to purchase shares of Target Common Stock, and
there shall be no further registration of transfers on the
records of the Surviving Corporation of shares of Target Common
Stock (subject to Section 4.2(c)). If, after the Effective
Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in
this Article 4.
4.5 Lost, Stolen or Destroyed Certificates. In the
event any Certificates shall have been lost, stolen or destroyed,
the Paying Agent shall pay in exchange for such lost, stolen or
destroyed Certificates, upon the making of an affidavit of that
fact by the holder thereof, an amount as may be required pursuant
to Section 4; provided, however, that Surviving Corporation
may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or
destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made
against the Surviving Corporation or the Paying Agent with
respect to the Certificates alleged to have been lost, stolen or
destroyed.
4.6. Dissenters and Appraisal Rights.
(a) Notwithstanding any provision of this Agreement to the
contrary and notwithstanding the absence of any requirement under
the MBCA to provide dissenters’ appraisal rights in
connection with the Merger, the Buyer Parties and Target agree
that provision shall be made for any holder of shares of Target
Common Stock to exercise dissenters’ appraisal rights on the
same basis as if such rights were required in connection with
the Merger under the MBCA. Accordingly, any shares of Target
Common Stock held by a holder who has demanded and perfected such
holder’s demand for appraisal of such holder’s shares
of Target Common Stock in accordance with the procedures set
forth in the MBCA (including but not limited to Sections 765
and 767 thereof) and as of the Effective Time has neither
effectively withdrawn nor lost his right to such appraisal
(“Dissenting Shares”), shall not be converted into or
represent a right to receive cash pursuant to
Section 4.2(a), but the holder thereof shall be entitled to
only such rights as would be available under the MBCA to a holder
that has undertaken to
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exercise dissenters’ appraisal rights in connection with a
transaction for which the MBCA provides dissenters’
appraisal rights.
(b) Notwithstanding the provisions of Section 4.6(a),
if any holder of shares of Target Common Stock who demands
appraisal of such holder’s shares of Target Common Stock
under the MBCA shall effectively withdraw or lose (through
failure to perfect or otherwise) his right to appraisal, then as
of the Effective Time or the occurrence of such event, whichever
later occurs, such holder’s shares of Target Common Stock
shall automatically be converted into and represent only the
right to receive cash as provided in Section 4.2(a), without
interest thereon, upon surrender of the certificate or
certificates representing such shares of Target Common Stock.
(c) The Target agrees to give each of its stockholders
written notice of their rights under Sections 765 and 767 of
the MBCA concurrent with sending notice of the Special
Stockholders Meeting and to provide Merger Sub with a copy of
such notice. The Target also agrees to give Merger Sub
(i) prompt notice of any written demands for appraisal or
payment of the fair value of any shares of Target Common Stock,
withdrawals of such demands, and any other instruments served
pursuant to the MBCA received by the Target and (ii) the
opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under the MBCA. The Target shall
not voluntarily make any payment with respect to any demands for
appraisal and shall not, except with the prior written consent
of Merger Sub, settle or offer to settle any such demands.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF TARGET
In this Agreement, any reference to any event, change, condition
or effect being “material” with respect to any entity
or group of entities means any material event, change, condition
or effect related to the financial condition, properties, assets
(including intangible assets), liabilities (including contingent
liabilities), business, operations or results of operations of
such entity or group of entities. In this Agreement, any
reference to a “Material Adverse Effect” with respect
to any entity or group of entities means any event, change,
condition or effect (a) that is, or is reasonably likely in
the future to be, materially adverse to the financial condition,
properties, assets (including intangible assets), liabilities
(including contingent liabilities), business, operations or
results of operations of such entity, and its subsidiaries, taken
as a whole, or (b) that would reasonably be expected to
prevent or materially delay or impair the ability of the Merger
Sub or Target to consummate the transactions contemplated by this
Agreement.
In this Agreement, any reference to Target’s
“knowledge” means the actual knowledge of any one or
more of the officers of Target or of any one or more of the
officers of any of its material subsidiaries, in each case after
due inquiry.
Except as disclosed in a document of even date herewith and
delivered by Target to Merger Sub prior to the execution and
delivery of this Agreement (which exceptions shall specifically
identify a Section, Subsection or clause of a single Section or
Subsection hereof, as applicable, to which such exception
relates) (the “Target Disclosure Schedule”), (Target
represents and warrants to Merger Sub as follows, which
representations and warranties shall expire at the Effective Time
and shall be without force or effect thereafter:
5.1 Organization, Standing and Power. Each of Target
and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction
of organization. Each of Target and its subsidiaries has the
corporate power to own its properties and to carry on its
business substantially as now being conducted and as proposed to
be conducted and to the knowledge of Target is duly qualified to
do business and is in good standing in each jurisdiction in which
the failure to be so qualified and in good standing would have
or could reasonably be expected to have a Material Adverse
6
Effect on Target. Target has delivered a true and correct copy of
the Articles of Incorporation and Bylaws or other charter
documents, as applicable, of Target and each of its subsidiaries,
each as amended to date, to Merger Sub. Neither Target nor any
of its subsidiaries is in violation of any of the provisions of
its Articles of Incorporation or Bylaws or equivalent
organizational documents, except for violations that would not
and could not reasonably be expected to, individually or in the
aggregate, result in a Material Adverse Effect on the Target.
Target is the owner, directly or indirectly through its
subsidiaries, of all outstanding shares of capital stock of each
of its subsidiaries and all such shares are duly authorized,
validly issued, fully paid and non-assessable. All of the
outstanding shares of capital stock of each such subsidiary are
owned by Target, directly or indirectly through its subsidiaries,
free and clear of all Liens, charges, claims and encumbrances or
rights of others. There are no outstanding subscriptions,
options, warrants, puts, calls, rights, exchangeable or
convertible securities or other commitments or agreements of any
character relating to the issued or unissued capital stock or
other securities of any such subsidiary, or otherwise obligating
Target or any such subsidiary to issue, transfer, sell, purchase,
redeem or otherwise acquire such securities. Except as disclosed
in the Target SEC Documents (as defined in Section 5.4),
Target does not directly or indirectly own any equity or similar
interest in, or any interest convertible or exchangeable or
exercisable for, any equity or similar interest in, any
corporation, partnership limited liability company, joint venture
or other business association or entity. For purposes of this
Agreement, “Lien” means, with respect to any asset
(including any security), any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such
asset; provided, however, that the term “Lien”
shall not include (i) statutory liens for Taxes, which are
not yet due and payable or are being contested in good faith by
appropriate proceedings and disclosed in Section 5.14 of the
Target Disclosure Schedule, (ii) statutory or common law
liens to secure landlords, lessors or renters under leases or
rental agreements confined to the premises rented,
(iii) deposits or pledges made in connection with, or to
secure payment of, workers’ compensation, unemployment
insurance, old age pension or other social security programs
mandated under applicable laws, (iv) statutory or common law
liens in favor of carriers, warehousemen, mechanics and
materialmen, to secure claims for labor, materials or supplies
and other like liens, and (v) restrictions on transfer of
securities imposed by applicable state and federal securities
laws.
5.2 Capital Structure. The authorized capital stock
of Target consists of 10,000,000 shares of Common Stock and
200,000 shares of Preferred Stock, of which there were issued and
outstanding as of the close of business on November 3,
1999, 6,312,508 shares of Common Stock and no shares of Preferred
Stock. There are no other outstanding shares of capital stock or
voting securities of Target and no outstanding commitments to
issue any such shares of capital stock or voting securities after
September 30, 1999 other than pursuant to the exercise of
options outstanding as of such date under the Target Stock Option
Plans. All outstanding shares of Target Common Stock are duly
authorized, validly issued, fully paid and non-assessable, were
not issued in violation of any preemptive rights and are free of
any Liens or encumbrances other than any Liens or encumbrances
created by or imposed upon the holders thereof, and are not
subject to preemptive rights or rights of first refusal created
by statute, the Articles of Incorporation, as amended, or Bylaws,
as amended, of Target or any agreement to which Target is a
party or by which it is bound. As of the close of business on
November 3, 1999, Target has reserved 914,657 shares of
Common Stock for issuance pursuant to the Target Stock Option
Plans, of which 684,517 shares are subject to outstanding,
unexercised options, and no shares are subject to outstanding
stock purchase or other rights. Since November 3, 1999,
Target has not issued or granted additional options under the
Target Stock Option Plans. Section 5.2 of the Target
Disclosure Schedule sets forth, for each outstanding option under
the Target Stock Option Plans at the close of business on
September 30, 1999, the name of the holder thereof, the date
of grant thereof, the number of shares of Target Common Stock
issuable upon the exercise thereof, the exercise price per share
of Target Common Stock subject thereto and the vesting schedule
therefor. Except for (i) the rights created pursuant to this
Agreement and the Target Stock Option Plans, and
(ii) Target’s right to repurchase any unvested shares
under the Target Stock Option Plans, there are no other options,
warrants, calls, rights,
7
commitments or agreements of any character to which Target is a
party or by which it is bound obligating Target to issue,
deliver, sell, repurchase or redeem, or cause to be issued,
delivered, sold, repurchased or redeemed, any shares of capital
stock of Target or obligating Target to grant, extend, accelerate
the vesting of, change the price of, or otherwise amend or enter
into any such option, warrant, call, right, commitment or
agreement. There are no contracts, commitments or agreements
relating to voting, purchase or sale of Target’s capital
stock between or among Target and any of its stockholders other
than the Stockholder Agreements being executed in connection
herewith. True and complete copies of all agreements and
instruments relating to or issued under the Target Stock Option
Plans have been delivered to Merger Sub and such agreements and
instruments have not been amended, modified or supplemented, and
there are no agreements to amend, modify or supplement such
agreements or instruments in any case from the form made
available to Merger Sub.
5.3 Authority. Target has all requisite corporate
power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Target, subject only
to the approval of the Merger by Target’s stockholders as
contemplated by Section 9.1(a). This Agreement has been duly
executed and delivered by Target and constitutes the valid and
binding obligation of Target enforceable against Target in
accordance with its terms. The execution and delivery of this
Agreement by Target does not, and the consummation of the
transactions contemplated hereby will not, violate or conflict
with, or result in any violation of, or default under (with or
without notice or lapse of time, or both), or give rise to a
right of termination, cancellation or acceleration of any
obligation or loss of any benefit under, or give rise to any Lien
under or increase the obligations arising under (i) any
provision of the Articles of Incorporation or Bylaws or
equivalent organizational documents of Target or any of its
subsidiaries, as amended, or (ii) except as set forth in
Section 5.3 of the Target Disclosure Schedule, any mortgage,
indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Target
or any of its subsidiaries or any of their properties or assets,
or (iii) except as set forth in Section 5.3 of the
Target Disclosure Schedule, any order, writ, injunction, decree,
law, statute, rule or regulation applicable to the Target or any
of its subsidiaries or any of their respective properties or
assets, except, in the case of clause (ii) or (iii), for
violations, breaches or defaults that would not and could not
reasonably be expected to, individually, result in cost, loss or
damage to the Target in excess of $100,000, in any individual
case, and that would not have and could not reasonable be
expected to have a Material Adverse Effect on the Target in the
aggregate. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court,
administrative agency or commission or other governmental
authority or instrumentality (“Governmental Entity”) is
required by or with respect to Target or any of its subsidiaries
in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby,
except for (i) the filing of the Certificate of Merger as
provided in Section 1.2, (ii) the filing with the
Securities and Exchange Commission (the “SEC”) and the
National Association of Securities Dealers, Inc. (the
“NASD”) of the Proxy Statement (as defined in
Section 5.23) relating to the Special Stockholders’
Meeting (as defined in Section 8.1), (iii) the filing
of a Form 8-K with the SEC and NASD within 15 days
after the Effective Time, (iv) such consents, approvals,
orders, authorizations, registrations, declarations and filings
as may be required under applicable state securities laws and the
securities laws of any foreign country; (v) such filings as
may be required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (“HSR”);
(vi) the filing of a Schedule 13e-3 with the SEC and
NASD and (vii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made,
would not have a Material Adverse Effect on Target and would not
prevent, or materially alter or delay any of the transactions
contemplated by this Agreement.
5.4 Documents; Financial Statements. Target has
furnished or made available to Merger Sub a true and complete
copy of each statement, report, registration statement (with the
prospectus in the form
8
filed pursuant to Rule 424(b) under the Securities Act of
1933, as amended (the “Securities Act”)), definitive
proxy statement and other filing filed with the SEC by Target
since January 1, 1997, and, prior to the Effective Time,
Target will have furnished Merger Sub with true and complete
copies of any additional documents filed with the SEC by Target
prior to the Effective Time (collectively, the “Target SEC
Documents”). In addition, Target has made available to
Merger Sub all exhibits (including those exhibits incorporated by
reference) to the Target SEC Documents filed prior to the date
hereof, and will promptly make available to Merger Sub all
exhibits to any additional Target SEC Documents filed prior to
the Effective Time. Target has filed with the SEC all reports and
registration statements and other filings required to be filed
with the SEC under the rules and regulations of the SEC. All
documents required to be filed as exhibits to the Target SEC
Documents have been so filed. As of their respective filing
dates, the Target SEC Documents complied in all material respects
with the requirements of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and the Securities Act,
and none of the Target SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they
were made and at the time, not misleading, except to the extent
corrected by a subsequently filed Target SEC Document. The
financial statements of Target, including the notes thereto,
included in the Target SEC Documents (the “Target Financial
Statements”), complied as to form in all material respects
with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto as of their
respective dates, and were prepared in accordance with generally
accepted accounting principles applied on a basis consistent
throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case
of unaudited statements included in Quarterly Reports on
Form 10-Q, as permitted by Form 10-Q of the SEC). The
Target Financial Statements fairly present the consolidated
financial condition, operating results, and cash flows of Target
and its subsidiaries at the dates and during the periods
indicated therein (subject, in the case of unaudited statements,
to normal, recurring year-end adjustments). There has been no
change in Target accounting policies except as described in the
notes to the Target Financial Statements.
5.5 Absence of Certain Changes. Except as disclosed
in Section 5.5 of the Target Disclosure Schedule, since
June 30, 1999 (the “Target Balance Sheet Date”),
there has not occurred: (i) to the knowledge of Target, any
change, event or condition (whether or not covered by insurance)
that has resulted in, or which could reasonably be expected to
result in, a Material Adverse Effect on Target; (ii) any
change in accounting methods or practices (including any change
in depreciation or amortization policies or rates) by Target or
any revaluation by Target of any of its or any of its
subsidiaries’ assets; (iii) any declaration, setting
aside, or payment of a dividend or other distribution with
respect to the shares of Target or any of its subsidiaries (other
than wholly-owned subsidiaries), or any direct or indirect
redemption, purchase or other acquisition by Target or any of its
subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interest in, the Target or any
of its subsidiaries, of any of its shares of capital stock;
(iv) any execution by Target or any of its subsidiaries of a
contract that would be required to be disclosed in the Target
SEC Documents or in Section 5.10 of the Target Disclosure
Schedule, other than in the ordinary course of business, or any
amendment or termination of, or default under, any contract
disclosed in the Target SEC Documents or in Section 5.10 of
the Target Disclosure Schedule; or (v) any damage,
destruction or other casualty loss with respect to any asset or
property owned, leased or otherwise used by the Target or any of
its subsidiaries, except for any damage, destruction or other
casualty loss that would not and could not reasonably be expected
to, individually or in the aggregate, result in a Material
Adverse Effect on the Target; (vi) any amendment of any term
of any outstanding security of the Target or any of its
subsidiaries; (vii) any incurrence, assumption or guarantee
by the Target or any of its subsidiaries of any indebtedness for
borrowed money other than in the ordinary course of business and
in amounts and on terms consistent with past practices;
(viii) any creation or assumption by the Target or any of
its subsidiaries of any Lien on any asset other than in the
ordinary course of business consistent with past
9
practices; (ix) any loan, advance or capital contributions
made by the Target or any of its subsidiaries to, or investment
in, any person other than (x) loans or advances to employees
in connection with business-related travel, (y) loans made
to employees consistent with past practices that are not in the
aggregate in excess of $250,000, and (z) loans, advances or
capital contributions to or investments in wholly-owned
subsidiaries, and in each case made in the ordinary course of
business consistent with past practices; (x) any transaction
or commitment made, or any contract or agreement entered into,
by the Target or any of its subsidiaries relating to its assets
or business (including the purchase or disposition of any assets)
or any relinquishment by the Target or any of its subsidiaries
of any contract, agreement or other right, in either case except
for (A) any such transaction, commitment, contract,
agreement or relinquishment that would not and could not
reasonably be expected to, individually or in the aggregate,
result in a Material Adverse Effect on the Target,
(B) transactions and commitments in the ordinary course of
business consistent with past practices and (C) those
contemplated by this Agreement (xi) any labor dispute, other
than routine individual grievances, or any activity or
proceeding by a labor union or representative thereof to organize
any employees of the Target or any of its subsidiaries, or any
lockouts, strikes, slowdowns or work stoppages or threats thereof
by or with respect to such employees; (xii) any change by
the Target or any of its subsidiaries in its accounting
principles, practices or methods; (xiii) any increase in the
compensation payable or that could become payable by the Target
or any of its subsidiaries, or any grant of stock options, to
(a) any officer of the Target or any of its subsidiaries or
(b) any employee of the Target or any of its Subsidiaries
whose annual cash compensation is $50,000 or more; or
(xiv) any commitment or agreement by Target or any of its
subsidiaries to do any of the things described in the preceding
clauses (i) through (xiii) (other than negotiations with
Merger Sub and its representatives regarding the transactions
contemplated by this Agreement). Since the date of the
Target’s most recent proxy statement to its stockholders, no
event has occurred that could be required to be reported by the
Target as a certain Relationship or Related Transaction, pursuant
to Item 404 of Regulation S-K promulgated by the SEC,
other than recurring events consistent with the descriptions
thereof set forth in such proxy statements.
5.6 Absence of Undisclosed Liabilities. Neither
Target nor any of its subsidiaries has any liabilities of any
nature (matured or unmatured, fixed or contingent) other than
(i) those set forth or adequately provided for in the
Balance Sheet included in Target’s Annual Report on
Form 10-K for the period ended June 30, 1999, including
the Notes thereto (the “Target Balance Sheet”),
(ii) those incurred in the ordinary course of business or
banking and financial affairs, consistent with past practices,
and not required to be set forth in the Target Balance Sheet or
the notes thereto under generally accepted accounting principles,
(iii) those incurred in the ordinary course of business
since the Target Balance Sheet Date and consistent with past
practice; and (iv) those incurred in connection with the
execution of this Agreement.
5.7 Litigation. There is no private or governmental
action, suit, proceeding, claim, arbitration or investigation
pending before any agency, court or tribunal, foreign or
domestic, or, to the knowledge of Target, threatened against
Target or any of its subsidiaries or any of their respective
properties or any of their respective officers or directors (in
their capacities as such) that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect
on Target. There is no judgment, decree, injunction or order
against Target or any of its subsidiaries, or, to the knowledge
of Target and its subsidiaries, any of their respective directors
or officers (in their capacities as such), that, individually or
in the aggregate, could prevent, enjoin, alter or materially
delay any of the transactions contemplated by this Agreement, or
that, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect on
Target.
5.8 Restrictions on Business Activities. There is no
agreement, judgment, injunction, order or decree binding upon
Target or any of its subsidiaries which has or reasonably could
be expected to have the effect of prohibiting, restricting or
impairing the ability of Target and its subsidiaries to
(i) engage in any business or industry, (ii) compete
against any other Person in any business or industry,
(iii) acquire
10
any property or business or (iv) operate their respective
businesses in any jurisdiction, except, for each of
clauses (i) through (iv), for any such agreement, judgment,
injunction, order or decree that would not and could not
reasonably be expected to, individually or in the aggregate,
result in a Material Adverse Effect on the Target.
5.9 Compliance; Governmental Authorization. To the
knowledge of Target, Target and each of its subsidiaries have
obtained each federal, state, county, local or foreign
governmental consent, license, permit, grant, or other
authorization of a Governmental Entity (i) pursuant to which
Target or any of its subsidiaries currently operates or holds
any interest in any of its properties or (ii) that is
required for the operation of Target’s or any of its
subsidiaries’ businesses or the holding of any such interest
((i) and (ii) herein collectively called “Target
Authorizations”), and all of such Target Authorizations are
in full force and effect, except where the failure to obtain or
have any of such Target Authorizations has not had and could not
reasonably be expected to have a Material Adverse Effect on
Target. The businesses of the Target and its subsidiaries have
not been and are not being conducted in violation of any law,
ordinance or regulation of the United States or any foreign
country or any political subdivision thereof or of any
Governmental Entity, except (i) as publicly disclosed by the
Target in the Target SEC Reports or Section 5.9 of the
Target Disclosure Schedule, and (ii) for violations or
possible violations of any United States or foreign laws,
ordinances or regulations that do not and, insofar as reasonably
can be foreseen in the future, will not result in any charges,
assessments, levies, fines or other liabilities being imposed
upon or incurred by the Target or any of its subsidiaries that
will, individually or in the aggregate, have a Material Adverse
Effect on Target. None of the Target, any of its subsidiaries or
any directors, officers, agents or employees of the Target or any
of its subsidiaries has (i) used any funds on behalf of
Target for unlawful contributions, gifts, entertainment or other
unlawful expenses related to political activity or (ii) made
any unlawful payments on behalf of Target 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.
5.10 Certain Contracts and Arrangements.
(a) Except for agreements listed as exhibits to the Target
SEC Documents or in Section 5.10 of the Target Disclosure
Schedule, neither Target nor any of its subsidiaries is a party
to any (i) individual written employment agreement or
consulting agreement that either (A) obligates Target and
its subsidiaries to pay aggregate annual compensation, or provide
annual services, as the case may be, in excess of $100,000 or
(B) is not terminable by Target or its subsidiaries upon
ninety (90) days notice or less, (ii) collective
bargaining agreement, (iii) license agreement or other
arrangement that limits or restrains Target or any of its
subsidiaries from engaging or competing in any business or
conveys to any other party exclusive rights in any jurisdiction
to use proprietary assets of the Target or any of its
subsidiaries, (iv) indenture, mortgage, note, installment
obligation, agreement or other instrument relating to the
borrowing of money by Target or any of its subsidiaries or the
guaranty of any obligation for the borrowing of money by Target
or any of its subsidiaries or any third party, (v) agreement
that creates a partnership, joint venture, teaming arrangement
or similar arrangement or (vi) other agreement described in
Item 601(b)(1) of Regulation S-K promulgated under the
Exchange Act. Except as set forth in Section 5.10 of the
Target Disclosure Schedule, neither the Target nor any of its
subsidiaries is in breach, default or violation (and no event has
occurred that with notice or the lapse of time or both would
constitute a breach, default or violation) of any term, condition
or provision of any note, bond, mortgage, indenture, lease,
license, Contract, agreement or other instrument or obligation to
which the Target or any of its subsidiaries is now a party or by
which it or any of its properties or assets may be bound, except
for violations, breaches or defaults that would not,
individually or in the aggregate, have a Material Adverse Effect
on the Target.
(b) Target has delivered to Merger Sub all indemnification
agreements currently in effect between Target and any of its past
or present officers, directors or employees.
11
5.11 Title to Property.
(a) Target and its subsidiaries have good and valid title
to all of their respective properties, interests in properties
and assets, real and personal, reflected in the Target Balance
Sheet or acquired after the Target Balance Sheet Date (except
properties or interests in properties and assets sold or
otherwise disposed of since the Target Balance Sheet Date in the
ordinary course of business), or in the case of leased properties
and assets, valid leasehold interests in such properties, free
and clear of all mortgages, Liens, pledges, charges,
encumbrances, adverse claims, rights of others or adverse
interests of any kind or character, except (i) the Lien of
current taxes not yet due and payable, (ii) such
imperfections of title, Liens and easements as do not and will
not materially detract from or interfere with the use of the
properties subject thereto or affected thereby, or otherwise
materially impair business operations involving such properties;
(iii) Liens securing debt which is reflected on the Target
Balance Sheet; and (iv) in case of real property, as appear
of record and are reflected in the policies of title insurance
for such real property that were previously delivered to Merger
Sub. All properties used in the operations of Target and its
subsidiaries are reflected in the Target Balance Sheet to the
extent generally accepted accounting principles require the same
to be reflected. Section 5.11(a) of the Target Disclosure
Schedule identifies each parcel of real property owned by Target
or any of its subsidiaries.
(b) Section 5.11(b) of the Target Disclosure Schedule
sets forth all leases to which Target and its subsidiaries are a
party or by which they are bound and under which (i) Target
and its subsidiaries are obligated to pay annual lease payments
in excess of $100,000 or (ii) that are necessary for the
conduct of the business in substantially the same manner as the
business of Target and its subsidiaries have heretofore been
conducted, such Section 5.11(b) of the Target Disclosure
Schedule describing separately those leases relating to real
property and those leases relating to personal property and
indicating where appropriate those leases that have been recorded
for tax, protection of title or interest, or other purposes)
entered into by Target and its subsidiaries (the
“Leases”). With respect to the Leases, there exist no
defaults by Target and its subsidiaries or, to the knowledge of
Target and its subsidiaries, any default or threatened default by
any third party thereunder, that could reasonably be expected to
materially impair business operations involving such properties
or result in a material liability of Target and its subsidiaries.
Except as disclosed in Section 5.11(b) of the Target
Disclosure Schedule, each Lease is in full force and effect and
is a legal, valid and binding obligation of Target and its
subsidiaries, and, to the knowledge of Target and its
subsidiaries, each other party thereto, enforceable against each
such party thereto in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights
generally and subject to general principles of equity. Except as
provided in Section 5.11(b) of the Target Disclosure
Schedule, the transactions contemplated by this Agreement will
not result in any material default, penalty or modification to
any Lease, nor will any consents thereto be required.
(c) Except as disclosed in Section 5.11(c) of the
Target Disclosure Schedule, to the knowledge of the Target
(i) the utilities, access and parking for each parcel of
real property utilized by the Target and its subsidiaries are
reasonably adequate for the current use and operation of each
such property, (ii) there are no zoning, building code,
occupancy restriction or other land-use regulation proceedings
or, to the knowledge of Target and its subsidiaries, any proposed
change in any applicable laws, which could materially impair the
use or operation of any such property, nor has Target and its
subsidiaries received any notice of any special assessment
proceedings affecting any such property, or applied for any
change to the zoning or land use status of any such property,
(iii) all water, sewer, gas, electric, telephone and
drainage facilities and all other utilities required by law or
for the normal use and operation of each such property are
installed to the property lines of each such property, and
(iv) Target and its subsidiaries have obtained all material
licenses, permits, approvals, easements and rights of way (and
all such items are currently in full force and effect) required
from any governmental authority having or claiming to have
competent jurisdiction over each such property or from private
parties for the current use and operation of each such property.
12
(d) To the knowledge of Target and its subsidiaries, there
are no material latent defects or material adverse physical
conditions affecting any of such properties or any of the
facilities, buildings, structures, erections, improvements,
fixtures, fixed assets and personal property of a permanent
nature affixed, annexed or attached to, located on or forming
part of any such property which, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect on Target.
5.12 Intellectual Property.
(a) Target and its subsidiaries own, or are licensed or
otherwise possess legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights, and any
applications therefor, maskworks, net lists, schematics,
technology, know-how, trade secrets, inventory, ideas,
algorithms, processes, computer software programs or
applications, and tangible or intangible proprietary information
or material (“Intellectual Property”) that are used or
proposed to be used in the business of Target and it subsidiaries
as currently conducted or as proposed to be conducted by Target
and its subsidiaries, except to the extent that the failure to
have such rights, individually or in the aggregate, have not had,
and could not reasonably be expected to have, a Material Adverse
Effect on Target.
(b) Section 5.12 of the Target Disclosure Schedule
lists (i) all patents and patent applications and all
registered and unregistered trademarks, trade names and service
marks, registered and unregistered copyrights, and maskworks
which Target considers to be material to its business and the
business of each of its subsidiaries and included in the
Intellectual Property, including the jurisdictions in which each
such Intellectual Property right has been issued or registered or
in which any application for such issuance and registration has
been filed, (ii) all material licenses, sublicenses and
other agreements as to which Target or any of its subsidiaries is
a party and pursuant to which any person is authorized to use
any Intellectual Property, and (iii) all material licenses,
sublicenses and other agreements as to which Target or any of its
subsidiaries is a party and pursuant to which Target or any of
its subsidiaries is authorized to use any third party patents,
trademarks or copyrights, including software (“Third Party
Intellectual Property Rights”), in each case which are
incorporated in, are, or form a part of any product or service of
Target or any of its subsidiaries that is material to Target.
(c) To the best knowledge of Target and its subsidiaries,
there is no material unauthorized use, disclosure, infringement
or misappropriation of any Intellectual Property rights of Target
or any of its subsidiaries, any trade secret material to Target
or any of its subsidiaries, or any Third Party Intellectual
Property Right, by any third party, including any employee or
former employee of Target or any of its subsidiaries. Neither
Target nor any of its subsidiaries has entered into any agreement
to indemnify any other person against any charge of infringement
of any Intellectual Property, other than indemnification
provisions contained in purchase orders arising in the ordinary
course of business.
(d) Neither Target nor any of its subsidiaries is, nor will
Target or any of Target’s subsidiaries be as a result of
the execution and delivery of this Agreement or the consummation
of the transactions contemplated by this Agreement, in breach of
any license, sublicense or other agreement relating to any of the
Intellectual Property or any Third Party Intellectual Property
Rights, the breach of which, individually or in the aggregate,
could have a Material Adverse Effect on Target.
(e) All patents, registered trademarks, service marks and
copyrights held by Target and its subsidiaries are valid and
subsisting. Neither Target nor any of its subsidiaries
(i) has been sued in any suit, action or proceeding which
involves a claim of infringement of any patents, trademarks,
service marks, copyrights or violation of any trade secret or
other proprietary right of any third party or (ii) has
brought any action, suit or proceeding for infringement of
Intellectual Property or breach of any license or agreement
involving Intellectual Property against any third party. The
manufacture, marketing, licensing or sale of the products and
services of Target and its subsidiaries do not infringe any
patent, trademark, service xxxx, copyright, trade secret or other
proprietary right of any third party, except where such
infringement should not have a Material Adverse Effect on Target.
13
(f) Target and its subsidiaries have secured valid written
assignments from all consultants and employees who contributed to
the creation or development of Intellectual Property of the
rights to such contributions that Target and its subsidiaries do
not already own by operation of law.
(g) Target and its subsidiaries have taken all reasonable
and appropriate steps to protect and preserve the confidentiality
of all Intellectual Property not otherwise protected by patents,
or patent applications or copyright (“Confidential
Information”). All use, disclosure or appropriation of
Confidential Information owned by Target and its subsidiaries by
or to a third party has been pursuant to the terms of a written
agreement with such third party. All use, disclosure or
appropriation of Confidential Information not owned by Target and
its subsidiaries has been pursuant to the terms of a written
agreement with the owner of such Confidential Information, or is
otherwise lawful.
5.13 Environmental Matters.
(a) “Environmental, Health and Safety Laws” shall
mean all federal, state or local laws, ordinances, codes,
regulations, rules, policies, common law, judgments and orders
regarding the protection of the environment, requiring pollution
control equipment, or that classify, regulate, call for the
remediation of, require reporting with respect to, or list or
define air, water, groundwater, solid waste, hazardous or toxic
substances, materials, wastes, pollutants or contaminants, or
regarding the safety of employees or workers.
(b) “Hazardous Substance” shall mean any
substance or material that is defined as a “pollutant or
contaminant,” “solid waste,” “hazardous
waste” or “hazardous substance” under any
Environmental, Health and Safety Laws.
(c) With respect to the operations of Target and its
subsidiaries, no formal written notices, administrative actions
or suits under any Environmental, Health or Safety laws are
pending.
(d) Except as set forth in Section 5.13(d) of the
Target Disclosure Schedule or as would not, individually or in
the aggregate, have a Material Adverse Effect on Target, there
are no past or present events, conditions or circumstances
involving Hazardous Substances and relating to Target and its
subsidiaries that are reasonably likely to violate any
Environmental, Health and Safety Laws or that are reasonably
likely to give rise to any liability (matured, unmatured, fixed
or contingent) for: (1) investigation or cleanup under
Environmental, Health and Safety Laws; or (2) injuries to
persons.
(e) Target and its subsidiaries have delivered to Merger
Sub all Phase I or Phase II environmental reports or
environmental compliance audits regarding any facilities or real
property ever owned, operated or leased by Target or its
subsidiaries.
5.14 Taxes.
(a) Target and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax
purposes of which Target or any of its subsidiaries is or has
been a member have timely filed all Tax Returns required to be
filed by it taking into account extensions of due dates, have
paid all Taxes shown thereon to be due and has provided adequate
accruals in accordance with generally accepted accounting
principles in its financial statements for any Taxes that have
not been paid, whether or not shown as being due on any Tax
returns. Except as disclosed in the Target SEC Documents,
(i) no material claim for Taxes has become a Lien against
the property of Target or any of its subsidiaries or is being
asserted against Target or any of its subsidiaries other than
Liens for Taxes not yet due and payable, (ii) no audit of
any Tax Return of Target or any of its subsidiaries is being
conducted by a Tax authority, (iii) no Tax authority is now
asserting, or to the best knowledge of Target, threatening to
assert against Target or any of its subsidiaries any deficiency
or claim for additional Taxes, and there are no requests for
information from a Tax authority currently outstanding that could
affect the Taxes of Target or any of its subsidiaries,
(iv) no extension of the statute of limitations on the
assessment of any Taxes has been granted by Target or any of its
subsidiaries and is currently in effect, and (v) neither
14
Target nor any of its subsidiaries has entered into any
compensatory agreements with respect to the performance of
services which payment thereunder would result in a nondeductible
expense pursuant to Sections 162(m) or 280G of the Code.
Target will not be required to include any material adjustment in
Taxable income for any Tax period (or portion thereof) ending
after the Effective Time attributable to adjustments made prior
to the Merger pursuant to Section 481 or 263A of the Code or
any comparable provision of any state or foreign Tax law.
Neither Target nor any of its subsidiaries is a party to any tax
sharing or tax allocation agreement nor does Target or any of its
subsidiaries owe any amount under any such agreement. For
purposes of this Agreement, the following terms have the
following meanings: “Tax” (and, with correlative
meaning, “Taxes” and “Taxable”) means
(i) any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty, or other tax,
governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or any penalty, addition
to tax or additional amount imposed by any Governmental Entity (a
“Tax authority”) responsible for the imposition of any
such tax (domestic or foreign), (ii) any liability for the
payment of any amounts of the type described in (i) as a result
of being a member of an affiliated, consolidated, combined or
unitary group for any Taxable period and (iii) any liability
for the payment of any amounts of the type described in (i) or
(ii) as a result of any express or implied obligation to
indemnify any other person. As used herein, “Tax
Return” shall mean any return, statement, report or form
(including, without limitation,) estimated Tax returns and
reports, withholding Tax returns and reports and information
reports and returns required to be filed with respect to Taxes.
Target and each of its subsidiaries are in full compliance with
all terms and conditions of any Tax exemptions or other Tax
sharing agreement or order of a foreign government and the
consummation of the Merger shall not have any adverse effect on
the continued validity and effectiveness of such Tax exemptions
or other Tax-sparing agreement or order.
(b) Neither Target nor any of its subsidiaries is obligated
under any agreements with respect to industrial development
bonds or other obligations with respect to which the
excludability from gross income of the holder for federal or
state income tax purposes would be affected by the transactions
contemplated hereunder. Neither Target nor any of its
subsidiaries is, or has been, a United States real property
holding corporation (as defined in Section 897(c)(2) of the
Code) during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code. Neither Target nor any
of its subsidiaries owns any property of a character, the
indirect transfer of which, pursuant to this Agreement, would
give rise to any material documentary, stamp or other transfer
tax.
(c) None of the Target’s subsidiaries organized under
the laws of a country other than the United States (i) has
any investment in U.S. property within the meaning of
Section 956 of the Code, (ii) is engaged in a United
States trade or business for federal income tax purposes,
(iii) is a passive foreign investment company within the
meaning of the Code, or (iv) is a foreign investment company
within the meaning of the Code.
5.15 Employee Benefit Plans
(a) Section 5.15 of the Target Disclosure Schedule
lists, with respect to Target, any subsidiary of Target and any
trade or business (whether or not incorporated) which is treated
as a single employer with Target (an “ERISA Affiliate”)
within the meaning of Section 414(b), (c), (m) or
(o) of the Code, (i) all material employee benefit
plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”)),
(ii) each loan to a non-officer employee in excess of
$50,000, loans to officers and directors and any stock option,
stock purchase, phantom stock, stock appreciation right,
supplemental retirement, severance, sabbatical, medical, dental,
vision care, disability, employee relocation, cafeteria benefit
(Code Section 125) or dependent care (Code
Section 129), life insurance or accident insurance plans,
programs or arrangements, (iii) all bonus, pension, profit
sharing, savings, deferred compensation or incentive plans,
programs or arrangements, (iv) other
15
fringe or employee benefit plans, programs or arrangements that
apply to senior management of Target and that do not generally
apply to all employees, and (v) any current or former
employment or executive compensation or severance agreements,
written or otherwise, as to which unsatisfied obligations of
Target of greater than $50,000 remain for the benefit of, or
relating to, any present or former employee, consultant or
director of Target (together, the “Target Employee
Plans”).
(b) Target has furnished to Merger Sub a copy of each of
the Target Employee Plans and related plan documents (including
trust documents, insurance policies or contracts, employee
booklets, summary plan descriptions and other authorizing
documents, and, to the extent still in its possession, any
material employee communications relating thereto) and has, with
respect to each Target Employee Plan which is subject to ERISA
reporting requirements, provided copies of the Form 5500,
including all schedules attached thereto and actuarial reports,
if any, filed for the last three Plan years. Any Target Employee
Plan intended to be qualified under Sections 401(a) or
501(c)(9) of the Code has either obtained from the Internal
Revenue Service a favorable determination letter as to its
qualified status under the Tax Reform Act of 1986 and subsequent
legislation, or has applied to the Internal Revenue Service for
such a determination letter prior to the expiration of the
requisite period under applicable Treasury Regulations or
Internal Revenue Service pronouncements in which to apply for
such determination letter and to make any amendments necessary to
obtain a favorable determination. Target has also furnished
Merger Sub with the most recent Internal Revenue Service
determination letter issued with respect to each such Target
Employee Plan, and nothing has occurred since the issuance of
each such letter which could reasonably be expected to cause the
loss of the tax-qualified status of any Target Employee Plan
subject to Code Section 401(a) and all prohibited
transaction exemptions (or requests for such exemptions), private
letter rulings, opinions, information letters or compliance
statements issued with respect to any plan described in this
Section above by the IRS, the Department of Labor or the Pension
Benefit Guaranty Corporation.
(c) None of the Target Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person;
(ii) there has been no “prohibited transaction,”
as such term is defined in Section 406 of ERISA and
Section 4975 of the Code, with respect to any Target
Employee Plan, which could reasonably be expected to have, in the
aggregate, a Material Adverse Effect on Target; (iii) to
the knowledge of Target, each Target Employee Plan has been
administered in accordance with its terms and in compliance with
the requirements prescribed by any and all statutes, rules and
regulations (including ERISA and the Code), except as would not
have, in the aggregate, a Material Adverse Effect on Target, and
Target and each subsidiary or ERISA Affiliate have performed all
obligations required to be performed by them under, are not in
any respect in default under or violation of, and have no
knowledge of any default or violation by any other party to, any
of the Target Employee Plans, which default or violation could
reasonably be expected to have a Material Adverse Effect on
Target; (iv) neither Target nor any subsidiary or ERISA
Affiliate is subject to any liability or penalty under
Sections 4976 through 4980 of the Code or Title I of ERISA
with respect to any of the Target Employee Plans which have a
Material Adverse Effect on any such parties; (v) all
material contributions required to be made by Target or any
subsidiary or ERISA Affiliate to any Target Employee Plan have
been made on or before their due dates and a reasonable amount
has been accrued for contributions to each Target Employee Plan
for the current plan years; (vi) with respect to each Target
Employee Plan, no “reportable event” within the
meaning of Section 4043 of ERISA (excluding any such event
for which the thirty (30) day notice requirement has been
waived under the regulations to Section 4043 of ERISA) nor
any event described in Section 4062, 4063 or 4041 of ERISA
has occurred; and (vii) no Target Employee Plan is covered
by, and neither Target nor any subsidiary or ERISA Affiliate has
incurred or expects to incur any liability under Title IV of
ERISA or Section 412 of the Code. With respect to each
Target Employee Plan subject to ERISA as either an employee
pension plan within the meaning of Section 3(2) of ERISA or
an employee welfare benefit plan within the meaning of
Section 3(1) of ERISA, Target has prepared in good faith and
timely filed all requisite governmental
16
reports (which were true and correct as of the date filed) and
has properly and timely filed and distributed or posted all
notices and reports to employees required to be filed,
distributed or posted with respect to each such Target Employee
Plan except where the failure to timely file, distribute or post
such documents would not, in the aggregate, have a Material
Adverse Effect on Target. No suit, administrative proceeding,
action or other litigation has been brought, or to the best
knowledge of Target is threatened, against or with respect to any
such Target Employee Plan, including any audit or inquiry by the
IRS or United States Department of Labor. Neither Target nor any
Target subsidiary or other ERISA Affiliate is a party to, or has
made any contribution to or otherwise incurred any obligation
under, any “multiemployer plan” as defined in
Section 3(37) of ERISA.
(d) With respect to each Target Employee Plan, Target and
each of its United States subsidiaries has complied with
(i) the applicable health care continuation and notice
provisions of the Consolidated Omnibus Budget Reconciliation Act
of 1985 (“COBRA”) and the proposed regulations
thereunder and (ii) the applicable requirements of the
Family and Medical Leave Act of 1993 and the regulations
thereunder, except to the extent that such failure to comply
would not, in the aggregate, have a Material Adverse Effect on
Target.
(e) The consummation of the transactions contemplated by
this Agreement will not (i) entitle any current or former
employee or other service provider of Target, any Target
subsidiary or any other ERISA Affiliate to severance benefits or
any other payment, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such
employee or service provider.
(f) There has been no amendment to, written interpretation
or announcement (whether or not written) by Target, any Target
subsidiary or other ERISA Affiliate relating to, or change in
participation or coverage under, any Target Employee Plan which
would materially increase the expense of maintaining such Plan
above the level of expense incurred with respect to that Plan for
the most recent fiscal year included in Target’s financial
statements.
5.16 Certain Agreements Affected by the Merger.
Except as set forth in Section 5.16 of the Target Disclosure
Schedule, the consummation or announcement of any transaction
contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or further acts or events or the
lapse of time) result in any (i) payment (whether of
severance pay, unemployment compensation, golden parachute, bonus
or otherwise) becoming due from the Target or any of its
subsidiaries to any present or former officer, employee,
consultant or director thereof under any management, employment,
deferred compensation, severance (including any payment, right or
benefit resulting from a change in control), bonus or other
contract for personal services with any present or former
officer, director, consultant or employee or any plan, agreement
or understanding similar to any of the foregoing, or any
“rabbi trust” or similar arrangement, or
(ii) benefit under any of the Target Employee Plans being
established or becoming accelerated, vested or payable.
5.17 Employee Matters. There are no pending claims
against Target or any of its subsidiaries under any workers
compensation plan or policy or for long term disability or under
COBRA with respect to any former employees or qualifying
beneficiaries thereunder, except for obligations that,
individually or in the aggregate, would not have a Material
Adverse Effect on Target. Neither Target nor any of its
subsidiaries is a party to any collective bargaining agreement or
other labor union contract nor does Target nor any of its
subsidiaries know of any activities or proceedings of any labor
union to organize any such employees. Target is not aware of any
strikes, slowdowns, work stoppages, lockouts, boycotts, corporate
campaigns or threats thereof, by or with respect to any
employees of Target or any of its subsidiaries.
5.18 Insurance. Target and each of its subsidiaries
have policies of insurance and bonds of the type and in amounts
as listed in Section 5.18 of the Target Disclosure Schedule.
There is no material claim pending under any of such policies or
bond as to which Target has received a denial, or to
17
Target’s knowledge as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or
bonds. All premiums due and payable under all such policies and
bonds have been paid and Target and its subsidiaries are
otherwise in compliance in all material respects with the terms
of such policies and bonds. Target has no knowledge of any
threatened termination of, or material premium increase with
respect to, any of such policies.
5.19 Compliance with Laws. To the knowledge of
Target, neither Target nor any of its subsidiaries has received
any notices of violation with respect to, any federal, state,
local or foreign statute, law or regulation with respect to the
conduct of its business, or the ownership or operation of its
business, except for such violations or failures to comply as,
singly or in the aggregate, could not be reasonably expected to
have a Material Adverse Effect on Target.
5.20 Minute Books. The minute books of Target and
its subsidiaries have been made available to Merger Sub and
contain all minutes of meetings of directors and stockholders or
actions by written consent since the time of incorporation of
Target and the respective subsidiaries through the date of this
Agreement.
5.21 Complete Copies of Materials. Target has
delivered or made available true and complete copies of each
document that has been requested by or on behalf of Merger Sub or
its counsel in connection with their legal and accounting review
of Target and its subsidiaries.
5.22 Brokers’ and Finders’ Fees. Except
for the fees payable by Target to Xxxxxxx Xxxxx & Associates,
Inc. (formerly known as Xxxxx & Co.) (“RJA”), a
true and correct copy of whose engagement agreement has been
provided to Merger Sub, neither Target nor any of its
subsidiaries has incurred, nor will any of them incur, directly
or indirectly, any liability for brokerage or finders’ fees
or agents’ commissions or investment bankers’ fees or
any similar charges in connection with this Agreement or any
transaction contemplated hereby.
5.23 Proxy Statement. The proxy statement to be sent
to the stockholders of the Target in connection with the Special
Stockholders’ Meeting (as defined in Section 8.1
hereof (such proxy statement, as amended or supplemented, being
referred to herein as the “Proxy Statement”)) shall
not, at the time (or, with respect to amendments or supplements
thereto, the respective times) the Proxy Statement is filed with
the SEC or is first published, sent or given to stockholders of
the Target, 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 are
made, not misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of
proxies for the Special Stockholders’ Meeting which shall
have become false or misleading. 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. No
representation is made by the Target with respect to statements
made in the Proxy Statement based on information supplied by
Merger Sub for inclusion therein.
5.24 Opinion of Financial Advisor. Target has been
advised in writing by RJA that, in such advisor’s opinion,
the consideration to be received by each of the stockholders of
Target is fair to the stockholders of Target from a financial
point of view.
5.25 Vote Required. Under Michigan law and the
Target’s Articles of Incorporation and Bylaws, the
affirmative vote of the holders of a majority of the shares of
Target Common Stock outstanding on the record date set for the
Special Stockholders’ Meeting is the only vote of the
holders of any of Target’s capital stock necessary to
approve this Agreement and the transactions contemplated hereby.
Under Michigan law and the Target’s Articles of
Incorporation and Bylaws, Target is not prohibited from setting,
as contemplated herein, a required vote that is in excess of such
majority. The Board of Directors of Target has (i) approved
this Agreement and the Merger, (ii) determined that this
Agreement and the transactions contemplated hereby, including the
Merger, are fair to and in the best
18
interests of the stockholders of Target and
(iii) recommended that the stockholders of Target approve
this Agreement and the Merger.
5.26 Chapter 7A and 7B of the MBCA Not Applicable.
The Board of Directors of Target has taken all actions, so that
the restrictions contained in Chapters 7A and 7B of the MBCA
applicable to a “business combination” or a
“control share acquisition” (as defined therein) will
not apply to the execution, delivery or performance of this
Agreement or the consummation of the Merger or the other
transactions contemplated by this Agreement.
5.27 Customers and Suppliers. As of the date hereof,
no customer which individually accounted for more than 5% of
Target’s gross revenues during the 12-month period preceding
the date hereof has indicated to Target or any of its
subsidiaries that it will stop, or decrease the rate of, buying
services or products of Target or any of its subsidiaries. As of
the date hereof, no material supplier of Target or any of its
subsidiaries has indicated to Target or any of its subsidiaries
that it will stop, or decrease the rate of, supplying materials,
products or service to Target or any of its subsidiaries. Neither
Target nor any of its subsidiaries has knowingly breached, so as
to provide a benefit to Target or any of its subsidiaries that
was not intended by the parties, any agreement with, or engaged
in any fraudulent conduct with respect to, any customer or
supplier of Target or any of its subsidiaries.
5.28 Year 2000 Compliance. All of the material
computer hardware and software systems of Target and its
subsidiaries (including, without limitation, those related to
their facilities, equipment manufacturing processes, quality
control activities, accounting and bookkeeping records and record
keeping activities) are expected to be by December 31, 1999
Year 2000 Compliant. As used in this Agreement, the phrase
“Year 2000 Compliant” shall mean with respect to
Target’s and its subsidiaries’ material hardware and
software systems, that such hardware and software is designed to
be used prior to, during, and after the calendar Year 2000
A.D., and such hardware and software used during each such time
period will accurately receive, provide and process date/ time
data from, into and between the twentieth and twenty-first
centuries, and will not malfunction, cease to function, or
provide invalid or incorrect results as a result of date/ time
data. With respect to the U.S. operations of Target and its
subsidiaries, Target and its subsidiaries have made reasonable
inquiries of their respective customers, suppliers and others
with which they do business and, based on such inquiries, neither
Target nor any of its subsidiaries has reason to believe that
any of such customers, suppliers or other persons will not be
Year 2000 Compliant by December 31, 1999 in any manner that,
individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect on Target.
5.29 Effect of Article. Notwithstanding anything in
this Agreement, the Target Disclosure Schedule or any document or
communication of any kind, executed, reviewed or existing in
connection herewith, the parties understand that no
representation or warranty of any sort as to further sales,
financial performance, or forecast of any sort is intended or may
be implied under any provision of this Agreement or provision
relating hereto and any and all forecasts which have been
discussed in connection herewith or otherwise are only for the
purposes of reviewing theoretical operating parameters and may
not be and are not relied on by Merger Sub or any other person.
5.30 Product Warranties. Section 5.30 of the
Target Disclosure Schedule sets forth complete and accurate
copies of the written warranties and guaranties by the Target or
any of its subsidiaries currently in effect with respect to their
respective products. There have not been any material deviations
from such warranties and guaranties, and neither the Target, any
of its subsidiaries nor any of their respective salesmen,
employees, distributors and agents is authorized to undertake
obligations to any customer or to other third parties in excess
of such warranties or guaranties. Neither the Target nor any of
its subsidiaries has made any material oral warranty or guaranty
with respect to its products.
5.31 Disclosure. None of the representations or
warranties made by the Target herein or in any schedule hereto,
including the Target Disclosure Schedule, or in any certificate
furnished by the Target
19
pursuant to this Agreement, or in the Target SEC Reports, when
all such documents are read together in their entirety, contains
or will contain any untrue statement of a material fact, or omits
or will omit to state any material fact necessary in order to
make the statements contained herein or therein, in light of the
circumstances under which made, not misleading.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF MERGER SUB
Except as disclosed in a document of even date herewith and
delivered by Merger Sub to Target prior to the execution and
delivery of this Agreement and referring to the representations
and warranties in this Agreement (the “Merger Sub Disclosure
Schedule”), the Parent and Merger Sub, jointly and
severally, represent and warrant to Target as follows:
6.1 Organization, Standing and Power, Capital Structure.
Each of Parent, Merger Sub and each of their significant
subsidiaries (as such term is defined in Section 1.02(w) of
Regulation S-X) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction
of organization except where the failure to be so organized,
existing and in good standing would not have a Material Adverse
Effect on Parent or Merger Sub. Each of Parent, Merger Sub and
their subsidiaries has the corporate power to own its properties
and to carry on its business as now being conducted and as
proposed to be conducted and is duly qualified to do business and
is in good standing in each jurisdiction in which the failure to
be so qualified and in good standing would have a Material
Adverse Effect on Parent or Merger Sub. Merger Sub has delivered
a true and correct copy of the Certificate of Incorporation and
Bylaws or other charter documents, as applicable, of Parent,
Merger Sub and each of their subsidiaries, each as amended to
date, to Target. None of Parent, Merger Sub or any of their
subsidiaries is in violation of any of the provisions of its
Certificate of Incorporation or Bylaws or equivalent
organizational documents. The authorized capital stock of Parent
consists of 6,500,000 shares of Parent Common Stock and 1,000,000
shares of Parent Preferred Stock, of which there were issued and
outstanding as of the close of business on November 4,
1999, 100 shares of Parent Common Stock and no shares of Parent
Preferred Stock. The authorized capital stock of Merger Sub
consists of 60,000 shares of Merger Sub Common Stock. As of the
close of business on November 4, 1999, 1000 shares of Merger
Sub Common Stock are issued and outstanding and all such issued
and outstanding stock was issued for an aggregate amount of
$1000. All issued and outstanding Merger Sub Common Stock is
owned beneficially and of record by Parent.
6.2 Authority. Parent and Merger Sub have all
requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of
Parent and Merger Sub. This Agreement has been duly executed and
delivered by Parent and Merger Sub and constitutes the valid and
binding obligations of Parent and Merger Sub. The execution and
delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, conflict with, or
result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or
loss of a benefit under (i) any provision of the Certificate
of Incorporation or Bylaws or equivalent organizational
documents of Parent, Merger Sub or any of their subsidiaries, as
amended, or (ii) any mortgage, indenture, lease, contract or
other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Parent, Merger Sub or any of their
subsidiaries or their properties or assets, except where such
conflict, violation, default, termination, cancellation or
acceleration with respect to the foregoing provisions of
(ii) would not have and could not reasonably be expected to
have a Material Adverse Effect on Parent or Merger Sub. No
consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required
by or
20
with respect to Parent, Merger Sub or any of their subsidiaries
in connection with the execution and delivery of this Agreement
by Parent or Merger Sub or the consummation by Parent or Merger
Sub of the transactions contemplated hereby, except for
(i) the filing of the Certificate of Merger as provided in
Section 1.2, (ii) any filings as may be required under
applicable state securities laws and the securities laws of any
foreign country, (iii) such filings as may be required under
HSR, and such other consents, authorizations, filings, approvals
and registrations which, if not obtained or made, would not have
a Material Adverse Effect on Parent or Merger Sub and would not
prevent or materially alter or delay any of the transactions
contemplated by this Agreement.
6.3 Governmental Authorization. Parent, Merger Sub
and each of their subsidiaries have obtained each federal, state,
county, local or foreign governmental consent, license, permit,
grant, or other authorization of a Governmental Entity
(i) pursuant to which Parent, Merger Sub or any of their
subsidiaries currently operates or holds any interest in any of
its properties or (ii) that is required for the operation of
Parent’s, Merger Sub’s or any of their
subsidiaries’ businesses or the holding of any such interest
((i) and (ii) herein collectively called “Buyer
Party Authorizations”), and all of such Buyer Party
Authorizations are in full force and effect, except where the
failure to obtain or have any of such Buyer Party Authorizations
could not reasonably be expected to have a Material Adverse
Effect on Parent or Merger Sub.
6.4 Proxy Statement. The information supplied by
Parent or Merger Sub for inclusion in the Proxy Statement will
not, on the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of Target, at
the time of the Special Stockholders’ Meeting, if
applicable or at the Effective Time, contain any statement which,
at such time and in light of the circumstances under which it is
made, is false or misleading with respect to any material fact,
or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein not false
or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies
for the Special Stockholders’ Meeting which shall have
become false or misleading. Notwithstanding the foregoing, Parent
and Merger Sub make no representation or warranty with respect
to any information supplied by the Target or any of its
representatives which is contained in any of the foregoing
documents.
6.5 Board Approval. The Boards of Directors of
Parent and Merger Sub have unanimously (i) approved this
Agreement and the Merger, (ii) determined that the Merger is
in the best interests of its respective stockholder or
stockholders and is on terms that are fair to such respective
stockholder or stockholders and (iii) authorized (or in the
case of Merger Sub recommended that the sole stockholder of
Merger Sub approve) this Agreement and the Merger. The sole
stockholder of Merger Sub has approved this Agreement and the
Merger.
6.6 Representations Complete. None of the
representations or warranties made by Parent or Merger Sub herein
or the Buyer Party Disclosure Schedule, or in any certificate
furnished by Parent or Merger Sub pursuant to this Agreement,
when all such documents are read together in their entirety,
contains or will contain at the Effective Time any untrue
statement of a material fact, or omits or will omit at the
Effective Time to state any material fact necessary in order to
make the statements contained herein or therein, in the light of
the circumstances under which made, not misleading.
6.7 Acknowledgments. Parent and Merger Sub
acknowledge the Section 5.29 statement by Target and agree
therewith.
6.8 Financing. Merger Sub has supplied evidence
(including, without limitation, the bank commitment letter
attached hereto as Exhibit H) to Target of its ability to
obtain on the Effective Date, sufficient funds to permit the
payment of the aggregate Merger Consideration and the aggregate
Spread. As of the date of this Agreement, such bank commitment
letter is in full force and effect and has not been amended in
any material respect.
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ARTICLE 7
CONDUCT PRIOR TO THE EFFECTIVE TIME
7.1 Conduct of Business of Target. During the period
from the date of this Agreement and continuing until the earlier
of the termination of this Agreement or the Effective Time,
Target agrees (except to the extent expressly contemplated by
this Agreement or as consented to in writing by Merger Sub),
(i) to carry on its and its subsidiaries’ business in
the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, (ii) to pay and to cause its
subsidiaries to pay debts and Taxes when due subject to good
faith disputes over such debts or taxes, (iii) to pay or
perform and to cause its subsidiaries to pay or perform other
obligations when due, and (iv) to use all reasonable efforts
consistent with past practice and policies to preserve intact
its and its subsidiaries’ present business organizations,
use its best efforts consistent with past practice to keep
available the services of its and its subsidiaries’ present
officers and key employees and use its best efforts consistent
with past practice to preserve its and its subsidiaries’
relationships with customers, suppliers, distributors, licensors,
licensees, and others having business dealings with it or its
subsidiaries. Target agrees to promptly notify Merger Sub in
writing of any event or occurrence not in the ordinary course of
its or its subsidiaries’ business, and of any event which it
recognizes could have a Material Adverse Effect on Target.
Without limiting the foregoing, except as expressly contemplated
by this Agreement, Target shall not do, cause or permit any of
the following, or allow, cause or permit any of its subsidiaries
to do, cause or permit any of the following, without the prior
written consent of Merger Sub:
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(a) Charter Documents. Cause or permit any
amendments to its Articles of Incorporation or Bylaws or
equivalent organizational documents;
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(b) Issuance of Securities. Issue, deliver or sell
or authorize or propose the issuance, delivery or sale of, or
purchase or propose the purchase of, any shares of its capital
stock or securities convertible into, or subscriptions, rights,
warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such
shares or other convertible securities, other than the issuance
of shares of its Common Stock pursuant to the exercise of stock
options, outstanding on November 3, 1999 under the Target
Stock Option Plans.
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(c) Dividends; Changes in Capital Stock. Other than
with respect to cash dividends in amounts and at times not
greater or more frequently than within the last twelve
(12) months, declare or pay any dividends on or make any
other distributions (whether in cash, stock or property) in
respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or repurchase or
otherwise acquire, directly or indirectly, any shares of its
capital stock except from former employees, directors and
consultants in accordance with agreements identified in
Section 7.1(c) of the Target Disclosure Schedule providing
for the repurchase of shares in connection with any termination
of service to it or its subsidiaries;
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(d) Stock Option Plans, Etc. Accelerate, amend or
change the period for exercising or vesting of options or other
rights granted under the Target Stock Option Plans or authorize
cash payments in exchange for any options or other rights granted
under any of such plans;
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(e) Provisions of MBCA. Elect, pursuant to
Section 783 of the MBCA, to be covered by the provisions of
Section 780 of the MBCA or take any action which could cause
Target or the shares of Target Common Stock held by Merger Sub
or any direct or indirect wholly-owned subsidiary of Merger Sub
to be covered by the provisions of Section 790 et seq. of
the MBCA;
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(f) Dissenters’ Rights. Adopt any resolutions
of the Board of Directors which would prohibit or restrict
Target’s stockholders dissenters’ rights provided in
Section 4.6;
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(g) Dissolution. Adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Target or any of
its subsidiaries (other than the Merger); or
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(h) Subsidiaries. Alter through merger, liquidation,
reorganization, restructuring or any other fashion the corporate
structure of ownership of any subsidiary.
7.2 Restrictions on Conduct of Business of Target.
During the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the
Effective Time, except as expressly contemplated by this
Agreement or in the ordinary course of the conduct of its
business, banking or financial affairs, Target shall not do,
cause or permit any of the following, or allow, cause or permit
any of its subsidiaries to do, cause or permit any of the
following, without the prior written consent of Merger Sub:
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(a) Material Contracts. (i) Enter into any
contract or agreement other than in the ordinary course of
business consistent with past practice that would be material to
the Target and its subsidiaries, taken as a whole;
(ii) amend, modify or waive any right under any material
contract of the Target or any of its subsidiaries; or
(iii) modify its standard warranty terms for its products or
amend or modify any product warranties in effect as of the date
hereof in any material manner that is adverse to the Target or
any of its subsidiaries;
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(b) Intellectual Property. Transfer to any person or
entity any rights to its Intellectual Property;
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(c) Exclusive Rights. Enter into or amend any
agreements pursuant to which any other party is granted exclusive
marketing, distribution, manufacturing, supply, purchase or
other exclusive rights of any type or scope with respect to any
of its products or technology;
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(d) Dispositions. Sell, lease, license or otherwise
dispose of or encumber any of its properties or assets which are
material, individually or in the aggregate, to its and its
subsidiaries’ business, taken as a whole, other than
pursuant to commitments in place on the date hereof, or with
respect to capital expenditures permitted by paragraph (h)
below;
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(e) Indebtedness. (i) Incur or assume any
long-term or short-term debt or issue any debt securities except
for borrowings under existing lines of credit in the ordinary
course of business; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other
person except for obligations of subsidiaries of the Target
incurred in the ordinary course of business; (iii) make any
loans, advances or capital contributions to or investments in any
other person (other than to subsidiaries of the Target or
customary loans or advances to employees in each case in the
ordinary course of business consistent with past practice);
(iv) pledge or otherwise encumber shares of capital stock of
the Target or any of its subsidiaries; or (v) mortgage or
pledge any of its material assets, tangible or intangible, or
create or suffer to exist any material Lien thereupon;
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(f) Leases. Enter into any operating lease providing
for payments in excess of an aggregate of $50,000, other than
pursuant to commitments in place on the date hereof, or with
respect to capital expenditures permitted by paragraph (h)
below;
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(g) Payment of Obligations. Pay, discharge or
satisfy in an amount in excess of $50,000 in any one case or
$250,000 in the aggregate, any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or
otherwise) arising other than in the ordinary course of business,
other than the payment, discharge or satisfaction of liabilities
reflected or reserved against in the Target Financial Statements
(including obligations to its principal commercial lender) or
incurred as permitted hereunder, liabilities that may become due
under the earn-out provisions in the Stock Purchase Agreement
dated October 1, 1998 relating to the acquisition of the
French
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subsidiary of the Company and other than the expenses related to
this Agreement or any of the transactions contemplated hereby;
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(h) Capital Expenditures. Except for anticipated
capital expenditures set forth in Section 7.2(h) of the
Target Disclosure Schedule, authorize or make any new capital
expenditure or expenditures that individually is in excess of
$250,000 or in the aggregate are in the excess of $500,000;
provided that nothing in the foregoing shall limit any
capital expenditure (i) previously committed to be made and
previously disclosed to Merger Sub in writing or
(ii) required pursuant to existing contracts;
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(i) Insurance. Reduce the amount of, or cancel or
fail to renew, any insurance coverage provided by existing
insurance policies;
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(j) Employee Benefit Plans; New Hires; Pay Increases.
Except as may be required by law, (i) enter into, adopt
or amend or terminate any bonus, profit sharing, compensation,
severance, termination, stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent, stock
purchase agreement, pension, retirement, deferred compensation,
employment, health, life, or disability insurance, dependent
care, severance or other employee benefit plan agreement, trust,
fund or other arrangement for the benefit or welfare of any
director, officer or employee in any manner, (ii) except for
increases for employees other than officers of the Target, in
the ordinary course of business consistent with past practice,
and after having delivered five days prior notice thereof to
Merger Sub, increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit
not required by any plan and arrangement as in effect as of the
date hereof (including the granting of stock appreciation rights
or performance units), or (iii) hire or retain any new
officer or management level employee;
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(k) Severance Arrangements. Grant or make any
severance or termination pay (i) to any director or officer,
or (ii) to any other employee except payments made pursuant
to standard written agreements outstanding on the date hereof;
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(l) Acquisitions. Acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree
to acquire any assets, other than in the ordinary course of
business consistent with past practice;
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(m) Taxes. Settle or compromise any income tax
liability material to the Target and its subsidiaries taken as a
whole or make or change any material election in respect of
Taxes, change any accounting method in respect of Taxes, enter
into any closing agreement, or consent to any extension or waiver
of the limitation period applicable or with respect to any Tax
to any claim or assessment in respect of such Taxes;
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(n) Commencement of Certain Litigation. Commence a
lawsuit other than (i) for the routine collection of bills,
(ii) in such cases where the Target in good faith, after
consultation with Merger Sub prior to such commencement,
determines that failure to commence suit would have a Material
Adverse Effect on the Target, or (iii) for breach of this
Agreement.
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(o) Settlement of Certain Litigation. Settle or
compromise any pending or threatened suit, action or claim that
(i) relates to the transactions contemplated hereby or
(ii) the settlement or compromise of which would have a
Material Adverse Effect on the Target;
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(p) Revaluation. Revalue any of its assets,
including without limitation writing down the value of inventory
or writing off notes or accounts receivable other than as
required by Target’s regular certified public accountant or
generally acceptable accounting principles consistently applied,
or, except as may be required as a result of a change in law or
in generally accepted
24
accounting principles, change any of the accounting principles,
practices or methods used by the Target; and
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(q) No Inconsistent Agreements. Take or agree in
writing or otherwise to take any of the actions described in
Sections 7.2(a) through 7.2(p) or take any action that would
make any of the representations or warranties of the Target
contained in this Agreement untrue or incorrect.
7.3 Other Potential Acquirors.
(a) The Target, its subsidiaries and their respective
officers, directors, affiliates, employees, representatives
(including RJA and Target’s legal counsel and accountants)
and agents shall immediately cease any discussions or
negotiations with any parties with respect to any Third Party
Acquisition (as defined below). After the date of this Agreement,
neither the Target nor any of its subsidiaries shall, nor shall
the Target authorize or permit any of its or their respective
officers, directors, employees, representatives (including RJA
and Target’s legal counsel and accountants) or agents to,
directly or indirectly, encourage, solicit, participate in or
initiate discussions or negotiations with or provide any
non-public information to any person or group (other than the
Buyer Parties or any designees of the Buyer Parties) concerning
any Third Party Acquisition; provided, however, that this
Section 7.3(a) shall not prohibit responses to inquiries
that have not been encouraged, solicited, or initiated after the
date of this Agreement if such responses are consistent with the
restrictions set forth in this Section 7.3(a)); and
provided further that, if the Board of Directors of the
Target determines in good faith, after consultation with
Xxxxxxxxx Xxxxxx PLLC or another firm of outside legal counsel of
national reputation (including, without limitation, Warner,
Norcross & Xxxx LLP), that it is necessary to do so in
order to comply with its fiduciary duties to the Target’s
stockholders under applicable law, the Target, its subsidiaries
and their respective officers, directors, affiliates, employees,
representatives (including RJA and Target’s legal counsel
and accountants) and agents may, in response to a proposal or
offer for a Third Party Acquisition that was not solicited after
the date of this Agreement and is from a Third Party (as defined
below) that appears reasonably likely to be capable of
consummating a Superior Proposal (as determined in good faith by
the Board of Directors of Target after consultation with its
legal and financial advisers) and only for so long as the Board
of Directors of the Target so determines that its actions are
reasonably likely to lead to a Superior Proposal,
(i) furnish information with respect to the Target to any
such person pursuant to a customary confidentiality agreement so
long as any information so provided which has not previously been
provided by the Target to Merger Sub will be promptly delivered
to Merger Sub and (ii) participate in the discussions and
negotiations regarding such proposal or offer. The Target
promptly (and in any event within one business day after becoming
aware thereof) will (i) notify Merger Sub in the event the
Target or any of its subsidiaries and other affiliates or any of
their respective officers, directors, employees and agents
receives any proposal or inquiry concerning a Third Party
Acquisition, including the material terms and conditions thereof,
and any request for confidential information in connection with
a potential Third Party Acquisition, (ii) provide a copy of
any written agreements, proposals or other materials the Target
receives from any such person or group (or its representatives),
and (iii) advise Merger Sub of the status, at any time upon
Merger Sub’s request, and from time to time promptly
following any material developments concerning the same. The
Target shall promptly notify the Merger Sub in the event it
receives any proposal or inquiry concerning a Third Party
Acquisition, including the terms and conditions thereof and the
identity of the party submitting such proposal or inquiry, and
shall advise Merger Sub from time to time of the status and any
material developments concerning the same, including the nature
and content of any “due diligence” inquiries made by it
concerning any such proposal or inquiry and furnishing copies of
any such written proposals or inquiries.
(b) Except as set forth in this Section 7.3(b), the
Board of Directors of Target shall not withdraw its approval or
recommendation of the transactions contemplated hereby or approve
or recommend, or cause the Target to enter into any agreement
with respect to, any Third Party Acquisition.
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Notwithstanding the foregoing, if the Board of Directors of
Target by a majority vote determines in its good faith judgment,
after consultation with and based upon the advice of Xxxxxxxxx
Xxxxxx PLLC or another firm of outside legal counsel of national
reputation (including, without limitation, Warner, Norcross &
Xxxx LLP), that it is necessary to do so in order to comply with
its fiduciary duties, the Board of Directors of Target may
withdraw its approval or recommendation of the transactions
contemplated hereby or approve or recommend a Superior Proposal
(as defined in Section 7.3 (c) below), but in each case
only (i) after providing written notice to Merger Sub (a
“Notice of Superior Proposal”) advising Merger Sub that
the Board of Directors of Target has received a Superior
Proposal specifying the material terms and conditions of such
Superior Proposal and identifying the person making such Superior
Proposal and (ii) if Merger Sub does not, within five
(5) business days of Merger Sub’s receipt of the Notice
of Superior Proposal, make an offer that the Board of Directors
of Target by a majority vote determines in its good faith
judgment (after consultation with its legal and financial
advisers) to be at least as favorable to the Target’s
stockholders as such Superior Proposal; provided, however,
that the Target shall not be entitled to withdraw its approval
of the transactions contemplated hereby or enter into any
agreement with respect to a Superior Proposal unless and until
this Agreement has been terminated in accordance with its terms
pursuant to Section 10.1(d)(i) and the Target has paid all
amounts due to Merger Sub pursuant to Section 10.3. Any
disclosure that Target may make with respect to the receipt of a
proposal for a Third Party Acquisition or otherwise, based on a
good faith belief by the Board of Directors of Target (after
consultation with its legal and financial advisers) that such
disclosure is necessary in order to comply with its fiduciary
duties or Rule 14a-9, 14d-9 or 14e-2, will not constitute a
violation of this Agreement; provided, however, that such
disclosure states that no action will be taken by the Board of
Directors of Target in violation of this Section 7.3(b).
(c) For the purposes of this Agreement, “Third Party
Acquisition” means the occurrence of any of the following
events after the date of this Agreement: (i) the acquisition
of the Target by merger or otherwise by any person (which
includes a “person” as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Merger Sub
or any affiliate thereof (a “Third Party”),
(ii) the acquisition by a Third Party of any material
portion of the assets of the Target and its subsidiaries taken as
a whole, other than the sale of its products in the ordinary
course of business consistent with past practices; (iii) the
acquisition by a Third Party of beneficial ownership of twenty
percent (20%) or more of the outstanding shares of Target Common
Stock; (iv) the adoption by the Target of a plan of
liquidation or the declaration or payment of an extraordinary
dividend; (v) the repurchase by the Target or any of its
subsidiaries of more than ten percent (10%) of the outstanding
shares or Target Common Stock; or (vi) the acquisition by
the Target or any of its subsidiaries by merger, purchase of
stock or assets, joint venture or otherwise of a direct or
indirect ownership interest or investment in any business whose
annual revenues, net income or assets are equal or greater than
ten percent (10%) of the annual revenues, net income or assets of
the Target. For purposes of this Agreement, a “Superior
Proposal” means any bona fide proposal (1) to acquire
directly or indirectly all of the shares of Target Common Stock
then outstanding (other than any shares held by the Principal
Stockholder that may be retained or may be exchanged or converted
into securities of the acquiring or surviving person) or all or
substantially all of the assets of the Target, (2) that is
financially superior to the Merger, for which the Third Party has
demonstrated that the necessary funds are reasonably likely to
be available and that is subject to no conditions other than
conditions that are not more favorable to the Third Party than
the conditions to the obligations of the Buyer Parties included
in this Agreement, unless such other conditions do not raise a
material risk that the transaction will not be completed (in each
case set forth in this clause (2) of Section 7.3(c) as
determined in good faith by the Board of Directors of Target
after consultation with its legal and financial advisers) and
(3) that does not in any event contain any due diligence
condition or a “right of first refusal” or “right
of first offer” with respect to any counter-proposal that
Merger Sub might make.
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7.4 Conduct of Parent and Merger Sub. During the
period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective
Time, none of Parent, Merger Sub or any of their officers or
directors will, directly or indirectly, through one or more
intermediaries engage in, or encourage or participate with
another person in any other manner in buying, selling or any
securities transaction impacting the market price of the Target
Common Stock other than in accordance with the terms of this
Agreement. Merger Sub will not permit any change in its
authorized capital stock between the date of this Agreement and
the Effective Time and during such period Merger Sub will not
issue any capital stock or any options or rights to acquire any
capital stock of Merger Sub to any person other than Parent.
Parent will not permit any change in its authorized capital stock
between the date of this Agreement and the Effective Time and
shall cause an aggregate amount of at least $75,000,000 in cash
to be contributed to Parent for its equity securities (including
equity securities issued before the date of this Agreement but
excluding equity securities issuable under Section 4.2(c)),
at least half of which shall be contributed for Parent Preferred
Stock. No person investing in such equity securities on or prior
to the Effective Time will be permitted to purchase Parent Common
Stock for an aggregate price constituting more than 50% of the
total investment made by such person. All shares of Parent Common
Stock and Parent Preferred Stock issued on or prior to the
Effective Time will be issued at a price of not less than $10 per
share (in the case of Parent Common Stock) and not less than
$100 per share (in the case of Parent Preferred Stock). All
options or rights to acquire Parent Common Stock or Parent
Preferred Stock issued on or prior to the Effective Time will be
issued at an exercise price (including any consideration paid for
such option or rights) of not less than $10 per share (in the
case of Parent Common Stock) and not less than $100 per share (in
the case of Parent Preferred Stock), except as may be provided
in agreements with option holders contemplated by the last
sentence of Section 4.2(d). All shares of Parent Common
Stock and Parent Preferred Stock issuable to the Principal
Stockholder under Section 4.2(c), at the time of issuance,
will be duly authorized, validly issued, fully paid and
non-assessable, will not be issued in violation of any preemptive
rights, will be free of any Liens or encumbrances other than any
Liens or encumbrances created by or imposed upon the holder
thereof, and will not be subject to preemptive rights or rights
of first refusal created by statute, the Certificate of
Incorporation, as amended, or Bylaws, as amended, of Parent or
any agreement to which Parent is a party or by which it is bound
(other than the Parent Securityholders Agreement).
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Special Stockholders’ Meeting. Target
shall, in accordance with applicable law and the Target’s
Articles of Incorporation and Bylaws, (i) duly call, give
notice of, convene and hold a special meeting of its stockholders
as soon as practicable for the purpose of considering and taking
action on this Agreement and the transactions contemplated
hereby (the “Special Stockholders’ Meeting”) and
(ii) subject to the provisions of this Agreement and the
fiduciary duty of the Board of Directors of Target,
(A) include in the Proxy Statement the recommendation of the
Board and the Special Committee that the stockholders of the
Target approve and adopt this Agreement and the transactions
contemplated hereby, including, without limitation, the Merger
and (B) use its all reasonable efforts to obtain such
approval and adoption. At the Special Stockholders’ Meeting,
Merger Sub shall cause all Target Common Stock then owned by it
to be voted in favor of the approval and adoption of this
Agreement and the transactions contemplated hereby, including,
without limitation, the Merger.
8.2 Proxy Statement. In connection with the Special
Stockholders’ Meeting, the Target will as promptly as
practicable after the date hereof prepare and file the Proxy
Statement with the SEC under the Exchange Act, and shall use all
reasonable efforts to have the Proxy Statement cleared by the SEC
as promptly as practicable. Merger Sub and the Target shall
cooperate with each other in the
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preparation of the Proxy Statement, and the Target shall notify
Merger Sub promptly of the receipt of any comments of the SEC
with respect to the Proxy Statement and of any requests by the
SEC for any amendment or supplement thereto or for additional
information and shall provide to Merger Sub promptly copies of
all correspondence between the Target or any representative of
the Target and the SEC. The Target shall give Merger Sub and its
counsel the opportunity to review the Proxy Statement prior to
its being filed with the SEC and shall give Merger Sub and its
counsel the opportunity to review all amendments and supplements
to the Proxy Statement and all responses to requests for
additional information and replies to comments prior to their
being filed with, or sent to, the SEC. Each of the Target and
Merger Sub agrees to use all reasonable 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 Target Common Stock
entitled to vote at the Special Stockholders’ Meeting at the
earliest practicable time. Subject to the provisions of this
Agreement and the fiduciary duty of the Board of Directors of
Target, Target shall take all other action necessary or, in the
reasonable opinion of Merger Sub, advisable to provide a
reasonable opportunity for any vote of stockholders required by
the MBCA to effect the Merger and will otherwise comply with all
legal requirements applicable to such Special Stockholders’
Meeting.
8.3 Access to Information.
(a) Target shall afford Merger Sub and its accountants,
counsel and other representatives, reasonable access during
normal business hours during the period prior to the Effective
Time to (i) all of Target’s and its subsidiaries’
officers, directors, employees, counsel and accountants and
properties, books, contracts, commitments and records, and
(ii) all other information concerning the business,
properties and personnel of Target and its subsidiaries as Merger
Sub may reasonably request. In connection with such access,
Merger Sub will cooperate with Target to avoid unreasonable
interference with the normal duties of Target’s and its
subsidiaries’ officers and directors or the normal
operations of the business of Target and its subsidiaries.
Between the date hereof and the Effective Time, the Target shall
furnish to Merger Sub (1) within two business days following
preparation thereof (and in any event within 40 days after
the end of each calendar month, commencing with
September 1999), an unaudited balance sheet as of the end of
such month and the related statements of earnings,
stockholders’ equity (deficit) and cash flows, and
(2) within two business days following preparation thereof
(and in any event within 40 days after the end of each
fiscal quarter) an unaudited balance sheet as of the end of such
quarter and the related statements of earnings,
stockholders’ equity (deficit) and cash flows for the
quarter then ended, all of such financial statements referred to
in clauses (1) and (2) to prepared in accordance with
generally accepted accounting principles in conformity with the
practices consistently applied by the Target with respect to such
financial statements. All the foregoing shall be in accordance
with the books and records of the Target and shall fairly present
its financial position (taking into account the differences
between the monthly, quarterly and annual financial statements
prepared by the Target in conformity with its past practices) as
of the last day of the period then ended.
(b) Subject to compliance with applicable law, from the
date hereof until the Effective Time, Target shall confer on a
regular and frequent basis with one or more representatives of
Merger Sub to report operational matters of materiality and the
general status of ongoing operations.
8.4 Public Disclosure. Unless otherwise permitted by
this Agreement, Merger Sub and Target shall consult with each
other before issuing any press release or otherwise making any
public statement or making any other public (or non-confidential)
disclosure (whether or not in response to an inquiry) regarding
the terms of this Agreement and the transactions contemplated
hereby, and neither shall issue any such press release or make
any such statement or disclosure without the prior approval of
the other (which approval shall not be unreasonably withheld),
except as the party issuing the disclosure reasonably believes to
be necessary to comply with law or with obligations pursuant to
any listing agreement with the NASD.
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8.5 Consents; Cooperation.
(a) Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use all reasonable efforts
to take or cause to be taken all action and to do or cause to be
done all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including using
all reasonable efforts to do the following, (i) cooperate in
the preparation and filing of any filings that may be required
under the HSR Act and any filings under similar merger
notification laws or regulations of foreign Governmental
Entities; (ii) obtain consents of all third parties
(including, without limitation, the consents of third parties
under the items identified on Schedule 5.3 of the Target
Disclosure Schedule) and Governmental Entities necessary, proper
or advisable for the consummation of the transactions
contemplated by this Agreement; (iii) contest any legal
proceeding relating to the Merger or the transactions
contemplated by this Agreement; and (iv) execute any
additional instruments necessary to consummate the transactions
contemplated hereby. If at any time after the Effective Time any
further action is necessary to carry out the purposes of this
Agreement the proper officers and directors of each party hereto
shall take all such necessary action. The parties hereto will
consult and cooperate with one another, and consider in good
faith the views of one another, in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments,
opinions and proposals made or submitted by or on behalf of any
party hereto in connection with proceedings under or relating to
HSR or any other Federal, State or foreign antitrust or fair
trade law.
(b) Each of Merger Sub and Target shall use all reasonable
efforts to resolve such objections, if any, as may be asserted by
any Governmental Entity with respect to the transactions
contemplated by this Agreement under the HSR, the Xxxxxxx Act, as
amended, the Xxxxxxx Act, as amended, the Federal Trade
Commission Act, as amended, and any other Federal, state or
foreign statutes, rules, regulations, orders and decrees that are
designed to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade
(collectively, “Antitrust Laws”). In connection
therewith, if any administrative or judicial action or proceeding
is instituted (or threatened to be instituted) challenging any
transaction contemplated by this Agreement as violative of any
Antitrust Law, each of Merger Sub and Target shall cooperate and
use all reasonable efforts vigorously to contest and resist any
such action or proceeding and to have vacated, lifted, reversed,
or overturned any decree, judgment, injunction or other order,
whether temporary, preliminary or permanent (each an
“Order”), that is in effect and that prohibits,
prevents, or restricts consummation of the Merger or any such
other transactions, unless either of Merger Sub and Target decide
that litigation is not in their respective best interests. Each
of Merger Sub and Target shall use all reasonable efforts short
of litigation to take such action as may be required to cause the
expiration of the notice periods under the HSR or other
Antitrust Laws with respect to such transactions as promptly as
possible after the execution of this Agreement.
(c) Notwithstanding anything to the contrary in
Section 8.5(a) or (b), (i) without the consent of
Merger Sub, neither Merger Sub nor any of its subsidiaries shall
be required to divest any of their respective businesses, product
lines or assets, or to take or agree to take any other action or
agree to any limitation that could reasonably be expected to
have a Material Adverse Effect on Merger Sub or on the Surviving
Corporation after the Effective Time and (ii) without the
consent of Merger Sub and Target, neither Target nor its
subsidiaries shall be required to (A) divest prior to or
after the Effective Time any of their respective businesses,
product lines or assets, or to (B) take or agree to take any
other action or agree to any limitation that would take effect
prior to or after the Effective Time and that could reasonably be
expected to have a Material Adverse Effect on Target.
8.6 Legal Requirements. Subject to
Section 8.5(c), each of Merger Sub and Target will, and will
cause their respective subsidiaries to, take all reasonable
actions necessary to comply promptly with all legal requirements
which may be imposed on them with respect to the consummation of
the transactions contemplated by this Agreement and will promptly
cooperate with and furnish information
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to any party hereto necessary in connection with any such
requirements imposed upon such other party in connection with the
consummation of the transactions contemplated by this Agreement
and will take all reasonable actions necessary to obtain (and
will cooperate with the other parties hereto in obtaining) any
consent, approval, order or authorization of, or any
registration, declaration or filing with, any Governmental Entity
or other person, required to be obtained or made in connection
with the taking of any action contemplated by this Agreement.
8.7 Indemnification.
(a) After the Effective Time, Merger Sub will, and will
cause the Target to, indemnify and hold harmless the present and
former officers, directors, employees, fiduciaries and agents of
Target and its subsidiaries (the “Indemnified Parties”)
in respect of acts or omissions occurring on or prior to the
Effective Time to the extent provided under Target’s
Articles of Incorporation and Bylaws and individual
indemnification agreements, in each case in effect on the date
hereof; provided that such indemnification shall be subject to
any limitation imposed from time to time under applicable law.
Without limitation of the foregoing, in the event any such
Indemnified Party is or becomes involved in any capacity in any
action, proceeding or investigation in connection with any matter
relating to this Agreement or the transactions contemplated
hereby occurring on or prior to the Effective Time or the
Principal Stockholder (or any Related Stockholders (as defined in
Section 11.10)) becomes involved in an action, proceeding or
investigation alleging breach of duty as a stockholder of Target
as a result of actions taken pursuant to or in connection
herewith, Merger Sub shall cause the Surviving Corporation to pay
as incurred the reasonable legal and other costs and expenses
(including the cost of any investigation and preparation but not
including fees and expenses of more than one firm of attorneys
except to the extent that conflict issues require the
participation of more than one firm) incurred in connection
therewith, subject to any limitation imposed from time to time
under applicable law with respect to officers, directors,
employee or agent indemnification and will also pay any liability
or award against the Principal Stockholder (or any Related
Stockholders) in any and all such actions.
(b) For six (6) years after the Effective Time, Merger
Sub will cause the Surviving Corporation to use its best efforts
to provide officers’ and directors’ liability
insurance in respect of acts or omissions occurring on or prior
to the Effective Time covering each such person (collectively
“Intended Beneficiaries”) currently covered by
Target’s officers’ and directors’ liability
insurance policy on terms substantially similar to those of such
policy in effect on the date hereof for as long as permitted by
applicable law; provided that in satisfying its obligation under
this Section, Merger Sub shall not be obligated to cause the
Surviving Corporation to pay annual premiums in excess of 150% of
the amount per annum which Target paid in its last full fiscal
year, which amount has been disclosed to Merger Sub, and if the
Surviving Corporation is unable to obtain the insurance required
by this Section, it shall obtain as much comparable insurance as
possible for an annual premium equal to such maximum amount. In
lieu of maintaining such existing insurance as provided above,
Merger Sub may cause coverage to be provided under any policy
maintained for the benefit of Merger Sub or any of its
subsidiaries, so long as the terms are not materially less
advantageous to the Intended Beneficiaries (together with any
other beneficiaries covered thereby, taken as a group) than such
existing insurance.
(c) The provisions of this Section 8.7 are intended to
be for the benefit of, and shall be enforceable by each
Indemnified Party, the Principal Stockholder, the Related
Stockholders, and its or his or her heirs and representatives.
8.8 Reasonable Efforts and Further Assurances.
Subject to actions taken strictly in compliance with the
provisions of Section 7.3, each of the parties to this
Agreement shall use its reasonable efforts to effectuate the
transactions contemplated hereby. Each party hereto, at the
reasonable request of another party hereto, shall execute and
deliver such other instruments and do and perform such other acts
and things as may be necessary or desirable for effecting
completely the consummation of this Agreement and the
transactions contemplated hereby.
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8.9 Notification of Certain Matters. The Target
shall give prompt notice to Merger Sub and Merger Sub shall give
prompt notice to the Target, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of
which has caused or would be likely to cause any representation
or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective
Time, (ii) any commencement or written threat of
commencement of any private or governmental action, suit,
proceeding, claim, arbitration or proceeding that becomes known
to the Target or Merger Sub, as the case may be, and which seeks
any of the relief referred to in Section 9.1(b),
Section 9.2(e) or clauses (i) through (iv) of
Section 9.3(e), and (iii) any material failure of the
Target or Merger Sub, as the case may be, to comply with or
satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant
to this Section 8.9 shall not cure such breach or
non-compliance or limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
8.10 Additions to and Modification of Target Disclosure
Schedule. Concurrent with the execution and delivery of this
Agreement, the Target has delivered a Target Disclosure Schedule
that includes all of the information required by the relevant
provisions of this Agreement. In addition, the Target shall
deliver to Merger Sub such additions to or modifications of any
Sections of the Target Disclosure Schedule necessary to make the
information set forth therein true, accurate and complete in all
material respects as soon as practicable after such information
is available to the Target after the date of execution and
delivery of this Agreement until the Effective Date; provided,
however, that such subsequent disclosure shall not be deemed
to constitute an exception to its representations and warranties
under Article 5, nor limit the rights and remedies of
Merger Sub under this Agreement for any breach by the Target of
such representation and warranties.
8.11 Regulatory Notices. Target shall give all
notices and other information required to be given to the
employees of Target, any collective bargaining unit representing
any group of employees of Target, and any applicable government
authority under the WARN Act, the National Labor Relations Act,
the Code, the Consolidated Omnibus Budget Reconciliation Act and
other applicable law in connection with the transactions provided
for in this Agreement.
ARTICLE 9
CONDITIONS TO THE MERGER
9.1 Conditions to Obligations of Each Party to Effect
the Merger. The respective obligations of each party to this
Agreement to consummate the Merger shall be subject to the
satisfaction at or prior to the Effective Time of each of the
following conditions, any of which may be waived, in writing, by
agreement of all the parties hereto.
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(a) Target Stockholder Approval. This Agreement and
the Merger shall have been approved and adopted by the holders of
not less than eighty and one-tenth percent (80.1%) of the shares
of Target Common Stock outstanding as of the record date set for
the Special Stockholders’ Meeting.
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(b) No Injunctions or Restraints; Illegality. No
temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or
other legal or regulatory restraint or prohibition preventing the
consummation of the Merger, nor any proceeding brought by an
administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of
the foregoing, shall be pending; nor shall there be any action
taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Merger, which makes
the consummation of the Merger illegal. In the event an
injunction or other order shall have been issued, each party
agrees to use its reasonable diligent efforts to have such
injunction or other order lifted.
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(c) Governmental Approval. The Buyer Parties and
Target and their respective subsidiaries shall have timely
obtained from each Governmental Entity all approvals, waivers and
consents, if any, necessary for consummation of or in connection
with the Merger and the several transactions contemplated
hereby, including such approvals, waivers and consents as may be
required under HSR.
9.2 Additional Conditions to Obligations of Target.
The obligations of Target to consummate the Merger shall be
subject to the satisfaction at or prior to the Effective Time of
each of the following conditions, any of which may be waived, in
writing, by Target:
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(a) Representations, Warranties and Covenants.
(i) The representations and warranties of the Buyer Parties
in this Agreement shall be true and correct in all material
respects (except for such representations and warranties that are
qualified by their terms by a reference to materiality or
Material Adverse Effect which representations and warranties as
so qualified shall be true in all respects) on and as of the
Effective Time as though such representations and warranties were
made on and as of such time and (ii) the Buyer Parties
shall have performed and complied in all material respects with
all covenants, obligations and conditions of this Agreement
required to be performed and complied with by them through or as
of the Effective Time; provided that clause (i) of this
Section 9.2(a) shall be limited to the extent that
representations and warranties set forth in this Agreement that
address matters only as of a particular date shall be true and
correct in all material respects only as of such specified date.
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(b) Certificate of Merger Sub. Target shall have
been provided with a certificate executed on behalf of Parent and
Merger Sub by their respective President and Chief Financial
Officer to the effect that, as of the Effective Time:
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(i) all representations and warranties made by the Buyer
Parties under this Agreement are true and complete in all
material respects; and
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(ii) all covenants, obligations and conditions of this
Agreement to be performed by the Buyer Parties on or before such
date have been so performed in all material respects.
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(c) Legal Opinion. Target shall have received a
legal opinion from Xxxxxx, Xxxx & Xxxxxxxx, LLP, counsel to
the Buyer Parties, in form and substance reasonably satisfactory
to Target.
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(d) Other Certificates. Target shall have received
such other certificates and documents (customary in similar
transactions) relating to the satisfaction of the conditions to
the obligations of Target as Target or its counsel reasonably
request.
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(e) Injunctions or Restraints on Conduct of Business.
No injunction or other order, decree, judgment or ruling
issued by a Governmental Entity of competent jurisdiction or a
statute, rule, regulation, executive order or other action shall
have been enacted, promulgated or taken by a Governmental Entity
of competent jurisdiction which in any such case restrains or
prohibits the consummation of the Merger or the performance of
the other transactions contemplated by this Agreement or the
Stockholder Agreements.
9.3 Additional Conditions to the Obligations of the
Buyer Parties. The obligations of the Buyer Parties to
consummate the Merger shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions,
any of which may be waived, in writing, by the Buyer Parties:
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(a) Representations, Warranties and Covenants.
(i) The representations and warranties of Target set forth
in Section 5.1, 5.2, 5.3, 5.4, 5.6, 5.20, 5.21, 5.22, 5.23,
5.24, 5.25, 5.26 and 5.31 of this Agreement shall be true and
correct in all material respects (except for such representations
and warranties that are qualified by their terms by a reference
to materiality or Material Adverse Effect, which representations
and warranties as so qualified shall be true in all respects) on
and as
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of the Effective Time as though such representations and
warranties were made on and as of such time, (ii) the
representations and warranties of Target set forth in this
Agreement other than those described in clause (i) of this
Section 9.3(a) shall be true and correct (without giving
effect to any materiality or Material Adverse Effect limitations
contained therein) except for any breach or breaches that
individually or in the aggregate do not and would not reasonably
be likely to result in a Material Adverse Effect and
(iii) Target shall have performed and complied in all
material respects with all covenants, obligations and conditions
of this Agreement required to be performed and complied with by
it through or as of the Effective Time; provided that
clauses (i) and (ii) of this Section 9.3(a) shall be
limited to the extent that representations and warranties set
forth in this Agreement that address matters only as of a
particular date shall be true and correct in all material
respects only as of such specified date.
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(b) Certificate of Target. Merger Sub shall have
been provided with a certificate executed on behalf of Target by
its Chairman and Chief Financial Officer to the effect that, as
of the Effective Time:
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(i) all representations and warranties made by Target under
this Agreement are true and complete in all material respects;
and
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(ii) all covenants, obligations and conditions of this
Agreement to be performed by Target on or before such date have
been so performed in all material respects.
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(c) Legal Opinion. Merger Sub shall have received a
legal opinion from Xxxxxxxxx Xxxxxx PLLC, legal counsel to
Target, in form and substance reasonably satisfactory to Merger
Sub.
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(d) Governmental and Third Party Consents. All
required governmental approvals for the transactions contemplated
by this Agreement shall have been obtained without the
imposition of any conditions that are or would become applicable
to the Surviving Corporation or any of its subsidiaries or any of
their respective affiliates after the Effective Time that the
Merger Sub in good faith determines would be reasonably likely to
have a Material Adverse Effect upon the Surviving Corporation
and its subsidiaries, taken as a whole, or any of their
affiliates or their respective businesses substantially as such
businesses have been conducted prior to the date hereof. All such
required governmental approvals shall be in effect, all
applicable waiting periods with respect to such required
governmental approvals shall have expired; and all conditions and
requirements prescribed by applicable law (except for filing of
the Merger Certificate) or by such required governmental
approvals to be satisfied at or prior to the Effective Time shall
have been satisfied. All consents from parties other than Target
and its subsidiaries to any indenture, contract, agreement or
other instrument listed on Schedule 9.3(d) that are required
in order to assign or to avoid a breach of or default under such
indenture, contract, agreement or other instrument as a result
of the execution and delivery by Target of this Agreement or
consummation of the transactions contemplated by this Agreement
(collectively, the “Required Contractual Consents”)
shall have been obtained without the imposition of any conditions
that are or would become applicable to the Surviving Corporation
or any of its subsidiaries or any of their respective affiliates
after the Effective Time that the Merger Sub in good faith
determines would be reasonably likely to have a Material Adverse
Effect upon the Surviving Corporation and its subsidiaries, taken
as a whole. All such Required Contractual Consents shall be in
effect and all conditions and requirements prescribed by any
Required Contractual Consent to be satisfied on or prior to the
Effective Time shall have been satisfied.
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(e) Injunctions or Restraints on Conduct of Business.
No injunction or other order, decree, judgment or ruling
issued by a Governmental Entity of competent jurisdiction or a
statute, rule, regulation, executive order or other action shall
have been enacted, promulgated or taken by a Governmental Entity
of competent jurisdiction which in any such case
(i) restrains or prohibits the
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consummation of the Merger or the performance of the other
transactions contemplated by this Agreement or the Stockholder
Agreements, (ii) prohibits or restricts the ownership or
operation by Merger Sub (or any of its affiliates or
subsidiaries) to dispose of or hold separate any portion of its
or the Target’s business or assets which is material to the
business of all such entities taken as a whole,
(iii) imposes any material limitations on the ability of
Merger Sub or any of its affiliates or subsidiaries effectively
to control in any material respect the business and operations of
the Target and its subsidiaries or (iv) results in, or if
the Merger is consummated would reasonably be likely to result
in, the imposition of damages, or the payment of costs, expenses
or fees, of an aggregate of $500,000 or more by or against
Target, Merger Sub or Surviving Corporation.
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(f) Litigation. There shall not have been instituted
and pending any action or proceeding that in the reasonable
judgment of Merger Sub could reasonably be expected to result in
any of the consequences referred to in clauses (i) through
(iv) of paragraph (e) above.
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(g) No Material Adverse Effect. There shall not have
occurred any Material Adverse Effect on Target.
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(h) Resignations. Merger Sub shall have received
letters of resignation, effective as of the Effective Time,
executed and tendered by each of the then incumbent directors of
Target and each of Target’s subsidiaries.
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(i) Dissenter’s Rights. The aggregate number of
shares of the Target Common Stock at the Effective Time of the
Merger, the holders of which have perfected dissenters’
rights in accordance with the provisions of the MBCA, shall not
equal five percent (5%) or more of the shares of Target Common
Stock outstanding as of the record date for the Special
Stockholders’ Meeting.
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(j) Stockholder Agreements. The Stockholder
Agreements shall be in full force and effect and the Principal
Stockholder shall have tendered the Contribution Shares for
contribution as contemplated by Section 4.2(c).
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(k) Employment Agreement. The Principal Stockholder
shall have executed and delivered to Merger Sub an employment
agreement substantially in the form of Exhibit E attached
hereto.
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(l) Noncompetition Agreement. The Principal
Stockholder shall have executed and delivered to Merger Sub a
noncompetition agreement substantially in the form of
Exhibit F attached hereto.
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(m) Securityholders Agreement. The Principal
Stockholder shall have executed and delivered to Surviving
Corporation a securityholders agreement substantially in the form
of Exhibit G attached hereto (the “Parent
Securityholders Agreement”).
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(n) Ninety Percent Approval. This Agreement and the
Merger shall have been approved and adopted by the holders of not
less than ninety percent (90%) of the shares of Target Common
Stock outstanding as of the record date set for the Special
Stockholders’ Meeting.
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(o) Other Certificates. The Buyer Parties shall have
received such other certificates and documents (customary in
similar transactions) relating to the satisfaction of the
conditions to the obligations of the Buyer Parties as the Buyer
Parties or their counsel reasonably request.
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ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. At any time prior to the Effective
Time, whether before or after approval of the matters presented
in connection with the Merger by the stockholders of Target and
Merger Sub, this Agreement may be terminated:
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(a) by mutual written consent of the Buyer Parties and
Target;
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(b) by either the Buyer Parties or Target, if, without
fault of the terminating party, the Effective Time shall not have
occurred on or before February 28, 2000 (the
“Termination Date”), or such later date as may be
agreed upon in writing by the parties hereto; provided
that no party may terminate this Agreement pursuant to this
clause (b) if such party’s failure to fulfill any of
its obligations under this Agreement shall have been the reason
that the Effective Time shall not have occurred on or before said
date; provided further, that if the condition set forth
in Section 9.1(a) is satisfied after the Board of Directors
of Target shall have withdrawn, or modified or changed in a
manner adverse to Merger Sub, its approval or recommendation of
this Agreement or the Merger, then the Buyer Parties may extend
the Termination Date for up to 30 days by notice given prior
to the Termination Date; and provided further, that if a
Material Adverse Effect shall have occurred that is a result of
general changes in the economy or the industry in which Target
and its subsidiaries operate, then either Target or the Buyer
Parties may extend the Termination Date for up to 30 days
(but in no event beyond February 28, 2000 unless otherwise
agreed upon in writing by the parties hereto) by notice given to
the other parties hereto prior to the Termination Date;
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(c) by the Buyer Parties;
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(i) if, prior to the Effective Time, any of the following
shall have occurred: (a) the Target shall have materially
breached its obligations set forth in Section 7.3; or
(b) the Board of Directors of Target shall have recommended
to the Target’s stockholders a Superior Proposal; or
(c) the Board shall have withdrawn, or modified or changed
in a manner adverse to Merger Sub, its approval of the Merger; or
(d) the Board of Directors of Target shall have approved a
Third Party Acquisition; or (e) there shall have occurred a
Third Party Acquisition; or (f) the condition set forth in
Section 9.3(n) is not satisfied after the Board of Directors
of Target shall have withdrawn, or modified or changed in a
manner adverse to Merger Sub, its recommendation of this
Agreement or the Merger;
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(ii) if, prior to the Effective Time, there shall occur an
event, condition or circumstance that would result in the failure
to satisfy any of the conditions set forth in Section 9.3
hereof; provided that, if such event, condition or
circumstance is a failure to satisfy the condition set forth in
Section 9.3(g) that is a result of general changes in the
economy or the industry in which Target and its Subsidiaries
operate, then termination based on such failure of condition
shall not occur prior to the Termination Date as it may be
extended pursuant to Section 10.1(b); or
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(iii) if Target shall have breached or failed to perform
any of its covenants or other agreements contained in this
Agreement (other than Section 7.3) in any material respect
(except for such covenants or other agreements as are qualified
by their terms by a reference to materiality or Material Adverse
Effect, which covenants and other agreements so qualified shall
not be breached in any respect), which breach or failure to
perform is incapable of being cured or has not been cured by the
earliest of (y) ten business days following written notice
thereof to the Target from Merger Sub and (z) the scheduled
termination of this Agreement; or
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(iv) if (A) Target shall have breached (1) any of
its representations and warranties set forth in
Section 5.1, 5.2, 5.3, 5.4, 5.6, 5.20, 5.21, 5.22, 5.23,
5.24, 5.25, 5.26 or 5.31 of this Agreement in any material
respect (except for such representations or warranties as are
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qualified by their terms by a reference to materiality or
Material Adverse Effect, which representations and warranties so
qualified shall not be breached in any respect) or (2) any
of its representations and warranties set forth in this Agreement
other than those described in clause (1) of this
Section 10.1(c)(iv)(A) (without giving effect to any
materiality or Material Adverse Effect limitations contained in
such representations and warranties) but not if such breach or
breaches individually or in the aggregate do not and would not
result in a Material Adverse Effect, and (B) any such breach
described in clauses (A)(1) or (A)(2) of this
Section 10.1(c)(iv) is incapable of being cured or has not
been cured by the earlier of (y) ten business days following
written notice thereof to Target from Merger Sub and
(z) the scheduled termination of this Agreement;
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provided that Merger Sub may not terminate this Agreement
pursuant to clause (ii), (iii) or (iv) of this
Section 10.1(c) if the Merger Sub is then in material breach
of this Agreement.
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(d) by the Target:
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(i) if the Target has approved a Superior Proposal in
accordance with Section 7.3(b), provided the Target has
complied with all provisions thereof, including the notice
provisions therein, and that it makes simultaneous payment of the
Buyer Parties Expenses due under Section 10.3(b) and the
Termination Fee due under Section 10.4(a)(as defined below);
or
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(ii) If the Buyer Parties shall have breached any of its
representations, warranties, covenants or other agreements
contained in this Agreement in any material respect (except for
such representations, warranties, covenants or other agreements
as are qualified by their terms by a reference to materiality or
Material Adverse Effect, which representations, warranties,
covenants and other agreements so qualified shall not be breached
in any respect) which breach or failure to perform is incapable
of being cured or has not been cured by the earlier of
(y) ten business days following written notice thereof to
Merger Sub from Target and (z) the scheduled termination of
this Agreement; provided that the Target may not terminate this
Agreement pursuant to this Section 10.1(d) if the Target is
then in material breach of this Agreement.
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(e) by either the Buyer Parties or Target if any permanent
injunction or other order of a court or other competent authority
preventing the consummation of the Merger shall have become
final and nonappealable.
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(f) by either the Buyer Parties or Target if the condition
set forth in Section 9.1(a) shall fail to be satisfied at a
duly held stockholders’ meeting of Target, including any
adjournments thereof.
10.2 Effect of Termination. In the event of
termination of this Agreement as provided in Section 10.1,
this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of the Buyer Parties or
Target or their respective officers, directors, stockholders or
affiliates, except as provided in Section 10.3 (Expenses),
Section 10.4 (Termination Fees), and this Section 10.2
shall remain in full force and effect and survive any termination
of this Agreement. Nothing set forth herein shall limit any
rights any party may have arising out of intentional fraudulent
conduct of any other party hereto.
10.3 Expenses.
(a) Consummation of Merger. If the Merger is
consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby
(including, without limitation, the fees and expenses of
advisers, accountants and legal counsel) shall be paid by the
party incurring such expenses.
(b) Failure to Consummate Merger. If the Merger is
not consummated in accordance with this Agreement, Target will
reimburse the Buyer Parties, upon submission of one or more
statements
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therefor, accompanied by reasonable supporting documentation, for
the amount of all of the Buyer Party Expenses (as defined
below); but not in excess of $1,500,000 of the Buyer Party
Expenses, provided however that if the Merger is not
consummated due to the termination of this Agreement by the Buyer
Parties pursuant to Section 10.1(c)(ii) that is
attributable to the condition set forth in Section 9.3(f),
then Target will not be obligated to reimburse the Buyer Parties
for more than $750,000 of the Buyer Party Expenses; provided
further that if the Merger is not consummated due to the
termination of this Agreement by Target pursuant to
Section 10.1(d)(ii), then Target shall not be obligated to
pay, or reimburse the Buyer Parties for, the Buyer Party
Expenses, and instead the Buyer Parties will reimburse Target,
upon submission of one or more statements therefor, accompanied
by reasonable supporting documentation, for the amount of all of
the Target’s Expenses (as defined below), but not in excess
of $1,500,000 of the Target’s Expenses; and provided
further that if the Merger is not consummated due to a
failure to satisfy Section 9.3(n) that is not also a failure
to satisfy Section 9.1(a) and that is not a circumstance
described in Section 10.1(c)(i)(f) or if the Merger is not
consummated due to a failure to satisfy Section 9.3(g) that
is a result of general changes in the economy or the industry in
which Target and its subsidiaries operate, then Target shall not
be obligated to pay or reimburse the Buyer Parties for any of the
Buyer Party Expenses. As used herein, the “Buyer Party
Expenses” means all of the documented out-of-pocket costs,
fees and expenses reasonably incurred by the Buyer Parties or on
the Buyer Parties’ behalf in connection with this Agreement,
the Merger, the financing of the Merger, the refinancing of debt
of Target and its subsidiaries, the consummation of any of the
transactions contemplated by this Agreement and any efforts to
accomplish any of the foregoing (including filing fees, and fees
payable to printers, counsel and accountants), and the
“Target’s Expenses” means all of the documented
out-of-pocket costs, fees and expenses reasonably incurred by
Target or on Target’s behalf in connection with this
Agreement, the Merger, the consummation of any of the
transactions contemplated by this Agreement and any efforts to
accomplish any of the foregoing (including filing fees, and fees
payable to printers, counsel and accountants).
(c) Expenses in addition to Termination Fees. The
parties hereto agree that the expenses that may be payable under
Section 10.3(b) are in addition to any amounts that may be
payable under Section 10.4, and each party hereby waives any
right to set-off or counterclaim against such amounts.
10.4 Termination Fees.
(a) Third Party Acquisition/ Superior Proposal
Termination. In the event that this Agreement shall be
terminated pursuant to Section 10.1(c)(i) or
Section 10.1(d)(i) (or if this Agreement shall be terminated
pursuant to Section 10.1(f) at a time when this Agreement
could be terminated pursuant to Section 10.1(c)(i)(f)), the
parties agree that the Buyer Parties would suffer direct and
substantial damages, which damages cannot be determined with
reasonable certainty, and that Target will have been unjustly
enriched by the execution hereof by the Buyer Parties and the
publication of the terms hereof. To compensate the Buyer Parties
for such damages, the Target shall pay to the Buyer Parties,
immediately upon the occurrence of the event described in this
Section 10.4(a) giving rise to such damages and such unjust
enrichment, an amount equal to $5,000,000 (the “Termination
Fee”). It is specifically agreed that the amount to be paid
pursuant to this Section 10.3(a) is to compensate the Buyer
Parties for such damages and to reimburse the Buyer Parties for
such unjust enrichment, and is not a penalty. Except for such
amount and expenses that may be payable under
Section 10.3(b) and any costs, expenses or interest that may
be payable under Section 10.4(e), Target shall have no
further liability or obligation to the Buyer Parties or any of
their respective officers, directors, stockholders or affiliates
with respect to this Agreement, except as provided in
Section 10.2.
(b) Willful or Knowing Breach by Target. In the
event that this Agreement shall be terminated by the Buyer
Parties pursuant to Section 10.1(c)(iii) or
Section 10.1(c)(iv) due to (i) a breach or failure to
perform existing on the date hereof that was known to exist on
the date hereof by Target or (ii) a willful breach by
Target, the parties agree that the Buyer Parties would suffer
direct and substantial damages, which damages cannot be
determined with reasonable certainty. To compensate the
37
Buyer Parties for such damages, Target shall pay $1,000,000 to
the Buyer Parties immediately upon the termination of this
Agreement pursuant to Section 10.1(c)(iii) or
Section 10.1(c)(iv). In addition to such $1,000,000 payment,
(A) if such willful breach occurs at a time when there
shall be outstanding a proposal or offer by a Third Party to
consummate a Third Party Acquisition, Target shall pay $4,000,000
to the Buyer Parties not later than two business days after such
termination of this Agreement and (B) if (1) such
willful breach occurs at a time not described in clause
(A) of this Section 10.4(b) and (2) within
12 months from the date of termination of this Agreement a
Third Party Acquisition shall occur or Target shall have entered
into a definitive agreement with respect to such a Third Party
Acquisition, Target shall pay $4,000,000 to the Buyer Parties
upon the occurrence of such Third Party Acquisition or, if such
Third Party Acquisition has not occurred but at the end of such
12-month period Target is a party to such a definitive agreement,
at the end of such 12-month period. It is specifically agreed
that the amount to be paid pursuant to this Section 10.4(b)
represents liquidated damages (including compensation for damages
and reimbursement for unjust enrichment in the case of the
payment required under the third sentence of this
Section 10.4(b)) and not a penalty. Except for such amount,
any expenses that may be payable under Section 10.3(b) and
any costs, expenses or interest that may be payable under
Section 10.4(e), Target shall have no further liability or
obligation to the Buyer Parties or any of their respective
officers, directors, stockholders or affiliates with respect to
this Agreement, except as provided in Section 10.2.
(c) Willful or Knowing Breach by the Buyer Parties.
In the event that this Agreement shall be terminated by Target
pursuant to Section 10.1(d)(ii) due to (i) a breach or
failure to perform existing on the date hereof that was known to
exist on the date hereof by the Buyer Parties or (ii) a
willful breach by the Buyer Parties (including any failure by
Parent to cause an aggregate of at least $75,000,000 to be
contributed to Parent for its equity securities (including equity
securities issued before the date of this Agreement but
excluding equity securities issuable under Section 4.2(c))
if the conditions to the obligations of the Buyer Parties have
been satisfied (or waived) under Article 9), the parties
agree that Target would suffer direct and substantial damages,
which damages cannot be determined with reasonable certainty. To
compensate Target for such damages, the Buyer Parties shall pay
$1,000,000 to Target immediately upon the occurrence of the event
described in this Section 10.4(c) giving rise to such
damages. It is specifically agreed that the amount to be paid
pursuant to this Section 10.4(c) represents liquidated
damages and not a penalty. Except for such amount, any expenses
that may be payable under Section 10.3(b) and any costs,
expenses or interest that may be payable under
Section 10.4(e), the Buyer Parties shall have no further
liability or obligation to the Target or any of its officers,
directors, stockholders or affiliates with respect to this
Agreement, except as provided in Section 10.2.
(d) Termination Fees and Liquidated Damages in addition
to Expenses. The parties hereto agree that the amounts that
may be payable under Section 10.4(a), (b) or
(c) are in addition to any amounts that may be payable under
Section 10.3(b), and each party hereby waives any right to
set-off or counterclaim against such amounts.
(e) Costs and Interest. The parties acknowledge that
the agreements contained in this Article 10 (including
Section 10.3 and this Section 10.4) are an integral
part of the transactions contemplated by this Agreement and that,
without these agreements, the parties would not enter into this
Agreement. Accordingly, if any party fails promptly to pay the
amounts required pursuant to Section 10.3 or 10.4 when due
(including circumstances where, in order to obtain such payment a
party commences a suit that results in a final nonappealable
judgment against another party for such amounts ), the defaulting
party shall pay to the other party (i) its costs and
expenses (including attorneys’ fees) in connection with such
suit and (ii) interest on the amount that was determined to
be due and payable hereunder at the rate announced by The Chase
Manhattan Bank as its “reference rate” in effect on the
date such payment was required to be made.
38
10.5 Amendment. The respective Boards of Directors
of the parties hereto may cause this Agreement to be amended at
any time by execution of an instrument in writing signed on
behalf of each of the parties hereto; provided that an amendment
made subsequent to adoption of the Agreement by the stockholders
of Target or Merger Sub shall not (i) alter or change the
amount or kind of consideration to be received on conversion of
the Target Common Stock, (ii) alter or change any term of
the Certificate of Incorporation of the Surviving Corporation to
be effected by the Merger, or (iii) alter or change any of
the terms and conditions of this Agreement if such alteration or
change would adversely affect the holders of Target Common Stock
or Merger Sub Common Stock.
10.6 Extension; Waiver. At any time prior to the
Effective Time any party hereto may, to the extent legally
allowed, (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document
delivered pursuant hereto and (iii) waive compliance with
any of the agreements or conditions for the benefit of such party
contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
ARTICLE 11
GENERAL PROVISIONS
11.1 Non-Survival at Effective Time. The
representations, warranties and agreements set forth in this
Agreement shall terminate at the Effective Time, except that the
agreements set forth in Articles 1-4, Section 8.2 (Proxy
Statement), 8.7 (Indemnification), 8.8 (Reasonable Efforts and
Further Assurances), Section 10.3 (Expenses),
Section 10.4 (Termination Fees) and 10.5 (Amendment), and
this Article 11 shall survive the Effective Time.
11.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally or by commercial delivery service, or mailed
by registered or certified mail (return receipt requested) or
sent via facsimile (with confirmation of receipt) to the parties
at the following address (or at such other address for a party as
shall be specified by like notice):
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(a)
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if to the Buyer Parties, to:
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Titan Holdings, Inc.
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c/o Aurora Capital Group
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00000 Xxxxxxxx Xxxxxxxxx
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Xxxxx 0000
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Xxx Xxxxxxx, XX 00000
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Attention: Xxxxxxx X. Xxxxxx
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Facsimile No.: (000) 000-0000
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with a copy to:
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Xxxxxx, Xxxx & Xxxxxxxx LLP
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000 Xxxxx Xxxxx Xxxxxx
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Xxx Xxxxxxx, XX 00000
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Attention: Xxxxx X. Xxxxx
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Facsimile No.: (000) 000-0000
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(b)
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if to Target, to:
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Autocam Corporation
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0000 Xxxx Xxxxx Xxxxxx
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Xxxxxxxx, XX 00000
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Attention: Xxxx X. Xxxxxxx
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Facsimile No.: (000) 000-0000
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with a copy to:
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Xxxxxxxxx Xxxxxx PLLC
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000 Xxxxxx Xxxxxx, X.X.
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Xxxxx 000
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Xxxxx Xxxxxx, XX 00000
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Attention: Xxxxxx X. Xxxxxx
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Facsimile No.: (000) 000-0000
11.3 Interpretation. When a reference is made in
this Agreement to Exhibits or Schedules, such reference shall be
to an Exhibit or Schedule to this Agreement unless otherwise
indicated. The words “include,” “includes”
and “including” when used herein shall be deemed in
each case to be followed by the words “without
limitation.” The phrases “the date of this
Agreement”, “the date hereof”, and terms of
similar import, unless the context otherwise requires, shall be
deemed to refer to November 6, 1999. The table of contents
and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.4 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
11.5 Entire Agreement; Nonassignability; Parties in
Interest. This Agreement and the documents and instruments
and other agreements specifically referred to herein or delivered
pursuant hereto, including the Exhibits and the Target
Disclosure Schedule (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter
hereof, except for any confidentiality agreement existing with
respect to Target, which shall continue in full force and effect,
and shall survive any termination of this Agreement or the
Effective Time, in accordance with its terms; (b) are not
intended to confer upon any other person any rights or remedies
hereunder, except as set forth in Sections 4.2(a)-(e),
4.3-4.6 and 8.7; and (c) shall not be assigned by operation
of law or otherwise except as otherwise specifically provided
herein or pursuant to the Merger.
11.6 Severability. In the event that any provision
of this Agreement, or the application thereof, becomes or is
declared by a court of competent jurisdiction to be illegal, void
or unenforceable, the remainder of this Agreement will continue
in full force and effect and the application of such provision to
other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The
parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or
unenforceable provision.
11.7 Remedies Cumulative; No Waiver. Except as
otherwise provided herein, any and all remedies herein expressly
conferred upon a party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby, or by law or
equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. No
failure or delay on the part of any party hereto in the exercise
of any right hereunder shall impair such right or be construed to
be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or
further exercise thereof or of any other right.
40
11.8 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Michigan (without regard to the principles of conflicts of law
thereof).
11.9 Rules of Construction. The parties hereto agree
that they have been represented by counsel during the
negotiation, preparation and execution of this Agreement and,
therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an
agreement or other document will be construed against the party
drafting such agreement or document.
11.10 Certain Definitions. For the purposes of this
Agreement the term:
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(a) “affiliate” means a person that, directly or
indirectly, through one or more intermediaries controls, is
controlled by or is under common control with the first-mentioned
person.
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(b) “applicable law” means, with respect to any
person, any domestic or foreign, federal, state or local statute,
law, ordinance, rule, regulation, order, writ, injunction,
judgment, decree or other requirement of any Governmental Entity
existing as of the date hereof or as of the Effective Time
applicable to such Person or any of its respective properties,
assets, officers, directors, employees, consultants or agents.
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(c) “Board of Directors of Target” means the
Board, or, with reference to matters properly delegated to it by
Board in accordance with the Bylaws of Target and applicable law,
the Special Committee.
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(d) “business day” means any day other than a day
on which the NASDAQ National Market is closed.
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(e) “capital stock” means common stock, preferred
stock, partnership interests, limited liability company
interests or other ownership interests entitling the holder
thereof to vote with respect to matters involving the issuer
thereof.
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(f) “person” means an individual, corporation,
partnership, limited liability company, association, trust,
unincorporated organization or other legal entity including any
Governmental Entity.
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(g) “Reference Rate” means the fluctuating per
annum rate of interest publicly announced from time to time by
The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York, New York.
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(h) “Related Stockholders” means Xxxxx Xxxxxxx
and the Xxxx X. and Xxxxx X. Xxxxxxx Family Foundation.
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(i) “subsidiary” or “subsidiaries” of
the Target, Merger Sub, Parent, the Surviving Corporation or any
other person means any corporation, partnership, limited
liability company, association, trust, unincorporated association
or other legal entity of which the Target, Merger Sub, Parent,
the Surviving Corporation or any such other person, as the case
may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of the
capital stock the holders of which are generally entitled to vote
for the election of the board of directors or other governing
body of such corporation or other legal entity.
11.11 Specific Performance. The parties hereby
acknowledge that the failure of any party to perform its
agreements and covenants hereunder, including its failure to take
all actions as are necessary on its part to consummate the
Merger, will cause irreparable injury to the other parties, for
which damages, even if available, will not be an adequate remedy.
Accordingly, each party hereby consents to the issuance of
injunctive relief by any court of competent jurisdiction to
compel performance of such party’s obligations and to the
granting by any court of the remedy of specific performance of
its obligations hereunder; provided, however, that if a
party hereto is entitled to receive any payment or reimbursement
of expenses or termination fees or liquidated damages pursuant to
Section 10.3(b) or Section 10.4(a), (b) or (c) it
shall not be entitled to specified performance to compel the
consummation of the Merger.
41
IN WITNESS WHEREOF, Target, Parent and Merger Sub have
caused this Agreement to be executed and delivered by their
respective officers thereunto duly authorized, all as of the date
first written above.
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TITAN HOLDINGS, INC.
By:
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/s/ Xxxxxxx X. Xxxxxx
Name:
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Xxxxxxx X. Xxxxxx
Title:
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President
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TITAN ACQUISITION CORPORATION
By:
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/s/ Xxxxxxx X. Xxxxxx
Name:
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Xxxxxxx X. Xxxxxx
Title:
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President
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AUTOCAM CORPORATION
By:
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/s/ Xxxx X. Xxxxxxx
Name:
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Xxxx X. Xxxxxxx
Title:
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President
42
I. EXHIBITS
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Exhibit A
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List of Designated Stockholders Executing Stockholder Agreements
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Exhibit B
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Certificate of Merger
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Exhibit C
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Merger Sub/Surviving Corporation Certificate of Incorporation
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Exhibit D
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Merger Sub/Surviving Corporation Bylaws
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Exhibit E
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Employment Agreement
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Exhibit F
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Noncompetition Agreement
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Exhibit G
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Parent Securityholders Agreement
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Exhibit H
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Bank Commitment Letter
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