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EXHIBIT 1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated December 11, 1997 (this "Agreement"),
by and among Voith Sulzer Paper Technology North America Inc., a Delaware
company ("Parent"), Voith Sulzer Acquisition Corp., a California corporation and
a wholly-owned subsidiary of Parent (the "Purchaser"), and Impact Systems, Inc.,
a California corporation (the "Company").
WHEREAS, as a condition and inducement to Parent's willingness to enter
into this Agreement, Parent has entered into Stockholder Agreements, dated the
date hereof, with certain holders of capital stock of the Company (the
"Stockholder Agreements"); and
WHEREAS, the respective Boards of Directors of Parent, the Purchaser and
the Company have approved the acquisition of the Company by the Purchaser on the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, in furtherance of such acquisition, Parent proposes to cause the
Purchaser to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase all of the issued and
outstanding shares of common stock, no par value per share, of the Company (the
"Common Shares" or "Shares") at a price per Common Share of $2.75 net to the
seller in cash (such price, as it may hereafter be increased, the "Offer
Price"); and
WHEREAS, the Board of Directors of the Company has approved this Agreement,
the Offer and the Merger (as hereinafter defined), has determined that the Offer
and the Merger are fair and in the best interests of the Company's shareholders
(the "Shareholders"), and is recommending that the Shareholders accept the Offer
and tender all their Shares; and
WHEREAS, the respective Boards of Directors of Parent, the Purchaser and
the Company have approved the merger of the Purchaser with and into the Company,
as set forth below (the "Merger"), in accordance with the General Corporation
Law of the State of California (the "GCL") and upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
Share not owned directly or indirectly by Parent, the Purchaser or the Company
will be converted into the right to receive the Offer Price in cash; and
WHEREAS, as a further inducement to Parent to enter into this Agreement,
Parent, the Purchaser and the Company have entered into a Stock Option
Agreement, dated the date hereof (the "Stock Option Agreement"), pursuant to
which the Company has granted to the Purchaser an option to purchase newly
issued Common Shares under certain circumstances; and
WHEREAS, Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Parent,
the Purchaser and the Company agree as follows.
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
(a) So long as none of the events set forth in clauses (a) through (g) of
Annex I hereto shall have occurred or exist, the Purchaser shall, and Parent
shall cause the Purchaser to, commence (within the meaning of Rule 14d-2(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as
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promptly as practicable after the date hereof, but in any event not later than
December 18, 1997, the Offer for any and all outstanding Shares not owned by the
Purchaser at the Offer Price applicable to such Shares, net to the seller in
cash. The initial expiration date for the Offer shall be the twentieth business
day from and after the date the Offer is commenced, including the date of
commencement as the first business day in accordance with Rule 14d-2 under the
Exchange Act (the "Initial Expiration Date"). As promptly as practicable, the
Purchaser shall file with the Securities and Exchange Commission (the "SEC") the
Purchaser's Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1" and
together with the documents therein pursuant to which the Offer will be made,
and with any supplements or amendments thereto, the "Offer Documents"), which
shall contain (as an exhibit thereto) the Purchaser's Offer to Purchase (the
"Offer to Purchase") which shall be mailed to the holders of Shares with respect
to the Offer. The obligation of Parent and the Purchaser to accept for payment
or pay for any Shares tendered pursuant to the Offer will be subject only to the
satisfaction or waiver of the conditions set forth in Annex I hereto. Without
the prior written consent of the Company, the Purchaser shall not (i) decrease
the Offer Price or change the form of consideration payable in the Offer, (ii)
decrease the number of Shares sought to be purchased in the Offer (except as
otherwise set forth in Section 1.01(b) hereof), (iii) change the conditions set
forth in Annex I, (iv) extend the expiration date of the Offer (except as
required by applicable rules and regulations of the SEC and except that
Purchaser may in its discretion extend the expiration date of the Offer for up
to 10 business days after the Initial Expiration Date, and may extend the Offer
thereafter for longer periods (not to exceed 90 calendar days from the date of
commencement (unless, in the Company's sole discretion, the Company requests
that the expiration date of the Offer be further extended, up to a maximum of
120 calendar days) from the date of commencement in the event that any condition
to the Offer is not satisfied or waived) (v) impose additional conditions to the
Offer, or (vi) amend any other term of the Offer in any manner adverse to the
holders of any Shares.
(b) Subject to the limitations set forth in clause (iv) of Section 1.01(a),
in the event the Minimum Condition (as defined in Annex I) is not satisfied on
any scheduled expiration date of the Offer, the Purchaser may either (i) extend
the Offer pursuant to clause (iv) of the last sentence of Section 1.01(a) or
(ii) amend the Offer to provide that, in the event (x) the Minimum Condition is
not satisfied at the next scheduled expiration date of the Offer (after giving
pro forma effect to the potential issuance of any Common Shares issuable upon
exercise of the Stock Option Agreement) and (y) the number of Common Shares
tendered pursuant to the Offer and not withdrawn as of such next scheduled
expiration date is more than 50% of the then outstanding Common Shares, the
Purchaser must waive the Minimum Condition and amend the Offer to reduce the
number of Common Shares subject to the Offer to a number of Shares that when
added to the Shares then owned by the Purchaser will equal 49.9999% of the
Common Shares then outstanding (the "Revised Minimum Number") and, if a greater
number of shares is tendered into the Offer and not withdrawn, purchase, on a
pro rata basis, the Revised Minimum Number of Common Shares (it being understood
that the Purchaser may, but shall not in any event be required to, accept for
payment, or pay for, any Common Shares if less than the Revised Minimum Number
of Shares are tendered pursuant to the Offer and not withdrawn at the applicable
expiration date).
(c) Subject to the terms of the Offer and this Agreement and the
satisfaction or waiver of all the conditions of the Offer set forth in Annex I
hereto as of any expiration date, the Purchaser will accept for payment and pay
for all Shares validly tendered and not withdrawn pursuant to the Offer as soon
as practicable after such expiration date of the Offer.
(d) The Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Shareholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by Parent or the
Purchaser with respect to information supplied by the Company in writing for
inclusion in the Offer Documents. No representation, warranty or covenant is
made or shall be made herein by the Company with respect to information
contained in the Offer Documents other than information supplied by the Company
in writing expressly for inclusion in the Offer Documents. Each of Parent and
the Purchaser, on the one hand,
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and the Company, on the other hand, agrees promptly to correct any information
provided by it for use in the Offer Documents if and to the extent that it shall
have become false or misleading in any material respect and the Purchaser
further agrees to take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to the Shareholders,
in each case as and to the extent required by applicable federal securities
laws. Each of Parent and the Purchaser, on the one hand, and the Company, on the
other hand, agrees to give a reasonable opportunity to review and comment upon
any Offer Document to be filed with the SEC prior to any such filing and to
provide in writing any comments each may receive from the SEC or its staff with
respect to the Offer Documents promptly after the receipt of such comments.
SECTION 1.02 Company Actions.
(a) The Company shall file with the SEC, simultaneously with the filing by
Parent and Purchaser of the Schedule 14D-1, and mail to the holders of Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (together with any amendments or supplements thereto, the "Schedule
14D-9"). The Schedule 14D-9 will set forth, and the Company hereby represents,
that the Board of Directors of the Company, at a meeting duly called and held,
has (i) determined that the Offer and the Merger are fair to and in the best
interests of the Company and the Shareholders, (ii) approved the Offer and the
Merger in accordance with Section 1101 of the GCL and approved this Agreement
and the Stock Option Agreement, and (iii) resolved to recommend acceptance of
the Offer by the Shareholders; provided, however, that such recommendation may
be withdrawn, modified or amended to the extent that the Board of Directors of
the Company determines in good faith by a majority vote that it is necessary
under applicable Law (as hereinafter defined) to do so in the exercise of its
fiduciary duties to the Shareholders but only after receipt of written advice of
the Company's outside legal counsel with respect to the fiduciary obligations of
the Board of Directors.
(b) The Schedule 14D-9 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Shareholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company with
respect to information supplied by Parent or the Purchaser in writing for
inclusion in the Schedule 14D-9. Each of the Company, on the one hand, and
Parent and the Purchaser, on the other hand, agree promptly to correct any
information provided by either of them for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and to be disseminated to the Shareholders,
in each case as and to the extent required by applicable federal securities law.
(c) In connection with the Offer, the Company will furnish the Purchaser
with such information and assistance as the Purchaser or its agents or
representatives may reasonably request in connection with communicating the
Offer to the record and beneficial holders of the Shares, including, without
limitation, its stockholders list, security position listings and non-objecting
beneficial owners list, if any. Subject to the requirements of applicable Law,
and except for such actions as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Offer and the Merger, Parent
and the Purchaser and each of their affiliates, associates, partners, employees,
agents and advisors shall hold in confidence the information contained in such
stockholders list, security position listings and non-objecting beneficial
owners list, shall use such information only in connection with the Offer and
the Merger, and, if this Agreement is terminated in accordance with its terms,
shall deliver promptly to the Company all copies of such information (and any
copies, compilations or extracts thereof or based thereon) then in their
possession or under their control.
SECTION 1.03 Directors.
(a) Subject to compliance with applicable Law, promptly upon the payment by
the Purchaser for Shares pursuant to the Offer, and from time to time
thereafter, the Purchaser shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as is equal to the product of the total number of directors on the Board
of Directors of the Company (determined
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after giving effect to the directors elected pursuant to this sentence)
multiplied by the percentage that the aggregate number of Shares beneficially
owned by the Purchaser or its affiliates bears to the total number of Shares
then outstanding, and the Company shall, subject to compliance with Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, upon request of
the Purchaser, promptly take all actions necessary to cause the Purchaser's
designees to be so elected, including, if necessary, seeking the resignations of
one or more existing directors; provided, however, that prior to the Effective
Time (as defined in Section 2.02) the Board of Directors of the Company shall
always have at least two members who are neither officers, directors,
stockholders or designees of the Purchaser or any of its affiliates ("Purchaser
Insiders"); and provided further, however, that the Purchaser shall be entitled
to designate a number of directors equal to or greater than 50% of the total
number of directors only if the Purchaser acquires 90% or more of the
outstanding Shares pursuant to the Offer. If the number of directors who are not
Purchaser Insiders is reduced below two for any reason prior to the Effective
Time, then the remaining directors who are not Purchaser Insiders (or if there
is only one director who is not a Purchaser Insider, the remaining director who
is not a Purchaser Insider) shall be entitled to designate a person (or persons)
to fill such vacancy (or vacancies) who is not an officer, director, stockholder
or designee of the Purchaser or any of its affiliates and who shall be a
director not deemed to be a Purchaser Insider for all purposes of this
Agreement.
(b) The Company's obligation to appoint the Purchaser's designees to the
Board of Directors of the Company shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder. The Company shall promptly take all
actions required pursuant to such Section and Rule in order to fulfill its
obligations under this Section 1.03 and shall include in the Schedule 14D-9 such
information with respect to the Company and its officers and directors as is
required under such Section and Rule in order to fulfill its obligations under
this Section 1.03. Parent will supply in writing any information with respect to
itself and its officers, directors and affiliates required by such Section and
Rule to the Company.
(c) From and after the election or appointment of the Purchaser's designees
pursuant to this Section 1.03 and prior to the Effective Time, any amendment or
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent
or the Purchaser or waiver of any of the Company's rights hereunder, or any
other action taken by the Board in connection with this Agreement, will require
the concurrence of a majority of the directors of the Company then in office who
are not Purchaser Insiders.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the satisfaction or
waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the GCL, at the Effective Time (as defined in
Section 2.02) the Purchaser shall be merged with and into the Company. Following
the Merger, the separate corporate existence of the Purchaser shall cease and
the Company shall continue as the surviving corporation (the "Surviving
Corporation").
SECTION 2.02 Effective Time; Closing. As soon as practicable after the
satisfaction or waiver of the Second-Step Conditions set forth in Article VII
hereof, the Company shall execute in the manner required by the GCL and file in
the office of the Secretary of State of the State of California an agreement of
merger together with an officer's certificate of the Company and the Purchaser,
and the parties shall take such other and further actions as may be required by
Law to make the Merger effective. The time the Merger becomes effective in
accordance with applicable Law is referred to as the Effective Time. On the
business day immediately preceding such filing, a closing shall be held at the
offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx 00000, unless another date or place is agreed to in writing by the
parties hereto, for the purpose of confirming the satisfaction or waiver, as the
case may be, of the conditions set forth in Article VII.
SECTION 2.03 Effects of the Merger. The Merger shall have the effects set
forth in Section 1107 of the GCL.
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SECTION 2.04 Articles of Incorporation and By-Laws of the Surviving
Corporation.
(a) The articles of incorporation of the Company, as in effect immediately
prior to the Effective Time, shall be the articles of incorporation of the
Surviving Corporation until thereafter amended in accordance with the provisions
thereof and hereof and applicable Law.
(b) The by-laws of the Company in effect at the Effective Time shall be the
by-laws of the Surviving Corporation until thereafter amended in accordance with
the provisions thereof and hereof and applicable Law.
SECTION 2.05 Directors. Subject to applicable Law, the directors of the
Purchaser immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
SECTION 2.06 Officers. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
SECTION 2.07 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of the holders thereof, each Share
issued and outstanding immediately prior to the Effective Time (other than any
Shares held by Parent, the Purchaser, any wholly-owned subsidiary of Parent or
the Purchaser, in the treasury of the Company or by any wholly-owned subsidiary
of the Company, which Shares, by virtue of the Merger and without any action on
the part of the holder thereof, shall be canceled and retired and shall cease to
exist with no payment being made with respect thereto, and other than Dissenting
Shares (as defined in Section 3.01)) shall be converted into the right to
receive in cash the Offer Price (the "Merger Price").
SECTION 2.08 Conversion of Purchaser Common Stock. At the Effective Time,
the shares of common stock, no par value, of the Purchaser issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and become the number of validly issued, fully paid and nonassessable
shares of common stock, no par value, of the Surviving Corporation equal to the
number of Common Shares outstanding on a fully diluted basis immediately prior
to the Effective Time.
SECTION 2.09 Company Option Plans. The Company shall take all actions
necessary so that, immediately prior to the Effective Time, (A) each outstanding
option to purchase Common Shares (an "Option") granted under the Company's
Discount Stock Option Plan, 1995 Incentive Stock Option Plan, 1985 Incentive
Stock Option Plan and 1982 Incentive Stock Option Plan (collectively, the
"Option Plans"), whether or not then exercisable or vested, shall become fully
exercisable and vested, (B) each Option which is then outstanding shall be
cancelled and (C) in consideration of such cancellation, and except to the
extent that Parent or the Purchaser and the holder of any such Option otherwise
agree, immediately following consummation of the Merger, the Company shall
promptly pay to such holders of Options an amount in respect thereof equal to
the product of (1) the excess of the Merger Price over the exercise price
thereof and (2) the number of Common Shares subject thereto (such payment to be
net of taxes required by law to be withheld with respect thereto); provided that
the foregoing shall be subject to the obtaining of any necessary consents of
holders of Options, it being agreed that the Company and Parent will use their
commercially reasonable best efforts to obtain any such consents.
SECTION 2.10 Shareholders' Meeting.
(a) If required by the Company's articles of incorporation and/or
applicable Law in order to consummate the Merger, the Company, acting through
its Board of Directors, shall, in accordance with applicable Law:
(i) duly call, give notice of, convene and hold a special meeting of
the Shareholders (the "Shareholders' Meeting") as soon as practicable
following the acceptance for payment of and payment for Shares by the
Purchaser pursuant to the Offer for the purpose of considering and taking
action upon this Agreement;
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(ii) prepare and file with the SEC a preliminary proxy statement
relating to the Merger and this Agreement and use its commercially
reasonable best efforts (x) to obtain and furnish the information required
to be included by the SEC in the Proxy Statement (as hereinafter defined)
and, after the consultation with Parent, to respond promptly to any
comments made by the SEC with respect to the preliminary proxy statement
and, subject to compliance with SEC rules and regulations, to cause a
definitive proxy statement (the "Proxy Statement") to be mailed to the
Shareholders and (y) to obtain the necessary approvals of the Merger and
this Agreement by the Shareholders; and
(iii) subject to the fiduciary obligations of the Board of Directors
of the Company under applicable Law, include in the Proxy Statement the
recommendation of the Board of Directors of the Company that the
Shareholders vote in favor of the approval of the Merger and the adoption
of this Agreement.
(b) Parent and the Purchaser will furnish to the Company the information
relating to Parent and the Purchaser required under the Exchange Act and the
rules and regulations thereunder to be set forth in the Proxy Statement.
(c) Parent agrees that it will (i) vote, or cause to be voted, all of the
Shares then owned by it, the Purchaser or any of its other subsidiaries in favor
of the approval of the Merger and the adoption of this Agreement and (ii) take
or cause to be taken all additional corporate actions necessary for the
Purchaser to adopt and approve this Agreement and the transactions contemplated
hereby.
SECTION 2.11 Merger Without Meeting of Shareholders. Notwithstanding
Section 2.10, in the event that Parent, the Purchaser or any other subsidiary of
Parent shall have acquired at least 90% of the outstanding Shares pursuant to
the Offer (including as a result of the exercise of the Stock Option Agreement)
and prior transactions, the parties hereto agree to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the acceptance for payment of and payment for Shares by the
Purchaser pursuant to the Offer without a meeting of Shareholders, in accordance
with Section 1110 of the GCL.
SECTION 2.12 Earliest Consummation. Each party hereto shall use its
commercially reasonable best efforts to consummate the Merger as soon as
practicable. If the conditions set forth in Annex I hereto are satisfied, or
waived, the Purchaser shall consummate the Offer and accept for payment Shares
tendered therein and thereafter effectuate the Merger.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.01 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, Shares outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger or consented thereto
in writing and who has demanded appraisal for such shares in accordance with
Section 1300 of the GCL, if such Section 1300 provides for appraisal rights for
such Shares in the Merger ("Dissenting Shares"), shall not be converted into the
right to receive the Merger Price as provided in Section 2.07, unless and until
such holder fails to perfect or withdraws or otherwise loses his right to
appraisal and payment under the GCL. If, after the Effective Time, any such
holder fails to perfect or withdraws or loses his right to appraisal, then such
Dissenting Shares shall thereupon be treated as if they had been converted as of
the Effective Time into the right to receive the Merger Price, if any, to which
such holder is entitled, without interest or dividends thereon. The Company
shall give Parent prompt notice of any demands received by the Company for
appraisal of Shares and, prior to the Effective Time, Parent shall have the
right to participate in all negotiations and proceedings with respect to such
demands. Prior to the Effective Time, the Company shall not, except with the
prior written consent of Parent, make any payment with respect to or settle or
offer to settle, any such demands.
SECTION 3.02 Payment for Shares.
(a) Prior to the commencement of the Offer, Purchaser shall appoint a
United States bank or trust company mutually acceptable to the Company and
Parent to act as paying agent (the "Paying Agent") for the
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payment of the Offer Price and the Merger Price. Prior to the payment time
thereof, Parent shall deposit or shall cause to be deposited with the Paying
Agent in a separate fund established for the benefit of the holders of Shares,
for payment in accordance with this Article III, through the Paying Agent (the
"Payment Fund"), immediately available funds in amounts necessary to make the
payments pursuant to the Offer, Section 2.07 and this Section 3.02 to holders
(other than the Company or any subsidiary of the Company or Parent, Purchaser or
any other subsidiary of Parent, or holders of Dissenting Shares). The Paying
Agent shall pay the Offer Price and the Merger Price out of the Payment Fund.
From time to time at or after the Effective Time, Parent shall take all
lawful action necessary to make the appropriate cash payments, if any, to
holders of Dissenting Shares. Prior to the Effective Time, Parent shall enter
into appropriate commercial arrangements to ensure effectuation of the
immediately preceding sentence. The Paying Agent shall invest the Payment Fund
as directed by Parent or the Purchaser in obligations of, or guaranteed by, the
United States of America, in commercial paper obligations rated A-1 or P-1 or
better by Xxxxx'x Investor Services or Standard & Poor's Corporation,
respectively, or in certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $1 billion, in
each case with maturities not exceeding seven days. Parent shall cause the
Payment Fund to be promptly replenished to the extent of any losses incurred as
a result of the aforementioned investments. All earnings thereon shall inure to
the benefit of the Surviving Corporation. If for any reason (including losses)
the Payment Fund is inadequate to pay the amounts to which holders of Shares
shall be entitled under Section 2.07 and this Section 3.02, Parent shall in any
event be liable for payment thereof. The Payment Fund shall not be used for any
purpose except as expressly provided in this Agreement.
(b) Promptly after the Effective Time, the Paying Agent shall mail to each
record holder of certificates (the "Certificates") that immediately prior to the
Effective Time represented Shares entitled to payment of the Merger Price
pursuant to Section 2.07 (other than Certificates representing Dissenting Shares
and Certificates representing Shares held by Parent or the Purchaser, any
wholly-owned subsidiary of Parent or the Purchaser, in the treasury of the
Company or by any wholly-owned subsidiary of the Company) a form of letter of
transmittal which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent and instructions for use in surrendering such
Certificates and receiving the aggregate Merger Price, in respect thereof. Upon
the surrender of each such certificate and subject to applicable withholding,
the Paying Agent shall pay the holder of such Certificate in respect of Shares,
the Merger Price multiplied by the number of Shares formerly represented by such
Certificate, and such Certificate shall forthwith be cancelled. Until so
surrendered, each such Certificate (other than Certificates representing
Dissenting Shares and Certificates representing Shares held by Parent or the
Purchaser, any wholly-owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly-owned subsidiary of the Company) shall
represent solely the right to receive the aggregate Merger Price relating
thereto. No interest or dividends shall be paid or accrued on the Merger Price.
If the Merger Price (or any portion thereof) is to be delivered to any person
other than the person in whose name the Certificate formerly representing Shares
is registered, it shall be a condition to such right to receive such Merger
Price, as applicable, that the Certificate so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the person
surrendering such Certificates shall pay to the Paying Agent any transfer or
other taxes required by reason of the payment of the Merger Price to a person
other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax has been paid or
is not applicable.
(c) Promptly following the date which is 270 days after the Effective Time,
the Paying Agent shall deliver to the Surviving Corporation all cash,
Certificates and other documents in its possession relating to the transactions
described in this Agreement, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly representing a Share may
surrender such Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in
consideration therefor the aggregate Merger Price, without any interest or
dividends thereon.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any Shares, which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates formerly representing Shares are presented to the Surviving
Corporation or the
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Paying Agent, they shall be surrendered and cancelled in return for the payment
of the aggregate Merger Price relating thereto, as provided in this Article III,
subject to applicable law in the case of Dissenting Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and the Purchaser as
follows (with such exceptions thereto as are set forth in the disclosure
schedule delivered by the Company to Parent on the date hereof (the "Company
Disclosure Statement")):
SECTION 4.01 Organization and Qualification; Subsidiaries. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California. Each of the Company's subsidiaries (the
"Subsidiaries") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The Company
and each of the Subsidiaries has the requisite corporate power and authority to
own, operate or lease its properties and to carry on its business as it is now
being conducted, and is duly qualified or licensed to do business, and is in
good standing, in each jurisdiction in which the nature of its business or the
properties owned, operated or leased by it makes such qualification, licensing
or good standing necessary, except where the failures to have such power or
authority, or the failures to be so qualified, licensed or in good standing,
individually, and in the aggregate, would not have a Material Adverse Effect on
the Company. The term "Material Adverse Effect on the Company", as used in this
Agreement, means any change in or effect on the business, results of operations,
assets or condition (financial or otherwise) of the Company or any of the
Subsidiaries that is materially adverse to the Company and the Subsidiaries
taken as a whole.
SECTION 4.02 Articles of Incorporation and By-Laws. The Company has
heretofore made available to Parent and the Purchaser a complete and correct
copy of the articles of incorporation and the by-laws, each as amended to the
date hereof and a copy of which is set forth in Section 4.02 of the Company
Disclosure Statement, of each of the Company and the Subsidiaries.
SECTION 4.03 Capitalization. The authorized capital stock of the Company
consists of 20,000,000 Common Shares and 2,000,000 shares of preferred stock, no
par value (the "Preferred Stock"). As of the close of business on December 10,
1997, there were 10,511,576 Common Shares issued and no shares of Preferred
Stock issued. The Company has no shares of capital stock reserved for issuance,
except that, as of December 10, 1997, there were 1,201,102 Common Shares
reserved for issuance pursuant to Options granted pursuant to the Option Plans.
Since March 31, 1997, the Company has not issued any shares of capital stock
except pursuant to the exercise of Options outstanding as of such date and in
accordance with their terms. All the outstanding Common Shares are, and all
Common Shares which may be issued pursuant to the exercise of outstanding
Options and pursuant to the Stock Option Agreement will be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
fully paid and nonassessable. There are no bonds, debentures, notes or other
indebtedness having general voting rights (or convertible into Shares having
such rights) ("Voting Debt") of the Company or any of the Subsidiaries issued
and outstanding. Except as set forth in this Section 4.03 and except for the
Merger and the Stock Option Agreement, there are no existing options, warrants,
calls, subscriptions or other rights, agreements, arrangements or commitments of
any character, relating to the issued or unissued capital stock of the Company
or any of the Subsidiaries, obligating the Company or any of the Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or any
of the Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests or obligations of the Company or any of the
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment. Except (i) as
contemplated by the Merger contemplated by this Agreement, (ii) for the
Company's obligations under the Option Plans and (iii) for the Company's
obligations under the Stock Option Agreement, there are no outstanding
contractual obligations of the Company or any of the Subsidiaries to repurchase,
redeem or otherwise acquire any Common Shares or the capital stock of the
Company or any of the Subsidiaries. Each of the outstanding shares of capital
stock of each of the Subsidiaries is duly authorized, validly issued, fully paid
and nonassessable, and such shares of the Subsidiaries as are
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9
owned by the Company or by another Subsidiary are owned in each case free and
clear of any lien, claim, option, charge, security interest, limitation,
encumbrance and restriction of any kind (any of the foregoing being a "Lien").
Section 4.03 of the Company Disclosure Statement contains a complete list as of
the date hereof of each Subsidiary and sets forth with respect to each of the
Subsidiaries its name and jurisdiction of organization and, with respect to each
Subsidiary that is not wholly-owned by the Company or another Subsidiary, the
percentage of shares of capital stock or share capital owned by the Company or a
Subsidiary. Except for the capital stock of the Subsidiaries or as set forth in
Section 4.03 of the Company Disclosure Statement, the Company does not own,
directly or indirectly, any capital stock or other ownership interest in any
corporation, partnership, limited liability company, joint venture or other
entity.
SECTION 4.04 Authority. The Company has all necessary corporate power and
authority to execute and deliver this Agreement and the Stock Option Agreement
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Stock Option Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly and validly authorized and approved by the
Board of Directors of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize or approve this Agreement or the Stock
Option Agreement or to consummate the transactions contemplated hereby or
thereby (other than, with respect to the Merger, the approval and adoption of
the Merger and this Agreement by holders of the Shares to the extent required by
the Company's articles of incorporation and by applicable Law). This Agreement
and the Stock Option Agreement have been duly and validly executed and delivered
by the Company and, assuming the due and valid authorization, execution and
delivery of this Agreement and the Stock Option Agreement by Parent and the
Purchaser, constitute valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity. The Board of
Directors of the Company has, at a meeting of such Board duly held on December
11, 1997, approved and adopted this Agreement, the Stock Option Agreement, the
Offer and the Merger and the other transactions contemplated hereby and thereby,
determined that the Offer Price to be received by the holders of Shares pursuant
to the Offer and the Merger is fair to the holders of the Shares and recommends
that the holders of Shares tender their Shares pursuant to the Offer.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement or the Stock
Option Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby or thereby or the compliance by the Company
with any of the provisions hereof or thereof will (i) conflict with or violate
the articles of incorporation or by-laws of the Company or the comparable
organizational documents of any of the Subsidiaries, (ii) conflict with or
violate any statute, ordinance, rule, regulation, order, judgment or decree
applicable to the Company or the Subsidiaries, or by which any of them or any of
their respective properties or assets may be bound or affected, or (iii) result
in a violation or breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in any loss of any material benefit, or the creation of any Lien on any of the
property or assets of the Company or any of the Subsidiaries (any of the
foregoing referred to in clause (ii) or this clause (iii) being a "Violation")
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries or any of their respective properties may be bound or affected,
except in the case of the foregoing clauses (ii) or (iii) for any Violation
which, individually and in the aggregate, would not have a Material Adverse
Effect on the Company.
(b) None of the execution and delivery of this Agreement or the Stock
Option Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby or thereby or the compliance by the Company
with any of the provisions hereof or thereof will require any consent, waiver,
approval, authorization or permit of, or registration or filing with or
notification to (any of the foregoing being a "Consent"), any government or
subdivision thereof, or any administrative, governmental or regulatory
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10
authority, agency, commission, tribunal or body, domestic, foreign or
supranational (a "Governmental Entity"), except for (i) compliance with any
applicable requirements of the Exchange Act, (ii) the filing of an agreement of
merger together with an officer's certificate of the Company and the Purchaser
pursuant to the GCL, (iii) compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and any requirements of any
foreign or supranational Antitrust Laws (as hereinafter defined), (iv) such
filings and approvals as may be required by any applicable state securities,
"blue sky" or takeover Laws, and (v) Consents or filings the failure of which to
obtain or make, individually and in the aggregate, would not have a Material
Adverse Effect on the Company or materially adversely affect the ability of the
Company to consummate the transactions contemplated by this Agreement and the
Stock Option Agreement.
SECTION 4.06 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports, schedules,
registration statements and definitive proxy statements required to be filed by
the Company with the SEC from March 31, 1997 until the date hereof (the "SEC
Reports"). As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Exchange Act or the Securities
Act of 1933, as amended, and the rules and regulations of the SEC promulgated
thereunder applicable, as the case may be, to such SEC Reports, and none of the
SEC Reports 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, not misleading.
(b) The consolidated balance sheets as of March 31, 1997 and 1996 and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended March 31, 1997 (including the
related notes and schedules thereto) of the Company contained in the Company's
Form 10-K for the year ended March 31, 1997 included in the SEC Reports present
fairly, in all material respects, the consolidated financial position and the
consolidated results of operations and cash flows of the Company and its
consolidated subsidiaries as of the dates or for the periods presented therein
in conformity with United States generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto).
(c) The consolidated balance sheets and the related statements of income
and cash flows (including in each case the related notes thereto) of the Company
contained in the Forms 10-Q for the periods ended June 30, 1997 and September
30, 1997 and included in the SEC Reports (collectively, the "Quarterly Financial
Statements") have been prepared in accordance with the requirements for interim
financial statements contained in Regulation S-X. The Quarterly Financial
Statements reflect all adjustments, which include only normal recurring
adjustments, necessary to present fairly and do present fairly, in all material
respects, the consolidated financial position, results of operations and cash
flows of the Company for all periods presented therein in conformity with GAAP
applied on a consistent basis during the periods involved.
(d) The Company and the Subsidiaries have no liabilities or obligations of
any nature (whether absolute, accrued, contingent, unmatured, unaccrued,
unliquidated, unasserted, conditional or otherwise) except for liabilities or
obligations (i) reflected or reserved against on the balance sheet as of
September 30, 1997 (including the notes thereto) included in the Quarterly
Financial Statements, (ii) incurred in the ordinary course of business
consistent with past practice since such date, or (iii) as set forth in Schedule
4.06 to the Company Disclosure Statement.
SECTION 4.07 Information. None of the information supplied by the Company
in writing specifically for inclusion or incorporation by reference in (i) the
Offer Documents, (ii) the Schedule 14D-9, (iii) the Proxy Statement or (iv) any
other document to be filed with the SEC or any other Governmental Entity in
connection with the transactions contemplated by this Agreement (the "Other
Filings") will, at the respective times filed with the SEC or other Governmental
Entity and, in addition, in the case of the Proxy Statement, at the date it or
any amendment or supplement is mailed to the Shareholders, at the time of the
Shareholders' Meeting and at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder,
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11
except that no representation is made by the Company with respect to statements
made therein based on information supplied by Parent or the Purchaser in writing
specifically for inclusion in the Proxy Statement.
SECTION 4.08 Tax Matters.
(a) Provision For Taxes. The provision made for taxes on the balance sheet
as of September 30, 1997, which balance sheet is included in the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 (the
"Recent Balance Sheet"), is sufficient for the payment of all federal, state,
foreign, county, local and other income, ad valorem, excise, profits, franchise,
occupation, property, payroll, sales, use, gross receipts and other taxes (and
any interest and penalties) and assessments of the Company and the Subsidiaries,
whether or not disputed, at the date of the Recent Balance Sheet and for all
years and periods prior thereto. Since the date of the Recent Balance Sheet,
neither the Company nor any Subsidiary has incurred any taxes other than taxes
incurred in the ordinary course of business consistent in type and amount with
past practices of the Company and the Subsidiaries.
(b) Tax Returns Filed. Except as set forth on Schedule 4.08(a) of the
Company Disclosure Statement, all federal, state, foreign, county, local and
other tax returns required to be filed by or on behalf of the Company and the
Subsidiaries have been timely filed and when filed were true and correct in all
material respects, and the taxes shown as due thereon were paid or adequately
accrued. Except as set forth on Schedule 4.08(b) of the Company Disclosure
Statement, neither the Company nor any of the Subsidiaries is the beneficiary of
any extension of time within which to file tax returns. The Company has
delivered to Parent and the Purchaser true and complete copies of all tax
returns or reports filed by the Company and the Subsidiaries for taxable periods
ending on or after December 31, 1991. The Company and each Subsidiary have
withheld and paid all taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, creditor, shareholder,
independent contractor or third party, and have filed all required information
returns.
(c) Tax Audits. The federal and state income tax returns of the Company and
the Subsidiaries have been audited by the Internal Revenue Service and
appropriate state taxing authorities for the periods and to the extent set forth
in Schedule 4.08(c) of the Company Disclosure Statement, and neither the Company
nor any Subsidiary has received from the Internal Revenue Service or from the
tax authorities of any state, county, local or other jurisdiction any (i) notice
of underpayment of taxes or other deficiency which has not been paid or (ii) any
objection to any return or report filed by the Company or the Subsidiaries. No
claim has been made by a tax authority in a jurisdiction where any of the
Company and the Subsidiaries does not file tax returns that the Company or any
Subsidiary is or may be subject to taxation by that jurisdiction. Except as set
forth in Schedule 4.08(c) of the Company Disclosure Statement, neither the
Company nor any of the Subsidiaries has waived any statute of limitations with
respect to taxes, or has agreed to an extension of time with respect to a tax
assessment or deficiency. There are outstanding no agreements or waivers
extending the statutory period of limitations applicable to any taxes.
(d) Consolidated Group. Schedule 4.08(d) of the Company Disclosure
Statement lists every year that the Company or any Subsidiaries were a member of
an affiliated group of corporations that filed a consolidated tax return on
which the statute of limitations does not bar a federal tax assessment, and
lists each corporation that has been part of such group. No affiliated group of
corporations of which the Company or any of the Subsidiaries has been a member
has discontinued filing consolidated returns during the past five years. A copy
of any tax sharing agreement to which the Company or any of the Subsidiaries is
a party has been delivered by the Company to Parent and the Purchaser.
(e) Other. Except as set forth in Schedule 4.08(e) of the Company
Disclosure Statement, neither the Company nor any Subsidiary has (i) filed any
consent or agreement under Section 341(f) of the Internal Revenue Code of 1986,
as amended (the "Code"), (ii) applied for any tax ruling, (iii) entered into a
closing agreement with any taxing authority, (iv) filed an election under
Section 338(g) or Section 338(h)(10) of the Code (nor has a deemed election
under Section 338(e) of the Code occurred), (v) made any payments that will not
be deductible because of Section 280G of the Code, or (vi) been a party to any
tax allocation or tax sharing agreement. The Company is not a "United States
real property holding corporation" within the meaning of Section 897 of the
Code.
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12
SECTION 4.09 No Litigation. There is no action, suit, arbitration,
proceeding, investigation or inquiry, whether civil, criminal or administrative
("Litigation"), pending or, to the knowledge of the Company or the Subsidiaries,
threatened against the Company or the Subsidiaries, their respective businesses
or any of their assets, nor does the Company or the Subsidiaries know, or have
grounds to know, of any basis for any Litigation that would have, individually
or in the aggregate, a Material Adverse Effect on the Company. Except as set
forth in Schedule 4.09 of the Company Disclosure Statement, neither the Company
nor the Subsidiaries or any of their respective assets which are material to the
conduct of the business of the Company and the Subsidiaries, taken as a whole,
as heretofore conducted are subject to any Order (as hereinafter defined) of any
Governmental Entity.
SECTION 4.10 Compliance With Laws and Orders.
(a) Compliance. The Company and the Subsidiaries are in compliance with all
applicable laws, ordinances, rules or regulations (collectively, "Laws") and
orders, writs, injunctions, judgments, plans or decrees (collectively, "Orders")
of any Governmental Entity, except for such failures to so comply which,
individually and in the aggregate, would not have a Material Adverse Effect on
the Company. The business operations of the Company and the Subsidiaries are not
being conducted in violation of any Law or Order of any Governmental Entity,
except for possible violations which, individually or in the aggregate, would
not have a Material Adverse Effect on the Company.
(b) Licenses and Permits. The Company and the Subsidiaries have all
material licenses, permits, approvals, authorizations and consents of all
Governmental Entities and all certification organizations required for the
conduct of the business of the Company and the Subsidiaries (as presently
conducted and as proposed to be conducted under any existing business plan of
the Company or any Subsidiary) and operation of the facilities of the Company
and the Subsidiaries.
(c) Environmental Matters. The applicable Laws relating to pollution or
protection of the environment or health, including Laws relating to emissions,
discharges, generation, storage, labeling, releases or threatened releases of
pollutants, contaminants, radioactive material, chemicals or industrial, toxic,
hazardous or petroleum or petroleum-based substances, hazardous substances or
wastes ("Waste") into the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Waste including, without limitation,
the Clean Water Act, the Clean Air Act, the Resource Conservation and Recovery
Act, the Toxic Substances Control Act and the Comprehensive Environmental
Response Compensation Liability Act, as amended, and their state, local and
foreign counterparts are herein collectively referred to as the "Environmental
Laws".
The operations of Company and the Subsidiaries have at all times been
(within the period of any applicable statute of limitations) and are currently
in compliance with all Environmental Laws and there are no conditions and have
been no acts or omissions in connection with the operations of the Company or
the Subsidiaries or with any real property now or ever owned or leased by the
Company or any Subsidiary which would impose liability under any Environmental
Law, including but not limited to liability for Waste disposed on or off-site
prior to the Effective Time.
Except as set forth in Schedule 4.10(c) of the Company Disclosure
Statement, the Company has not received any written notice nor, to the knowledge
of the Company or the Subsidiaries, is there any matter threatened against the
Company or any Subsidiary, with respect to any of their respective facilities of
any material violation of or liability under any Environmental Laws which would
have a Material Adverse Effect on the Company.
SECTION 4.11 Title to Properties. The Company and the Subsidiaries have
good and marketable title to all of their respective assets, business and
properties, including, without limitation, all such properties (tangible and
intangible) reflected in the Recent Balance Sheet, except for inventory disposed
of in the ordinary course of business since the date of such Recent Balance
Sheet, free and clear of all mortgages, Liens, claims, licenses, equities,
options, conditional sales contracts, assessments, levies, easements, covenants,
reservations, restrictions, rights-of-way, exceptions, limitations, charges or
encumbrances of any nature
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13
whatsoever except those described in Schedule 4.11 of the Company Disclosure
Statement, and, in the case of real property, Liens for taxes not yet due or
which are being contested in good faith by appropriate proceedings (and which
have been sufficiently accrued or reserved against in the Recent Balance Sheet),
municipal and zoning ordinances and easements for public utilities, none of
which interfere with the use of the property as currently utilized. None of the
Company's or any Subsidiary's assets, business or properties are subject to any
restrictions with respect to the transferability thereof.
SECTION 4.12 Labor Matters. Except as set forth in Schedule 4.12 of the
Company Disclosure Statement, neither the Company nor any Subsidiary is a party
to any collective bargaining agreement. The employment agreements that have been
entered into by either the Company or any Subsidiary are set forth in Schedule
4.12 of the Company Disclosure Statement. Except to the extent set forth in
Schedule 4.12 of the Company Disclosure Statement, (a) there is no unfair labor
practice charge or complaint against the Company or the Subsidiaries pending or,
to the knowledge of the Company or the Subsidiaries, threatened; (b) there is no
labor strike, dispute, request for representation, slowdown or stoppage actually
pending or, to the knowledge of Company or the Subsidiaries, threatened against
or affecting the Company or the Subsidiaries nor any secondary boycott with
respect to products of the Company or the Subsidiaries; (c) no question
concerning representation has been raised or, to the knowledge of the Company or
the Subsidiaries, is threatened respecting the employees of the Company or the
Subsidiaries; and (d) there are no administrative charges or court complaints
against the Company or the Subsidiaries concerning alleged employment
discrimination or other employment related matters pending or, to the knowledge
of the Company or the Subsidiaries, threatened before the U.S. Equal Employment
Opportunity Commission or any Governmental Entity.
SECTION 4.13 Employee Benefit Plans.
(a) Disclosure. Schedule 4.13(a) of the Company Disclosure Statement sets
forth all pension, thrift, savings, profit sharing, retirement, incentive bonus
or other bonus, medical, dental, life, accident insurance, benefit, employee
welfare, disability, group insurance, stock purchase, stock option, stock
appreciation, stock bonus, executive or deferred compensation, hospitalization
and other similar fringe or employee benefit plans, programs and arrangements,
and any employment or consulting contracts, "golden parachutes," collective
bargaining agreements, severance agreements or plans, vacation and sick leave
plans, programs, arrangements and policies, including, without limitation, all
"employee benefit plans" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")). The items described in the
foregoing sentence and all employee manuals, and all written or binding oral
statements of policies, practices or understandings relating to employment,
which are provided to, for the benefit of, or relate to, any persons employed by
the Company or any Subsidiary are hereinafter sometimes referred to collectively
as "Employee Plans/Agreements," and each individually as an "Employee
Plan/Agreement." True and correct copies of all the Employee Plans/Agreements,
including all amendments thereto, have heretofore been made available to the
Purchaser. No Employee Plan/Agreement is a "multiemployer plan" (as defined in
Section 4001 of ERISA), and neither the Company nor any Subsidiary has ever
contributed nor been obligated to contribute to any such multiemployer plan.
(b) Terminations, Proceedings, Penalties, etc. With respect to each
employee benefit plan (including, without limitation, the Employee
Plans/Agreements) that is subject to the provisions of Title IV of ERISA and
with respect to which the Company or any Subsidiary or any of their assets may,
directly or indirectly, be subject to any material liability, contingent or
otherwise, or the imposition of any Lien (whether by reason of the complete or
partial termination of any such plan, the funded status of any such plan, any
"complete withdrawal" (as defined in Section 4203 of ERISA) or "partial
withdrawal" (as defined in Section 4205 of ERISA) by any person from any such
plan, or otherwise):
(i) no such plan has been terminated so as to subject, directly or
indirectly, any assets of the Company or any Subsidiary to any liability,
contingent or otherwise, or the imposition of any lien under Title IV of
ERISA;
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(ii) no proceeding has been initiated or, to the knowledge of the
Company or any Subsidiary, threatened by any person (including the Pension
Benefit Guaranty Corporation ("PBGC")) to terminate any such plan;
(iii) no condition or event currently exists or currently is expected
to occur that could subject, directly or indirectly, any assets of the
Company or any Subsidiary to any liability, contingent or otherwise, or the
imposition of any lien under Title IV of ERISA, whether to the PBGC or to
any other person or otherwise on account of the termination of any such
plan;
(iv) if any such plan were to be terminated, or if the Company or any
Subsidiary caused a partial or total withdrawal from any such plan, as of
the Effective Time, no assets of the Company or any Subsidiary would be
subject, directly or indirectly, to any liability, contingent or otherwise,
or the imposition of any Lien under Title IV of ERISA;
(v) no "reportable event" (as defined in Section 4043 of ERISA) has
occurred with respect to any such plan;
(vi) no such plan which is subject to Section 302 of ERISA or Section
412 of the Code has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code, respectively),
whether or not waived; and
(vii) no such plan is a plan described in Section 413(c) of the Code.
(c) Prohibited Transactions, etc. There have been no "prohibited
transactions" within the meaning of Section 406 or 407 of ERISA or Section 4975
of the Code for which a statutory or administrative exemption does not exist
with respect to any Employee Plan/Agreement. To the knowledge of the Company and
the Subsidiaries, no event or omission has occurred in connection with which the
Company or any Subsidiary or any Employee Plan/Agreement, directly or
indirectly, could be subject to any material liability under ERISA, the Code or
any other Law or Order applicable to any Employee Plan/Agreement.
(d) Full Funding. The funds available under each Employee Plan/Agreement
that is subject to Title IV of ERISA or Section 412 of the Code which is
intended to be a funded plan equal or exceed the amounts required to be paid, or
which would be required to be paid if such Employee Plan/Agreement were
terminated, on account of rights vested or accrued as of the Effective Time
(using the actuarial methods and assumptions then used by the Company's
actuaries in connection with the funding of such Employee Plan/ Agreement).
(e) Controlled Group; Affiliated Service Group; Leased Employees. Other
than the current relationship between the Company and the Subsidiaries, neither
the Company nor any Subsidiary has ever been a member of a controlled group of
corporations as defined in Section 414(b) of the Code or in common control with
any unincorporated trade or business as determined under Section 414(c) of the
Code. Neither the Company nor any Subsidiary is or ever has been a member of an
"affiliated service group" within the meaning of Section 414(m) of the Code.
There are not any leased employees within the meaning of Section 414(n) of the
Code who perform services for the Company or any Subsidiary for which the
Company or any Subsidiary has not materially complied with the terms of the
applicable Employee Plans/Agreements.
(f) Payments and Compliance. With respect to each Employee Plan/Agreement,
(i) all payments currently due and owing from the Company and any Subsidiary to
date have been made and all amounts accrued to date as liabilities of the
Company or any Subsidiary which have not been paid have been recorded on the
books of the Company and the Subsidiaries and are reflected in the Recent
Balance Sheet in accordance with GAAP; (ii) the Company and the Subsidiaries
have materially complied with, and each such Employee Plan/Agreement conforms in
form and operation to, all applicable laws and regulations, including but not
limited to ERISA and the Code, in all material respects and all reports and
information relating to such Employee Plan/Agreement required to be filed with
any Governmental Entity have been timely filed; (iii) all reports and
information relating to each such Employee Plan/Agreement required to be
disclosed or provided to participants or their beneficiaries have been timely
disclosed or provided; (iv) each such Employee Plan/Agreement which is intended
to qualify under Section 401 of the Code has received a favorable
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15
determination (or, in the case of a standardized plan, the opinion) letter from
the Internal Revenue Service with respect to such qualification, its related
trust has been determined to be exempt from taxation under Section 501(a) of the
Code, and nothing has occurred since the date of such letter that has or is
likely to have a material adverse effect on such qualification or exemption;
(iv) there are no actions, suits or claims pending (other than routine claims
for benefits) or, to the knowledge of the Company or the Subsidiaries,
threatened with respect to such Employee Plan/Agreement; and (v) no Employee
Plan/Agreement is a plan which is established and maintained outside the United
States primarily for the benefit of individuals substantially all of whom are
nonresident aliens.
(g) Post-Retirement Benefits. No Employee Plan/Agreement provides benefits,
including, without limitation, death or medical benefits (whether or not
insured) with respect to current or former employees of the Company or any
Subsidiary beyond their retirement or other termination of service other than
(i) coverage mandated by applicable law, (ii) death or retirement benefits under
any Employee Plan/Agreement that is an employee pension benefit plan, (iii)
deferred compensation benefits accrued as liabilities on the books of the
Company (including the Recent Balance Sheet), (iv) disability benefits under any
Employee Plan/Agreement, (v) benefits arising in connection with a severance or
separation plan, program or arrangement or (vi) conversion rights under ordinary
life insurance policies.
(h) No Triggering of Obligations. Except as set forth on Schedule 4.13(h)
to the Company Disclosure Statement, the consummation of the transactions
contemplated by this Agreement and the Stock Option Agreement will not (i)
entitle any current or former employee of the Company or any Subsidiary to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due to any such employee or
former employee.
(i) Future Commitments. Neither the Company nor any Subsidiary has
announced any plan or legally binding commitment to create any additional
Employee Plans/Agreements or to amend or modify any existing Employee
Plan/Agreement, except to the extent necessary or appropriate to comply with
applicable Law.
SECTION 4.14 Trade Rights. Schedule 4.14 of the Company Disclosure
Statement lists all Trade Rights (as defined below) in which the Company or any
Subsidiary has any interest, specifying whether such Trade Rights are owned,
controlled, used or held (under license or otherwise) by the Company or any
Subsidiary, and also indicating which of such Trade Rights are registered. All
Trade Rights shown as registered in Schedule 4.14 of the Company Disclosure
Statement have been properly registered, all pending registrations and
applications have been properly made and filed and all annuity, maintenance,
renewal and other fees relating to registrations or applications are current. In
order to conduct the business of the Company and the Subsidiaries, as such is
currently being conducted or proposed to be conducted under currently existing
business plans, neither the Company nor any Subsidiary requires any Trade Rights
that it does not already have. Neither the Company nor any Subsidiary is
infringing and/or has infringed any Trade Rights of another in the operation of
the business of the Company and the Subsidiaries, nor, to the knowledge of the
Company and the Subsidiaries, is any other person infringing the Trade Rights of
the Company or the Subsidiaries. Neither the Company nor any Subsidiary has
granted any license or made any assignment of any Trade Right listed on Schedule
4.14 of the Company Disclosure Statement, nor does the Company or any Subsidiary
pay any royalties or other consideration for the right to use any Trade Rights
of others. There is no Litigation pending or, to the knowledge of the Company
and the Subsidiaries, threatened to challenge the Company's or any Subsidiary's
right, title and interest with respect to its continued use and right to
preclude others from using any Trade Rights of the Company or any Subsidiary.
All Trade Rights of the Company and the Subsidiaries are valid, enforceable and
in good standing, and, to the knowledge of the Company and the Subsidiaries,
there are no equitable defenses to enforcement based on any act or omission of
the Company or the Subsidiaries. The consummation of the transactions
contemplated hereby or by the Stock Option Agreement will not alter or impair
any Trade Rights owned or used by Company or the Subsidiaries. As used herein,
the term "Trade Rights" shall mean and include: (i) all trademark rights,
business identifiers, trade dress, service marks, trade names and brand names,
all registrations thereof and applications therefor and all goodwill associated
with the foregoing; (ii) all copyrights, copyright registrations and copyright
applications,
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and all other rights associated with the foregoing and the underlying works of
authorship; (iii) all patents and patent applications, and all international
proprietary rights associated therewith; (iv) all contracts or agreements
granting any right, title, license or privilege under the intellectual property
rights of any third party; (v) all inventions, mask works and mask work
registrations, know-how, discoveries, improvements, designs, trade secrets, shop
and royalty rights, employee covenants and agreements respecting intellectual
property and non-competition and all other types of intellectual property; and
(vi) all claims for infringement or breach of any of the foregoing.
SECTION 4.15 Material Adverse Change. Since March 31, 1997, except as
otherwise set forth in the Company's Quarterly Reports on Form 10-Q for the
quarters ended June 30 and September 30, 1997 and except as set forth in
Schedule 4.15 to the Company Disclosure Statement, there has not been any change
in the business of the Company and the Subsidiaries, results of operations,
assets or condition (financial or otherwise) of the Company and the Subsidiaries
that is materially adverse to the Company and the Subsidiaries taken as a whole.
Since March 31, 1997, except as otherwise set forth in the Company's Quarterly
Reports on Form 10-Q for the quarters ended June 30 and September 30, 1997 and
except as set forth in Schedule 4.15 to the Company Disclosure Statement, the
Company and the Subsidiaries have conducted their businesses only in the
ordinary course of business consistent with past practices and there has not
been, directly or indirectly:
(a) any payment or granting by the Company or any of the Subsidiaries of
any increase in compensation to any director or executive officer of the Company
or, except in the ordinary course of business and consistent with past practice,
any employee of the Company or the Subsidiaries;
(b) any granting by the Company or any of the Subsidiaries to any such
director, executive officer or employee of any increase in severance or
termination pay, except as required under employment, severance or termination
agreements or plans in effect prior to the date of this Agreement;
(c) any entry by the Company or any of the Subsidiaries into any
employment, severance or termination agreement with any such director or
executive officer;
(d) any adoption or increase in payments to or benefits under any Employee
Plans/Agreements;
(e) any change in accounting methods, principles or practices by the
Company and the Subsidiaries, except insofar as may have been required by a
change in GAAP;
(f) any declaration, setting aside, or payment of any dividend or any other
distribution in respect of the Company's capital stock; any redemption, purchase
or other acquisition by the Company of any capital stock of the Company, or any
security relating thereto; or any other payment to any shareholder of the
Company as such a shareholder;
(g) any sale, lease or other transfer or disposition of any properties or
assets of the Company or any Subsidiary, except for the sale of inventory items
in the ordinary course of business;
(h) any discharge of any obligation or liability (whether accrued,
absolute, contingent or otherwise), other than in the ordinary course of
business consistent with past practices;
(i) any indebtedness for borrowed money incurred, assumed or guaranteed by
the Company or any Subsidiary, which will not be repaid prior to the Effective
Time; or
(j) any agreement or commitment to do any of the things described in the
preceding clauses (a) through (i).
SECTION 4.16 Certain Approvals. The Board of Directors of the Company has
taken appropriate action such that the provisions of Section 1203 of the GCL
will not apply to any of the transactions contemplated by this Agreement, the
Stock Option Agreement and the Stockholder Agreements.
SECTION 4.17 Brokers. None of the Company, the Subsidiaries, or any of
their respective officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees,
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commission or finder's fees in connection with the transactions contemplated by
this Agreement or the Stock Option Agreement.
SECTION 4.18 State Takeover Statutes; Applicability of Articles of
Incorporation; Required Vote. Except for Section 1101 of the GCL, no California
takeover statute or similar statute applies or purports to apply to the Offer or
the Merger, or to this Agreement, the Stock Option Agreement or the Stockholder
Agreements or the transactions contemplated hereby or thereby. The Board of
Directors of the Company has taken such action as may be necessary to ensure
that the supermajority vote provision of ARTICLE FOUR of the Company's articles
of incorporation is inapplicable to the Offer or the Merger, or to this
Agreement, the Stock Option Agreement or the Stockholders Agreements or the
transactions contemplated hereby or thereby. In the event the Shareholders'
Meeting is required to approve the Merger and the adoption of this Agreement,
the approval by the holders of a majority of the votes entitled to be cast by
all holders of Common Stock is the only vote required to approve the Merger and
the adoption of this Agreement.
SECTION 4.19 Year 2000 Compliance. Except as identified on Schedule 4.19 of
the Company Disclosure Statement, none of the personal property, equipment or
assets owned or utilized by the Company and the Subsidiaries, including but not
limited to computer software, databases, hardware, controls and peripherals,
contains any defect related to the occurrence of the year 2000 or the use of any
date after December 31, 1999 in connection with such property or asset (a "Year
2000 Defect"). Except as identified on Schedule 4.19 of the Company Disclosure
Statement, none of the property or assets owned or utilized by the Company and
the Subsidiaries will fail to perform in any material respect or require any
repair, rewrite, conversion or other adaption because of, or due in any way to,
a Year 2000 Defect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser jointly and severally represent and warrant to the
Company as follows:
SECTION 5.01 Organization and Qualification. Parent is a corporation duly
organized, validly existing and in good standing under the laws of Delaware. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of California. Each of Parent and the Purchaser has
the requisite corporate power and authority to own, operate or lease its
properties and to carry on its business as it is now being conducted, and is
duly qualified or licensed to do business, and is in good standing, in each
jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not have a
Material Adverse Effect on Parent. The term "Material Adverse Effect on Parent",
as used in this Agreement, means any change in or effect on the business,
operations, financial condition or prospects of Parent or any of its
subsidiaries that would be materially adverse to Parent and its subsidiaries
taken as a whole.
SECTION 5.02 Authority. Each of Parent and the Purchaser has all necessary
corporate power and authority to execute and deliver this Agreement and the
Stock Option Agreement and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Stock Option
Agreement by Parent and the Purchaser and the consummation by Parent and the
Purchaser of the transactions contemplated hereby and thereby have been duly and
validly authorized and approved by the Boards of Directors of Parent and the
Purchaser and by the sole stockholder of the Purchaser and no other corporate
proceedings on the part of Parent or the Purchaser are necessary to authorize or
approve this Agreement or the Stock Option Agreement or to consummate the
transactions contemplated hereby or thereby. Each of this Agreement and the
Stock Option Agreement has been duly executed and delivered by each of Parent
and the Purchaser and, assuming the due and valid authorization, execution and
delivery by the Company, constitutes a valid and binding obligation of each of
Parent and the Purchaser enforceable against each of them in accordance with its
respective terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
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SECTION 5.03 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement or the Stock
Option Agreement by Parent or the Purchaser, the consummation by Parent or the
Purchaser of the transactions contemplated hereby or thereby or the compliance
by Parent or the Purchaser with any of the provisions hereof or thereof will (i)
conflict with or violate the organizational documents of Parent or the
Purchaser, (ii) conflict with or violate any statute, ordinance, rule,
regulation, order, judgment or decree applicable to Parent or the Purchaser, or
any of their subsidiaries, or by which any of them or any of their respective
properties or assets may be bound or affected, or (iii) result in a Violation
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or
the Purchaser, or any of their respective subsidiaries, is a party or by which
any of their respective properties or assets may be bound or affected, except in
the case of the foregoing clauses (ii) and (iii) for any such Violations which
would not have a Material Adverse Effect on Parent or materially adversely
affect the ability of Parent or the Purchaser to consummate the transactions
contemplated by this Agreement and the Stock Option Agreement.
(b) None of the execution and delivery of this Agreement or the Stock
Option Agreement by Parent and the Purchaser, the consummation by Parent and the
Purchaser of the transactions contemplated hereby or thereby or the compliance
by Parent and the Purchaser with any of the provisions hereof or thereof will
require any Consent of any Governmental Entity, except for (i) compliance with
any applicable requirements of the Exchange Act, (ii) the filing of an agreement
of merger together with an officer's certificate of the Company and the
Purchaser pursuant to the GCL, (iii) compliance with the HSR Act and any
requirements of any foreign or supranational Antitrust Laws, and (iv) Consents
or filings the failure of which to obtain or make would not have a Material
Adverse Effect on Parent or materially adversely affect the ability of Parent or
the Purchaser to consummate the transactions contemplated by this Agreement and
the Stock Option Agreement.
SECTION 5.04 Information. None of the information supplied or to be
supplied by Parent and the Purchaser in writing specifically for inclusion in
(i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the Proxy Statement or
(iv) the other filings will, at the respective times filed with the SEC or such
other Governmental Entity and, in addition, in the case of the Proxy Statement
at the date it or any amendment or supplement is mailed to Shareholders, at the
time of the Shareholders' Meeting and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
SECTION 5.05 Financing. Parent or the Purchaser has available the funds
necessary to consummate the Offer and the Merger and the transactions
contemplated hereby on a timely basis.
SECTION 5.06 Brokers. None of Parent, the Purchaser, or any of their
respective subsidiaries, officers, directors or employees, has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the transactions contemplated by this
Agreement or the Stock Option Agreement for or with respect to which the Company
is or might be liable.
SECTION 5.07 Purchaser.
(a) Parent owns all of the outstanding stock of Purchaser; at all times
prior to the Merger, no person other than Parent has owned, or will own, any of
the outstanding stock of Purchaser. Purchaser was formed by Parent solely for
the purpose of engaging in the transactions contemplated by this Agreement.
(b) There are not as of the date of this Agreement, and there will not be
at the Effective Time, any outstanding or authorized options, warrants, calls,
rights, commitments or any other agreements of any character which Purchaser is
a party to, or may be bound by, requiring it to issue, transfer, sell, purchase,
redeem or acquire any shares of its capital stock or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for or
acquire, any shares of its capital stock.
(c) As of the date of this Agreement and the Effective Time, except for
obligations incurred in connection with this Agreement or the transactions
contemplated hereby, Purchaser has not and will not have
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incurred, directly or indirectly through any other corporation, any obligations
or liabilities of any kind or engaged in any activities of any type or kind
whatsoever or entered into any arrangement or arrangements with any person or
entity.
(d) Parent will make available, and Purchaser will have, at or before the
date on which Parent or the Purchaser acquires Shares pursuant to the Offer,
adequate funds to accept for payment, purchase and pay for all of the Shares
tendered and not withdrawn pursuant to the Offer.
SECTION 5.08 No Share Acquisition. Neither Parent nor the Purchaser has
acquired any of the Shares during the two year period prior to the date hereof.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as required by this
Agreement or with the prior written consent of Parent, during the period from
the date of this Agreement to the Effective Time, the Company will and will
cause each of the Subsidiaries to conduct its operations only in the ordinary
course of business consistent with past practice and will use its best efforts
and will cause each of the Subsidiaries to use its best efforts, to preserve
intact the business organization of the Company and each of the Subsidiaries, to
keep available the services of its and their present officers and key employees
and to preserve the goodwill of those having business relationships with it.
Without limiting the generality to the foregoing, and except as otherwise
required by this Agreement or as set forth in Section 6.01 of the Company
Disclosure Statement, the Company will not, and will not permit any of the
Subsidiaries to, prior to the Effective Time, without the prior written consent
of Parent:
(a) adopt any amendment to its charter or by-laws or comparable
organizational documents;
(b) except for issuances of capital stock of the Subsidiaries to the
Company, or to a wholly-owned Subsidiary of the Company, issue, reissue or sell
or authorize the issuance, reissuance or sale of additional shares of capital
stock of any class, or shares convertible into capital stock of any class, or
any rights, warrants or options to acquire any convertible shares or capital
stock, other than the issuance of Shares, pursuant to Options outstanding on the
date of this Agreement or pursuant to the Stock Option Agreement;
(c) declare, set aside or pay any dividend or other distribution (whether
in cash, shares or property or any combination thereof) in respect of any class
or series of its capital stock other than between any of the Company and any
Subsidiary which is wholly-owned by the Company;
(d) split, combine, subdivide, reclassify or redeem, purchase or otherwise
acquire, or propose to redeem or purchase or otherwise acquire, any shares of
its capital stock, or any of its other shares;
(e) except for (A) increases in salary, wages and benefits of non-executive
officers or employees of the Company or the Subsidiaries in the ordinary course
of business consistent with past practice, (B) increases in salary, wages and
benefits granted to officers and employees of the Company or the Subsidiaries in
conjunction with new hires, promotions or other changes in job status in the
ordinary course of business consistent with past practice, or (C) increases in
salary, wages and benefits to employees of the Company or the Subsidiaries
pursuant to collective bargaining agreements entered into in the ordinary course
of business consistent with past practice, (i) increase the compensation or
fringe benefits payable or to become payable to its directors, officers or key
employees (whether from the Company or any of the Subsidiaries), or (ii) pay any
benefit not required by any existing plan or arrangement (including, without
limitation, the granting of stock options, stock appreciation rights, shares of
restricted stock or performance units), or (iii) grant any severance or
termination pay to (except pursuant to existing agreements, plans or policies
and as required by such agreements, plans or polices), or (iv) enter into any
employment or severance agreement with, any director, officer or other key
employee of the Company or any of the Subsidiaries or (iv) establish, adopt,
enter into, or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock or Employee Plans/Agreements for
the benefit or welfare of any directors, officers or current or former
employees, except in each case to the extent required by applicable Law or
regulation;
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(f) acquire, sell, lease or dispose of any assets (other than inventory)
which are material to the Company and the Subsidiaries, taken as a whole, or
enter into any commitment to do any of the foregoing or enter into any material
commitment or transaction outside the ordinary course of business consistent
with past practice;
(g) (i) incur, assume or pre-pay any long-term debt or incur or assume any
short-term debt, except that the Company and the Subsidiaries may incur, assume
or pre-pay debt in the ordinary course of business consistent with past practice
under existing lines of credit, (ii) pay, discharge, settle or satisfy as other
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise, other than in the ordinary course of business
consistent with past practice, (iii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person, or (iv) make any loans, advances or capital
contributions to, or investments in, any other person except in the ordinary
course of business consistent with past practice and except for loans, advances,
capital contributions or investments between any Subsidiary wholly-owned by the
Company and the Company or another Subsidiary wholly-owned by the Company;
(h) make any tax election that would have a material effect on the tax
liability of the Company or the Subsidiaries or settle or compromise any tax
liability of the Company or the Subsidiaries that would materially affect the
aggregate tax liability of the Company or the Subsidiaries;
(i) except in the ordinary course of business consistent with past
practice, enter into, modify, amend or terminate any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license which is material to the Company and the
Subsidiaries or waive, release or assign any material rights or claims; or
(j) agree in writing or otherwise to take any of the foregoing actions.
SECTION 6.02 Information. From the date hereof until the Effective Time,
the Company will, and will cause the Subsidiaries, and each of its and their
respective officers, directors, employees, counsel, advisors and representatives
(collectively, the "Company Representatives") to, provide Parent and the
Purchaser and their respective officers, employees, counsel, advisors and
representatives (collectively, the "Parent Representatives") access, during
normal business hours and upon reasonable notice, to the offices and other
facilities and to the books and records of the Company and the Subsidiaries, and
will permit Parent and the Purchaser to make inspections of such as either of
them may reasonably require (including environmental testing) and will cause the
Company Representatives and the Subsidiaries to furnish Parent, the Purchaser
and the Parent Representatives to the extent available with such other
information with respect to the business of the Company and the Subsidiaries as
Parent and the Purchaser may from time to time reasonably request; provided,
however, that all requests for such access, inspection or information pursuant
to this Section 6.02 shall be made through the President and Chief Executive
Officer of the Company or such other person as he shall designate in writing to
Parent. Unless otherwise required by Law, Parent and the Purchaser will, and
will cause the Parent Representatives to hold any such information in confidence
until such time as such information otherwise becomes publicly available through
no wrongful act of Parent, the Purchaser or the Parent Representative, all as
specifically provided in the confidentiality agreement, dated August 1, 1997,
between Voith Sulzer Papiertechnik GmbH & Co KG and the Company (the
"Confidentiality Agreement").
SECTION 6.03 Commercially Reasonable Best Efforts. Subject to the terms and
conditions herein provided and to applicable legal requirements, each of the
parties hereto agrees to use its commercially reasonable best efforts to take,
or cause to be taken, all action, and to do, or cause to be done, in the case of
the Company, consistent with the fiduciary duties of the Company's Board of
Directors, and to assist and cooperate with the other parties hereto in doing,
as promptly as practicable, all things necessary, proper or advisable under
applicable Laws and regulations to ensure that the conditions set forth in Annex
I and Article VII are satisfied and to consummate and make effective the
transactions contemplated by the Offer, this Agreement and the Stock Option
Agreement.
In addition, if at any time prior to the Effective Time any event or
circumstance relating to either the Company or Parent or the Purchaser or any of
their respective subsidiaries should be discovered by the Company or Parent, as
the case may be, and which should be set forth in an amendment to the Offer
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Documents or Schedule 14D-9, the discovering party will promptly inform the
other party of such event or circumstance. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement or the Stock Option Agreement, including the execution of
additional instruments, the proper officers and directors of each party to this
Agreement or the Stock Agreement, as the case may be, shall take all such
necessary action.
SECTION 6.04 Consents.
(a) Each of the parties will use its commercially reasonable best efforts
to obtain as promptly as practicable all Consents of any Governmental Entity or
any other person required in connection with, and waivers of any Violations that
may be caused by, the consummation of the transactions contemplated by the
Offer, the Merger, this Agreement and the Stock Option Agreement.
(b) In furtherance and not in limitation of the foregoing, Parent shall use
its commercially reasonable best efforts to resolve such objections, if any, as
may be asserted with respect to the transactions contemplated by this Agreement
or the Stock Agreement under any antitrust, competition or trade regulatory
laws, rules or regulations of any domestic or foreign government or governmental
authority or any multinational authority ("Antitrust Laws").
(c) Any party hereto shall promptly inform the others of any material
communication from the United States Federal Trade Commission, the Department of
Justice or any other domestic or foreign government or governmental or
multinational authority regarding any of the transactions contemplated by this
Agreement or the Stock Option Agreement. If any party or any affiliate thereof
receives a request for additional information or documentary material from any
such government or authority with respect to the transactions contemplated by
this Agreement or the Stock Option Agreement, then such party will endeavor in
good faith to make, or cause to be made, as soon as reasonably practicable and
after consultation with the other party, an appropriate response in compliance
with such request. Parent will advise the Company promptly in respect of any
understandings, undertakings or agreements (oral or written) which Parent
proposes to make or enter into with the Federal Trade Commission, the Department
of Justice or any other domestic or foreign government or governmental or
multinational authority in connection with the transactions contemplated by this
Agreement or the Stock Option Agreement.
SECTION 6.05 Public Announcements. So long as this Agreement is in effect,
Parent, the Purchaser and the Company agree to use reasonable efforts to consult
with each other before issuing any press release or otherwise making any public
statement with respect to the transactions contemplated by this Agreement or the
Stock Option Agreement.
SECTION 6.06 Employee Benefit Arrangements. Parent agrees that the Company
will honor and, from and after the Effective Time, Parent will cause the
Surviving Corporation to honor, all Employee Plans/Agreements to which the
Company or any of its Subsidiaries is presently a party which have been
disclosed hereunder; provided , however, that nothing contained in this Section
6.06 shall limit or restrict the Surviving Corporation's right on or after the
Effective Time to amend, modify or terminate any Employee Plans/Agreements in
accordance with the terms thereof and applicable Law.
SECTION 6.07 No Solicitation.
(a) The Company represents and warrants to, and covenants and agrees with,
Parent and the Purchaser that neither the Company nor any of the Subsidiaries
has any agreement, arrangement or understanding with any potential acquirer that
directly or indirectly, would be violated, or require any payments, by reason of
the execution, delivery and/or consummation of this Agreement and the Stock
Option Agreement. The Company shall, and shall use its commercially reasonable
best efforts to cause the Subsidiaries and the officers, directors, employees,
investment bankers, attorneys and other agents and representatives of the
Company and the Subsidiaries to, immediately cease any existing discussions or
negotiations with any person (including a "person" as defined in Section
13(d)(3) of the Exchange Act) other than Parent or the Purchaser (a "Third
Party") heretofore conducted with respect to any Acquisition Transaction (as
hereinafter defined). The Company shall not, and shall use its commercially
reasonable best efforts to cause the Subsidiaries and the officers, directors,
employees, investment bankers, attorneys and other agents and representatives of
the
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Company and the Subsidiaries not to, directly or indirectly, (x) solicit,
initiate, continue, facilitate or encourage (including by way of furnishing or
disclosing non-public information) any inquiries, proposals or offers from any
Third Party with respect to, or that could reasonably be expected to lead to,
any acquisition or purchase of a material portion of the assets or business of,
or any significant equity interest in (including by way of a tender offer), or
any amalgamation, merger, consolidation or business combination with, or any
recapitalization or restructuring, or any similar transaction involving, the
Company or any of the Subsidiaries (the foregoing being referred to collectively
as an "Acquisition Transaction"), or (y) negotiate, explore or otherwise
communicate in any way with any Third Party with respect to any Acquisition
Transaction or enter into, approve or recommend any agreement, arrangement or
understanding requiring the Company to abandon, terminate or fail to consummate
the Offer and/or the Merger or any other transaction contemplated hereby or by
the Stock Option Agreement. Notwithstanding anything to the contrary in the
foregoing, the Company may in response to an unsolicited written proposal with
respect to an Acquisition Transaction involving the acquisition of all of the
Shares (or all or substantially all of the assets of the Company and the
Subsidiaries) from a Third Party (which proposal (1) is not subject to a
financing condition and is from a person that a nationally recognized investment
bank advises in writing is financially capable of consummating such proposal or
(2) is subject to financing, but is from a person that a nationally recognized
investment bank advises in writing is financially capable of achieving such
financing to consummate such proposal), (i) furnish or disclose non-public
information to such Third Party and (ii) negotiate, explore or otherwise
communicate with such Third Party, in each case only if (A) after being advised
in writing by its outside counsel with respect to its fiduciary obligations to
the Shareholders under applicable Law, the Board of Directors of the Company
determines in good faith that taking such action is necessary in the exercise of
its fiduciary obligations under applicable Law (the proposal with respect to an
Acquisition Transaction meeting such requirements being a "Superior Proposal"),
(B) prior to furnishing or disclosing any non-public information to, or entering
into discussions or negotiations with, such Third Party, the Company receives
from such Third Party an executed confidentiality agreement with terms no less
favorable in the aggregate to the Company than those contained in the
Confidentiality Agreement, but which confidentiality agreement shall not provide
for any exclusive right to negotiate with the Company or any payments by the
Company and (C) the Company advises Parent of all such non-public information
delivered to such Third Party concurrently with such delivery; provided,
however, that the Company shall not, and shall cause its affiliates not to,
enter into a definitive agreement with respect to a Superior Proposal unless the
Company first complies with Section 6.07(b) hereof, including the last sentence
thereof, and then unless (I) the Company concurrently terminates this Agreement
in accordance with the terms hereof, pays any Termination Fee required under
Section 8.03(b) and agrees to pay any other amounts required under such Section
8.03(b) and (II) such agreement permits the Company, subject to the fiduciary
duties of the Board of Directors, to terminate it if it receives a Superior
Proposal, such termination and related provisions to be on terms no less
favorable to the Company, including as to fees and reimbursement of expenses, as
those contained herein.
(b) The Company shall promptly (but in any event within one business day of
the Company becoming aware of same) advise Parent of the receipt by the Company,
any of the Subsidiaries or any of the Company's bankers, attorneys or other
agents or representatives of any inquiries or proposals relating to an
Acquisition Transaction and any actions taken pursuant to Section 6.07(a). The
Company shall promptly (but in any event within three business days of the
Company becoming aware of same) provide Parent with a copy of any such inquiry
or proposal in writing and a written statement with respect to any such
inquiries or proposals not in writing, which statement shall include the
identity of the parties making such inquiries or proposal and the material terms
thereof; provided, however, that the Company shall not be obligated to provide a
copy of, or a written statement with respect to, any such inquiry if, after
being advised in writing by its outside legal counsel with respect to its
fiduciary obligations, the Board of Directors of the Company determines that not
providing such copy or written statement is necessary to allow the Board of
Directors of the Company to fulfill its fiduciary duties to the Shareholders
under applicable Law. The Company shall, from time to time, promptly (but in any
event within one business day of the Company becoming aware of same) inform
Parent of the status and content of and material developments (including the
calling of meetings of the Board of Directors of the Company to take action with
respect to such Acquisition Transaction) with respect to any discussions
regarding any Acquisition Transaction with a Third Party; provided, however,
that the Company shall not be
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23
obligated to make such disclosure if, after being advised in writing by its
outside legal counsel with respect to its fiduciary obligations, the Board of
Directors of the Company determines that not providing such disclosure is
necessary to allow the Board of Directors of the Company to fulfill its
fiduciary duties to the Shareholders under applicable Law. For the avoidance of
doubt, the Company agrees that it will not enter into any agreement with respect
to a Superior Proposal unless and until Parent has been given the opportunity at
least six business days prior to the entering into such agreement to match the
terms of such agreement.
(c) The Company has obtained the oral agreement of each member of the Board
of Directors of the Company and of its executive officers that each such person
will comply with the provisions of this Section 6.07.
SECTION 6.08 Notification of Certain Matters. Parent and the Company shall
promptly notify each other of (a) the occurrence or non-occurrence of any fact
or event which would be reasonably likely (i) to cause any representation or
warranty contained in this Agreement or the Stock Option Agreement to be untrue
or inaccurate in any material respect at any time from the date hereof to the
Effective Time or (ii) to cause any material covenant, condition or agreement
hereunder or under the Stock Option Agreement not to be complied with or
satisfied in all material respects and (b) any failure of the Company, Parent or
the Purchaser, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder or under
the Stock Option Agreement in any material respect; provided, however, that no
such notification shall affect the representations or warranties of any party or
the conditions to the obligations of any party hereunder or under the Stock
Option Agreement.
SECTION 6.09 State Takeover Laws. The Company shall, upon the request of
the Purchaser, take all reasonable steps to assist in any challenge by the
Purchaser to the validity or applicability to the transactions contemplated by
this Agreement and the Stock Option Agreement, including the Offer and the
Merger and by the Stockholder Agreements, of any state takeover law.
SECTION 6.10 Indemnification and Insurance.
(a) The Purchaser and Parent agree that until six years from the date the
Shares are purchased by Parent or the Purchaser in the Offer (the "Acceptance
Date"), the Purchaser will maintain all rights to indemnification now existing
in favor of the directors, officers, employees, fiduciaries and agents of the
Company as provided in the Company's Articles of Incorporation and Bylaws or
otherwise in effect under any agreement on the date of this Agreement and that
the Articles of Incorporation and Bylaws of the Purchaser shall not be amended
to reduce or limit the rights of indemnity afforded to the present and former
directors and officers of the Company, or the ability of the Purchaser to
indemnify them, nor to hinder, delay or make more difficult the exercise of such
rights of indemnity or the ability to indemnify.
(b) The Purchaser will at all times exercise the powers granted to it by
its Articles of Incorporation, its Bylaws, and by applicable law to indemnify
and hold harmless to the fullest extent possible present or former directors,
officers, employees, fiduciaries and agents of the Company against any
threatened or actual claim, action, suit, proceeding or investigation made
against them arising from their service in such capacities (or service in such
capacities for another enterprise at the request of the Company) prior to, and
including the Acceptance Date for at least six years from the Acceptance Date.
Parent shall assume and perform the obligations of the Purchaser under this
Section 6.10; provided, that, any indemnified party shall make a good faith
effort (which shall not include any requirement to bring any suit, claim,
action, or other proceeding) to cause the Purchaser to perform its obligations
under this Section 6.10 before requesting Parent to assume and perform such
obligations.
(c) Should any threatened or actual claim action, suit, proceeding or
investigation be made against any present or former director, officer, employee,
fiduciary or agent of the Company, arising from his services as such, within six
years from the Effective Time, the provisions of this Section 6.10 shall
continue in effect until the final disposition of all such claims.
(d) Any indemnified party wishing to claim indemnification under this
Section, upon learning of any such action, suit, claim, proceeding or
investigation, shall notify Parent and the Purchaser within 15 days thereof;
provided, however, that any failure so to notify Parent and the Purchaser of any
obligation to
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24
indemnify such indemnified party or of any other obligation imposed by this
Section shall not affect such obligations except to the extent Parent and/or the
Purchaser is actually prejudiced thereby. Parent and the Purchaser shall be
entitled to assume the defense of any such action, suit, claim, proceeding or
investigation with counsel of its choice, unless there is, under applicable
standards of professional conduct, a conflict of any significant issue between
the positions of Parent and the Purchaser, on the one hand, and the indemnified
parties, on the other, in which event the indemnified parties as a group may
retain one law firm to represent them with respect to such matter. Neither
Parent or the Purchaser, on the one hand, nor the indemnified parties, on the
other hand, may settle any such action, suit, claim, proceeding or investigation
without the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed.
(e) In addition to the foregoing, Parent shall cause the Purchaser to honor
in accordance with their terms any indemnification agreements in existence on
the date hereof between the Company and any present or former director, officer,
employee, fiduciary or agent of the Company.
(f) The parties agree that the provisions of this Section 6.10 will not
require Parent or the Purchaser to maintain directors' and officers' insurance
coverage in favor of the Company's present and former directors and officers.
(g) Notwithstanding anything in this Agreement to the contrary, in the
event this Agreement is terminated in accordance with its terms before the
consummation of the Merger, the Purchaser's and Parent's obligations under this
Section 6.10 shall cease upon such termination.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger If
the Offer Shall Have Been Consummated. The respective obligations of Parent, the
Purchaser and the Company to consummate the Merger if the Offer shall have been
consummated are subject to the satisfaction or waiver in writing by each party
hereto at or before the Effective Time, of each of the following conditions (the
"Second-Step Conditions"):
(a) Shareholder Approval. The Shareholders shall have duly approved the
transactions contemplated by this Agreement, to the extent required pursuant to
the requirements of the Company's articles of incorporation and applicable Law.
(b) Purchase of Shares. The Purchaser shall have accepted for payment and
paid for Shares pursuant to the Offer in accordance with the terms hereof;
provided, that this condition shall be deemed to have been satisfied with
respect to Parent and the Purchaser if the Purchaser fails to accept for payment
or pay for Shares pursuant to the Offer in violation of the terms of the Offer.
(c) Injunctions; Illegality. The consummation of the Merger shall not be
restrained, enjoined or prohibited by any order, judgment, decree, injunction or
ruling of a court of competent jurisdiction or any Governmental Entity, and
there shall not have been any statute, rule or regulation enacted, promulgated
or deemed applicable to the Merger by any Governmental Entity that prevents the
consummation of the Merger.
(d) No Material Adverse Change. No Material Adverse Change in the Company
(as defined below) shall have occurred and be in effect at the Effective Time;
provided, that this condition shall be deemed to have been satisfied with
respect to the Company if Parent agrees to waive satisfaction thereof. The term
"Material Adverse Change in the Company," as used in this Section 7.01(d) means
a change in the business of the Company as a result of an extraordinary event
outside of the ordinary course of business which would be materially adverse to
the Company's sales or profits. Notwithstanding the foregoing, a Material
Adverse Change in the Company shall not include (i) any change in the Company's
business because of any defect or deficiency in the Company's existing product
line occurring in the ordinary course of business and that can be remedied in
the ordinary course of business, (ii) any loss by the Company of orders from, or
sales to, direct competitors of Parent or (iii) the loss of orders or sales due
to general market conditions in the paper industry.
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25
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
whether or not approval thereof by the Shareholders has been obtained:
(a) by the mutual written consent of Parent, the Purchaser and the Company
prior to the date on which Parent's designees constitute a majority of the Board
of Directors of the Company; or
(b) by the Company if the Company is not in material breach of any of its
representations, warranties, covenants or arrangements contained in this
Agreement and the Stock Option Agreement and if (i) the Purchaser fails to
commence the Offer as provided in Section 1.01 hereof, (ii) the Purchaser shall
not have accepted for payment and paid for Shares pursuant to the Offer in
accordance with the terms thereof on or before April 30, 1998 or (iii) the
Purchaser fails to purchase validly tendered Shares in violation of the terms of
the Offer or this Agreement; or
(c) by Parent or the Company if the Offer expires or is terminated or
withdrawn pursuant to its terms without any Shares being purchased thereunder;
provided, however, that Parent may terminate this Agreement pursuant to this
Section 8.01(c) upon the termination or withdrawal of the Offer only if Parent's
or the Purchaser's termination or withdrawal of the Offer is not in violation of
the terms of this Agreement or the Offer; or
(d) by Parent or the Company if any court or other Governmental Entity
shall have issued, enacted, entered, promulgated or enforced any order,
judgment, decree, injunction, or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, judgment, decree
injunction, ruling or other action shall have become final and nonappealable; or
(e) by the Company if, prior to the purchase of Shares pursuant to the
Offer in accordance with the terms of this Agreement, (i) there shall have
occurred, on the part of Parent or the Purchaser, a material breach of any
representation, warranty, covenant or agreement contained in this Agreement
which is not curable or, if curable, is not cured within seven business days
after written notice of such breach is given by the Company to the party
committing the breach or (ii) the Company (A) enters into a definitive agreement
with respect to a Superior Proposal as permitted under Section 6.07(a) hereof
and after complying with the provisions of Section 6.07(b) hereof, and (B) pays
any Termination Fee and agrees to pay any other amounts required under Section
8.03(b); or
(f) by Parent if, prior to the purchase of Shares pursuant to the Offer in
accordance with the terms of this Agreement, (i) there shall have occurred, on
the part of the Company, a breach of any representation, warranty, covenant or
agreement contained in this Agreement which individually, or in the aggregate,
if not cured would be reasonably likely to have a Material Adverse Effect on the
Company and which is not curable or, if curable, is not cured within the later
of (x) 7 business days after written notice of such breach is given by Parent to
the Company and (y) the satisfaction of all conditions to the Offer not related
to such breach or (ii) the Board of Directors of the Company or committee
thereof shall have withdrawn or modified (or shall have resolved to withdraw or
modify), in a manner adverse to Parent, its approval or recommendation of this
Agreement or any of the transactions contemplated hereby and the Board of
Directors of the Company and such committee shall not have fully reinstated such
approval or recommendations within two business days or shall have recommended
(or resolved to recommend) an Acquisition Transaction (other than the Offer and
Merger) to the Shareholders and at least ten business days shall have passed
since such recommendation (or resolution); or
(g) by Parent if it is not in material breach of its obligation hereunder
or under the Offer and no Shares shall have been purchased pursuant to the Offer
on or before April 30, 1998.
SECTION 8.02 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.01, this Agreement shall forthwith become void
and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, other than the provisions of this Section
8.02, Section 8.03
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26
and the last sentence of Section 6.02, which shall survive any such termination.
The Stock Option Agreement shall also survive any such termination. Nothing
obtained in this Section 8.02 shall relieve any party from liability for any
breach of this Agreement or the Confidentiality Agreement.
SECTION 8.03 Fees and Expenses.
(a) Except as otherwise provided herein, whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Offer, this
Agreement, the Stock Option Agreement and the transactions contemplated by this
Agreement and the Stock Option Agreement shall be paid by the party incurring
such expenses.
(b) In the event this Agreement is terminated pursuant to
Section 8.01(e)(ii), 8.01(f)(i) (other than for a termination due to an
unintentional breach of a representation or warranty by the Company) or
8.01(f)(ii), then the Company shall promptly reimburse Parent for the documented
out-of-pocket fees and expenses (but in no event greater than $500,000) of
Parent and the Purchaser related to this Agreement, the Stock Option Agreement,
the transactions contemplated hereby and thereby and any related financing and
in the event this Agreement is terminated pursuant to 8.01(e)(ii), then the
Company shall promptly pay Parent a Termination Fee of $1,200,000 by wire
transfer of same day funds to an account designated by the Parent as a condition
precedent to such termination.
(c) In the event that (i) any person shall have publicly disclosed a
proposal regarding an Acquisition Transaction and (ii) following such
disclosure, either (x) April 30, 1998 occurs without the Revised Minimum Number
being satisfied or the requisite stockholder approval of the Merger being
obtained (other than as a result of a material breach hereof by Parent or the
Purchaser that has not been cured within the time period set forth in Article
VIII of this Agreement) or (y) the Company breaches (prior to the time that the
designees of the Purchaser constitute a majority of the Board of Directors of
the Company) any of its material obligations hereunder and does not cure such
breach within the time period set forth in Article VIII of this Agreement or (z)
the Agreement is terminated pursuant to Section 8.01(f)(ii), and (iii) not later
than twelve months after any such termination the Company shall have entered
into an agreement for an Acquisition Transaction, or an Acquisition Transaction
shall have been consummated, then the Company shall promptly, but in no event
later than immediately prior to, and as a condition of, entering into such
definitive agreement, or, if there is no such definitive agreement then
immediately upon consummation of the Acquisition Transaction, pay Parent a
Termination Fee of $1,200,000 which amount shall be payable by wire transfer of
same day funds to an account designated by the Parent. Notwithstanding anything
to the contrary contained herein, in no event shall the Company be obligated to
pay more than one Termination Fee in accordance with this Agreement.
(d) The Company acknowledges that the agreements contained in Section
8.03(b) and (c) are an integral part of the transactions contemplated in this
Agreement and constitute liquidated damages and not a penalty, and that, without
these agreements, Parent and the Purchaser would not enter into this Agreement;
accordingly, if the Company fails to promptly pay the amount due pursuant to
Section 8.03(b) and (c), and, in order to obtain such payment, Parent or the
Purchaser commences a suit that results in a judgment against the Company for
the fee and expenses set forth in Section 8.03(b) and (c), the Company shall pay
to Parent its documented out-of-pocket costs and expenses (including attorneys'
fees) in connection with such suit. No termination of this Agreement pursuant to
Article VIII or otherwise shall prejudice the ability of a non-breaching party
from seeking damages from any other party for any breach of this Agreement,
including, without limitation, attorneys' fees and the right to pursue any
remedy at law or in equity.
SECTION 8.04 Amendment. Subject to Section 1.03(c), this Agreement may be
amended by the Company, Parent and the Purchaser at any time before or after any
approval of this Agreement by the Shareholders but, after any such approval, no
amendment shall be made which decreases the Merger Price or which adversely
affects the rights of the Shareholders hereunder without the requisite
affirmative vote of such Shareholders; provided, however, that this Agreement
shall not be amended after the time, if ever, that the Purchaser's designees
constitute a majority of the Board of Directors of the Company. This Agreement
may not be amended except by an instrument in writing signed on behalf of all
the parties.
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SECTION 8.05 Extension; Waiver. Subject to Section 1.03(c), at any time
prior to the Effective Time, the parties hereto may (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other party or in any document, certificate or writing delivered
pursuant hereto by any other party or (iii) waive compliance with any of the
agreements of any other party or with any conditions to its own obligations, it
being understood that the other conditions set forth in Annex I may be waived by
Parent and the Purchaser without the consent of the Company. Any agreement on
the part of any party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time.
SECTION 9.02 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the instruments referred to
herein) and the Confidentiality Agreement constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other party. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns. This Agreement is not intended to confer upon any person other than
Parent, the Purchaser and the Company any rights or remedies hereunder.
SECTION 9.03 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
SECTION 9.04 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Parent or the Purchaser:
Voith Sulzer Paper Technology North America Inc.
0000 X. Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxx & Xxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Fax: (000) 000-0000
If to the Company:
Impact Systems, Inc.
00000 Xxxxxxxxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: (000) 000-0000
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with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxxxx, Esq.
Fax: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.06 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY OR DISPUTE THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE STOCK OPTION AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I)
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.06.
SECTION 9.07 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.08 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 9.09 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and, except with respect to
Sections 1.03(c), 2.09, 6.07 and 6.10, nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
SECTION 9.10 Certain Definitions. As used in this Agreement:
(a) the term "affiliate", as applied to any person shall mean any other
person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting shares, by contract or otherwise;
(b) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act); and
(c) the term "subsidiary" or "subsidiaries" means, with respect to Parent,
the Company or any other person, any corporation, partnership, joint venture or
other legal entity of which Parent, the Company or such
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29
other person, as the case may be (either alone or through or together with any
other subsidiary), owns, directly or indirectly, stock or other equity interests
the holders of which are generally entitled to more than 50% of the vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
SECTION 9.11 SPECIFIC PERFORMANCE. THE PARTIES HERETO AGREE THAT
IRREPARABLE DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS
AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE
OTHERWISE BREACHED. IT IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED
TO AN INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO
ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS HEREOF IN ANY COURT OF THE UNITED
STATES OR ANY STATE HAVING JURISDICTION, THIS BEING IN ADDITION TO ANY OTHER
REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY.
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ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other provisions of the Offer,
the Purchaser shall not be required to accept for payment or pay for any
tendered Shares, unless there are validly tendered and not withdrawn prior to
the expiration date for the Offer that number of Common Shares which, when added
to the Shares owned by the Purchaser, will represent at least 90% of the
outstanding Common Shares on a fully diluted basis (after giving pro forma
effect to the potential issuance of any Shares issuable under the Stock Option
Agreement) on the date of purchase (the "Minimum Condition"); provided, however,
that the Minimum Condition must be waived by the Purchaser and the Revised
Minimum Number may be substituted therefor as contemplated by Section 1.01(b) of
the Merger Agreement. Furthermore, notwithstanding any other provisions of the
Offer, the Purchaser shall not be required to accept for payment or pay for any
tendered Shares until expiration of all applicable waiting periods under the HSR
Act and the satisfaction of conditions under any other applicable Antitrust Laws
and the Purchaser may, subject to the terms of the Merger Agreement, amend the
Offer or postpone the acceptance for payment of tendered Shares if at any time
on or after the date of the Merger Agreement and before the expiration of the
Offer, any of the following events (each, an "Event") shall occur:
(a) any order, preliminary or permanent injunction, decree, judgment or
ruling in any suit, action or proceeding is entered that (i) makes illegal or
otherwise directly or indirectly restrains or prohibits the acquisition by
Parent or the Purchaser of any Shares under the Offer or the making or
consummation of the Offer or the Merger, the performance by the Company of any
of its material obligations under the Merger Agreement or the Stock Option
Agreement or the consummation of any purchase of Shares contemplated by the
Merger Agreement, the Stock Option Agreement or related agreements, (ii)
prohibits or limits the ownership or operation by the Company, Parent or any of
their respective subsidiaries of a material portion of the Business or assets of
the Company and the Subsidiaries, taken as a whole, or Parent and the
Subsidiaries, taken as a whole, or compels the Company or Parent to dispose of
or hold separate any material portion of the Business or assets of the Company
and the Subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as
a whole, as a result of the Offer or the Merger, (iii) imposes material
limitations on the ability of Parent or the Purchaser to acquire or hold, or
exercise full rights of ownership of, any Shares accepted for payment pursuant
to the Offer or acquired pursuant to the Stock Option Agreement, including,
without limitation, the right to vote such Shares on all matters properly
presented to the Shareholders or (iv) prohibits Parent or any of its
subsidiaries from effectively controlling in any material respect the Business
or operation of the Company and the Subsidiaries; or
(b) any Law is enacted, entered, enforced, promulgated or deemed applicable
to the Offer, the Merger or the transactions contemplated by the Stock Option
Agreement, or any other action is taken by any Governmental Entity, other than
the application to the Offer, the Merger or the transactions contemplated by the
Stock Option Agreement of applicable waiting periods under the HSR Act or
applicable conditions under other Antitrust Laws that results, directly or
indirectly, in any of the consequences referred to in clauses (i) through (iv)
of paragraph (a) above; or
(c) (i) the Board of Directors of the Company or any committee thereof
withdraws or modifies in a manner adverse to Parent or the Purchaser its
approval or recommendation of the Offer, the Merger, the Merger Agreement or the
Stock Option Agreement or approves or recommends any Acquisition Transaction, or
(ii) the Company enters into any agreement to consummate any Acquisition
Transaction; or
(d) any of the representations and warranties of the Company set forth in
the Merger Agreement that are qualified as to Material Adverse Effect are not
true and correct, or any such representations and warranties that are not so
qualified are not true and correct in any respect (when taken together with all
other failures of such representations and warranties to be true and correct)
that would have a Material Adverse Effect on the Company, in each case at the
date of the Merger Agreement or at the scheduled expiration of the Offer (as
though made as of such date, except that those representations and warranties
that address matters only as of a particular date shall remain true and correct
as of such date); or
(e) the Merger Agreement shall have been terminated in accordance with its
terms; or
I-1
31
(f) the Company shall have breached or failed to perform in any material
respect any of its obligations, covenants or agreements under the Merger
Agreement or the Stock Option Agreement and such breach or failure to perform is
not curable or, if curable, is not cured within seven (7) business days after
written notice of such breach or failure is given by Parent to the Company; or
(g) there shall have occurred, and continued to exist, (i) any general
suspension of, or limitation on prices for, trading in securities on the New
York Stock Exchange or the Nasdaq National Market, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or Germany, (iii) a commencement of a war, armed hostilities or
other national or international crisis directly involving the United States or
Germany (other than an action involving solely United Nations' personnel or
support of United Nations' personnel), or (iv) in the case of any of the events
described in the foregoing clauses (i) through (iii) existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof.
The foregoing conditions are for the benefit of Parent and the Purchaser and may
be asserted by Parent or the Purchaser regardless of the circumstances giving
rise to any such conditions and may be waived by Parent or the Purchaser in
whole or in part at any time and from time to time in their sole discretion. The
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
The capitalized terms used in this Annex I shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex I is
appended.
I-2
32
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
VOITH SULZER PAPER TECHNOLOGY
NORTH AMERICA INC.
By: /s/ R. XXX XXXX
------------------------------------
Name: R. Xxx Xxxx
Title: Executive Vice President
By: /s/ XXXX XXXXXXXXX
------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Secretary
VOITH SULZER ACQUISITION CORP.
By: /s/ R. XXX XXXX
------------------------------------
Name: R. Xxx Xxxx
Title: President
By: /s/ XXXX XXXXXXXXX
------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Secretary
IMPACT SYSTEMS, INC.
By: /s/ XXXXXXX X. XXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
By: /s/ XXXXXX X. XXXXXX
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: V.P. Finance and Secretary
I-3
