(c)(1)
CONFIDENTIAL
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AGREEMENT AND PLAN OF MERGER
among
XXXXX XXXXXXXX CORPORATION
VISION ACQUISITION CORPORATION
and
STIMSONITE CORPORATION
Dated as of June 4, 1999
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TABLE OF CONTENTS
Page
ARTICLE 1. THE OFFER......................................................... 2
1.1. The Offer......................................................... 2
1.2. Actions by Purchaser and Merger Sub............................... 3
1.3. Actions by the Company............................................ 4
1.4. Directors......................................................... 6
ARTICLE 2. THE MERGER........................................................ 6
2.1. The Merger........................................................ 6
2.2. The Closing....................................................... 7
2.3. Effective Time.................................................... 7
2.4. Effects of the Merger............................................. 7
ARTICLE 3. CERTIFICATE OF INCORPORATION AND BYLAWS OF THE
SURVIVING CORPORATION............................................. 7
3.1. Certificate of Incorporation...................................... 7
3.2. Bylaws............................................................ 7
ARTICLE 4. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION............... 7
4.1. Directors......................................................... 7
4.2. Officers.......................................................... 8
ARTICLE 5. EFFECT OF THE MERGER ON SECURITIES OF MERGER SUB
AND THE COMPANY................................................... 8
5.1. Merger Sub Stock.................................................. 8
5.2. Company Securities................................................ 8
5.3. Exchange of Certificates Representing Shares of Common Stock......10
5.4. Merger Without Meeting of Stockholders............................12
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................12
6.1. Existence; Good Standing; Corporate Authority.....................12
6.2. Authorization, Validity and Effect of Agreements..................12
6.3. Compliance with Laws..............................................13
6.4. Capitalization....................................................13
6.5. Subsidiaries......................................................14
6.6. No Violation......................................................14
6.7. Company Reports; Offer Documents..................................15
6.8. Absence of Certain Changes........................................16
6.9. Taxes.............................................................17
6.10. Employee Benefit Plans............................................18
6.11. Brokers...........................................................19
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6.12. Licenses and Permits..............................................19
6.13. Environmental Compliance and Disclosure...........................20
6.14. Title to Assets...................................................20
6.15. Labor and Employment Matters......................................21
6.16. Intellectual Property.............................................21
6.17. Material Agreements...............................................22
6.18. No Undisclosed Liabilities........................................23
6.19. Litigation........................................................23
6.20. Insurance.........................................................23
6.21. Millennium Compliance.............................................23
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND
MERGER SUB........................................................24
7.1. Existence; Good Standing; Corporate Authority.....................24
7.2. Authorization, Validity and Effect of Agreements..................24
7.3. Offer Documents...................................................24
7.4. No Violation......................................................25
7.5. Financing.........................................................25
7.6. Purchaser-Owned Shares of Common Stock............................26
7.7. Interim Operations of Merger Sub..................................26
ARTICLE 8. COVENANTS.........................................................26
8.1. Interim Operations................................................26
8.2. Company Stockholder Approval; Proxy Statement.....................28
8.3. Filings; Other Action.............................................29
8.4. Publicity.........................................................30
8.5. Further Action....................................................30
8.6. Insurance; Indemnity..............................................30
8.7. Restructuring of Merger...........................................32
8.8. Employee Benefit Plans............................................32
8.9. Acceleration of Outstanding Indebtedness..........................32
8.10. Access to Information.............................................33
8.11. No Solicitation...................................................33
ARTICLE 9. CONDITIONS........................................................34
9.1. Conditions to Each Party's Obligation to Effect the Merger........34
ARTICLE 10. TERMINATION; AMENDMENT; WAIVER..................................35
10.1. Termination.......................................................35
10.2. Effect of Termination.............................................37
10.3. Amendment.........................................................38
10.4. Extension; Waiver.................................................38
ARTICLE 11. GENERAL PROVISIONS..............................................38
11.1. Nonsurvival of Representations and Warranties....................38
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11.2. Notices..........................................................39
11.3. Assignment; Binding Effect.......................................39
11.4. Entire Agreement.................................................39
11.5. Fees and Expenses................................................40
11.6. Governing Law....................................................40
11.7. Headings.........................................................40
11.8. Interpretation...................................................40
11.9. Severability.....................................................40
11.10. Enforcement of Agreement.........................................40
11.11. Counterparts.....................................................41
11.12. Obligation of Purchaser..........................................41
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of June
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4, 1999, is made and entered into among Xxxxx Xxxxxxxx Corporation, a Delaware
corporation ("Purchaser"), Vision Acquisition Corporation, a Delaware
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corporation and a wholly owned subsidiary of Purchaser ("Merger Sub"), and
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Stimsonite Corporation, a Delaware corporation (the "Company").
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RECITALS
WHEREAS, the boards of directors of Purchaser, Merger Sub and the
Company each have determined that it would be advisable and is in the best
interests of their respective companies and stockholders for Purchaser to
acquire the Company on the terms and subject to the conditions set forth herein;
and
WHEREAS, to effectuate the acquisition, Purchaser and the Company each
desire that Purchaser cause Merger Sub to commence a cash tender offer to
purchase all, and in any event not less than a majority on a fully diluted
basis, of the outstanding shares of common stock, par value $0.01 per share (the
"Common Stock"), of the Company on the terms and subject to the conditions set
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forth in this Agreement; and
WHEREAS, concurrently with the execution hereof and in order to induce
Merger Sub and Purchaser to enter into this Agreement, Merger Sub and Purchaser
are entering into a Tender and Stockholder Support Agreement (the "Tender
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Agreement") with Xxxxxx X. Xxxxxx Xx., Xxx X. Xxxxxx, and Xxxxxxxx X. Xxxxxxx
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and certain affiliates of Messrs. Xxxxxx and Xxxxxxx (each a "Significant
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Stockholder") under which each Significant Stockholder is, among other things,
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agreeing to tender all of such Significant Stockholder's shares of Common Stock
in the Offer upon the terms and conditions set forth therein; and
WHEREAS, the board of directors of the Company (the "Board of
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Directors" or the "Board") has approved the tender offer and recommends (subject
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to the limitations contained herein) that the Company's stockholders accept the
tender offer and tender their shares of Common Stock pursuant thereto; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection herewith;
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1.
THE OFFER
1.1. The Offer.
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(a) Subject to the provisions of this Agreement and this Agreement not
having been terminated in accordance with Article 10 hereof, as promptly as
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practicable but in any event within five business days after the date hereof,
Merger Sub shall commence, within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934 (the "Exchange Act") and the rules and regulations
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promulgated thereunder, an offer to purchase (the "Offer") all, and in any event
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not less than a majority on a fully diluted basis, of the outstanding shares of
Common Stock at a price of $14.75 per share of Common Stock, net to the seller
in cash, without interest (such price or any higher price paid pursuant to the
Offer, the "Offer Consideration"). Notwithstanding the foregoing, if between
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the date of this Agreement and the closing of the Offer the outstanding shares
of Common Stock shall have been changed into a different number of shares or a
different class by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Offer
Consideration shall be correspondingly adjusted on a per-share basis to reflect
such stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares. The obligation of Purchaser and Merger Sub
to commence the Offer and accept for payment, and pay for, any shares of Common
Stock tendered pursuant to the Offer shall be subject to the conditions set
forth in Exhibit A hereto and to the terms and conditions of this Agreement.
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Subject to the provisions of this Agreement, the Offer shall expire 20 business
days after the date of its commencement, unless this Agreement is terminated in
accordance with Article 10, in which case the Offer (whether or not previously
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extended in accordance with the terms hereof) shall expire on such date of
termination.
(b) Merger Sub expressly reserves the right to modify the terms of the
Offer and to waive any condition of the Offer, except that, without the prior
written consent of the Company, Merger Sub shall not (and Purchaser shall cause
Merger Sub not to) (i) waive the Minimum Condition (as defined in Exhibit A),
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(ii) reduce the number of shares of Common Stock subject to the Offer, (iii)
reduce the price per share of Common Stock to be paid pursuant to the Offer,
(iv) except as set forth below, extend the Offer, (v) change the form of
consideration payable in the Offer, (vi) amend or modify any term or condition
of the Offer (including the conditions set forth on Exhibit A) in any manner
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adverse to the holders of Common Stock or (vii) impose additional conditions to
the Offer other than such conditions required by applicable law. So long as
this Agreement is in effect and the conditions to the Offer have not been
satisfied or waived, Merger Sub may, without the consent of the Company, extend
(or shall extend at the request of the Company) the Offer for an aggregate
period of not more than 20 business days (for all such extensions) beyond the
originally scheduled expiration date of the Offer. So long as this Agreement is
in effect and the conditions to the Offer have been satisfied or waived, Merger
Sub may, without the consent of the Company, extend the Offer for an aggregate
period of not more than 20 business days (for all such extensions) beyond the
originally scheduled expiration date of the Offer, if the number of shares of
Common Stock that have been validly tendered and not withdrawn represent less
than 90% of the issued and outstanding shares of the Common Stock.
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Notwithstanding the foregoing, Merger Sub may, without the consent of the
Company, extend the Offer for any period required by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable to the
Offer. It is agreed that the conditions set forth in Exhibit A are for the sole
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benefit of Merger Sub and Purchaser and may be asserted by Merger Sub or
Purchaser, or may be waived in whole or in part by Merger Sub or Purchaser, in
their sole discretion. The failure by Merger Sub or 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. Subject to the terms and conditions of the Offer and this
Agreement, Merger Sub shall accept for payment and pay for, in accordance with
the terms of the Offer, all shares of Common Stock validly tendered and not
withdrawn pursuant to the Offer as soon as practicable after the expiration of
the Offer.
(c) Purchaser shall provide or cause to be provided to Merger Sub on a
timely basis the funds necessary to purchase any shares of Common Stock that
Merger Sub becomes obligated to purchase pursuant to the Offer and shall be
liable on a direct and primary basis for the performance by Merger Sub or the
Surviving Corporation (as defined in Section 2.1), as the case may be, of its
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obligations under this Agreement with respect to the payment of the Offer
Consideration, the Option Consideration (as defined in Section 5.2(d)) and the
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Merger Consideration (as defined in Section 5.2(b)).
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1.2. Actions by Purchaser and Merger Sub. As soon as reasonably practicable
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following execution of this Agreement, but in no event later than five business
days from the date hereof, Purchaser and Merger Sub shall file with the
Securities and Exchange Commission (the "SEC") a Tender Offer Statement on
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Schedule 14D-1 with respect to the Offer, which shall contain an offer to
purchase and a related letter of transmittal and any other ancillary documents
pursuant to which the Offer shall be made (such Schedule 14D-1 and the documents
therein pursuant to which the Offer will be made, together with any supplements
or amendments thereto, the "Offer Document"). The Company and its counsel shall
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be given a reasonable opportunity to review and comment upon the Offer Documents
prior to the filing thereof with the SEC. The Offer Documents shall comply as to
form in all material respects with the requirements of the Exchange Act, and, on
the date filed with the SEC and on the date first published, sent or given to
the Company's stockholders, the Offer Documents 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 therein, in the
light of the circumstances under which they were made, not misleading, except
that no representation is made by Purchaser or Merger Sub with respect to
information supplied in writing by the Company for inclusion in the Offer
Documents. Each of Purchaser, Merger Sub and the Company agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent such information shall have become false or misleading in any
material respect, and each of Purchaser, Merger Sub and the Company 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 holders of shares of Common
Stock, in each case as and to the extent required by applicable federal
securities laws. Purchaser and Merger Sub agree to provide the Company and its
counsel with any comments Purchaser, Merger Sub or their counsel may receive
from the SEC or its staff with respect to the Offer Documents promptly after
receipt of such comments.
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1.3. Actions by the Company.
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(a) The Company hereby approves of and consents to the Offer and represents
and warrants that the Board of Directors at a meeting duly called and held has
duly adopted resolutions (i) approving this Agreement, the Offer and the Merger
(as defined in Section 2.1), determining that the Merger is advisable and that
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the terms of the Offer and Merger are fair to, and in the best interests of, the
Company's stockholders and recommending that the Company's stockholders accept
the Offer and tender all of their shares of Common Stock to Merger Sub and
approve this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, (ii) taking all action necessary to render Section 203 of
the Delaware General Corporation Law, as amended (the "DGCL"), inapplicable to
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the Offer, the Merger, this Agreement, the Tender Agreement and any of the
transactions contemplated hereby and thereby and (iii) electing, to the extent
permitted by law, not to be subject to any "moratorium," "control share
acquisition," "business combination," "fair price" or other form of corporate
antitakeover laws and regulations of any jurisdiction that may purport to be
applicable to this Agreement or the Tender Agreement. The Company further
represents and warrants that the Board of Directors has received the written
opinion of Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (the "Financial
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Advisor") that the proposed consideration to be received by the holders of
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shares of Common Stock pursuant to the Offer and the Merger is fair to such
holders from a financial point of view (the "Fairness Opinion"). Subject to the
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last sentence of this Section 1.3(a), the Company hereby consents to the
inclusion in the Offer Documents of the recommendation of the Board of Directors
described in the first sentence of this Section 1.3(a). The Company hereby
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represents and warrants that it has been authorized by the Financial Advisor to
permit the inclusion of the Fairness Opinion and references thereto, subject to
prior review and consent by the Financial Advisor (such consent not to be
unreasonably withheld) in the Offer Documents, the Schedule 14D-9 (as defined in
Section 1.3(b)) and the Proxy Statement (as defined in Section 8.2(b)). The
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Company has been advised by each of its directors and executive officers that
each such person intends to tender all shares of Common Stock owned by such
person pursuant to the Offer, except to the extent of any restrictions created
by Section 16(b) of the Exchange Act. The Board of Directors shall not
withdraw, modify or amend its recommendations described above in a manner
adverse to Purchaser (or announce publicly its intention to do so) provided that
the disclosure of the receipt of an Acquisition Proposal (as defined in Section
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8.11) and the fact that the Board of Directors is considering such Acquisition
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Proposal or reviewing it with its advisors shall not by itself constitute such a
withdrawal, modification or amendment, except that the Board shall be permitted
to withdraw, amend or modify its recommendation (or publicly announce its
intention to do so) of this Agreement or the Merger in a manner adverse to
Purchaser or approve or recommend or enter into an agreement with respect to a
Superior Proposal (as defined in Section 8.11) if the Company has complied with
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the terms of Section 8.11 and Section 10.1(d).
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(b) The Company shall use its reasonable best efforts to file with the SEC,
concurrently with the filing of the Offer Documents with the SEC, and in any
event the Company shall file within five days thereafter, a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (such Schedule 14D-9, as amended from time to time, the "Schedule 14D-9")
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containing the recommendations described in the first sentence of Section
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1.3(a) (subject to the last sentence of Section 1.3(a) and shall mail the
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Schedule 14D-9 to the stockholders of the Company. To the extent practicable,
the Company shall cooperate with Purchaser in mailing or otherwise disseminating
the Schedule 14D-9 with the appropriate Offer Documents to the Company's
stockholders. Purchaser and its counsel shall be given a reasonable opportunity
to review and comment upon the Schedule 14D-9 prior to the filing thereof with
the SEC. The Schedule 14D-9 shall comply as to form in all material respects
with the requirements of the Exchange Act and, on the date filed with the SEC
and on the date first published, sent or given to the Company's stockholders,
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 therein, in the 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 Purchaser or Merger Sub for inclusion in the
Schedule 14D-9. Each of the Company, Purchaser and Merger Sub agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent such information shall have become false or misleading in any
material respect, and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to the holders of shares of Common Stock, in each case as and to
the extent required by applicable federal securities laws. The Company agrees to
provide Purchaser and Merger Sub and their counsel in writing with any comments
the Company or its counsel may receive from the SEC or its staff with respect to
the Schedule 14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its transfer
agent to furnish promptly to Merger Sub mailing labels containing the names and
addresses of the record holders of Common Stock as of a recent date and of those
persons becoming record holders subsequent to such date, and to furnish copies
of other information in the Company's possession or control regarding the
beneficial owners of Common Stock, and shall furnish to Merger Sub such
information and assistance (including updated lists of stockholders, security
position listings and computer files) as Merger Sub may reasonably request in
communicating the Offer to the Company's stockholders. Subject to the
requirements of law, and except for such steps as are necessary to disseminate
the Offer Documents and any other documents necessary to consummate the Offer
and the Merger, Purchaser and Merger Sub and each of their affiliates and
associates shall hold in confidence the information contained in any of such
labels, lists and files, shall use such information only in connection with the
Offer and the Merger, and, if this Agreement is terminated, shall promptly
deliver to the Company all copies of such information then in their possession
or under their control.
(d) Subject to the terms and conditions of this Agreement, if there shall
occur a change in law or in a binding judicial interpretation of existing law
that would, in the absence of action by the Company or the Board, prevent Merger
Sub, were it to acquire a specified percentage of the shares of Common Stock
then outstanding, from adopting this Agreement by its affirmative vote as the
holder of a majority of shares of Common Stock and without the affirmative vote
of any other stockholder, the Company will use its best efforts to promptly take
or cause such action to be taken.
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1.4. Directors.
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(a) Upon the purchase of shares of Common Stock pursuant to the
consummation of the Offer, Purchaser shall be entitled to designate such number
of directors, rounded up to the next whole number, as will give Purchaser
representation on the Board of Directors equal to the product of (i) the number
of authorized directors on the Board of Directors (giving effect to the
directors elected pursuant to this Section 1.4) and (ii) the percentage that the
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number of shares of Common Stock purchased by Merger Sub or Purchaser or any
affiliate thereof bears to the aggregate number of shares of Common Stock
outstanding (the "Percentage"), and the Company shall, upon the election and
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request by Purchaser, promptly increase the size of the Board of Directors
and/or secure the resignations of such number of directors as is necessary to
enable Purchaser's designees to be elected to the Board of Directors and shall
cause Purchaser's designees to be so elected. At the request of Purchaser, the
Company will cause such individuals designated by Purchaser to constitute the
same Percentage of (i) each committee of the Board, (ii) the board of directors
of each Subsidiary (as defined in Section 11.8) of the Company and (iii) the
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committees of each such board of directors. The Company's obligations to seek
to appoint designees to the Board of Directors shall be subject to Section 14(f)
of the Exchange Act. The Company shall promptly take all appropriate action
necessary to effect any such election and shall, subject to the next succeeding
sentence, include in the Schedule 14D-9 the information required by Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. Purchaser will
supply to the Company in writing and be solely responsible for any information
with respect to itself and its nominees, directors and affiliates required by
Section 14(f) and Rule 14f-1. Notwithstanding the foregoing, the parties hereto
shall use their respective reasonable efforts to ensure that at least three of
the members of the Board of Directors shall at all times prior to the Effective
Time be Continuing Directors (as defined in Section 1.4(b)).
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(b) Following the election or appointment of Purchaser's designees pursuant
to this Section 1.4 and prior to the Effective Time (as defined in Section 2.3),
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the approval of a majority of the directors of the Company then in office who
are not designated by Purchaser (the "Continuing Directors") shall be required
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to authorize (and such authorization shall constitute the authorization of the
Board of Directors and no other action on the part of the Company, including any
action by any other director of the Company, shall be required to authorize) any
termination of this Agreement by the Company, any amendment of this Agreement
requiring action by the Board of Directors, any extension of time for the
performance of any of the obligations or other acts of Purchaser or Merger Sub,
and any waiver of compliance with any of the agreements or conditions contained
herein for the benefit of the Company.
ARTICLE 2.
THE MERGER
2.1. Merger. Subject to the terms and conditions of this Agreement, at the
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Effective Time, Merger Sub shall be merged with and into the Company in
accordance with this Agreement and the applicable provisions of the DGCL, and
the separate corporate existence of
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Merger Sub shall thereupon cease (the "Merger"). The Company shall be the
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surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation").
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2.2. The Closing. Subject to the terms and conditions of this Agreement,
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the closing of the Merger (the "Closing") shall take place at the offices of
Xxxxx, Day, Xxxxxx & Xxxxx, 00 Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, at 10:00
a.m., local time, as soon as practicable following the satisfaction (or waiver
if permissible) of the conditions set forth in Article 9. The date on which the
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Closing occurs is hereinafter referred to as the "Closing Date."
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2.3. Effective Time. If all the conditions to the Merger set forth in
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Article 9 shall have been fulfilled or waived in accordance herewith and this
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Agreement shall not have been terminated as provided in Article 10, the parties
hereto shall cause a certificate of merger meeting the requirements of Section
251 of the DGCL and any other appropriate documents to be properly executed and
filed in accordance with such Section 251 on the Closing Date (or on such other
date as Purchaser and the Company may agree). The Merger shall become effective
at the time of filing of the certificate of merger with the Secretary of State
of the State of Delaware in accordance with the DGCL or at such later time that
the parties hereto shall have agreed upon and designated in such filing as the
effective time of the Merger (the "Effective Time").
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2.4. Effects of the Merger. The Merger shall have the effects set forth in
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the applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all property of the
Company and Merger Sub shall vest in the Surviving Corporation, and all
liabilities and obligations of the Company and Merger Sub shall become
liabilities and obligations of the Surviving Corporation.
ARTICLE 3.
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
3.1. Certificate of Incorporation. The certificate of incorporation of the
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Company in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation, until duly amended in
accordance with applicable law and the terms thereof.
3.2. Bylaws. The bylaws of Merger Sub in effect immediately prior to the
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Effective Time shall be the bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law, the terms thereof and the Surviving
Corporation's certificate of incorporation.
ARTICLE 4.
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
4.1. Directors. The directors of Merger Sub immediately prior to the
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Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time and until their
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successors are duly appointed or elected in accordance with applicable law and
the Surviving Corporation's certificate of incorporation and bylaws.
4.2. Officers. The officers of Merger Sub immediately prior to the
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Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time and until their successors are duly appointed or elected in
accordance with applicable law and the Surviving Corporation's certificate of
incorporation and bylaws.
ARTICLE 5.
EFFECT OF THE MERGER ON SECURITIES
OF MERGER SUB AND THE COMPANY
5.1. Merger Sub Stock. At the Effective Time, each share of common stock,
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par value $0.01 per share, of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, par value $0.01 per share,
of the Surviving Corporation.
5.2. Company Securities.
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(a) Each share of Common Stock issued and outstanding immediately prior to
the Effective Time that is owned by the Company or any Subsidiary of the Company
or by Purchaser, Merger Sub or any other Subsidiary of Purchaser (other than
shares held in trust accounts, managed accounts, custodial accounts and the like
that are beneficially owned by third parties) shall automatically be canceled
and retired and shall cease to exist, and no cash or other consideration shall
be delivered or deliverable in exchange therefor.
(b) Each share of Common Stock issued and outstanding immediately prior to
the Effective Time (other than shares of Common Stock to be canceled and retired
in accordance with Section 5.2(a) and any Dissenting Common Stock (as defined in
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Section 5.2(c)) shall be converted into the right to receive the Offer
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Consideration, payable in cash to the holder thereof, without any interest
thereon (the "Merger Consideration"), in accordance with Section 5.3.
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Notwithstanding the foregoing, if between the date of this Agreement and the
Effective Time the outstanding shares of Common Stock shall have been changed
into a different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the Merger Consideration shall be correspondingly adjusted
on a per-share basis to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares.
(c) Notwithstanding any provision of this Agreement to the contrary, if
required by the DGCL but only to the extent required thereby, shares of Common
Stock that are issued and outstanding immediately prior to the Effective Time
and that are held by holders of such shares of Common Stock who have properly
exercised appraisal rights with respect thereto in accordance with Section 262
of the DGCL (the "Dissenting Common Stock") will not be exchangeable for the
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right to receive the Merger Consideration, and holders of such shares of
Dissenting Common Stock will be entitled to receive payment of the appraised
value of such
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shares of Common Stock in accordance with the provisions of such Section 262
unless and until such holders fail to perfect or effectively withdraw or lose
their rights to appraisal and payment under the DGCL. If, after the Effective
Time, any such holder fails to perfect or effectively withdraws or loses such
right, such shares of Common Stock will thereupon be treated as if they had been
converted into and become exchangeable for, at the Effective Time, the right to
receive the Merger Consideration, without any interest thereon. The Company will
promptly give Purchaser notice of any demands received by the Company for
appraisals of shares of Common Stock. The Company shall not, except with the
prior written consent of Purchaser, make any payment with respect to any demands
for appraisal or settle any such demands.
(d) Subject to Section 5.3, at the Effective Time, each holder of a then-
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outstanding option to purchase shares of Common Stock under any plan, program or
arrangement of the Company (collectively, the "Stock Option Plans") (true and
------------------
correct copies of which have been provided to Purchaser by the Company), whether
or not then exercisable (individually, an "Option" and collectively, the
------
"Options"), shall, in settlement thereof, receive for each share of Common Stock
--------
subject to such Option an amount (subject to any applicable withholding tax) in
cash equal to the difference between the Merger Consideration and the per share
exercise price of such Option to the extent such difference is a positive number
(such amount being hereinafter referred to as the "Option Consideration").
--------------------
Payment for Options shall be made by the Company, subject to the terms and
conditions of this Agreement, as soon as practicable after consummation of the
Offer. Upon receipt of the Option Consideration therefor, each Option shall be
deemed canceled. The surrender of an Option to the Company in exchange for the
Option Consideration shall be deemed a release of any and all rights the holder
had or may have had in respect of such Option.
Either prior to or as soon as practicable following the consummation
of the Offer, the Board of Directors (or, if appropriate, any committee of the
Board of Directors administering the Stock Option Plans) shall adopt such
resolutions or take other such actions as are required to cause any Options that
are not exercisable as of the date hereof to become exercisable at the Effective
Time. All amounts payable pursuant to this Section 5.2(d) shall be subject to
--------------
any required withholding of taxes and shall be paid without interest:
(e) The Surviving Corporation's obligation to make the cash payment
described in Section 5.2(d): (i) shall be subject to obtaining from optionees
--------------
any necessary consents to the cancellation of the applicable Options, and
agreements from such optionees releasing any and all rights such optionees may
have in respect of the applicable Options; and (ii) shall not require any action
that violates any of the Stock Option Plans. Except as otherwise may be agreed
to by the parties, the Company shall take all necessary action prior to the
consummation of the Offer to assure that (x) the Stock Option Plans shall
terminate as of the Effective Time and the provisions in any other plan, program
or arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any Subsidiary thereof shall be
canceled as of the Effective Time and (y) at and after the Effective Time no
participant in the Stock Option Plans or other plans, programs or arrangements
shall have any right thereunder to acquire any equity securities of the Company,
the Surviving Corporation or any Subsidiary thereof and that all such plans will
be terminated.
9
5.3. Exchange of Certificates Representing Shares of Common Stock.
------------------------------------------------------------
(a) Prior to the Effective Time, Purchaser shall appoint a commercial bank
or trust company having net capital of not less than $200 million, which shall
be reasonably satisfactory to the Company, to act as paying agent hereunder (the
"Paying Agent") for payment of the Merger Consideration upon surrender of a
------------
certificate or certificates (each, a "Certificate") representing such shares of
-----------
Common Stock. Prior to or concurrently with the Effective Time, Purchaser shall
cause Merger Sub or the Surviving Corporation, as the case may be, to provide
the Paying Agent with cash in amounts necessary to pay for all the shares of
Common Stock pursuant to Section 5.2(b). Such amounts shall hereinafter be
--------------
referred to as the "Exchange Fund."
-------------
(b) Promptly after the Effective Time, Purchaser shall cause the Paying
Agent to mail to each holder of record of shares of Common Stock (i) a letter of
transmittal that shall specify that delivery shall be effected, and risk of loss
and title to such Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and which letter shall be in such form and have
such other provisions as Purchaser may reasonably specify and (ii) instructions
for effecting the surrender of such Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate to the Paying Agent together
with such letter of transmittal, duly executed and completed in accordance with
the instructions thereto, and such other documents as may reasonably be required
by the Paying Agent, the holder of such Certificate shall promptly receive in
exchange therefor the amount of cash into which shares of Common Stock
theretofore represented by such Certificate shall have been converted pursuant
to Section 5.2, and the shares represented by the Certificate so surrendered
-----------
shall forthwith be canceled. No interest will be paid or will accrue on the
cash payable upon surrender of any Certificate. In the event of a transfer of
ownership of Common Stock that is not registered in the transfer records of the
Company, payment may be made with respect to such Common Stock to such a
transferee if the Certificate representing such shares of Common Stock is
presented to the Paying Agent, accompanied by all documents reasonably required
to evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(c) As of the Effective Time, all shares of Common Stock (other than shares
of Common Stock to be canceled and retired in accordance with Section 5.2(a) and
--------------
any shares of Dissenting Common Stock) issued and outstanding immediately prior
to the Effective Time shall cease to be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of any such
shares shall cease to have any rights with respect thereto or arising therefrom
(including, without limitation, the right to vote), except the right to receive
the Merger Consideration, without interest, upon surrender of the Certificate
representing such shares in accordance with Section 5.3(b), and until so
--------------
surrendered, the Certificate representing such shares shall represent for all
purposes only the right to receive the Merger Consideration, without interest.
The Merger Consideration paid upon the surrender for exchange of Certificates in
accordance with the terms of this Section 5.3 shall be deemed to have been paid
-----------
in full satisfaction of all rights pertaining to the shares of Common Stock
theretofore represented by such Certificates.
10
(d) At or after the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Common Stock that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged as provided in this Article 5.
---------
(e) The Paying Agent shall invest the Exchange Fund, as directed by
Purchaser, in (i) direct obligations of the United States of America, (ii)
obligations for which the full faith and credit of the United States of America
is pledged to provide for the payment of principal and interest, (iii)
commercial paper rated the highest quality by either Xxxxx'x Investors Services,
Inc. or Standard & Poor's Corporation or (iv) certificates of deposit, bank
repurchase agreements or bankers' acceptances of commercial banks with capital
exceeding $500 million. Any net earnings with respect to the Exchange Fund
shall be the property of and paid over to Purchaser as and when requested by
Purchaser; provided, however, that any such investment or any such payment of
-------- -------
earnings may not delay the receipt by holders of Certificates of any Merger
Consideration.
(f) Any portion of the Exchange Fund (including the proceeds of any
interest and other income received by the Paying Agent in respect of all such
funds) that remains unclaimed by the former stockholders of the Company one year
after the Effective Time shall be delivered to the Surviving Corporation. Any
former stockholders of the Company who have not theretofore complied with this
Article 5 shall thereafter look only to the Surviving Corporation for payment of
---------
any Merger Consideration that may be payable in respect of each share of Common
Stock such stockholder holds as determined pursuant to this Agreement, without
any interest thereon.
(g) None of Purchaser, the Company, the Surviving Corporation, the Paying
Agent or any other person shall be liable to any former holder of shares of
Common Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(h) If any Certificate is lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving Corporation, the posting
by such person of a bond in such reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent will issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration payable in
respect thereof pursuant to this Agreement.
(i) Except as otherwise provided herein or in the letter of transmittal
referred to in Section 5.3(b), Purchaser shall pay all charges and expenses (but
--------------
excluding income and withholding taxes), including those of the Paying Agent, in
connection with the exchange of the Merger Consideration for Certificates.
(j) Purchaser shall be entitled to deduct and withhold, or cause to be
deducted or withheld, from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Common Stock or Options such amounts as are
required to be deducted and withheld
11
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "Code"), or any provision of applicable state, local or
----
foreign tax law. To the extent that amounts are so deducted and withheld, such
deducted and withheld amounts shall be treated for all purposes of this
Agreement as having been paid to such holders in respect of which such deduction
and withholding was made.
5.4. Merger Without Meeting of Stockholders.
--------------------------------------
Notwithstanding the foregoing, if Merger Sub, or any other direct or
indirect subsidiary of Purchaser, shall acquire at least 90 percent of the
outstanding shares of Common Stock, the parties hereto shall take all necessary
and appropriate action to cause the Merger to become effective as soon as
practicable, and in any event within five business days, after the expiration of
the Offer without a meeting of stockholders of the Company, in accordance with
Section 253 of the DGCL.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the corresponding sections of the disclosure
letter, dated the date hereof, delivered by the Company to Purchaser (the
"Disclosure Letter"), the Company hereby represents and warrants to Purchaser
------------------
and Merger Sub as follows:
6.1. Existence; Good Standing; Corporate Authority. Each of the Company
---------------------------------------------
and its Subsidiaries is (a) duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and (b) is duly
licensed or qualified to do business as a foreign corporation and is in good
standing under the laws of any other state of the United States or the laws of
any foreign jurisdiction, if applicable, in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such qualification necessary, except where the failure to be so qualified
or to be in good standing could not reasonably be expected to (i) materially
adversely affect the assets, liabilities, business, results of operations or
condition (financial or otherwise) of the Company and its Subsidiaries, taken as
a whole or (ii) adversely affect or delay the ability of the Company on the one
hand, or Merger Sub and Purchaser on the other, to consummate the transactions
contemplated by this Agreement or the Tender Agreement (either of the foregoing
clauses (i) or (ii) being a "Material Adverse Effect"). Each of the Company and
-----------------------
its Subsidiaries has all requisite corporate power and authority to own, operate
and lease its properties and carry on its business as now conducted except where
the failure to have such power and authority could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. The Company
has heretofore made available to Purchaser true and correct copies of the
certificate of incorporation and bylaws or other governing instruments of the
Company and each of its Subsidiaries (as defined in Section 11.8) as currently
------------
in effect.
6.2. Authorization, Validity and Effect of Agreements. The Company has the
------------------------------------------------
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby or executed in connection
herewith to which it is a party (the "Ancillary Documents") and subject, if
-------------------
required with respect to the consummation of the Merger,
12
to the approval of holders of the Common Stock, to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Ancillary Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby have been duly and validly
authorized by the Board of Directors, and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement and the Ancillary
Documents or to consummate the transactions contemplated hereby and thereby
(other than the adoption of this Agreement by the holders of the Common Stock if
required by applicable law). This Agreement has been, and any Ancillary Document
at the time of execution will have been, duly and validly executed and delivered
by the Company, and (assuming this Agreement and such Ancillary Documents each
constitute a valid and binding obligation of Purchaser and Merger Sub)
constitutes and will constitute the valid and binding obligations of the
Company, enforceable in accordance with their respective terms. The Company has
taken all actions necessary to render the restrictions of Section 203 of the
DGCL to be inapplicable to the transactions contemplated by this Agreement and
the Tender Agreement, including without limitation the Offer and the Merger.
6.3. Compliance with Laws. Neither the Company nor any of its Subsidiaries
--------------------
is or has been in violation of any foreign, federal, state or local law,
statute, ordinance, rule, regulation, order, judgment, ruling or decree of any
foreign, federal, state or local judicial, legislative, executive,
administrative or regulatory body or authority or any court, arbitration, board
or tribunal ("Governmental Entity") applicable to the Company or any of its
-------------------
Subsidiaries or any of their respective properties or assets, except for
violations that could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
6.4. Capitalization. The authorized capital stock of the Company consists
--------------
of 15,000,000 shares of Common Stock. As of June 2, 1999, 8,444,377 shares of
Common Stock were issued and outstanding, (b) Options to purchase an aggregate
of 819,882 shares of Common Stock were outstanding, (c) 635,500 shares of Common
Stock held by the Company in its treasury and (d) no shares of capital stock of
the Company were held by the Company's Subsidiaries. The Company has no
outstanding bonds, debentures, notes or other obligations entitling the holders
thereof to vote (or that are convertible into or exercisable for securities
having the right to vote) with the stockholders of the Company on any matter.
Since June 2, 1999, the Company (i) has not issued any shares of Common Stock
other than upon the exercise of Options, (ii) has granted no Options to purchase
shares of Common Stock under the Stock Option Plans and (iii) has not split,
combined, converted or reclassified any of its shares of capital stock. All
issued and outstanding shares of Common Stock are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. Except as set
forth in this Section 6.4, there are no other shares of capital stock or voting
-----------
securities of the Company, and no existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments that obligate the Company or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock of, or equity interests in, the
Company or any of its Subsidiaries. There are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company and there are no performance awards
outstanding under the Stock Option Plans or any other outstanding stock-related
awards. There are no voting trusts or other agreements or understandings to
which the Company or any of
13
its Subsidiaries or, to the knowledge of the Company, any of the Company's
directors or executive officers is a party with respect to the voting of capital
stock of the Company or any of its Subsidiaries.
6.5. Subsidiaries. (a) The Company owns directly, or indirectly through a
------------
Subsidiary, all the outstanding shares of capital stock (or other ownership
interests having by their terms ordinary voting power to elect directors or
others performing similar functions with respect to such Subsidiary) of each of
the Company's Subsidiaries, and (b) each of the outstanding shares of capital
stock (or other ownership interests having by their terms ordinary voting power
to elect directors or others performing similar functions with respect to such
Subsidiary) of each of the Company's Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and is owned directly or indirectly by the
Company free and clear of all liens, pledges, security interests, claims or
other encumbrances ("Encumbrances").
------------
6.6. No Violation. Neither the execution and delivery by the Company of
------------
this Agreement or any of the Ancillary Documents nor the consummation by the
Company of the transactions contemplated hereby or thereby will: (a) violate,
conflict with or result in a breach of any provisions of the certificate of
incorporation or bylaws of the Company; (b) violate, conflict with, result in a
breach of any provision of, constitute a default (or an event that, with notice
or lapse of time or both, would constitute a default) under, result in the
termination or in a right of termination of, accelerate the performance required
by or benefit obtainable under, result in the triggering of any payment, penalty
or other obligations pursuant to, result in the creation of any Encumbrance upon
any of the properties owned or used by the Company or its Subsidiaries under, or
result in there being declared void, voidable, or without further binding
effect, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract or other obligation (financial or otherwise)
(each, a "Contract" and, collectively, "Contracts") to which the Company or any
-------- ---------
of its Subsidiaries is a party, or by which the Company or any of its
Subsidiaries or any of their respective properties is bound, except for any such
breach, default or right with respect to which requisite waivers or consents
have been obtained, or any of the foregoing matters that could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;
(c) require any consent, approval or authorization of, license, permit or waiver
by, or declaration, filing or registration (collectively, "Consents") with, any
-------
Governmental Entity, including any such Consent under the laws of any foreign
jurisdiction, other than (i) the filings provided for in Section 2.3 and the
-----------
filings required under the Exchange Act and the Securities Act of 1933, as
amended (the "Securities Act") and (ii) the filing required under the
--------------
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
---
Act"), and any other applicable law governing antitrust or competition matters,
---
and any Consents required or permitted to be obtained pursuant to the laws of
any foreign jurisdiction relating to antitrust matters or competition ("Foreign
-------
Antitrust Laws") (collectively, "Other Antitrust Filings and Consents", together
-------------- ------------------------------------
with the other filings described in clauses (i) and (ii) above, "Regulatory
----------
Filings" except for those Consents the failure of which to obtain or make could
-------
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect; (d) violate any laws applicable to the Company or any of its
Subsidiaries, except for violations that could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect; or (e)
subject the Company or (by reason of the
14
Company's participation therein) the Offer or the Merger to any "moratorium,"
"control share acquisition," "business combination," "fair price" or other form
of corporate antitakeover laws and regulations.
6.7. Company Reports; Offer Documents.
--------------------------------
(a) The Company has previously made available to Purchaser and Merger Sub
true and complete copies of (i) its Annual Report on Form 10-K for each of the
fiscal years ended December 31, 1996, 1997 and 1998, filed by the Company with
the SEC, (ii) proxy statements relating to all of the Company's meetings of
stockholders held or scheduled to be held since December 31, 1996 and (iii) each
other registration statement, proxy or information statement, Quarterly Report
on Form 10-Q or Current Report on Form 8-K filed since December 31, 1996 by the
Company with the SEC (such items referenced in (i) through (iii), the "Company
-------
Reports"). Since December 31, 1996, the Company has complied in all material
-------
respects with its SEC filing obligations under the Exchange Act and the
Securities Act. Since December 31, 1996, except as disclosed in a subsequent
Company Report, there has not occurred an event or circumstance that, but for
the passage of time, would be required to be disclosed in a Company Report.
Except as set forth in or amended by a subsequent Company Report, the financial
statements and related schedules and notes thereto of the Company contained in
the Company Reports (or incorporated therein by reference) were prepared in
accordance with generally accepted accounting principles (except in the case of
interim unaudited financial statements) applied on a consistent basis except as
noted therein, and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended, subject in the case of interim unaudited financial
statements to normal year-end audit adjustments, and, except as set forth in or
amended by a subsequent Company Report, such financial statements complied as to
form as of their respective dates in all material respects with applicable rules
and regulations of the SEC. Each Company Report was prepared in accordance with
the requirements of the Securities Act or the Exchange Act, as applicable, and
did not, as of the date of effectiveness in the case of a registration
statement, the date of mailing in the case of a proxy statement and the date of
filing in the case of other Company Reports, except as set forth in or amended
by a subsequent Company Report, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) None of the Schedule 14D-9, any information statement filed by the
Company in connection with the Offer pursuant to Rule 14f-1 under the Exchange
Act (the "Information Statement"), any schedule required to be filed by the
---------------------
Company with the SEC or any amendment or supplement thereto, at the respective
times such documents are filed with the SEC and first published, sent or given
to the Company's stockholders, will contain any untrue statement of a material
fact or will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading except that no
representation is made by the Company with respect to information supplied by
Purchaser or Merger Sub for inclusion in the Schedule 14D-9 or Information
Statement or any amendment or supplement to such information supplied by
15
Purchaser or Merger Sub. None of the information supplied or to be supplied by
the Company for inclusion or incorporation by reference in the Offer Documents
will, at the date of filing with the SEC, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If, at any time prior
to the Effective Time, the Company shall obtain knowledge of any facts with
respect to itself, any of its officers or directors or any of its Subsidiaries
that would require the supplement or amendment to any of the foregoing documents
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or to comply with applicable laws, such
amendment or supplement shall be promptly filed with the SEC and, as required by
law, disseminated to the stockholders of the Company, and in the event Purchaser
shall advise the Company as to its obtaining knowledge of any facts that would
make it necessary to supplement or amend any of the foregoing documents, the
Company shall promptly amend or supplement such document, and such amendment or
supplement shall be promptly filed with the SEC, and as required by law
disseminated to the stockholders of the Company.
6.8. Absence of Certain Changes. During the period from December 31, 1998,
--------------------------
to and including the date of this Agreement, the Company and its Subsidiaries
have conducted their business in the ordinary course of such business consistent
with past practices, and there have not been (a) any events or states of fact
that could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; (b) any declaration, setting aside or payment of any
dividend or other distribution with respect to its capital stock; (c) any
repurchase, redemption or any other acquisition by the Company or its
Subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or its Subsidiaries; (d) any
material change in accounting principles, practices or methods; (e) any entry
into any employment agreement with, or any increase in the rate or terms
(including, without limitation, any acceleration of the right to receive
payment) of compensation payable or to become payable by the Company or any of
its Subsidiaries to, their respective directors, officers or employees, except
for regularly scheduled employee raises in the ordinary course of business
consistent with the Company's past practices or raises that, in the case of
executive officers, have been approved by the compensation committee of the
Board of Directors prior to the date hereof in the ordinary course of business
consistent with the committee's past practices; (f) any increase in the rate or
terms (including, without limitation, any acceleration of the right to receive
payment) of any bonus, insurance, pension or other employee benefit plan or
arrangement covering any such directors, officers or employees, except, in the
case of employees, increases occurring in the ordinary course of business
consistent with the Company's past practices; (g) any revaluation by the Company
or any of its Subsidiaries of any material amount of their assets, taken as a
whole, including, without limitation, write-downs of inventory or write-offs of
accounts receivable other than in the ordinary course of business consistent
with past practices; (h) any material adverse change in the business
relationship with any material customer, distributor or supplier of the Company
or its Subsidiaries; and (i) any action of the type described in Sections 8.1(a)
--------------
or 8.1(b) that had such action been taken after the date of this Agreement would
------
be in violation of any such Section.
16
6.9. Taxes. The Company and each of its Subsidiaries have timely filed and
-----
will have timely filed on or prior to the Effective Time all Tax Returns (as
hereinafter defined) required to be filed by any of them. All such Tax Returns
are true, correct and complete. All Taxes (as hereinafter defined) of the
Company and its Subsidiaries that are shown as due on such Tax Returns, or are
otherwise due and payable, or are claimed or asserted by any taxing authority to
be due, have been paid or will have been paid on or before the Effective Time,
or adequate reserves (in conformity with generally accepted accounting
principles applied on a consistent basis and consistent with such entity's past
custom and practice) have been established therefor or will be established
therefor on or before the Effective Time, except for those Taxes being contested
in good faith and for which adequate reserves have been established in the
financial statements included in the Company Reports in accordance with
generally accepted accounting principles applied on a consistent basis and
consistent with such entity's past custom and practice. No deficiencies for
Taxes of the Company or any of its Subsidiaries have been claimed, proposed or
assessed by any taxing or other governmental authority that are not being
contested in good faith by the Company or a Subsidiary and for which adequate
reserves have not been established in the financial statements included in the
Company Reports in accordance with generally accepted accounting principles
applied on a consistent basis and consistent with past practice. There are no
pending or, to the best of the Company's and its Subsidiaries' knowledge,
threatened audits, investigations or claims for or relating to any liability in
respect of Taxes of the Company or its Subsidiaries, and there are no on-going
negotiations with any taxing or other governmental authority with respect to
Taxes of the Company or its Subsidiaries. No extension of a statute of
limitations relating to Taxes is in effect with respect to the Company or any of
its Subsidiaries. The Company and each Subsidiary have withheld and paid over to
the relevant taxing authority all Taxes required to have been withheld and paid
in connection with payments to employees, independent contractors, creditors,
stockholders or other third parties. The Company and its Subsidiaries are not
parties to or bound by any tax sharing, tax indemnity or tax allocation
agreement or other similar arrangement with any other person or entity. There
are no liens for Taxes (other than for Taxes not yet delinquent) upon the assets
of the Company or any of its Subsidiaries. The Company and its Subsidiaries have
never been members of an affiliated group of corporations within the meaning of
Section 1504 of the Code, with the exception of the common group for which the
Company is the common parent, nor has the Company or any of its Subsidiaries, or
any predecessor or affiliate of any of them, become liable (whether by contract,
as transferee or successor, by law or otherwise) for the Taxes of any other
person or entity under Treasury Regulation Section 1.1502-6 or any similar
provision of state, local or foreign law. The Company and its Subsidiaries have
not been "United States real property holding corporations" within the meaning
of Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code. For purposes of this Agreement, (i) "Tax"
---
(and, with correlative meaning, "Taxes") means any federal, state, local or
-----
foreign income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, premium, withholding, alternative or added
minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty or other additions to Tax, imposed by any
Governmental Entity and (ii) "Tax Return" means any return, report or similar
----------
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
17
6.10. Employee Benefit Plans.
----------------------
(a) Copies of all material employee benefit plans (including without
limitation all "employee benefit plans" as defined in Section 3(3) of ERISA)
which cover or have covered employees, former employees or directors of the
Company or any of its ERISA Affiliates (as hereinafter defined) or any person
treated by the Company or an ERISA Affiliate as an independent contractor for
tax purposes ("Independent Contractor") and all other plans, policies,
----------------------
arrangements and agreements providing material compensation, severance or other
benefits to any current or former employee, director or Independent Contractor
of the Company or any of its Subsidiaries (the "Company Benefit Plans") are
---------------------
listed on Schedule 6.10 attached hereto, and copies of all such Company Benefit
Plans and all Benefit Plan Related Documents (as hereinafter defined) have
previously been provided to Purchaser. To the extent applicable, the Company
Benefit Plans comply with the requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the Code and any other applicable
-----
law. None of any Company Benefit Plan, or any officer, employee, former
employee or director of the Company, any Subsidiary or any ERISA Affiliate, or
the Company or any of its Subsidiaries or ERISA Affiliates has incurred any
liability or penalty under Section 4975 of the Code or Section 502(i) of ERISA
or has engaged in any transaction that is reasonably likely to result in any
such liability or penalty.
(b) Neither the Company nor any ERISA Affiliate has ever (i) maintained any
Company Benefit Plan which has been subject to Title IV of ERISA, (ii) been
required to contribute to, or otherwise incurred any liability in connection
with, any "multiemployer plan" as defined in Section 4001(a)(3) or Section 3(37)
of ERISA, (iii) except to the extent reflected in the financial statements (and
the notes thereto) attached to the Company's Annual Report filed on Form 10-K
for the fiscal year ended December 31, 1998, provided heath care or any other
non-pension benefits to any employees after their employment is terminated
(other than as required by Part 6 of Subtitle B of Title I of ERISA), or (iv)
maintained any Company Benefit Plan or other contract that individually or
collectively provides for the payment by the Company or any of its Subsidiaries
of any amount that is or could be an "excess parachute payment" pursuant to
Section 280G of the Code or that is not or would not be deductible under Section
162(a)(1) of the Code or Section 404 of the Code.
(c) Neither the execution and delivery of this Agreement by the Company nor
the consummation of the transactions contemplated hereby or any related
transactions will result in the acceleration or creation of any rights of any
person to benefits under any Company Benefit Plan (including, without
limitation, the acceleration of the vesting or exercisability of any stock
options, the acceleration of the vesting of any restricted stock, the
acceleration of the accrual or vesting of any benefits under any pension plan or
the acceleration or creation of any rights under any severance, parachute or
change in control agreement).
(d) There is no action, order, writ, injunction, judgment or decree
outstanding or claim (other than routine claims for benefits), suit, litigation,
proceeding, arbitral action, governmental audit or investigation relating to or
seeking benefits under any Company Benefit Plan that is pending, threatened or
anticipated against the Company, any ERISA Affiliate or any
18
Company Benefit Plan. Neither the Company nor any ERISA Affiliate has any
announced plan or legally binding commitment to create any additional employee
benefit plans or agreements of the Company or any ERISA Affiliate or to amend or
modify any existing Company Benefit Plan.
(e) No event has occurred in connection with which the Company, any ERISA
Affiliate or any Company Benefit Plan, directly or indirectly, could be subject
to any material liability (i) under any statute, regulation or governmental
order relating to any Company Benefit Plan or (ii) pursuant to any obligation of
the Company or any ERISA Affiliate to indemnify any person against liability
incurred under any such statute, regulation or order as they relate to the
Company Benefit Plans.
(f) For purposes of this Agreement, "ERISA Affiliate" means any business or
entity that is a member of the same "controlled group of corporations" under
"common control" or an "affiliated service group" with an entity within the
meanings of Sections 414(b), (c) or (m) of the Code, or required to be
aggregated with the entity under Section 414(o) of the Code, or is under "common
control" with the entity, within the meaning of Section 4001(a)(14) of ERISA, or
any regulations promulgated or proposed under any of the foregoing Sections.
For purposes of this Agreement, "Benefit Plan Related Documents" means (i) each
------------------------------
Company Benefit Plan (and, if applicable, related trust agreements) which covers
or has covered current or former employees, directors or Independent Contractors
of the Company or any ERISA Affiliate and all amendments thereto, all material
written interpretations or descriptions thereof which have been distributed to
employees of the Company or its ERISA Affiliates and all annuity contracts or
other funding instruments with respect to a Company Benefit Plan, (ii) the most
recent determination or opinion letter issued by the Internal Revenue Service as
to qualification under Section 401(a) of the Code, or analogous ruling, if any,
required under foreign law for each applicable Company Benefit Plan, and (iii)
for the three most recent plan years, Annual Reports on Form 5500 Series (or
analogous periodic report, if any, required under foreign law) required to be
filed with any governmental agency for each applicable Company Benefit Plan.
6.11. Brokers. The Company has not entered into any contract, arrangement
-------
or understanding with any person or firm that may result in the obligation of
Purchaser or Merger Sub or the Company to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby, except that the Company has retained the Financial Advisor, the
arrangements with which have been disclosed in writing to Purchaser prior to the
date hereof.
6.12. Licenses and Permits. The Company and its Subsidiaries have all
--------------------
necessary licenses, permits, certificates, approvals and authorizations
(collectively, "Permits") required to lawfully conduct their respective
businesses as presently conducted, except for those Permits the lack of which
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and no Permit is subject to any outstanding order,
decree, judgment or stipulation that would be likely to affect such Permit,
where the effect of the foregoing could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
19
6.13. Environmental Compliance and Disclosure. Except for any matters
---------------------------------------
that, individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect, (a) the Company and each of its Subsidiaries has been
and are now in compliance with all Environmental Laws in effect on the date
hereof; (b) the Company and each of its Subsidiaries have obtained, and are in
full compliance with, all material Permits required by applicable laws for the
use, storage, treatment, transportation, release, emission and disposal of raw
materials, byproducts, wastes and other substances used or produced by or
otherwise relating to the operations of any of them; (c) there is not now and
has not been any Hazardous Substance used, generated, treated, stored,
transported, disposed of, released, handled or otherwise existing on, under,
about, or emanating from, or to, any property owned, leased or operated by the
Company or any of its Subsidiaries which could impose liability or
responsibility on the Company or any of its Subsidiaries; (d) neither the
Company nor any of its Subsidiaries has received any written notice from any
governmental agency or third party of alleged actual or potential responsibility
for, or any inquiry or investigation regarding, any release or threatened
release of Hazardous Substances or alleged violation of, or non-compliance with,
any Environmental Law, nor are the Company and its Subsidiaries aware of any
information which might form the basis of any such notice; and (e) to the
knowledge of the Company, there is no site to which the Company or any of its
Subsidiaries have transported or arranged for the transport of Hazardous
Substances that is the subject of any environmental action. As used in this
Agreement, the term "Environmental Laws" means foreign, federal, state or local
------------------
laws, statutes, ordinances, regulations, rules, judgments, court orders, permits
and licenses that are applicable to the Company and in effect on the date of
this Agreement and (i) regulate or relate to the protection or clean up of the
environment; the use, treatment, storage, transportation, handling, disposal or
release of Hazardous Substances, the preservation or protection of waterways,
groundwater, drinking water, air, wildlife, plants or other natural resources;
or the health and safety of persons or property, including without limitation
protection of the health and safety of employees; or (ii) impose liability or
responsibility with respect to any of the foregoing. As used in this Agreement,
the term "Hazardous Substances" means any pollutant, chemical, substance and any
toxic, infectious, carcinogenic, reactive, corrosive, ignitable or flammable
chemical, or chemical compound, or hazardous substance, material or waste,
whether solid, liquid or gas, that is subject to regulation, control or
remediation under any Environmental Laws.
6.14. Title to Assets.
---------------
(a) Except as set forth in the Company's audited balance sheet (including
any related notes thereto) for the fiscal year ended December 31, 1998 included
in the Company's Annual Report on Form 10-K for the fiscal year then ended (the
"1998 Balance Sheet"), the Company and each of its Subsidiaries have good and
------------------
marketable title to all of their real and personal properties and assets
reflected on the 1998 Balance Sheet or acquired after December 31, 1998 (other
than assets disposed of since December 31, 1998 in the ordinary course of
business consistent with past practice), in each case free and clear of all
title defects and Encumbrances, except for (i) Encumbrances that secure
indebtedness that is properly reflected in the 1998 Balance Sheet; (ii) liens
for Taxes accrued but not yet payable; (iii) liens arising as a matter of law in
the ordinary course of business with respect to obligations incurred after
December 31, 1998, provided that the obligations secured by such liens are not
delinquent; and (iv) such title
20
defects or Encumbrances, if any, as individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. The Company and each
of its Subsidiaries either own, or have valid leasehold interests in, all
properties and assets used by them in the conduct of their business except where
the absence of such ownership or leasehold interest could not reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries owns any real property.
(b) Neither the Company nor any of its Subsidiaries has any legal
obligation, absolute or contingent, to any person to sell or otherwise dispose
(except in the ordinary course of business consistent with past practice) of any
of its assets with an individual value of $140,000 or an aggregate value in
excess of $1,400,000.
6.15. Labor and Employment Matters. Neither the Company nor any of its
----------------------------
Subsidiaries is a party to, or bound by, any collective bargaining agreement or
other Contract or understanding with a labor union or labor organization. Except
for such matters that could not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, there is no (a) unfair labor
practice, labor dispute (other than routine individual grievances) or labor
arbitration proceeding pending or, to the knowledge of the Company, threatened
against the Company or its Subsidiaries relating to their business, (b) to the
knowledge of the Company, activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any of its
Subsidiaries or (c) lockout, strike, slowdown, work stoppage or, to the
knowledge of the Company, threat thereof by or with respect to such employees.
6.16. Intellectual Property.
---------------------
(a) The Company Disclosure Letter sets forth a true and complete list and
description of (i) all United States and foreign patents, patent applications,
trademarks, trademark registrations and applications, trade names, service
marks, copyrights and applications therefor and trade secrets owned by the
Company and its Subsidiaries (the "Intellectual Property Rights") and (ii) all
----------------------------
United States and foreign patents, patents applications, trademarks, trademark
registrations and applications, trade names, service marks, copyrights and
applications therefor and trade secrets licensed to the Company or any of its
Subsidiaries (the "Licensed Rights").
---------------
(b) Except to the extent that the inaccuracy of any of the following (or
the circumstances giving rise to such inaccuracy) could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect:
21
(i) (A) the Intellectual Property Rights are free and clear of any
Encumbrances, are not subject to any license (royalty bearing or royalty
free) and are not subject to any other arrangement requiring any payment to
any person nor the obligation to grant rights to any person in exchange;
(B) the Licensed Rights are free and clear of any Encumbrances, royalties
or other obligations; and (C) the Intellectual Property Rights and the
Licensed Rights are all those material rights necessary to the conduct of
the business of each of the Company and its Subsidiaries as presently
conducted.
(ii) To the knowledge of the Company, the validity of the Intellectual
Property Rights and title thereto, and the validity of the Licensed Rights,
(A) have not been questioned in any prior litigation; (B) are not being
questioned in any pending litigation; and (C) are not the subject or
subjects of any threatened or proposed litigation and is not involved in
any interference, reissue, challenge, reexamination, invalidation,
opposition proceeding or cancellation.
(iii) The business of the Company and its Subsidiaries, as presently
conducted, does not conflict with and has not been alleged to conflict with
any patents, trademarks, trade names, service marks, copyrights or other
intellectual property rights of others.
(iv) The consummation of the transactions contemplated hereby will not
result in the loss or impairment of any of the Intellectual Property Rights
or any of the Licensed Rights.
The Company does not know of any use by others of any of the
Intellectual Property Rights or the Licensed Rights material to the business of
the Company and its Subsidiaries as presently conducted.
(c) Each of the Company and its Subsidiaries owns, or possesses valid
license rights to, all computer software programs that are material to the
conduct of the business of the Company and its Subsidiaries, except to the
extent that the failure thereof, could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. There are no
infringement suits, actions or proceedings pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary with respect to any
software owned or licensed by the Company or any Subsidiary.
6.17. Material Agreements. Except as listed in the Exhibit Index to
-------------------
Company's Annual Report on Form 10-K for the fiscal year ending December 31,
1998 (the "1998 10-K") or any subsequently filed Company Report and except for
--------------
agreements made for the purpose of completing the transactions contemplated by
this Agreement, neither the Company nor any of its Subsidiaries is a party to,
or bound by, any Material Agreement of any kind to be performed in whole or in
part after the Effective Time. The term "Material Agreement" shall mean any
agreement to which the Company or any of its Subsidiaries is a party and (i) is
outside of the ordinary course of business of the Company or its Subsidiaries,
(ii) a customer of the Company or one of its Subsidiaries is a party and either
(1) involves the payment or receipt by the Company or any of its Subsidiaries,
subsequent to the date of this Agreement, of more than $1,000,000 or (2) is not
terminable without penalty by the Company or the Subsidiary party
22
thereto on fewer than 365 days' notice or (iii) except for customer contracts,
either (A) involves the payment or receipt by the Company or any of its
Subsidiaries, subsequent to the date of this Agreement, of more than $500,000 or
(B) is not terminable without penalty by the Company or the Subsidiary party
thereto on fewer than 180 days' notice. Except for any such breaches or defaults
that could not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect, neither the Company nor any of its Subsidiaries is in
breach or default under, and there are no facts which with notice or the passage
of time would cause the Company to be in breach or default under, or give rise
to any right of termination, amendment, cancellation or acceleration of other
parties under, whether as a result of the consummation of the transactions
contemplated hereby or otherwise, any Material Agreement.
6.18. No Undisclosed Liabilities. Except as disclosed in the Company
--------------------------
Reports filed and publicly available prior to the date of this Agreement and
except for liabilities and obligations incurred in the ordinary course of
business consistent with past practice since December 31, 1998, the Company and
its Subsidiaries do not have any indebtedness, obligations or liabilities of any
kind (whether accrued, absolute, contingent or otherwise) (a) required by GAAP
to be reflected on a consolidated balance sheet of the Company and its
consolidated Subsidiaries or in the notes, exhibits or schedules thereto or (b)
which could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
6.19. Litigation. Except as described in the 1998 10-K, there is no action,
---------- ---------
suit or proceeding, claim, arbitration or investigation pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries, that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Except as disclosed in the 1998 10-K,
there is no judgment, order, injunction or decree of any Governmental Entity
outstanding against the Company or any of its Subsidiaries that could reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.
6.20. Insurance. The Company and its Subsidiaries have insurance coverage
---------
with insurance companies or associations in such amounts, on such terms and
covering such risks, including fire and other risks insured against by extended
coverage, as is reasonably prudent, and each has public liability insurance,
insurance against claims for personal injury or death or property damage
occurring in connection with any activities of the Company or any of its
Subsidiaries or any properties owned, occupied or controlled by the Company or
any of its Subsidiaries, in such amount as is reasonably prudent.
6.21. Millennium Compliance. To the knowledge of the Company after due
---------------------
inquiry, all computer software used by the Company and/or any of its
Subsidiaries is capable (or will be capable by October 1, 1999) of operating
consistently after December 31, 1999 to accurately process data (including
calculating, comparing and sequencing) from, into and between the twentieth and
twenty-first centuries, including leap year calculations, and is otherwise
currently "Year 2000 compliant," except where the failure to operate
consistently or be "Year 2000 compliant" could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has adopted and implemented a plan to investigate and correct
23
any and all "Year 2000 problems" associated with the operation of the Company's
and its Subsidiaries' businesses and has provided to Purchaser a complete and
correct copy of such plan.
ARTICLE 7.
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Except as set forth in the corresponding sections of the disclosure
letter, dated the date hereof, delivered by Purchaser and Merger Sub to the
Company (the "Purchaser Disclosure Letter"), Purchaser and Merger Sub hereby
---------------------------
represent and warrant to the Company as follows:
7.1. Existence; Good Standing; Corporate Authority. Each of Purchaser and
---------------------------------------------
Merger Sub is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own, operate and lease its properties
and carry on its business as now conducted, except where the failure to have
such power and authority would not materially adversely affect the ability of
Purchaser or Merger Sub to consummate the transactions contemplated by this
Agreement.
7.2. Authorization, Validity and Effect of Agreements. Each of Purchaser
------------------------------------------------
and Merger Sub has the requisite corporate power and authority to execute and
deliver this Agreement and the Ancillary Documents and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Ancillary Documents and the consummation by Purchaser and
Merger Sub of the transactions contemplated hereby and thereby have been duly
and validly authorized by the respective boards of directors of Purchaser and
Merger Sub and by Purchaser as the sole stockholder of Merger Sub and no other
corporate proceedings on the part of Purchaser or Merger Sub are necessary to
authorize this Agreement and the Ancillary Documents or to consummate the
transactions contemplated hereby and thereby. This Agreement has been, and any
Ancillary Documents at the time of execution will have been, duly and validly
executed and delivered by Purchaser and Merger Sub, and (assuming this Agreement
and such Ancillary Documents each constitutes a valid and binding obligation of
the Company) constitutes and will constitute the valid and binding obligations
of each of Purchaser and Merger Sub, enforceable in accordance with their
respective terms.
7.3. Offer Documents. None of the Offer Documents, any schedule required to
---------------
be filed by Purchaser or Merger Sub with the SEC or any amendment or supplement
thereto will contain, at the respective times such documents are filed with the
SEC or first published, sent or given to the Company's stockholders, any untrue
statement of a material fact or will omit to state any material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they are made, not misleading, except
that no representation is made by Purchaser or Merger Sub with respect to
information supplied by the Company for inclusion in the Offer Documents, any
schedule required to be filed with the SEC or any amendment or supplement. None
of the information supplied by Purchaser or Merger Sub for inclusion or
incorporation by reference in the Schedule 14D-9 will, at the date of filing
with the SEC, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light
24
of the circumstances under which they were made, not misleading. If at any time
prior to the Effective Time either Purchaser or Merger Sub shall obtain
knowledge of any facts with respect to itself, any of its officers or directors
or any of its Subsidiaries that would require the supplement or amendment to any
of the foregoing documents in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or to comply
with applicable laws, such amendment or supplement shall be promptly filed with
the SEC and, as required by law, disseminated to the stockholders of the
Company, and in the event the Company shall advise Purchaser or Merger Sub as to
its obtaining knowledge of any facts that would make it necessary to supplement
or amend any of the foregoing documents, Purchaser or Merger Sub shall promptly
amend or supplement such document, and such amendment or supplement shall be
promptly filed with the SEC, and as required by law disseminated to the
stockholders of the Company.
7.4. No Violation. Neither the execution and delivery of this Agreement or
------------
any of the Ancillary Documents by Purchaser and Merger Sub nor the consummation
by them of the transactions contemplated hereby or thereby will (a) violate,
conflict with or result in any breach of any provision of the respective
certificates of incorporation or bylaws of Purchaser or Merger Sub; (b) violate,
conflict with, result in a breach of any provision of, constitute a default (or
an event that, with notice or lapse of time or both, would constitute a default)
under, result in the termination or in a right of termination of, accelerate the
performance required by or benefit obtainable under, result in the triggering of
any payment or other obligations pursuant to, result in the creation of any
Encumbrance upon any of the properties of Purchaser or Merger Sub under, or
result in there being declared void, voidable or without further binding effect,
any Contract to which Purchaser or Merger Sub is a party, or by which Purchaser
or Merger Sub or any of their respective properties is bound, except for any
such breach, default or right with respect to which requisite waivers or
consents have been, or prior to the Effective Time will be, obtained or any of
the foregoing matters that would not have a material adverse effect on the
ability of Purchaser or Merger Sub to consummate the transactions contemplated
hereby; (c) other than the Regulatory Filings, require any Consent of any
Governmental Entity, the lack of which would have a material adverse effect on
the ability of Purchaser or Merger Sub to consummate the transactions
contemplated hereby; or (d) violate any laws applicable to Purchaser or the
Merger Sub or any of their respective assets, except for violations that would
not have a material adverse effect on the ability of Purchaser or Merger Sub to
consummate the transactions contemplated hereby.
7.5. Financing. Purchaser and Merger Sub collectively have cash on hand or
---------
credit facilities with financially responsible third parties, or a combination
thereof, in an aggregate amount sufficient to enable Purchaser and Merger Sub to
timely perform their obligations hereunder, including to (a) pay in full (i) the
aggregate Merger Consideration and the aggregate Option Consideration and (ii)
all fees and expenses payable by Purchaser and Merger Sub in connection with
this Agreement and the transactions contemplated hereby and (b) satisfy and
discharge such of the Company's existing indebtedness as, pursuant to its terms,
will become due and payable prior to its stated maturity as a result of the
consummation of the transactions contemplated hereby. The source and any
commitments related thereto are set forth on the Purchaser Disclosure Letter. At
the consummation of the Offer and at the Effective Time,
25
Purchaser will have, and will cause Merger Sub to have, funds available to it
sufficient to consummate the Offer and the Merger on the terms contemplated
hereby.
7.6. Purchaser-Owned Shares of Common Stock. As of the date of this
--------------------------------------
Agreement, Purchaser, Merger Sub and their respective Subsidiaries own, in the
aggregate, no shares of Common Stock.
7.7. Interim Operations of Merger Sub. Merger Sub was formed solely for the
--------------------------------
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
ARTICLE 8.
COVENANTS
8.1. Interim Operations.
------------------
(a) From and after the date of this Agreement to the Effective Time, unless
Purchaser has consented in writing thereto, the Company shall, and shall cause
each of its Subsidiaries to, (i) conduct its operations according to its usual,
regular and ordinary course of business consistent with past practice; (ii) use
its reasonable best efforts to preserve intact their business organizations,
maintain in effect all existing material qualifications, licenses, permits,
approvals and other authorizations referred to in Sections 6.1 and 6.12, keep
------------ ----
available the services of their officers and key employees and maintain
satisfactory relationships with those persons having business relationships with
them; (iii) promptly upon the discovery thereof notify Purchaser of the
existence of any breach of any representation or warranty contained herein (or,
in the case of any representation or warranty that makes no reference to
Material Adverse Effect, any breach of such representation or warranty in any
material respect) or the occurrence of any event that would cause any
representation or warranty contained herein no longer to be true and correct
(or, in the case of any representation or warranty that makes no reference to
Material Adverse Effect, to no longer be true and correct in any material
respect); (iv) promptly deliver to Purchaser true and correct copies of any
report, statement or schedule filed with the SEC subsequent to the date of this
Agreement; and (v) maintain its books of account and records in its usual,
regular and ordinary manner, consistent with its past practices.
(b) From and after the date of this Agreement to the Effective Time, unless
Purchaser has consented in writing thereto, the Company shall not, and shall not
permit any of its Subsidiaries to, (i) amend its certificate of incorporation or
bylaws or comparable governing instruments; (ii) issue, sell, pledge or register
for issuance or sale any shares of capital stock or other ownership interest in
the Company (other than issuances of Common Stock in respect of any exercise of
Options outstanding on the date hereof) or any of the Subsidiaries, or any
securities convertible into or exchangeable for any such shares or ownership
interest, or any rights, warrants or options to acquire or with respect to any
such shares of capital stock, or ownership interest, or convertible or
exchangeable securities or accelerate any right to convert or exchange or
acquire any securities of the Company (other than Options pursuant to Section
-------
5.2(d)) or any of its Subsidiaries for any such shares or ownership interest;
------
(iii) effect
26
any stock split or conversion of any of its capital stock or otherwise change
its capitalization as it exists on the date hereof, other than as set forth in
this Agreement; (iv) directly or indirectly redeem, purchase or otherwise
acquire any shares of its capital stock or capital stock of any of its
Subsidiaries, other than as set forth in this Agreement; (v) sell, lease or
otherwise dispose of any of its assets or property (including capital stock of
any of its Subsidiaries), mortgage, pledge or impose a lien or other encumbrance
on any of its material assets or property (including capital stock of any of its
Subsidiaries), except in the ordinary course of business; (vi) acquire by
merger, purchase or any other manner, any material business or entity or
otherwise acquire any assets that are material to the Company and its
Subsidiaries taken as a whole, except for purchases of inventory, supplies or
capital expenditures in the ordinary course of business consistent with past
practice; (vii) incur or assume any long-term or short-term debt, except for
working capital purposes in the ordinary course of business under the Company's
existing credit facilities and capital expenditures made in accordance with the
Company's previously adopted capital budget, copies of which have been provided
to Purchaser; (viii) assume, guarantee or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person except wholly owned Subsidiaries of the Company; (ix) make or forgive any
loans, advances or capital contributions to, or investments in, any other
person; (x) enter into any new employment, severance, consulting or salary
continuation agreements with any newly hired employees other than in the
ordinary course of business or enter into any of the foregoing with any existing
officers, directors or employees or grant any increases in compensation or
benefits to any officers, directors or employees except for regularly scheduled
employee raises in the ordinary course of business consistent with the Company's
past practices or raises that, in the case of executive officers, have been
approved by the compensation committee of the Board of Directors prior to the
date hereof in the ordinary course of business consistent with the committee's
past practices; (xi) adopt or amend in any material respect (including any
increase in the payment to or benefits under) or terminate any employee benefit
plan or arrangement; (xii) make any material changes in the type or amount of
their insurance coverage or permit any material insurance policy naming the
Company or any Subsidiary as a beneficiary or a loss payee to be canceled or
terminated; (xiii) except as may be required by law or generally accepted
accounting principles, change any material accounting principles or practices
used by the Company or its Subsidiaries; (xiv) take any action to cause the
Common Stock to cease to be traded on the Nasdaq National Market prior to the
completion of the Offer or the Merger; (xv) enter into a Material Agreement,
except as required or permitted by subsection (vii) or (xvi) of this Section
-------
8.1(b) and except for agreements relating to the purchase or sale of the
------
Company's products (including, without limitation, supply, purchase and shipping
contracts) to be performed within 90 days; (xvi) enter into, terminate, fail to
renew, or accelerate any license, distributorship, dealer, sales representative,
joint venture, credit or other agreement if such action could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;
(xvii) fail to operate, maintain, repair or otherwise preserve its material
assets and properties consistent with past practice; (xviii) fail to comply with
all applicable filing, payment and withholding obligations under all applicable
federal, state, local or foreign laws relating to Taxes except where such
failure to comply could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect; (xix) make any tax election or settle
or compromise any federal, state, local or foreign income tax liability; (xx)
pay, discharge, settle or satisfy any claims, liabilities or objections
(absolute, accrued, asserted or unasserted,
27
contingent or otherwise), other than the payment, discharge or satisfaction of
the foregoing in the ordinary course of business consistent with past practice,
or, if not in the ordinary course of business, the payment, discharge or
satisfaction of the foregoing that, individually and in the aggregate, does not
exceed $500,000; or (xxi) agree in writing or otherwise to take any of the
foregoing actions.
8.2. Company Stockholder Approval; Proxy Statement.
---------------------------------------------
(a) If approval or action in respect of the Merger by the stockholders of
the Company is required by applicable law, the Company, through its Board of
Directors, shall (i) call a meeting of its stockholders (the "Stockholder
-----------
Meeting") for the purpose of voting upon the Merger, (ii) hold the Stockholder
-------
Meeting as soon as practicable following the purchase of shares of Common Stock
pursuant to the Offer and (iii) unless the Board of Directors approves,
recommends or enters into an agreement with respect to a Superior Proposal in
accordance with Section 8.11(b), recommend to its stockholders the approval of
---------------
this Agreement and the transactions contemplated hereby, including the Merger.
The record date for the Stockholder Meeting shall be a date subsequent to the
date Purchaser or Merger Sub becomes a record holder of Common Stock purchased
pursuant to the Offer.
(b) If required by applicable law, the Company will, as soon as practicable
following the expiration of the Offer, prepare and file a preliminary Proxy
Statement (such proxy statement, and any amendments or supplements thereto, the
"Proxy Statement") or, if applicable, an Information Statement with the SEC with
---------------
respect to the Stockholder Meeting and will use reasonable efforts to respond to
any comments of the SEC or its staff and to cause the Proxy Statement to be
cleared by the SEC. The Proxy Statement shall include the recommendation of the
Board of Directors that the stockholders of the Company vote in favor of
approving the agreement of merger (in accordance with Section 251 of the DGCL)
contained in this Agreement and the determination of the Board of Directors that
this Agreement and the transactions contemplated hereby, including the Offer and
the Merger, are fair to, and in the best interests of, the stockholders of the
Company. The Company will notify Purchaser of the receipt of any comments from
the SEC or its staff and of any request by the SEC or its staff for amendments
or supplements to the Proxy Statement or for additional information and will
supply Purchaser with copies of all correspondence between the Company or any of
its representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Proxy Statement or the Merger. The Company shall give
Purchaser and its counsel the opportunity to review the Proxy Statement prior to
its being filed with the SEC and shall give Purchaser and its counsel the
opportunity to review all amendments and supplements to the Proxy Statement and
all responses to requests for additional information and replies to comments
prior to their being filed with, or sent to, the SEC. Each of the Company and
Purchaser agrees to use its best efforts, after consultation with the other
parties hereto, to respond promptly to all such comments of and requests by the
SEC. As promptly as practicable after the Proxy Statement has been cleared by
the SEC, the Company shall mail the Proxy Statement to the stockholders of the
Company. If at any time prior to the approval of this Agreement by the
Company's stockholders there shall occur any event that is required to be set
forth in an amendment or supplement to the Proxy Statement under applicable law,
the Company will prepare and mail to its stockholders such an amendment or
supplement.
28
(c) The Company represents and warrants that any required Proxy Statement
will comply as to form in all material respects with the Exchange Act and, at
the respective times filed with the SEC and distributed to stockholders of the
Company, will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no
-------- -------
representation or warranty as to any information included in the Proxy Statement
that was provided by Purchaser or Merger Sub. Purchaser represents and warrants
that none of the information supplied by Purchaser or Merger Sub for inclusion
in the Proxy Statement will, at the respective times filed with the SEC and
distributed to stockholders of the Company, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) Subject to clause (iii) of Section 8.2(a), the Company shall use its
-------------
reasonable efforts to obtain the necessary approvals by its stockholders of the
Merger, this Agreement and the transactions contemplated hereby.
(e) Purchaser agrees to cause all shares of Common Stock purchased by
Merger Sub pursuant to the Offer and all other shares of Common Stock owned by
Purchaser, Merger Sub or any other subsidiary or affiliate of Purchaser to be
voted in favor of the approval of the Merger.
8.3. Filings; Other Action.
---------------------
Subject to the terms and conditions herein provided, the Company,
Purchaser and Merger Sub shall: (a) as promptly as practicable but in no event
later than 10 business days after the date hereof, make their respective filings
and thereafter make any other required submissions under the HSR Act with
respect to the Offer and, if applicable, the Merger, and request early
termination of the waiting period under the HSR Act; (b) cooperate and consult
with one another in, (i) determining which Regulatory Filings are required or,
in the case of Other Antitrust Filings and Consents, permitted to be made prior
to the Effective Time with, and which Consents are required or, in the case of
Other Antitrust Filings and Consents, permitted to be obtained prior to the
Effective Time from Governmental Entities or other third parties in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and determining which Consents are required to
transfer to the Surviving Corporation any Permits or registrations held on
behalf of the Company or any of its Subsidiaries by or in the name of
distributors, brokers or sales agents; (ii) promptly preparing all Regulatory
Filings and all other filings, submissions and presentations required or prudent
to obtain all Consents, including by providing to the other parties drafts of
such material reasonably in advance of the anticipated filing or submission
dates; (iii) promptly making all such Regulatory Filings and promptly seeking
all such Consents; (iv) defending against any lawsuit or proceeding, whether
judicial or administrative, challenging this Agreement or the consummation of
any of the transactions contemplated hereby; and (c) use their reasonable best
efforts to take, or cause to be taken, all other action and do, or cause to be
done, all other things necessary, proper or appropriate to consummate and make
effective the transactions contemplated by this
29
Agreement (including without limitation those actions described in the foregoing
(ii) through (iv)). Each of Purchaser and the Company shall use its best efforts
to contest any proceeding seeking a preliminary injunction or other legal
impediment to, and to resolve any objections as may be asserted by any
Governmental Entity with respect to, the Offer or the Merger under the HSR Act
or Foreign Antitrust Laws. If, at any time after the Effective Time, any further
action is necessary or desirable to carry out the purpose of this Agreement, the
proper officers and directors of Purchaser and the Surviving Corporation shall
take all such necessary action.
8.4. Publicity. The initial press release relating to this Agreement shall
---------
be a joint press release and thereafter the Company and Purchaser shall consult
with each other before issuing any press release or otherwise making public
statements with respect to the transactions contemplated hereby and in making
any filings with any Governmental Entity or with The Nasdaq Stock Market with
respect thereto.
8.5. Further Action. Each party hereto shall, subject to the fulfillment at
--------------
or before the Effective Time of each of the conditions of performance set forth
herein or the waiver thereof, perform such further acts and execute such
documents as may be reasonably required to effect the Merger, including the
execution of any deeds, bills of sale, assignments, assurances and all such
other acts and things necessary, desirable or proper to carry out the purposes
of this Agreement. In addition to the foregoing, the Company and its
Subsidiaries shall deliver to Purchaser a certificate in form and substance
reasonably satisfactory to Purchaser, duly executed and acknowledged, certifying
facts that would exempt the transactions contemplated hereby from withholding
pursuant to the provisions of the Foreign Investment in Real Property Tax Act.
8.6. Insurance; Indemnity.
--------------------
(a) Purchaser will cause the Surviving Corporation to purchase a six year
pre-paid noncancellable directors and officers insurance policy covering the
current and all former directors, officers and similar persons of the Company
and its Subsidiaries, with respect to acts or failures to act prior to the
Effective Time, in a single aggregate amount over the six-year period
immediately following the Closing Date equal to the policy limit for the
Company's current directors and officers insurance policy as of the date hereof
(the "Current Policy"). If such insurance is obtainable at an annual cost per
--------------
covered year not in excess of 200% of the annual premium paid by the Company for
the Current Policy (the "Cap"), then Purchaser will cause the Surviving
---
Corporation to purchase policies providing (or Purchaser will modify its
existing policies to provide for) at least the same coverage as the Current
Policy and containing terms and conditions no less advantageous to the current
and former directors, officers and similar persons of the Company and its
Subsidiaries than the Current Policy with respect to acts or failures to act
prior to the Effective Time; provided, however, that Purchaser and the Surviving
-------- -------
Corporation shall not be required to obtain policies providing such coverage
except to the extent that such coverage can be provided at an annual cost of no
greater than the Cap; and, if equivalent coverage cannot be obtained, or can be
obtained only by paying an annual premium in excess of the Cap, Purchaser or the
Surviving Corporation shall only be required to obtain as much coverage as can
be obtained by paying an annual premium equal to the Cap.
30
(b) Purchaser shall cause the Surviving Corporation to keep in effect in
its bylaws provisions for a period of not less than six years from the Effective
Time (or, in the case of matters occurring prior to the Effective Time that have
not been resolved prior to the sixth anniversary of the Effective Time, until
such matters are finally resolved) that provide for exculpation of director and
officer liability and indemnification (and advancement of expenses related
thereto) of the past and present officers and directors of the Company and its
Subsidiaries to the fullest extent permitted by the DGCL, which provisions shall
not be amended except as required by applicable law or except to make changes
permitted by law that would enhance the rights of past or present officers and
directors to indemnification or advancement of expenses.
(c) Subject to Section 8.6(f), from and after the Effective Time, Purchaser
--------------
shall indemnify and hold harmless, to the fullest extent permitted under
applicable law, each person who is, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, an officer, director or
similar person of the Company or any Subsidiary, against all losses, claims,
damages, liabilities, costs or expenses (including attorneys' fees), judgments,
fines, penalties and amounts paid in settlement (collectively, "Losses") in
------
connection with any claims, actions, suits, proceedings, arbitrations,
investigations or audits (collectively, "Litigation") arising before or after
----------
the Effective Time out of or pertaining to acts or omissions, or alleged acts or
omissions, by them in their capacities as such, which acts or omissions occurred
prior to the Effective Time. Without limiting the foregoing, Purchaser shall
periodically advance expenses as incurred with respect to the foregoing to the
fullest extent permitted under applicable law provided that the person to whom
the expenses are advanced provides an undertaking to repay such advance if it is
ultimately determined that such person is not entitled to indemnification.
(d) If, after the Effective Time, Purchaser or the Surviving Corporation or
any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties or assets to any person, then, in each such case, proper
provisions shall be made so that successors and assigns of Purchaser or the
Surviving Corporation, as the case may be, shall assume such entity's
obligations set forth in this Section 8.6. The provisions of this Section 8.6
----------- -----------
are intended for the benefit of and shall be enforceable by each person who is
now or has been at any time prior to the date of this Agreement, or who becomes
prior to the Effective Time, an officer, director or similar person of the
Company or any of its Subsidiaries.
(e) If any Litigation described in Section 8.6(c) (each, an "Action")
-------------- ------
arises or occurs, the Surviving Corporation shall control the defense of such
Action with counsel selected by the Surviving Corporation, which counsel shall
be reasonably acceptable to the party seeking indemnification pursuant to
Section 8.6(c) (each, an "Indemnified Party"), provided that the Indemnified
-------------- -----------------
Party shall be permitted to participate in the defense of such Action through
counsel selected by the Indemnified Party, at the Indemnified Party's expense.
Notwithstanding the foregoing, if there is any actual or potential conflict
between the Surviving Corporation and any Indemnified Party or there are
additional defenses available to any Indemnified Party, such Indemnified Party
shall be permitted to participate in the defense of such Action with counsel
selected by the Indemnified Party, at the Surviving Corporation's expense;
provided, however,
-------- -------
31
that the Surviving Corporation shall not be obligated to pay the fees and
expenses of more than one counsel for any Indemnified Party in any single
Action. The Surviving Corporation shall not be liable for any settlement
effected without its written consent, which consent shall not unreasonably be
withheld.
(f) Purchaser shall have no obligations under Section 8.6(c), unless and
--------------
until the Surviving Corporation transfers outside of the ordinary course of
business a material portion of its assets, in a single transaction or in a
series of transactions, and such transfer materially and adversely affects the
legal or financial ability of the Surviving Corporation to satisfy its
indemnification obligations under this Section 8.6.
-----------
8.7. Restructuring of Merger. Upon the mutual agreement of Purchaser and
-----------------------
the Company, the Merger shall be restructured in the form of a forward
subsidiary merger of the Company with and into Merger Sub, with Merger Sub being
the surviving corporation, or as a merger of the Company with and into
Purchaser, with Purchaser being the surviving corporation. In such event, this
Agreement shall be deemed appropriately modified to reflect such form of merger.
8.8. Employee Benefit Plans.
----------------------
(a) From and after the Effective Time, the Surviving Corporation and its
respective Subsidiaries will honor, in accordance with their terms, all existing
employment, change in control and severance agreements between the Company or
any of its Subsidiaries and any current or former officer, director, consultant
or employee of the Company or any of its Subsidiaries ("Covered Employees") to
-----------------
the extent in effect on, and disclosed to Purchaser prior to, the date hereof
and all benefits or other amounts earned or accrued to the extent vested or that
become vested in the ordinary course through the Effective Time under all
employee benefit plans of the Company and any of its Subsidiaries, in each case
to the extent in effect on the date hereof.
(b) To the extent that Covered Employees are included in any benefit plan
of Purchaser or its subsidiaries, Purchaser agrees that the Covered Employees
shall receive credit under such plan for service prior to the Effective Time
with the Company and its Subsidiaries to the same extent such service was
counted under similar Company Benefit Plans for purposes of eligibility,
vesting, eligibility for retirement (but not for benefit accrual).
8.9. Acceleration of Outstanding Indebtedness. In the event any of the
----------------------------------------
Company's or any of its Subsidiaries' obligation for borrowed money outstanding
as of the date of this Agreement is accelerated or the Company or such
Subsidiary is otherwise required to repay or prepay any such obligation, in each
case, after the consummation of the Offer as a result of (a) the consummation of
any transaction contemplated hereby or (b) Purchaser's acquisition of shares of
Common Stock pursuant to this Agreement or otherwise, Purchaser agrees, within
two business days after notice thereof, to loan to the Company at no cost to the
Company an amount equal to the amount that the Company or any such Subsidiary is
required to so repay or prepay (including any related prepayment premiums or
penalties). The term of such loan shall be equal
32
to the term of such accelerated obligation (prior to its acceleration) and the
Company and Purchaser shall enter into any agreement reasonably necessary to
evidence such agreement.
8.10. Access to Information. The Company shall, and shall cause each of its
Subsidiaries to, afford to Purchaser and to the officers, employees,
accountants, counsel, financial advisors and other representatives of Purchaser,
reasonable access during normal business hours during the period prior to the
Effective Time to all their respective properties, books, contracts,
commitments, personnel and records and, during such period, the Company shall,
and shall cause its respective Subsidiaries to, furnish promptly to the other
party (a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of federal
or state securities laws and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request. Except as
required by applicable laws, each of the parties hereto will hold, and will
cause its respective officers, employees, accountants, counsel, financial
advisors and other representatives and affiliates to hold, any nonpublic
information in confidence to the extent required by, and in accordance with, the
provisions of that certain Confidentiality Agreement dated as of February 19,
1999 between Purchaser and the Company (the "Confidentiality Agreement").
-------------------------
8.11. No Solicitation.
---------------
(a) The Company shall not, and shall not authorize, permit or cause any of
its Subsidiaries or any of the officers and directors of it or its Subsidiaries
to, and shall not authorize, permit or direct its and its Subsidiaries'
employees, agents and representatives (including the Financial Advisor or any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) to, directly or indirectly, (i) initiate, solicit, or otherwise
encourage any inquiries or the making of any proposal or offer with respect to a
merger, reorganization, share exchange, tender offer, consolidation or similar
transaction involving, or any purchase of, 15% or more of the assets or any
equity securities of the Company or any of its Subsidiaries (any such proposal
or offer being hereinafter referred to as, an "Acquisition Proposal") or (ii)
--------------------
initiate or engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person or entity
relating to an Acquisition Proposal, whether made before or after the date of
this Agreement, or otherwise facilitate any effort or attempt to make or
implement or consummate an Acquisition Proposal.
(b) Notwithstanding clause (a) above, nothing contained in this Agreement
shall prevent the Company or its Board of Directors from (i) complying with Rule
14e-2 promulgated under the Exchange Act with regard to an Acquisition Proposal
or (ii): (x) providing information in response to a request therefor by a
person or entity who has made an unsolicited bona fide written Acquisition
Proposal if the Board of Directors receives from the person or entity so
requesting such information an executed confidentiality agreement on terms
substantially equivalent to those contained in the Confidentiality Agreement;
(y) engaging in any negotiations or discussions with any person or entity who
has made an unsolicited bona fide written Acquisition Proposal; or (z)
recommending such an Acquisition Proposal to the stockholders of the Company,
if, and only to the extent that, (i) in each such case referred to in clause
(x), (y) or (z) above, the Board of Directors of the Company determines in good
faith after consultation
33
with outside legal counsel and the Financial Advisor that such action is
necessary in order for its members to comply with their fiduciary duties under
applicable law (the parties hereto acknowledge and agree that, so long as
Section 8.11(a) has been complied with in all respects, any such action
described in clauses (x), (y) or (z) above shall be permitted to be taken
regardless of whether it would be necessary under applicable law, if it is taken
only with respect to a Superior Proposal) and (ii) in each case referred to in
clause (x), (y) or (z) above, the Board of Directors of the Company determines
in good faith (after consultation with outside legal counsel and the Financial
Advisor) that, if accepted, such Acquisition Proposal is reasonably likely to be
consummated, taking into account all legal, financial and regulatory aspects of
the proposal and the person or entity making the proposal, and would provide for
a higher per share value to the stockholders of the Company, and is fully
financed (or, based on a good faith determination of the Board of Directors of
the Company, is readily financeable) (any such Acquisition Proposal meeting the
foregoing conditions being referred to herein as a "Superior Proposal"). The
-----------------
Company shall immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. The Company agrees that it will take the
necessary steps to promptly inform the individuals or entities referred to in
the first sentence of Section 8.11(a) of the obligations undertaken in this
---------------
paragraph and in the Confidentiality Agreement. The Company also shall promptly
request each person or entity that has heretofore executed a confidentiality
agreement in connection with its consideration of an Acquisition Proposal to
return all confidential information heretofore furnished to such person or
entity by or on behalf of it or any of its Subsidiaries.
(c) The Company shall notify Purchaser immediately if any Acquisition
Proposal or inquiries regarding a potential Acquisition Proposal are received
by, any information with respect to an Acquisition Proposal or a potential
Acquisition Proposal is requested from, or any discussions or negotiations with
respect to an Acquisition Proposal or a potential Acquisition Proposal are
sought to be initiated or continued with, it or any of its representatives
indicating, in connection with such notice, the name of the person or entity
involved and the material terms and conditions of any such Acquisition Proposal,
and thereafter shall keep Purchaser informed, on a current basis, of the status
and terms of any such inquiries or Acquisition Proposals and the status of any
such negotiations or discussions.
ARTICLE 9.
CONDITIONS
9.1. Conditions to Each Party's Obligation to Effect the Merger. The
----------------------------------------------------------
respective obligation of each party to effect the Merger shall be subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of the
following conditions:
(a) Merger Sub shall have accepted for payment and paid for all shares of
Common Stock validly tendered in the Offer and not withdrawn; provided, however,
-------- -------
that neither Purchaser nor Merger Sub may invoke this condition if Merger Sub
shall have failed in violation of the terms of this Agreement or the Offer to
purchase shares so tendered and not withdrawn.
34
(b) This Agreement shall have been adopted by the affirmative vote of the
holders of the requisite number of shares of capital stock of the Company if
such vote is required pursuant to Company's certificate of incorporation, the
DGCL or other applicable law; provided, however, that neither Purchaser nor
-------- -------
Merger Sub may invoke this condition if either of them or any of their
respective affiliates shall have failed to vote the shares of Common Stock held
by it in favor of this Agreement and the Company may not invoke this condition
if the Company shall have failed to fulfill its obligations under Section 8.2.
-----------
(c) No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing, restraining or restricting the consummation
of the Merger shall be in effect; provided, however, that the party invoking
-------- -------
this condition shall use its best efforts to have any such order, injunction or
restraint vacated.
(d) All necessary waiting periods under the HSR Act that are applicable to
the Merger shall have expired or been earlier terminated, and all other
necessary approvals from any other Governmental Entity that are applicable to
the Merger shall have been obtained.
ARTICLE 10.
TERMINATION; AMENDMENT; WAIVER
10.1. Termination. This Agreement may be terminated and the Merger
-----------
contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the stockholders of the Company, but prior to the Effective Time:
(a) by mutual written consent of the Company and Purchaser; or
(b) by the Company, if (i) Purchaser or Merger Sub shall have failed to
commence the Offer within five business days after the date of this Agreement,
(ii) Purchaser or Merger Sub shall have failed to comply with its payment
obligations under this Agreement with respect to any shares of Common Stock
accepted for payment pursuant to the Offer, or (iii) any change to the offer is
made in contravention of the provisions of Article 1; or
---------
(c) by Purchaser or the Company:
(i) if the Effective Time shall not have occurred on or before the
date which is six months from the date of this Agreement (provided that the
right to terminate this Agreement pursuant to this clause (i) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of the Effective
Time to occur on or before such date);
(ii) if, upon a vote at the Stockholder Meeting, or any adjournment
thereof, the adoption of this Agreement by the stockholders of the Company
required by the DGCL shall not have been obtained (provided that the right
to terminate this Agreement pursuant to this clause (ii) shall not be
available to Purchaser if Purchaser, Merger Sub or any of
35
their affiliates shall have failed to vote the shares of Common Stock held
by them in favor of adoption of this Agreement, and shall not be available
to the Company, if the Company shall have failed to fulfill its obligations
under Section 8.2);
-----------
(iii) if there shall be any statute, law, rule or regulation that
makes consummation of the Offer or the Merger illegal or prohibited or if
any court of competent jurisdiction or other Governmental Entity shall have
issued an order, judgment, decree or ruling, or taken any other action
restraining, enjoining or otherwise prohibiting the Offer or the Merger and
such order, judgment, decree, ruling or other action shall have become
final and non-appealable; or
(iv) if the Offer terminates or expires on account of the failure of
any condition specified in Exhibit A without Merger Sub having purchased
---------
any shares of Common Stock thereunder (provided that the right to terminate
this Agreement pursuant to this clause (iv) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of any such condition); or
(d) by Purchaser, prior to the consummation of the Offer, if (i) the Board
of Directors of the Company withdraws, amends or modifies, its approval of this
Agreement and the transactions contemplated hereby, or its recommendation that
the holders of the shares of Common Stock accept the Offer and tender all of
their shares of Common Stock to Merger Sub and approve this Agreement and the
transactions contemplated hereby (or, in each case, publicly announces its
intention to do so) in a manner adverse to Purchaser or Merger Sub or (ii) the
Company approves, recommends or enters into an agreement with respect to, or
consummates, an Acquisition Proposal; or
(e) by the Company, prior to the consummation of the Offer, if the Company
approves, recommends or enters into an agreement providing for the Company to
engage in a Superior Proposal; provided, however, that the right to terminate
-------- -------
this Agreement pursuant to this Section 10.1(e) shall not be available if the
---------------
Company has not provided Purchaser and Merger Sub with at least five business
days' prior written notice of its intent to so terminate this Agreement together
with a summary of the material terms and conditions of the Superior Proposal;
provided, further, however, that no termination shall be effective pursuant to
-------- ------- -------
this Section 10.1(e) unless concurrently with such termination, a Break-Up Fee
--------------
is paid in full by the Company in accordance with Section 10.2; or
------------
(f) by Purchaser, if any of the conditions set forth in Exhibit A shall
---------
have become forever incapable of fulfillment and shall not have been waived by
all applicable parties; or
(g) by Purchaser, if the Company shall breach any of its representations,
warranties or obligations hereunder and such breach shall not have been cured or
waived or the Company shall not have provided reasonable assurance that such
breach will be cured at least two business days prior to the consummation of the
Offer and such breach shall not have been cured by such time, but only if such
breach, individually or together with all other such breaches, would constitute
failure of a condition contained in Exhibit A as of the date of such
---------
termination; or
36
(h) by the Company, if Purchaser or Merger Sub shall materially breach any
of its representations, warranties or obligations hereunder and such breach
shall not have been cured or waived or Purchaser or Merger Sub shall not have
provided reasonable assurance that such breach will be cured prior to the
consummation of the Offer, but only if such breach, individually or together
with all other such breaches, is reasonably likely to materially and adversely
affect Purchaser's or Merger Sub's ability to consummate the Offer or the
Merger; or
(i) by Purchaser, prior to the consummation of the Offer, if the Tender
Agreement shall not be in full force and effect or any Significant Stockholders
shall have breached in any material respect any representation, warranty or
covenant contained in the Tender Agreement; provided, however, that the party
-------- -------
seeking termination pursuant to clause (f), (g) or (h) hereof is not in material
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement.
10.2. Effect of Termination
---------------------
(a) If this Agreement is terminated and the Merger is abandoned pursuant to
Section 10.1, this Agreement, except for the provisions of Sections 1.3(c), 8.4,
------------ --------------- ---
and Article 11, shall terminate, without any liability (except as set forth
----------
below) on the part of any party or its affiliates, directors, officers or
stockholders. Nothing herein shall relieve any party from liability for any
intentional breach of this Agreement.
(b) The Company shall pay Purchaser a Break-Up Fee in the event that this
Agreement is terminated by Purchaser pursuant to Section 10.1(d) or by the
---------------
Company pursuant to Section 10.1(e).
--------------
(c) If all of the following events have occurred:
(i) an Acquisition Proposal is commenced, publicly disclosed, publicly
proposed or otherwise communicated to the Company at any time on or after
the date of this Agreement and prior to the consummation of the Offer and
either Purchaser or the Company terminates this Agreement pursuant to
Section 10.1(c)(i) or Section 10.1(c)(iv) or Purchaser terminates this
------------------ -------------------
Agreement pursuant to Section 10.1(g); and
---------------
(ii) thereafter, within 12 months of the date of termination of this
Agreement, the Company enters into a definitive agreement with respect to,
or consummates, any Acquisition Proposal described in clause (i) above (or
any other Acquisition Proposal whether or not described in clause (i) above
if such Acquisition Proposal is made by any Person (or Affiliate thereof)
who made any Acquisition Proposal described in clause (i) above),
then, the Company shall pay to Purchaser an amount equal to the Break-Up Fee
concurrently with the execution of the relevant definitive agreement.
37
(d) If this Agreement is terminated by Purchaser pursuant to Section
10.1(g), the Company shall reimburse Purchaser up to a maximum of $1,500,000 for
all expenses incurred by Purchaser in connection with the negotiation,
execution, delivery and performance of this Agreement by Purchaser and Merger
Sub.
(e) If this Agreement is terminated by the Company pursuant to Section
10.1(h), Purchaser shall reimburse the Company up to a maximum of $1,500,000 for
all expenses incurred by the Company in connection with the negotiation,
execution, delivery and performance of this Agreement by the Company.
(f) The "Break-Up Fee" shall be $6,000,000, provided that, such amount will
------------ --------
be reduced by any amounts paid by the Company to Purchaser pursuant to Section
-------
10.2(d) above. In the event that the Break-Up Fee shall be payable under this
-------
Agreement, the Company shall pay the Break-Up Fee to Purchaser by wire transfer
of immediately available funds to an account designated by Purchaser on the next
business day following the termination of this Agreement (or, in the case of a
termination pursuant to Section 10.1(e), prior to the effectiveness of such
---------------
termination).
10.3. Amendment. To the extent permitted by applicable law, this Agreement
---------
may be amended by action taken by or on behalf of the Boards of Directors of the
Company and Purchaser at any time before or after adoption of this Agreement by
the stockholders of the Company but, after any such stockholder approval, no
amendment shall be made that decreases the Merger Consideration or that
adversely affects the rights of the Company's stockholders hereunder without the
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties.
10.4. Extension; Waiver. At any time prior to the Effective Time, the
-----------------
parties hereto, by action taken by or on behalf of the boards of directors of
the Company (subject to Section 1.4) and Purchaser, may (a) extend the time for
-----------
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein by any other applicable party or in any document, certificate
or writing delivered pursuant hereto by any other applicable party or (c) waive
compliance with any of the agreements or conditions contained herein, except
after adoption of this Agreement by the stockholders of the Company, for any
waiver that has the effect of decreasing the Merger Consideration or that
adversely affects the rights of the Company's stockholders hereunder without
approval of such stockholders. 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 11.
GENERAL PROVISIONS
11.1. Nonsurvival of Representations and Warranties. None of the
---------------------------------------------
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time.
38
11.2. Notices. Any notice required to be given hereunder shall be
-------
sufficient if in writing, and sent by facsimile transmission (with a
confirmatory copy sent by overnight courier), by courier service (with proof of
service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
If to Purchaser or Merger Sub: If to the Company:
Xxxxx Xxxxxxxx Corporation Stimsonite Corporation
000 Xxxxx Xxxxxx Xxxxx Xxxx. 0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000 Xxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Attention: Xxxxxx X. xxx Xxxxxxxxxxxx Attention: Xxxxxx X. Xxxxx
With a copy to: With a copy to:
Xxxxxx & Xxxxxxx Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000 00 Xxxx Xxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000 Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx Attention: Xxxxxxx X. Xxxxxx
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
11.3. Assignment; Binding Effect. Neither this Agreement nor any of the
--------------------------
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; provided, however, that either Purchaser
-------- -------
or Merger Sub (or both) may assign its rights hereunder (including, without
limitation, the right to make the Offer or to purchase shares of Common Stock in
the Offer) to a wholly owned Subsidiary of Purchaser or Merger Sub but nothing
shall relieve the assignor from its obligations hereunder. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, except for
the provisions of Sections 8.6 and 8.8, nothing in this Agreement, expressed or
------------ ---
implied, is intended to confer on any person other than the parties hereto or
their respective heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
11.4. Entire Agreement. This Agreement, the first three paragraphs of the
----------------
Confidentiality Agreement which are hereby adopted and made a part hereof, the
Disclosure Letter, the Purchaser Disclosure Letter, the Exhibit hereto, the
Ancillary Documents and any other documents delivered by the parties in
connection herewith constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto (it being understood that,
except for the first three paragraphs, all of the remaining provisions of the
Confidentiality Agreement will terminate upon execution of this Agreement).
39
11.5. Fees and Expenses. Whether or not the Offer or Merger is consummated,
-----------------
all costs and expenses incurred in connection with the transactions contemplated
by this Agreement shall be paid by the party incurring such expenses.
11.6. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware without regard to its rules of
conflict of laws. Each of the Company, Purchaser and Merger Sub hereby
irrevocably and unconditionally consents to submit to the jurisdiction of the
federal and state courts located in Xxxx County, Illinois or to the jurisdiction
of the federal and state courts located in Los Angeles County, California for
any litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any litigation relating thereto
except in such courts), waives any objection to the laying of venue of any such
litigation in such courts and agrees not to plead or claim in any such court
that such litigation brought therein has been brought in an inconvenient forum.
11.7. Headings. Headings of the Articles and Sections of this Agreement are
--------
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
11.8. Interpretation. In this Agreement, unless the context otherwise
--------------
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa. Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." As used in this Agreement, (a) the words "Subsidiary," "affiliate"
and "associate" shall have the meanings ascribed thereto in Rule 12b-2 under the
Exchange Act, (b) "business day" means any day other than Saturday, Sunday or
any other day on which banks in the City of New York are required or permitted
to close and (c) "knowledge" means the actual knowledge of any executive officer
of the Company or Purchaser, as the case may be.
11.9. Severability. Any term or provision of this Agreement that is
------------
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
11.10. Enforcement of Agreement. 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 its specific terms or was 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 federal or state court
located in Xxxx County, Illinois or Los Angeles County, California, this being
in addition to any other remedy to which they are entitled at law or in equity.
The prevailing party in any judicial action
40
shall be entitled to receive from the other party reimbursement for the
prevailing party's reasonable attorneys' fees and disbursements, and court
costs.
11.11. Counterparts. This Agreement may be executed by the parties hereto
------------
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all, of the parties hereto.
11.12. Obligation of Purchaser. Whenever this Agreement requires Merger Sub
-----------------------
to take any action, such requirement shall be deemed to include an undertaking
on the part of Purchaser to cause Merger Sub to take such action.
[signature page follows]
41
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused me same to be duly delivered on their behalf on the day and year first
written above.
PURCHASER:
---------
XXXXX XXXXXXXX CORPORATION
By: /s/ Xxxxxx X. xxx Xxxxxxxxxxxx
-------------------------------------
Name: Xxxxxx X. xxx Xxxxxxxxxxxx
Title: Senior Vice President, General
Counsel and Secretary
MERGER SUB:
----------
VISION ACQUISITION CORPORATION
By: /s/ Xxxxxx X. xxx Xxxxxxxxxxxx
-----------------------------------
Name: Xxxxxx X. xxx Xxxxxxxxxxxx
Title: President
S-1
COMPANY:
-------
STIMSONITE CORPORATION
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief
Executive Officer
S-2
EXHIBIT A
CONDITIONS OF THE OFFER
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings assigned to them in the Agreement and Plan of Merger, dated as
of June 4, 1999 (the "Merger Agreement"), among Purchaser, Merger Sub and
----------------
Stimsonite Corporation, a Delaware corporation.
Notwithstanding any other term of the Merger Agreement, Merger Sub
shall not be required to accept for payment or pay for, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) of the
Exchange Act, any shares of Common Stock not theretofore accepted for payment or
paid for and may terminate or amend the Offer as to such shares of Common Stock
unless (i) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer that number of shares of Common Stock which would
represent at least a majority on a fully diluted basis of the outstanding shares
of Common Stock on a fully diluted basis (collectively, the "Minimum Condition")
-----------------
and (ii) any waiting period under the HSR Act and any non-United States laws
regulating competition, antitrust, investment or exchange controls applicable to
the purchase of shares of Common Stock pursuant to the Offer shall have expired
or been terminated. Furthermore, notwithstanding any other term of the Offer or
the Merger Agreement, Merger Sub shall not be required to accept for payment or,
subject as aforesaid, to pay for any shares of Common Stock not theretofore
accepted for payment or paid for, and may terminate or amend the Offer if at any
time on or after the date of the Merger Agreement and prior to the expiration of
the Offer, any of the following conditions exist or shall occur and remain in
effect:
(a) any United States or state Governmental Entity shall have enacted,
issued, promulgated, enforced, instituted or entered any statute, rule,
regulation, executive order, decree, injunction, action, application or
claim or other order that is in effect or pending (a "Claim"), (i)
challenging or prohibiting the acquisition by Purchaser or Merger Sub of
the shares of Common Stock pursuant to the Merger Agreement, including the
Offer or the Merger, (ii) restraining or prohibiting the making or
consummation of the Merger Agreement, including the Offer or the Merger or
the performance of any of the other transactions contemplated by the Merger
Agreement, (iii) seeking to obtain from Purchaser or Merger Sub any damages
that arise out of the transactions contemplated by this Agreement and could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect if such damages were assessed against the Company,
(iv) restraining or prohibiting, or limiting in any material respect, the
ownership or operation by Purchaser or Merger Sub of any material portion
of the business or assets of the Company and its Subsidiaries taken as a
whole, (v) seeking to compel Purchaser or Merger Sub to dispose of or
forfeit material incidents of control of all or any material portion of the
business or assets of the Company or any of its Subsidiaries, (vi) imposing
limitations on the ability of Purchaser, Merger Sub or any other Subsidiary
of Purchaser effectively to exercise full rights of ownership of the shares
A-1
of Common Stock, including, without limitation, the right to vote any
shares of Common Stock acquired or owned by Purchaser or Merger Sub on all
matters properly presented to the Company's stockholders, or (vii) seeking
to require divestiture by Merger Sub or Purchaser of any shares of Common
Stock; or
(b) there shall be any statute, rule, regulation, judgment, order
or injunction enacted, promulgated, entered, enforced or deemed applicable
to the Offer, the Merger or the Merger Agreement, or any other action shall
have been taken by any government, Governmental Entity or court, domestic
or foreign, other than the routine application to the Offer or the Merger
of waiting periods under the HSR Act or any non-United States laws
regulating competition, antitrust, investment or exchange controls, that
has, or has a substantial likelihood of resulting in, any of the
consequences referred to in paragraph (a) above; or
(c)(i) the representations and warranties made by the Company in the
Merger Agreement shall not be true and correct as of the date of
consummation of the Offer as though made on and as of that date (other than
representations and warranties made as of a specified date, in which case
such representations and warranties shall be true and correct in all
material respects on and as of such specified date) except for any breach
or breaches that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect or (ii) the Company shall have
breached or failed to comply in any material respect with any of its
obligations, covenants or agreements under the Merger Agreement (other than
those obligations, covenants or agreements under Section 5.2(e), with
--------------
respect to which the Company shall have performed in all respects) and,
with respect to any such failure that can be remedied, the failure is not
remedied within 20 business days after Purchaser has furnished the Company
with written notice of such failure; or
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange,
any other national securities exchange or the Nasdaq National Market, (ii)
the declaration of a banking moratorium or any mandatory suspension of
payments in respect of banks in the United States, (iii) the commencement
of or escalation of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States, (iv)
any limitation (whether or not mandatory) by any United States governmental
authority on the extension of credit by banks or other financial
institutions, (v) a change in general financial bank or capital market
conditions which materially and adversely affects the ability of financial
institutions in the United States to extend credit or syndicate loans, or
(vi) in the case of any of the foregoing existing on the date of the
Agreement, a material acceleration or worsening thereof; or
(e) the Company's Board of Directors shall have withdrawn or
modified in a manner adverse to Purchaser or Merger Sub (including by
amendment of the Schedule 14D-9) its approval of the Merger Agreement and
the transactions contemplated thereby,
A-2
or its recommendation that the holders of the shares of Common Stock accept
the Offer and tender all of their shares of Common Stock to Merger Sub and
approve the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger, or shall have approved or recommended
any Acquisition Proposal or Superior Proposal; or
(f) the Merger Agreement shall have been terminated in accordance
with its terms; or
(g) there shall have occurred any events or states of fact that
have had, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
The foregoing conditions are for the sole benefit of Purchaser and
Merger Sub and may be asserted by Purchaser and Merger Sub regardless of the
circumstances (including any action or inaction by Purchaser) giving rise to any
such condition and, except for the Minimum Condition, may be waived by Purchaser
or Merger Sub, in whole or in part, at any time and from time to time, in the
sole discretion of Purchaser. The failure by Purchaser or Merger Sub at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right, the waiver of such right with respect to any particular facts or
circumstances shall not be deemed a waiver with respect to any other facts or
circumstances, and each such right will be deemed an ongoing right which may be
asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions,
all tendered shares of Common Stock not theretofore accepted for payment shall
forthwith be returned by the Paying Agent to the tendering stockholders.
A-3
