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EXHIBIT 2.1
SECOND AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ELTRAX SYSTEMS, INC.,
SOLEMN ACQUISITION CORPORATION
AND
CEREUS TECHNOLOGY PARTNERS, INC.
DATED AS OF JULY 27, 2000
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TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER 2
SECTION 1.1 THE MERGER...............................................................................2
SECTION 1.2 EFFECTIVE TIME OF THE MERGER.............................................................2
SECTION 1.3 CERTIFICATE OF INCORPORATION.............................................................2
SECTION 1.4 BYLAWS...................................................................................2
SECTION 1.5 OFFICERS.................................................................................2
SECTION 1.6 DIRECTORS................................................................................2
ARTICLE II CONVERSION OF SHARES 3
SECTION 2.1 CONVERSION OF CEREUS SHARES AND OPTIONS..................................................3
SECTION 2.2 CONVERSION OF CEREUS ACQUIRING SUB SHARES................................................4
SECTION 2.3 EXCHANGE OF CEREUS CERTIFICATES..........................................................5
SECTION 2.4 NO FRACTIONAL SECURITIES.................................................................6
SECTION 2.5 CLOSING..................................................................................6
SECTION 2.6 CLOSING OF CEREUS TRANSFER BOOKS.........................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF CEREUS 7
SECTION 3.1 ORGANIZATION AND QUALIFICATION...........................................................7
SECTION 3.2 CAPITALIZATION...........................................................................7
SECTION 3.3 SUBSIDIARIES.............................................................................8
SECTION 3.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS..................................................8
SECTION 3.5 REPORTS AND FINANCIAL STATEMENTS........................................................10
SECTION 3.6 EMPLOYEE BENEFIT PLANS; LABOR MATTERS; NO PARACHUTE PAYMENTS............................10
SECTION 3.7 CERTAIN TAX MATTERS.....................................................................13
SECTION 3.8 CONTRACTS; DEBT INSTRUMENTS.............................................................13
SECTION 3.9 LITIGATION..............................................................................13
SECTION 3.10 INTELLECTUAL PROPERTY...................................................................14
SECTION 3.11 TAXES...................................................................................14
SECTION 3.12 INTERESTED PARTY TRANSACTIONS...........................................................15
SECTION 3.13 ABSENCE OF CERTAIN CHANGES OR EVENTS....................................................15
SECTION 3.14 REGISTRATION STATEMENT AND PROXY STATEMENT..............................................15
SECTION 3.15 REORGANIZATION..........................................................................15
SECTION 3.16 BROKERS AND FINDERS.....................................................................15
SECTION 3.17 OPINION OF FINANCIAL ADVISOR............................................................16
SECTION 3.18 HAZARDOUS SUBSTANCES AND HAZARDOUS WASTE................................................16
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SECTION 3.19 DISCLOSURE..............................................................................17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SOLEMN ACQUIRING SUB 17
SECTION 4.1 ORGANIZATION AND QUALIFICATION..........................................................17
SECTION 4.2 CAPITALIZATION..........................................................................18
SECTION 4.3 SUBSIDIARIES............................................................................18
SECTION 4.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS.................................................19
SECTION 4.5 REPORTS AND FINANCIAL STATEMENTS........................................................20
SECTION 4.6 EMPLOYEE BENEFIT PLANS; LABOR MATTERS; NO PARACHUTE PAYMENTS............................21
SECTION 4.7 CERTAIN TAX MATTERS.....................................................................23
SECTION 4.8 CONTRACTS; DEBT INSTRUMENTS.............................................................23
SECTION 4.9 LITIGATION..............................................................................24
SECTION 4.10 INTELLECTUAL PROPERTY...................................................................24
SECTION 4.11 TAXES...................................................................................24
SECTION 4.12 INTERESTED PARTY TRANSACTIONS...........................................................25
SECTION 4.13 ABSENCE OF CERTAIN CHANGES OR EVENTS....................................................25
SECTION 4.14 REGISTRATION STATEMENT AND PROXY STATEMENT..............................................25
SECTION 4.15 REORGANIZATION..........................................................................25
SECTION 4.16 BROKERS AND FINDERS.....................................................................26
SECTION 4.17 OPINION OF FINANCIAL ADVISOR............................................................26
SECTION 4.18 HAZARDOUS SUBSTANCES AND HAZARDOUS WASTE................................................26
SECTION 4.19 DISCLOSURE..............................................................................27
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER 27
SECTION 5.1 TRANSITION MATTERS......................................................................27
SECTION 5.2 CONDUCT OF BUSINESS BY PARENT AND CEREUS PENDING THE MERGER.............................28
SECTION 5.3 ACQUISITION TRANSACTIONS................................................................30
ARTICLE VI ADDITIONAL AGREEMENTS 31
SECTION 6.1 ACCESS TO INFORMATION...................................................................31
SECTION 6.2 REGISTRATION STATEMENT AND PROXY STATEMENT..............................................32
SECTION 6.3 STOCKHOLDERS' APPROVALS.................................................................32
SECTION 6.4 COMPLIANCE WITH THE SECURITIES ACT......................................................33
SECTION 6.5 EXPENSES AND FEES.......................................................................33
SECTION 6.6 AGREEMENT TO COOPERATE..................................................................33
SECTION 6.7 PUBLIC STATEMENTS.......................................................................35
SECTION 6.8 NOTIFICATION OF CERTAIN MATTERS.........................................................35
SECTION 6.9 DIRECTORS' AND OFFICERS' INDEMNIFICATION................................................35
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SECTION 6.10 CORRECTIONS TO THE JOINT PROXY STATEMENT/PROSPECTUS AND REGISTRATION STATEMENT..........36
SECTION 6.11 LISTING.................................................................................36
SECTION 6.12 PARENT BOARD OF DIRECTORS...............................................................36
SECTION 6.13 BRIDGE FACILITY.........................................................................36
SECTION 6.14 EMPLOYMENT AGREEMENTS...................................................................37
SECTION 6.15 EXECUTIVE OFFICERS OF PARENT............................................................37
SECTION 6.16 REVERSE STOCK SPLIT; CORPORATE NAME.....................................................37
ARTICLE VII CONDITIONS 37
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER..............................37
SECTION 7.2 ADDITIONAL CONDITIONS TO OBLIGATION OF CEREUS TO EFFECT THE MERGER......................38
SECTION 7.3 ADDITIONAL CONDITIONS TO OBLIGATION OF PARENT TO EFFECT THE MERGER......................39
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER 40
SECTION 8.1 TERMINATION.............................................................................40
SECTION 8.2 EFFECT OF TERMINATION...................................................................41
SECTION 8.3 AMENDMENT...............................................................................42
SECTION 8.4 WAIVER..................................................................................42
SECTION 8.5 TERMINATION FEES AND EXPENSES...........................................................42
ARTICLE IX GENERAL PROVISIONS 43
SECTION 9.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES..........................................43
SECTION 9.2 NOTICES.................................................................................43
SECTION 9.3 INTERPRETATION..........................................................................45
SECTION 9.4 GOVERNING LAW...........................................................................45
SECTION 9.5 ARBITRATION.............................................................................45
SECTION 9.6 COUNTERPARTS, TELECOPIED SIGNATURES.....................................................45
SECTION 9.7 PARTIES IN INTEREST.....................................................................46
SECTION 9.8 MISCELLANEOUS...........................................................................46
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SECOND AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS SECOND AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as
of July 27, 2000 (the "AGREEMENT"), is by and among ELTRAX SYSTEMS, INC., a
Minnesota corporation ("PARENT"), SOLEMN ACQUISITION CORPORATION, a Delaware
corporation and a wholly owned subsidiary of Parent ("CEREUS ACQUIRING SUB"),
and CEREUS TECHNOLOGY PARTNERS, INC., a Delaware corporation ("CEREUS"). Parent
and Cereus are sometimes together referred to collectively as the "COMPANIES"
and, individually, as a "COMPANY".
RECITALS
A. The Boards of Directors of Parent, Cereus Acquiring Sub and
Cereus have approved the merger of Cereus Acquiring Sub with and into Cereus,
upon the terms and subject to the conditions set forth herein (the "MERGER"),
and deem it advisable and in the best interests of their respective shareholders
that the Merger be consummated.
B. For federal income tax purposes, the parties intend to adopt
this Agreement as a tax-free reorganization and to consummate the Merger in
accordance with the provisions of Section 368 of the Internal Revenue Code of
1986, as amended (the "CODE"), and the regulations promulgated thereunder.
C. The parties desire to make certain representations,
warranties, covenants and agreements in connection with the transactions
contemplated by this Agreement (the "TRANSACTIONS").
D. On June 12, 2000 the parties executed an Agreement and Plan of
Merger (the "ORIGINAL AGREEMENT"). On July 14, 2000, the parties amended various
terms of the Original Agreement, and executed a First Amendment to Agreement and
Plan of Merger (the "FIRST AMENDMENT").
E. The boards of directors of each of Parent, Cereus Acquiring
Sub and Cereus have determined that it is fair to and in the best interests of
their respective stockholders to further amend the Original Agreement and the
First Amendment, and to restate in full their mutual agreements and
understandings regarding the Transactions in this Second Amended and Restated
Agreement and Plan of Merger.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein, the parties hereto agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.2) and in
accordance with the General Corporation Law of the State of Delaware, as amended
(the "DGCL"), Cereus Acquiring Sub shall be merged with and into Cereus and the
separate existence of Cereus Acquiring Sub shall thereupon cease. Cereus shall
be the surviving corporation in the Merger and a wholly-owned subsidiary of
Parent and is hereinafter sometimes referred to as the "SURVIVING CORPORATION."
SECTION 1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective at such time (the "EFFECTIVE TIME") as shall be stated in a
certificate of merger, in a form mutually acceptable to Parent and Cereus, to be
filed with the Secretary of State of the State of Delaware in accordance with
the DGCL (the "MERGER FILING"), concurrently with the closing of the
Transactions in accordance with Section 2.5.
SECTION 1.3 CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Surviving Corporation as in effect immediately prior to the
Effective Time shall, after the Effective Time, be the Certificate of
Incorporation of Cereus Acquiring Sub, and thereafter may be amended in
accordance with their terms and as provided in the DGCL.
SECTION 1.4 BYLAWS. The Bylaws of the Surviving Corporation as in
effect immediately prior to the Effective Time shall, after the Effective Time,
be the Bylaws of Cereus Acquiring Sub and (subject to Section 6.9) thereafter
may be amended in accordance with their terms and as provided by the Certificate
of Incorporation of the Surviving Corporation and the DGCL.
SECTION 1.5 OFFICERS. The officers of the Surviving Corporation after
the Effective Time shall be the officers of Cereus Acquiring Sub in office
immediately prior to the Effective Time, until their successors are elected or
appointed and qualified or until their resignation or removal.
SECTION 1.6 DIRECTORS. The directors of the Surviving Corporation after
the Effective Time shall be the directors of Cereus Acquiring Sub in office
immediately prior to the Effective Time, until their successors are elected or
appointed and qualified or until their resignation or removal.
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ARTICLE II
CONVERSION OF SHARES
SECTION 2.1 CONVERSION OF CEREUS SHARES AND OPTIONS. At the Effective
Time, by virtue of the Merger and without any action on the part of any holder
of any capital stock of Cereus:
(a) Subject to paragraphs (b), (e) and (f) of this Section
2.1, each share of the common stock, par value $.01 per share, of Cereus (the
"CEREUS COMMON STOCK") issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive, without interest, 1.75 fully
paid and nonassessable shares (the "EXCHANGE RATIO") of the common stock, par
value $.01 share of Parent ("PARENT COMMON STOCK");
(b) Each share of Cereus Common Stock held by Cereus or any
of its Subsidiaries (as defined in Section 3.3), and any shares of Cereus Common
Stock owned by Parent, Cereus Acquiring Sub or any other Subsidiary of Parent,
other than shares under any existing employee benefit plan which are held by
either Company as trustee, shall be cancelled;
(c) Each option or warrant granted by Cereus to purchase
shares of Cereus Common Stock that is outstanding and unexercised immediately
prior thereto (an "CEREUS STOCK OPTION"), whether vested or unvested at the
Effective Time, shall cease to represent a right to acquire shares of Cereus
Common Stock and shall be converted automatically into an option to purchase a
number of shares of Parent Common Stock (a "PARENT OPTION") equal to the number
of shares of Cereus Common Stock that could be purchased under such Cereus Stock
Option multiplied by the Exchange Ratio, at a price per share of Parent Common
Stock equal to the per share exercise price of such Cereus Stock Option divided
by the Exchange Ratio; provided, however, that any fractional shares of Parent
Common Stock resulting from such determination shall be rounded down to the
nearest share. The adjustments provided herein with respect to any Cereus Stock
Option that is an "incentive stock option" (as defined in section 422 of the
Code) shall be and are intended to be effected in a manner that is consistent
with section 424(a) of the Code;
(d) Any Cereus plans governing the issuance and
administration of the Cereus Stock Options (the "CEREUS OPTION PLANS") shall
terminate, and within 90 days following the Closing Date, each holder of a
Cereus Stock Option will receive an award agreement with respect to the Parent
Options they acquire pursuant to Section 2.1(c) above, which shall preserve the
remaining exercise period and vesting schedule (if any) of such converted Cereus
Stock Options and, if applicable, shall preserve the status of any converted
Cereus Stock Options as "incentive stock options" (as defined in Section 422 of
the Code). Cereus shall take all actions necessary to ensure that following the
Effective Time, no holder of Cereus Stock Options or any participant in the
Cereus Option Plans or any other plans, programs, agreements or arrangements
shall have any right thereunder to
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acquire any equity securities of Cereus, the Surviving Corporation or any
subsidiary of either of the foregoing;
(e) Notwithstanding anything in this Agreement to the
contrary, any issued and outstanding shares of Cereus Common Stock held by a
Cereus stockholder entitled to and validly exercising appraisal rights pursuant
to Section 262 of the DGCL (a "DISSENTING STOCKHOLDER") shall not be converted
as described in Section 2.1(a) but, as of the Effective Time, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist and shall become the right to receive such consideration as may be
determined to be due such Dissenting Stockholder pursuant to the laws of the
State of Delaware; provided, however, that the shares of Cereus Common Stock
outstanding immediately prior to the Effective Time and held by a Dissenting
Stockholder who shall, after the Effective Time, withdraw his or her demand for
appraisal or lose his or her right of appraisal, in either case pursuant to the
DGCL shall be deemed to be converted at the Effective Time into the right to
receive shares of Parent Common Stock in accordance with Section 2.1(a). Cereus
shall give Parent (i) prompt notice of any written demands for appraisal of
shares of Cereus Common Stock received by Cereus and (ii) the opportunity to
participate in all negotiations and proceedings with respect to any such
demands; and
(f) If Cereus has not executed the Cereus Amended Loan
Documents (as defined in Section 6.13) by September 1, 2000 (provided, however,
that if the PNC Conditions (as defined in Section 6.13) have not been satisfied
by such date, then such date shall be extended to September 18, 2000 provided
that Cereus is negotiating in good faith to satisfy the PNC Conditions), then
the Exchange Ratio shall be 1.667; provided, however, that if Parent sells (in
one or more transactions) any part of its Hospitality Services Group (as defined
in Parent's Form 10-K for the fiscal year ended December 31, 1999) for $8.0
million or more in cash in the aggregate at or prior to the Effective Time, in
one or more transactions consented to in writing by Cereus, which consent will
not be unreasonably withheld or delayed (and which consent will be granted if
the consideration for the assets of the Hospitality Services Group (the
"HOSPITALITY ASSETS") proposed to be in sold in such transaction or transactions
is not materially less than the estimated value thereof previously agreed to by
the Companies in writing), then the Exchange Ratio shall decrease (i) by an
amount equal to (1) .007 divided by (2) 1,000,000 for each $1.00 in cash
received by Parent at or prior to the Effective Time upon the sale of such
assets; and (ii) an amount equal to (1) .0035 divided by (2) 1,000,000 for each
$1.00 in principal amount payable to Parent on or prior to the one year
anniversary of the Closing Date (as defined in Section 2.5) pursuant to the
terms of any full recourse promissory note received by Parent upon the sale of
such assets, provided that the repayment of such promissory note is not
contingent upon any post-closing event or performance and is not subject to any
contractual right of set off and that such promissory note is adequately
secured, bears interest at a market rate, and has a fixed repayment schedule and
principal amount.
SECTION 2.2 CONVERSION OF CEREUS ACQUIRING SUB SHARES. At the Effective
Time, by virtue of the Merger and without any action on the part of Parent, each
issued and outstanding share of common stock, $.01 par value per share, of
Cereus
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Acquiring Sub shall be converted into one share of common stock, $.01 par value
per share of the Surviving Corporation.
SECTION 2.3 EXCHANGE OF CEREUS CERTIFICATES.
(a) From and after the Effective Time, each holder of an
outstanding certificate which immediately prior to the Effective Time
represented shares of Cereus Common Stock (individually, a "CERTIFICATE" and,
collectively, the "CERTIFICATES"), shall receive in exchange therefor, upon
surrender thereof to an exchange agent reasonably satisfactory to Parent (the
"EXCHANGE AGENT"), a certificate or certificates representing the number of
whole shares of Parent Common Stock to which such holder is entitled pursuant to
Section 2.1 based on the Exchange Ratio. Notwithstanding any other provision of
this Agreement, (i) until holders or transferees of Certificates have
surrendered them for exchange as provided herein, no dividends or other
distributions shall be paid with respect to any shares represented by such
Certificates and no payment for fractional shares shall be made and (ii) without
regard to when such Certificates representing shares of Cereus Common Stock are
surrendered for exchange as provided herein, no interest shall be paid on any
dividends or other distributions or any payment for fractional shares. Upon
surrender of a Certificate, there shall be paid to the holder of such
Certificate the amount of any dividends or other distributions which became
payable, but which were not paid by reason of the foregoing, with respect to the
number of whole shares of Parent Common Stock represented by the certificate or
certificates issued upon such surrender.
(b) On the Closing Date, Parent shall make available to the
Exchange Agent, for the benefit of each holder of Cereus Common Stock, a
sufficient number of certificates representing shares of Parent Common Stock
required to effect the exchanges referred to in paragraph (a) above and cash for
payment of any fractional shares referred to in Section 2.4.
(c) Promptly after the Effective Time, the Exchange Agent
shall mail to each holder of record of a Certificate or Certificates (as shown
on the books of Cereus's Exchange Agent as of the Effective Time) (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon actual delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing
shares of Parent Common Stock. Upon surrender of the Certificates for
cancellation to the Exchange Agent, together with a duly executed letter of
transmittal and such other documents as the Exchange Agent shall reasonably
require, the holder of such Certificates shall receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock into
which the shares of Cereus Common Stock, heretofore represented by the
Certificates so surrendered, shall have been converted pursuant to the
provisions of Section 2.1 based on the Exchange Ratio, and the Certificates so
surrendered shall be canceled. The Exchange Agent shall not be entitled to vote
or exercise any rights of ownership with respect to the shares of Parent Common
Stock held by it from time to time hereunder, except that it shall receive and
hold all dividends or other distributions paid or
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distributed with respect to such Parent Common Stock for the account of the
persons entitled thereto.
(d) Promptly following the date which is 12 months after
the Effective Time, the Exchange Agent shall deliver to Parent all cash,
certificates (including any Parent Common Stock) and other documents in its
possession relating to the Transactions, and the Exchange Agent's duties shall
terminate. Thereafter, any holders of Certificates shall contact Parent directly
in order to exchange such Certificates for shares of Parent Common Stock.
SECTION 2.4 NO FRACTIONAL SECURITIES. Notwithstanding any other
provision of this Agreement, no certificates or scrip representing less than one
share of Parent Common Stock shall be issued in the Merger, and no Parent Common
Stock dividend, stock split or interest shall relate to any fractional security,
and such fractional interests shall not entitle the owner thereof to vote or to
any other rights of a security holder. In lieu of any such fractional shares,
each holder of shares of Cereus Common Stock who would otherwise have been
entitled to receive a fraction of a share of Parent Common Stock upon surrender
of Certificates for exchange pursuant to this Article II shall be entitled to
receive from the Exchange Agent a cash payment equal to such fraction multiplied
by the closing price per share of Parent Common Stock, as reported by The Wall
Street Journal (Eastern Edition), as of the close of business on the business
day immediately preceding the Closing Date.
SECTION 2.5 CLOSING. The closing (the "CLOSING") of the Transactions
shall take place simultaneously at a location mutually agreeable to Cereus and
Parent as promptly as practicable (but in any event within five business days)
following the date on which the last of the conditions set forth in Article VII
is fulfilled or waived, or at such other time and place as Parent and Cereus
shall agree. The date on which the Closing occurs is referred to in this
Agreement as the "CLOSING DATE."
SECTION 2.6 CLOSING OF CEREUS TRANSFER BOOKS. At and after the
Effective Time, holders of Certificates shall cease to have any rights as
stockholders of Cereus, except for the right to receive shares of Parent Common
Stock pursuant to Section 2.1 and the right to receive cash for payment of
fractional shares pursuant to Section 2.4. At the Effective Time, the stock
transfer books of Cereus shall be closed and no transfer of shares of Cereus
Common Stock which were outstanding immediately prior to the Effective Time
shall thereafter be made. If, after the Effective Time, subject to the terms and
conditions of this Agreement, Certificates are presented to Parent or the
Surviving Corporation, they shall be canceled and exchanged for shares of Parent
Common Stock in accordance with this Article II.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CEREUS
Except as disclosed in the Cereus SEC Reports (as defined in Section
3.5) or as set forth in the Restated Cereus Disclosure Schedule delivered by
Cereus to Parent prior to the execution of this Agreement (the "CEREUS
DISCLOSURE SCHEDULE"), Cereus represents and warrants to Parent that the
following statements are true and correct as of the date hereof.
SECTION 3.1 ORGANIZATION AND QUALIFICATION. Cereus is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Delaware and has the requisite corporate power and authority to own,
lease and operate its assets and properties and to carry on its business as it
is now being conducted. Cereus is qualified to do business and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified and in good standing will
not, when taken together with all other such failures, have, or be reasonably
expected to have, a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
Cereus and its Subsidiaries, taken as a whole, other than any change,
circumstance or effect (i) relating to or resulting from the economy or
securities markets in general, (ii) relating to or resulting from the industries
in which Cereus or Parent operate and not uniquely relating to Cereus or Parent,
or (iii) resulting from the announcement or existence of the Original Agreement,
this Agreement or the Transactions (a "CEREUS MATERIAL ADVERSE EFFECT"), and
copies of good standing certificates evidencing such qualification will be
delivered to Parent at or prior to the Closing, in each case bearing a date
within thirty (30) days prior to the Closing Date. True, accurate and complete
copies of Cereus's Certificate of Incorporation and Bylaws, in each case as in
effect the date hereof, including all amendments thereto, have been delivered to
Parent. All jurisdictions in which Cereus owns, uses or operates property, and
any qualifications in such jurisdictions, are listed on Schedule 3.1.
SECTION 3.2 CAPITALIZATION.
(a) On June 12, 2000, the authorized capital stock of
Cereus consisted of 50,000,000 shares of Cereus Common Stock and 10,000,000
shares of preferred stock, par value $.01 per share ("CEREUS PREFERRED STOCK").
As of June 9, 2000, (i) 8,961,953 shares of Cereus Common Stock were issued and
outstanding, all of which were validly issued and were fully paid, nonassessable
and free of preemptive rights, (ii) no shares of Cereus Preferred Stock were
issued and outstanding, (iii) 4,931,379 shares of Cereus Common Stock were
reserved for issuance pursuant to the Cereus Option Plans, (iv) 7,843,693 shares
of Cereus Common Stock were reserved for issuance upon exercise of outstanding
warrants and options not issued under the Cereus Option Plans, and (v) no shares
of Cereus Common Stock were reserved for issuance upon conversion of outstanding
convertible debentures and outstanding convertible notes.
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(b) Except as set forth in subsection (a) above or as
otherwise contemplated by this Agreement, there are no outstanding
subscriptions, options, calls, contracts, commitments, restrictions,
arrangements, rights or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement, and also
including any rights plan or other anti-takeover agreement, obligating Cereus or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of Cereus or
obligating Cereus or any of its Subsidiaries to grant, extend or enter into any
such agreement or commitment. Except as otherwise disclosed in the Cereus SEC
Reports, there are no voting trusts, proxies or other agreements or
understandings to which Cereus or any of its Subsidiaries is a party or is bound
with respect to the voting of any shares of capital stock of Cereus.
SECTION 3.3 SUBSIDIARIES. Identified in Section 3.3 of the Cereus
Disclosure Schedule is each direct and indirect Subsidiary (as defined below) of
Cereus. Each such Subsidiary (i) is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization and
has the requisite corporate power and authority to own, lease and operate its
assets and properties and to carry on its business as it is now being conducted;
and (ii) is qualified to do business, and is in good standing, in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary, all
such qualifications being listed in Section 3.3 of the Cereus Disclosure
Schedule, except in all cases where the failure to be so qualified and in good
standing would not, when taken together with all such other failures, result in
a Cereus Material Adverse Effect. At or prior to Closing, copies of good
standing certificates evidencing such qualification will be delivered to Parent
in each case bearing a date within thirty (30) days prior to the Closing Date.
All of the outstanding shares of capital stock or other equity interests of each
Subsidiary of Cereus are validly issued, fully paid, nonassessable and free of
preemptive rights, and are owned directly or indirectly by Cereus, free and
clear of any liens, claims or encumbrances. There are no subscriptions, options,
warrants, rights, calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions or arrangements relating to the issuance, sale,
voting, transfer, ownership or other rights with respect to any shares of
capital stock or other equity interests of any Subsidiary of Cereus, including
any right of conversion or exchange under any outstanding security, instrument
or agreement. As used in this Agreement, the term "SUBSIDIARY" shall mean, when
used with reference to any person or entity, any corporation, partnership,
limited liability company, joint venture or other entity of which such person or
entity (either acting alone or together with its other Subsidiaries) owns,
directly or indirectly, 50% or more of the capital stock or other voting
interests, the holders of which are entitled to vote for the election of a
majority of the board of directors or any similar governing body of such
corporation, partnership, limited liability company, joint venture or other
entity.
SECTION 3.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Cereus has full corporate power and authority to enter
into this Agreement and, subject to the Cereus Stockholders' Approval (as
defined in Section 6.3(a)) and the Cereus Required Statutory Approvals (as
defined in Section 3.4(c)), to
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consummate the Transactions. This Agreement has been approved by the Board of
Directors of Cereus and no other corporate proceeding on the part of Cereus is
necessary to authorize the execution and delivery of this Agreement and, except
for the Cereus Stockholders' Approval, the consummation by Cereus of the
Transactions. This Agreement has been duly executed and delivered by Cereus and,
assuming the due authorization, execution and delivery by the other parties
hereto, constitutes a valid and legally binding agreement of Cereus, enforceable
against it in accordance with its terms.
(b) The execution and delivery of this Agreement by Cereus
do not violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Cereus or any of
its Subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or bylaws of Cereus or any of its Subsidiaries, (ii) other
than as provided in Section 3.4(c), any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to Cereus or any of its Subsidiaries
or any of their respective properties or assets or (iii) except as set forth in
Section 3.4(b) of the Cereus Disclosure Schedule, any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which Cereus
or any of its Subsidiaries is now a party or by which Cereus or any of its
Subsidiaries or any of their respective properties or assets may be bound or
affected. The consummation by Cereus of the Transactions will not result in any
violation, conflict, breach, termination, acceleration or creation of liens
under the immediately preceding sentence, subject: (A) in the case of the terms,
conditions or provisions described in clause (ii) above, to obtaining (prior to
the Effective Time) the Cereus Required Statutory Approvals and the Cereus
Stockholder's Approval and (B) in the case of the terms, conditions or
provisions described in clause (iii) above, to obtaining (prior to the Effective
Time) consents required from commercial lenders, lessors or other third parties.
Excluded from the foregoing sentences of this paragraph (b), insofar as they
apply to the terms, conditions or provisions described in clauses (ii) and (iii)
of the first sentence of this paragraph (b)(and whether resulting from such
execution and delivery or consummation), are such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of liens, security
interests, charges or encumbrances that would not, in the aggregate, result in a
Cereus Material Adverse Effect.
(c) Except for (i) the filing of the Registration Statement
and Joint Proxy Statement/Prospectus (as such terms are defined in Section
3.14) with the Securities and Exchange Commission (the "SEC") pursuant to the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and the declaration
of the effectiveness by the SEC and filings with or approvals from various state
blue sky authorities, (ii) the making of the Merger Filing, (iii) the filings by
Cereus required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), and (iv) any required filings with or approvals from
NASDAQ
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or NASD (the filings and approvals referred to in clauses (i) through (iv) are
collectively referred to as the "CEREUS REQUIRED STATUTORY APPROVALS"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by Cereus or the
consummation by Cereus of the Transactions, other than such declarations,
filings, registrations, notices, authorizations, consents or approvals which, if
not made or obtained, as the case may be, would not, in the aggregate, result in
a Cereus Material Adverse Effect.
SECTION 3.5 REPORTS AND FINANCIAL STATEMENTS. Since January 1, 1997,
Cereus has filed with the SEC all forms, statements, reports and documents
(including all exhibits, post-effective amendments and supplements thereto)
required to be filed by it under each of the Securities Act, the Exchange Act
and the respective rules and regulations thereunder, all of which, as amended if
applicable, complied when filed in all material respects with all applicable
requirements of the appropriate act and the rules and regulations thereunder. No
Subsidiary of Cereus is required to file any form, report or other document with
the SEC. Cereus has previously made available to Parent, via its ▇▇▇▇▇ filings
where available, copies (including all exhibits, post-effective amendments and
supplements thereto) of its (a) Annual Reports on Form 10-KSB (as amended on
Form 10-KSB/A) for the fiscal years ended December 31, 1999, 1998 and 1997, as
filed with the SEC, (b) proxy and information statements relating to (i) all
meetings of its stockholders (whether annual or special), (ii) actions by
written consent in lieu of a stockholders' meeting, in each case from January 1,
1998 until the date hereof, (c) all other reports, including quarterly reports,
and registration statements filed by Cereus with the SEC since January 1, 1997
(the documents referred to in clauses (a), (b) and (c) are collectively referred
to as the "Cereus SEC Reports"), and (d) all material documents associated with
the Mineral Transaction (as defined in Cereus's Form 10-KSB for the fiscal year
ended December 31, 1999). As of their respective dates, the Cereus SEC Reports
contained no untrue statement of a material fact or omitted 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.
The audited financial statements for the fiscal year ended December 31, 1999 and
the two prior fiscal years, and the unaudited consolidated financial statements
of Cereus included in Cereus's Quarterly Reports on Form 10-QSB for the period
ended March 31, 2000 (collectively, the "CEREUS FINANCIAL STATEMENTS"), have
been prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis ("GAAP") (except as may be indicated
therein or in the notes thereto) and fairly present the financial position of
Cereus and its Subsidiaries as of the dates thereof and the results of their
operations and changes in financial position for the periods then ended.
SECTION 3.6 EMPLOYEE BENEFIT PLANS; LABOR MATTERS; NO PARACHUTE
PAYMENTS.
(a) Section 3.6(a) of the Cereus Disclosure Schedule lists
all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and all bonus,
stock option, stock purchase,
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restricted stock, incentive, deferred compensation, retiree medical or life
insurance, supplemental retirement, severance or other benefit plans, programs
or arrangements, whether legally enforceable or not, to which Cereus or any
Subsidiary of Cereus is a party, with respect to which Cereus or any Subsidiary
of Cereus has any obligation or which are maintained, contributed to or
sponsored by Cereus or any Subsidiary of Cereus for the benefit of any current
or former employee, officer or director of Cereus or any Subsidiary of Cereus
(collectively, the "CEREUS BENEFIT PLANS"). With respect to each Cereus Benefit
Plan, Cereus has delivered, or prior to Closing will deliver, or make available
to Parent a true, complete and correct copy of (i) such Cereus Benefit Plan and
the most recent summary plan description related to such Cereus Benefit Plan, if
a summary plan description is required therefor, (ii) each trust agreement or
other funding arrangement relating to such Cereus Benefit Plan, (iii) the most
recent annual report (Form 5500) filed with the Internal Revenue Service
("IRS")with respect to such Cereus Benefit Plan, (iv) the most recent actuarial
report or financial statement relating to such Cereus Benefit Plan and (v) the
most recent determination letter issued by the IRS with respect to such Cereus
Benefit Plan, if it is qualified under Section 401(a) of the Code. Neither
Cereus nor any Subsidiary of Cereus has any express or implied commitment,
whether legally enforceable or not, (i) to create, incur liability with respect
to or cause to exist any other employee benefit plan, program or arrangement,
(ii) to enter into any contract or agreement to provide compensation or benefits
to any individual or (iii) to modify, change or terminate any Cereus Benefit
Plan, other than with respect to a modification, change or termination required
by ERISA or the Code.
(b) None of the Cereus Benefit Plans is a multiemployer
plan (within the meaning of Section 3(37) or 4001(a)(3) of ERISA) (a
"MULTIEMPLOYER PLAN") or a single employer pension plan (within the meaning of
Section 4001(a)(15) of ERISA) for which Cereus or any Subsidiary of Cereus could
incur liability under Section 4063 or 4064 of ERISA (a "MULTIPLE EMPLOYER
PLAN"). None of the Cereus Benefit Plans provides for or promises retiree
medical, disability or life insurance benefits to any current or former
employee, officer or director of Cereus or any Subsidiary of Cereus.
(c) Each Cereus Benefit Plan has been administered in all
material respects in accordance with its terms and all contributions required to
be made under the terms of any of the Cereus Benefit Plans as of the date of
this Agreement have been timely made or have been reflected on the most recent
consolidated balance sheet filed or incorporated by reference in the Cereus SEC
Reports prior to the date of this Agreement. Except as set forth in Schedule
3.6(c), with respect to the Cereus Benefit Plans, no event has occurred and, to
the knowledge of Cereus, there exists no condition or set of circumstances in
connection with which Cereus or any Subsidiary of Cereus could be subject to any
liability under the terms of such Cereus Benefit Plans, ERISA, the Code or any
other applicable law which would reasonably be expected to have, individually or
in the aggregate, a Cereus Material Adverse Effect. No legal action, suit or
claim is pending or, to the knowledge of Cereus, threatened with respect to any
Cereus Benefit Plan (other than claims for benefits in the ordinary course).
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(d) Except as would not reasonably be expected to have,
individually or in the aggregate, a Cereus Material Adverse Effect: (i) each
Cereus Benefit Plan which is intended to be qualified under Section 401(a) of
the Code or Section 401(k) of the Code has received a favorable determination
letter from the IRS that it is so qualified and each trust established in
connection with any Cereus Benefit Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and no fact or event has
occurred since the date of such determination letter from the IRS to adversely
affect the qualified status of any such Cereus Benefit Plan or the exempt status
of any such trust; (ii) each trust maintained or contributed to by Cereus or any
Subsidiary of Cereus which is intended to be qualified as a voluntary employees'
beneficiary association and which is intended to be exempt from federal income
taxation under Section 501(c)(9) of the Code has received a favorable
determination letter from the IRS that it is so qualified and so exempt, and no
fact or event has occurred since the date of such determination by the IRS to
adversely affect such qualified or exempt status; (iii) there has been no
prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Cereus Benefit Plan; (iv) neither Cereus
nor any Subsidiary of Cereus has incurred any liability for any penalty or tax
arising under Section 4971, 4972, 4980, 4980B or 6652 of the Code or any
liability under Section 502 of ERISA, and no fact or event exists which could
give rise to any such liability; (v) no complete or partial termination has
occurred within the five years preceding the date hereof with respect to any
Cereus Benefit Plan; (vi) no Cereus Benefit Plan is subject to Title IV of
ERISA; (vii) none of the assets of Cereus or any Subsidiary of Cereus is the
subject of any lien arising under Section 302(f) of ERISA or Section 412(n) of
the Code; neither Cereus nor any Subsidiary of Cereus has been required to post
any security under Section 307 of ERISA or Section 401(a)(29) of the Code; and
no fact or event exists which could give rise to any such lien or requirement to
post any such security; (viii) all contributions, premiums or payments required
to be made with respect to any Cereus Benefit Plan have been made on or before
their due dates; and (ix) all such contributions have been fully deducted for
income tax purposes and no such deduction has been challenged or disallowed by
any government entity and no fact or event exists which could give rise to any
such challenge or disallowance.
(e) Neither Cereus nor any Subsidiary of Cereus is a party
to any collective bargaining or other labor union contract applicable to persons
employed by Cereus or any Subsidiary of Cereus and no collective bargaining
agreement is being negotiated by Cereus or any Subsidiary of Cereus. As of the
date of this Agreement, there is no labor dispute, strike or work stoppage
against Cereus or any Subsidiary of Cereus pending or, to the knowledge of
Cereus, threatened which may interfere with the respective business activities
of Cereus or any Subsidiary of Cereus, except where such dispute, strike or work
stoppage would not reasonably be expected to have a Cereus Material Adverse
Effect. As of the date of this Agreement, to the knowledge of Cereus, there is
no charge or complaint against Cereus or any Subsidiary of Cereus pending before
the National Labor Relations Board or any comparable governmental entity pending
or threatened in writing, except where such unfair labor practice, charge or
complaint would not reasonably be expected to have a Cereus Material Adverse
Effect.
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(f) Cereus has delivered or made available to Parent true,
complete and correct copies of (i) all employment agreements with officers and
all consulting agreements of Cereus and each Subsidiary of Cereus providing for
annual compensation in excess of $200,000, (ii) all severance plans, agreements,
programs and policies of Cereus and each Subsidiary of Cereus with or relating
to their respective employees or consultants, and (iii) all plans, programs,
agreements and other arrangements of Cereus and each Subsidiary of Cereus with
or relating to their respective employees or consultants which contain "change
of control" provisions.
(g) No employee of Cereus or its Subsidiaries will be
entitled to any additional benefits or any acceleration of the time of payment
or vesting of any benefits ▇▇▇▇▇▇ any Cereus Benefit Plan as a result of the
Transactions. No amount payable, or economic benefit provided, by Cereus or its
Subsidiaries (including any acceleration of the time of payment or vesting of
any benefit) could be considered an "excess parachute payment" under Section
280G of the Code. No person is entitled to receive any additional payment from
Cereus or its Subsidiaries or any other person in the event that the excise tax
of Section 4999 of the Code is imposed on such person.
SECTION 3.7 CERTAIN TAX MATTERS. Neither Cereus nor, to the knowledge
of Cereus, any of its affiliates has taken or agreed to take any action that
would reasonably be expected to prevent the Merger from constituting a
transaction qualifying under Section 368 of the Code. Cereus is not aware of any
agreement, plan or other circumstances that would reasonably be expected to
prevent the Merger from so qualifying under Section 368 of the Code.
SECTION 3.8 CONTRACTS; DEBT INSTRUMENTS. There is no contract or
agreement that is material to the business, financial condition or results of
operations of Cereus and its Subsidiaries taken as a whole. Except as disclosed
in Schedule 3.8, neither Cereus nor any Subsidiary of Cereus is in violation of
or in default under (nor does there exist any condition which with the passage
of time or the giving of notice would reasonably be expected to cause such a
violation of or default under) any loan or credit agreement, note, bond,
mortgage, indenture or lease, or any other contract, license, agreement,
arrangement or understanding to which it is a party or by which it or any of its
properties or assets is bound, except for violations or defaults that would not
reasonably be expected to have, individually or in the aggregate, a Cereus
Material Adverse Effect. Set forth in Section 3.8 of the Cereus Disclosure
Schedule is a description of any material changes to the amount and terms of the
indebtedness of Cereus and its subsidiaries as described in the notes to the
financial statements incorporated in Cereus's March 31, 2000 Form 10-QSB.
SECTION 3.9 LITIGATION. There is no suit, claim, action, proceeding or
investigation pending, to the knowledge of Cereus, or threatened against Cereus
or any Subsidiary of Cereus before any governmental entity that would reasonably
be expected to have, individually or in the aggregate, a Cereus Material Adverse
Effect, and, except as disclosed to Parent, to the knowledge of Cereus, there
are no existing facts or circumstances
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that would reasonably be expected to result in such a suit, claim, action,
proceeding or investigation. Except as disclosed to Parent, Cereus is not aware
of any facts or circumstances which would reasonably be expected to result in
the denial of insurance coverage under policies issued to Cereus and its
Subsidiaries in respect of such suits, claims, actions, proceedings and
investigations for which Cereus has a reasonable expectation of obtaining
insurance coverage, except in any case as would not reasonably be expected to
have, individually or in the aggregate, a Cereus Material Adverse Effect or as a
result of the execution of this Agreement and consummation of transactions
hereunder. Neither Cereus nor any Subsidiary of Cereus is subject to any
outstanding order, writ, injunction or decree which would reasonably be expected
to have, individually or in the aggregate, a Cereus Material Adverse Effect.
SECTION 3.10 INTELLECTUAL PROPERTY. Except as would not reasonably be
expected to have, individually or in the aggregate, a Cereus Material Adverse
Effect, (i) Cereus and its Subsidiaries own or possess adequate licenses or
other valid rights to use all patents, patent applications, patent rights,
trademarks, trademark rights, trade names, trade dress, trade name rights,
copyrights and copyright registrations and applications, copyright rights,
service marks, trade secrets, applications for trademarks and for service marks,
know-how and other proprietary rights and information used or held for use in
connection with the respective businesses of Cereus and its Subsidiaries as
currently conducted (collectively, the "CEREUS IP"), free and clear of all
liens, and (ii) Cereus is unaware of any assertion or claim challenging the
ownership, use or validity of any of the foregoing. The licenses associated with
the Cereus IP are valid and binding obligations of Cereus, enforceable in
accordance with their terms, and there are no material breaches or defaults
thereunder. The conduct of the respective businesses of Cereus and its
Subsidiaries as currently conducted does not infringe upon any patent, patent
right, license, trademark, trademark right, trade dress, trade name, trade name
right, service ▇▇▇▇, copyright or copyright right of any third party that would
reasonably be expected to have, individually or in the aggregate, a Cereus
Material Adverse Effect. To the knowledge of Cereus, there are no infringements
of any proprietary rights owned by or licensed by or to Cereus or any Subsidiary
of Cereus that could reasonably be expected to have, individually or in the
aggregate, a Cereus Material Adverse Effect.
SECTION 3.11 TAXES. Except for such matters that would not reasonably
be expected to have, individually or in the aggregate, a Cereus Material Adverse
Effect, (i) Cereus and each of its Subsidiaries has timely filed or shall timely
file all returns and reports required to be filed by it with any taxing
authority, taking into account any extension of time to file granted to or
obtained on behalf of Cereus and its Subsidiaries, (ii) all taxes shown to be
payable on such returns or reports have been or will be paid, (iii) as of the
date hereof, no deficiencies for any amount of tax have been asserted or
assessed by any taxing authority against Cereus or any Subsidiary of Cereus that
are not adequately reserved for and (iv) the most recent financial statements
contained in the Cereus SEC Reports reflect an adequate reserve in accordance
with GAAP for all taxes payable by Cereus and its Subsidiaries for all taxable
periods and portions thereof accrued through the date of such financial
statements.
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SECTION 3.12 INTERESTED PARTY TRANSACTIONS. Except for transactions of
the type described in the Cereus SEC Reports which have occurred since March 31,
2000 in the ordinary course of business, since March 31, 2000, no executive
officer, director or stockholder of Cereus or any of its Subsidiaries has
engaged in any business dealings with Cereus or any of its Subsidiaries (other
than any such business dealings that would not be required to be disclosed in a
proxy statement satisfying the requirements of Regulation 14A promulgated under
the Exchange Act filed on the date hereof).
SECTION 3.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31,
2000, except without the actual knowledge of Parent, after reasonable inquiry,
there has not been (i) any change that would result in a Cereus Material Adverse
Effect , (ii) any event or occurrence which, insofar as can be reasonably
foreseen, would in the future result in a Cereus Material Adverse Effect, or
(iii) any entry into a commitment or transaction material to Cereus and its
Subsidiaries taken as a whole (including any merger, acquisition, borrowing of
money or sales of assets), except in the ordinary course of business consistent
with past practice or undertaken with the knowledge of Parent.
SECTION 3.14 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied by Cereus or its Subsidiaries for inclusion in (i)
the Registration Statement on Form S-4 to be filed under the Securities Act with
the SEC in connection with the Merger for the purpose of registering the shares
of Parent Common Stock to be issued in the Merger (the "REGISTRATION STATEMENT")
or (ii) the proxy statement to be distributed in connection with Cereus's and
Parent's meetings of their respective stockholders to vote upon this Agreement
and the Transactions, and any amendments thereof or supplements thereto (the
"PROXY STATEMENT" and, together with the prospectus included in the Registration
Statement, the "JOINT PROXY STATEMENT/PROSPECTUS") will, in the case of the
Proxy Statement, at the time of the mailing of the Proxy Statement and at the
time of the meetings of stockholders of Parent and Cereus to be held in
connection with the Transactions, or, in the case of the Registration Statement,
as amended or supplemented, at the time it becomes effective and at the time of
such meetings of the stockholders of Parent and Cereus, 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, in the light of the
circumstances under which they are made, not misleading.
SECTION 3.15 REORGANIZATION. None of Cereus or its Subsidiaries has
willfully taken or agreed to or intends to take any action or has any knowledge
of any fact or circumstance that would prevent the Merger from constituting a
reorganization within the meaning of Section 368(a) of the Code.
SECTION 3.16 BROKERS AND FINDERS. Cereus has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of Cereus to pay any finder's fees, brokerage or agent
commissions or other like payments in connection with the Transactions, except
The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company, LLC ("▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇"), whose fees and
expenses will be paid by Cereus in
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accordance with Cereus's agreement with ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, based upon
arrangements made by or on behalf of Cereus and previously disclosed to Parent.
SECTION 3.17 OPINION OF FINANCIAL ADVISOR. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ has
rendered an opinion to the Board of Directors of Cereus to the effect that, as
of the date hereof, the Exchange Ratio is fair to the holders of Cereus Common
Stock from a financial point of view; it being understood and acknowledged by
Cereus that such opinion has been rendered for the benefit of the Board of
Directors of Cereus and is not intended to, and may not, be relied upon by
Parent, its affiliates or their respective Subsidiaries. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ has
authorized the inclusion of its opinion in the Joint Proxy Statement/Prospectus.
SECTION 3.18 HAZARDOUS SUBSTANCES AND HAZARDOUS WASTE.
(a) There is not now, nor has there ever been, any
disposal, release or threatened release of Hazardous Material (as defined below)
on, from or under properties now or ever owned or leased by or to Cereus or its
Subsidiaries (the "CEREUS PROPERTIES") and there has not been generated by or on
behalf of Cereus or its Subsidiaries any Hazardous Material that would result in
a material adverse effect to the business of Cereus or its Subsidiaries, taken
as a whole. No Hazardous Material has been disposed of or allowed to be disposed
of by Cereus or its Subsidiaries, by any other party, on or off any of the
Cereus Properties during the period that Cereus or its Subsidiaries owned or
leased the property which may give rise under applicable Environmental Law to a
clean-up responsibility, personal injury liability or property damage claim
against Cereus or its Subsidiaries or Cereus or its Subsidiaries being named a
potentially responsible party for any such clean-up costs, personal injuries or
property damage or create any cause of action by any third party against Cereus
or its Subsidiaries. For purposes of this subsection, the terms "disposal,"
"release," and "threatened release" shall have the definitions assigned thereto
by the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended. The term "Hazardous Material" means any material or substance
which is (i) defined as a "hazardous waste" or a "hazardous substance" under
applicable Law, (ii) designated as a "hazardous substance" pursuant to Section
311 of the Federal Water Pollution Control Act, (iii) defined as a "hazardous
waste" pursuant to Section 1004 of the Federal Resource Conservation and
Recovery Act, or (iv) defined as a "hazardous substance" pursuant to Section 101
of the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended. The term "Environmental Laws" means any law, statute,
ordinance, rule or regulation of any governmental authority for which the
primary purpose is to control pollution and protect the environment, including
the statutes referenced above in this paragraph.
(b) None of Cereus or its Subsidiaries' operations at the
Cereus Properties is (or, with respect to past Cereus Properties and Cereus
Properties of former Subsidiaries, was at the time of disposition) in violation
of any Environmental Law (with respect to past Cereus Properties and Cereus
Properties of former Subsidiaries,
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Environmental Laws in effect at the time of disposition) relating to industrial
hygiene or to the environmental conditions on, under or about such Cereus
Properties, including, without limitation, soil and ground water condition and
there are (or at the time of disposition were) no underground tanks or related
piping, conduits or related structures used by Cereus or its Subsidiaries in the
conduct of its business at such properties. During the period that Cereus or its
Subsidiaries owned or leased the Cereus Properties, neither Cereus nor its
Subsidiaries nor any third party used, generated, manufactured or stored on,
under or about such Cereus Properties or transported to or from such Cereus
Properties any Hazardous Material.
SECTION 3.19 DISCLOSURE. The representations and warranties of Cereus
in this Agreement do not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements contained herein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND CEREUS ACQUIRING SUB
Except as disclosed in the Parent SEC Reports (as defined in Section
4.5) or as set forth in the Restated Parent Disclosure Schedule delivered by
Parent to Cereus prior to the execution of this Agreement (the "PARENT
DISCLOSURE SCHEDULE"), Parent and Cereus Acquiring Sub jointly and severally
represent and warrant to Cereus that the following statements are true and
correct as of the date hereof.
SECTION 4.1 ORGANIZATION AND QUALIFICATION. Each of Parent and Cereus
Acquiring Sub is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has the requisite
corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. Each of
Parent and Cereus Acquiring Sub is qualified to do business and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified and in good standing will
not, when taken together with all other such failures, have, or be reasonably
expected to have, a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
Parent and its Subsidiaries, taken as a whole, other than any change,
circumstance or effect (i) relating to or resulting from the economy or
securities markets in general, (ii) relating to or resulting from the industries
in which Cereus or Parent operate and not uniquely relating to Cereus or Parent,
or (iii) resulting from the announcement or existence of the Original Agreement,
this Agreement or the Transactions (a "PARENT MATERIAL ADVERSE EFFECT"), and
copies of good standing certificates evidencing such qualification will be
delivered to Cereus at or prior to the Closing, in each case bearing a date
within thirty (30) days prior to the Closing Date.
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SECTION 4.2 CAPITALIZATION.
(a) On June 12, 2000, the authorized capital stock of
Parent consists of 50,000,000 shares of Parent Common Stock, $.01 par value per
share, and 1,000,000 shares of preferred stock, par value $.01 per share
("PARENT PREFERRED STOCK"). As of June 9, 2000, (i) 25,467,250 shares of Parent
Common Stock were issued and outstanding, all of which were validly issued and
are fully paid, nonassessable and free of preemptive rights, (ii) no shares of
Parent Preferred Stock were issued and outstanding, (iii) 6,700,103 shares of
Parent Common Stock were reserved for issuance pursuant to one or more plans of
Parent governing the issuance and administration of Parent Options (the "PARENT
OPTION PLANS"), (iv) 540,000 shares of Parent Common Stock were reserved for
issuance upon exercise of outstanding warrants and options not issued under the
Parent Option Plans, and (v) no shares of Parent Common Stock were reserved for
issuance upon conversion of outstanding convertible debentures and outstanding
convertible notes.
(b) Except as set forth in subsection (a) above, Section
4.2 of the Parent Disclosure Schedule, or as otherwise contemplated by this
Agreement, there are no outstanding subscriptions, options, calls, contracts,
commitments, restrictions, arrangements, rights or warrants, including any right
of conversion or exchange under any outstanding security, instrument or other
agreement and also including any rights plan or other anti-takeover agreement,
obligating Parent or any of its Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of the capital stock of
Parent or obligating Parent or any of its Subsidiaries to grant, extend or enter
into any such agreement or commitment. Except as otherwise disclosed in the
Parent SEC Reports, there are no voting trusts, proxies or other agreements or
understandings to which Parent or any of its Subsidiaries is a party or is bound
with respect to the voting of any shares of capital stock of Parent.
SECTION 4.3 SUBSIDIARIES. Identified on Schedule 4.3 of the Parent
Disclosure Schedule is each direct and indirect Subsidiary of Parent. Each such
Subsidiary (i) is duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has the requisite corporate
power and authority to own, lease and operate its assets and properties and to
carry on its business as it is now being conducted; and (ii) is qualified to do
business, and is in good standing, in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, all such qualifications being listed in
Section 4.3 of the Parent Disclosure Schedule, except in all cases where the
failure to be so qualified and in good standing would not, when taken together
with all such other failures, result in a Parent Material Adverse Effect. At or
prior to Closing, copies of good standing certificates evidencing such
qualification will be delivered to Cereus in each case bearing a date within
thirty (30) days prior to the Closing Date. All of the outstanding shares of
capital stock or other equity interests of each Subsidiary of Parent are validly
issued, fully paid, nonassessable and free of preemptive rights, and are owned
directly or indirectly by Parent, free and clear of any liens, claims or
encumbrances, except that such shares are pledged to secure Parent's credit
facilities. There are no subscriptions, options, warrants, rights, calls,
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contracts, voting trusts, proxies or other commitments, understandings,
restrictions or arrangements relating to the issuance, sale, voting, transfer,
ownership or other rights with respect to any shares of capital stock or other
equity interests of any corporate Subsidiary of Parent, including any right of
conversion or exchange under any outstanding security, instrument or agreement.
SECTION 4.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Each of Parent and Cereus Acquiring Sub has full
corporate power and authority to enter into this Agreement and, subject to the
Parent Stockholders' Approval (as defined in Section 6.3(b)) and the Parent
Required Statutory Approvals (as defined in Section 4.4(c)), to consummate the
Transactions. This Agreement has been approved by the Board of Directors of each
of Parent and Cereus Acquiring Sub and no other corporate proceeding on the part
of Parent or Cereus Acquiring Sub is necessary to authorize the execution and
delivery of this Agreement and, except for the Parent Stockholders' Approval,
the consummation by Parent and Cereus Acquiring Sub of the Transactions. This
Agreement has been duly executed and delivered by each of Parent and Cereus
Acquiring Sub and, assuming the due authorization, execution and delivery by the
other parties hereto, constitutes a valid and legally binding agreement of each
of Parent and Cereus Acquiring Sub, enforceable against each in accordance with
its terms.
(b) The execution and delivery of this Agreement by each of
Parent and Cereus Acquiring Sub do not violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Parent or any of its Subsidiaries under any of the terms, conditions
or provisions of (i) the respective charters or by-laws of Parent or any of its
Subsidiaries, (ii) other than as provided in Section 4.4(c), any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any court or governmental authority applicable to Parent or any of
its Subsidiaries or any of their respective properties or assets or (iii) except
as set forth in Section 4.4(b) of the Parent Disclosure Schedule, any note,
bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of any
kind to which Parent or any of its Subsidiaries is now a party or by which
Parent or any of its Subsidiaries or any of their respective properties or
assets may be bound or affected. The consummation by each of Parent and Cereus
Acquiring Sub of the Transactions will not result in any violation, conflict,
breach, termination, acceleration or creation of liens under the immediately
preceding sentence, subject (A) in the case of the terms, conditions or
provisions described in clause (ii) above, to obtaining (prior to the Effective
Time) the Parent Required Statutory Approvals and the Parent Stockholder's
Approval and (B) in the case of the terms, conditions or provisions described in
clause (iii) above, to obtaining (prior to the Effective Time) consents required
from commercial lenders, lessors or other third parties. Excluded from the
foregoing sentences of this paragraph (b), insofar as they apply to the terms,
conditions or provisions
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described in clauses (ii) and (iii) of the first sentence of this paragraph (b)
(and whether resulting from such execution and delivery or consummation), are
such violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances that would not,
in the aggregate, result in a Parent Material Adverse Effect.
(c) Except for (i) the filing of the Registration Statement
and Joint Proxy Statement/Prospectus with the SEC pursuant to the Exchange Act
and the Securities Act, and the declaration of the effectiveness thereof by the
SEC and filings with various or approvals from state blue sky authorities, (ii)
the making of the Merger Filing, (iii) the filings by Parent required by the HSR
Act and (iv) any required filings with or approvals from the NASDAQ or NASD (the
filings and approvals referred to in clauses (i) through (iv) are collectively
referred to as the "PARENT REQUIRED STATUTORY APPROVALS"), no declaration,
filing or registration with, or notice to, or authorization, consent or approval
of, any governmental or regulatory body or authority is necessary for the
execution and delivery of this Agreement by Parent or the consummation by Parent
of the Transactions, other than such declarations, filings, registrations,
notices, authorizations, consents or approvals which, if not made or obtained,
as the case may be, would not, in the aggregate, result in a Parent Material
Adverse Effect.
SECTION 4.5 REPORTS AND FINANCIAL STATEMENTS. Since January 1, 1997,
Parent has filed with the SEC all forms, statements, reports and documents
(including all exhibits, post-effective amendments and supplements thereto)
required to be filed by it under each of the Securities Act, the Exchange Act
and the respective rules and regulations thereunder, all of which, as amended if
applicable, complied when filed in all material respects with all applicable
requirements of the appropriate act and the rules and regulations thereunder. No
Subsidiary of Parent is required to file any form, report or other document with
the SEC. Parent has previously made available to Cereus, via its ▇▇▇▇▇ filings
where available, copies (including all exhibits, post-effective amendments and
supplements thereto) of its (a) Annual Reports on Form 10-K (as amended on Form
10-K/A) for the fiscal years ended December 31, 1998 and December 31, 1999,
Annual Report on Form 10-KSB (as amended on Form 10-KSB/A) for the fiscal year
ended December 31, 1997, as filed with the SEC, (b) proxy and information
statements relating to (i) all meetings of its stockholders (whether annual or
special) and (ii) actions by written consent in lieu of a stockholders' meeting,
in each case from January 1, 1998 until the date hereof, and (c) all other
reports, including quarterly reports, and registration statements filed by
Parent with the SEC since January 1, 1997 (the documents referred to in clauses
(a), (b) and (c) are collectively referred to as the "PARENT SEC REPORTS"). As
of their respective dates, the Parent SEC Reports did not contain any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The audited financial
statements for the fiscal year ended December 1999 and the two prior fiscal
years, and the unaudited consolidated financial statements of Parent included in
Parent's Quarterly Report on Form 10-Q for the period ended March 31, 2000
(collectively, the "PARENT FINANCIAL STATEMENTS"), have been prepared in
accordance with GAAP (except as may be indicated therein or in the notes
thereto) and fairly present the financial position of Parent
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and its Subsidiaries as of the dates thereof and the results of their operations
and changes in financial position for the periods then ended.
SECTION 4.6 EMPLOYEE BENEFIT PLANS; LABOR MATTERS; NO PARACHUTE
PAYMENTS.
(a) Section 4.6(a) of the Parent Disclosure Schedule lists
all employee benefit plans (as defined in Section 3(3) of ERISA) and all bonus,
stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, whether legally
enforceable or not, to which Parent or any Subsidiary of Parent is a party, with
respect to which Parent or any Subsidiary of Parent has any obligation or which
are maintained, contributed to or sponsored by Parent or any Subsidiary of
Parent for the benefit of any current or former employee, officer or director of
Parent or any Subsidiary of Parent (collectively, the "PARENT BENEFIT PLANS").
With respect to each Parent Benefit Plan, Parent has delivered, or prior to
Closing will deliver, or make available to Parent a true, complete and correct
copy of (i) such Parent Benefit Plan and the most recent summary plan
description related to such Parent Benefit Plan, if a summary plan description
is required therefor, (ii) each trust agreement or other funding arrangement
relating to such Parent Benefit Plan, (iii) the most recent annual report (Form
5500) filed with the IRS) with respect to such Parent Benefit Plan, (iv) the
most recent actuarial report or financial statement relating to such Parent
Benefit Plan and (v) the most recent determination letter issued by the IRS with
respect to such Parent Benefit Plan, if it is qualified under Section 401(a) of
the Code. Neither Parent nor any Subsidiary of Parent has any express or implied
commitment, whether legally enforceable or not, (i) to create, incur liability
with respect to or cause to exist any other employee benefit plan, program or
arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Parent Benefit Plan, other than with respect to a modification,
change or termination required by ERISA or the Code.
(b) None of the Parent Benefit Plans is a Multiemployer
Plan or a Multiple Employer Plan. None of the Parent Benefit Plans provides for
or promises retiree medical, disability or life insurance benefits to any
current or former employee, officer or director of Parent or any Subsidiary of
Parent.
(c) Each Parent Benefit Plan has been administered in all
material respects in accordance with its terms and all contributions required to
be made under the terms of any of the Parent Benefit Plans as of the date of
this Agreement have been timely made or have been reflected on the most recent
consolidated balance sheet filed or incorporated by reference in Parent Reports
prior to the date of this Agreement. Except as set forth in Schedule 4.6(c),
with respect to the Parent Benefit Plans, no event has occurred and, to the
knowledge of Parent, there exists no condition or set of circumstances in
connection with which Parent or any Subsidiary of Parent could be subject to any
liability under the terms of such Parent Benefit Plans, ERISA, the Code or any
other applicable law which would reasonably be expected to have, individually or
in the aggregate, a Parent
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Material Adverse Effect. No legal action, suit or claim is pending or, to the
knowledge of Parent, threatened with respect to any Parent Benefit Plan (other
than claims for benefits in the ordinary course).
(d) Except as would not reasonably be expected
to have, individually or in the aggregate, a Parent Material Adverse Effect: (i)
each Parent Benefit Plan which is intended to be qualified under Section 401(a)
of the Code or Section 401(k) of the Code has received a favorable determination
letter from the IRS that it is so qualified and each trust established in
connection with any Parent Benefit Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and no fact or event has
occurred since the date of such determination letter from the IRS to adversely
affect the qualified status of any such Parent Benefit Plan or the exempt status
of any such trust; (ii) each trust maintained or contributed to by Parent or any
Subsidiary of Parent which is intended to be qualified as a voluntary employees'
beneficiary association and which is intended to be exempt from federal income
taxation under Section 501(c)(9) of the Code has received a favorable
determination letter from the IRS that it is so qualified and so exempt, and no
fact or event has occurred since the date of such determination by the IRS to
adversely affect such qualified or exempt status; (iii) there has been no
prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) with respect to any Parent Benefit Plan; (iv) neither Parent
nor any Subsidiary of Parent has incurred any liability for any penalty or tax
arising under Section 4971, 4972, 4980, 4980B or 6652 of the Code or any
liability under Section 502 of ERISA, and no fact or event exists which could
give rise to any such liability; (v) no complete or partial termination has
occurred within the five years preceding the date hereof with respect to any
Parent Benefit Plan; (vi) no Parent Benefit Plan is subject to Title IV of
ERISA; (vii) none of the assets of Parent or any Subsidiary of Parent is the
subject of any lien arising under Section 302(f) of ERISA or Section 412(n) of
the Code; neither Parent nor any Subsidiary of Parent has been required to post
any security under Section 307 of ERISA or Section 401(a)(29) of the Code; and
no fact or event exists which could give rise to any such lien or requirement to
post any such security; (viii) all contributions, premiums or payments required
to be made with respect to any Parent Benefit Plan have been made on or before
their due dates; and (ix) all such contributions have been fully deducted for
income tax purposes and no such deduction has been challenged or disallowed by
any government entity and no fact or event exists which could give rise to any
such challenge or disallowance.
(e) Neither Parent nor any Subsidiary of Parent
is a party to any collective bargaining or other labor union contract applicable
to persons employed by Parent or any Subsidiary of Parent and no collective
bargaining agreement is being negotiated by Parent or any Subsidiary of Parent.
As of the date of this Agreement, there is no labor dispute, strike or work
stoppage against Parent or any Subsidiary of Parent pending or, to the knowledge
of Parent, threatened which may interfere with the respective business
activities of Parent or any Subsidiary of Parent, except where such dispute,
strike or work stoppage would not reasonably be expected to have a Parent
Material Adverse Effect. As of the date of this Agreement, to the knowledge of
Parent, there is no charge or complaint
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against Parent or any Subsidiary of Parent pending before the National Labor
Relations Board or any comparable governmental entity pending or threatened in
writing, except where such unfair labor practice, charge or complaint would not
reasonably be expected to have a Parent Material Adverse Effect.
(f) Parent has delivered or made available to
Parent true, complete and correct copies of (i) all employment agreements with
officers and all consulting agreements of Parent and each Subsidiary of Parent
providing for annual compensation in excess of $200,000, (ii) all severance
plans, agreements, programs and policies of Parent and each Subsidiary of Parent
with or relating to their respective employees or consultants, and (iii) all
plans, programs, agreements and other arrangements of Parent and each Subsidiary
of Parent with or relating to their respective employees or consultants which
contain "change of control" provisions.
(g) No employee of Parent or its Subsidiaries
will be entitled to any additional benefits or an acceleration of the time of
payment or vesting of any benefits under any of Parent Benefit Plan as a result
of the Transactions. No amount payable, or economic benefit provided, by Parent
or its Subsidiaries (including any acceleration of the time of payment or
vesting of any benefit) could be considered an "excess parachute payment" under
Section 280G of the Code. No person is entitled to receive any additional
payment from Parent or its Subsidiaries or any other person in the event that
the excise tax of Section 4999 of the Code is imposed on such person.
SECTION 4.7 CERTAIN TAX MATTERS. Neither Parent nor, to the
knowledge of Parent, any of its affiliates has taken or agreed to take any
action that would reasonably be expected to prevent the Merger from constituting
a transaction qualifying under Section 368 of the Code. Parent is not aware of
any agreement, plan or other circumstances that would reasonably be expected to
prevent the Merger from so qualifying under Section 368 of the Code.
SECTION 4.8 CONTRACTS; DEBT INSTRUMENTS. There is no contract or
agreement that is material to the business, financial condition or results of
operations of Parent and its Subsidiaries taken as a whole. Except as disclosed
in Schedule 4.8, neither Parent nor any Subsidiary of Parent is in violation of
or in default under (nor does there exist any condition which with the passage
of time or the giving of notice would reasonably be expected to cause such a
violation of or default under) any loan or credit agreement, note, bond,
mortgage, indenture or lease, or any other contract, license, agreement,
arrangement or understanding to which it is a party or by which it or any of its
properties or assets is bound, except for violations or defaults that would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. Set forth in Schedule 4.8 is a description of any
material changes to the amount and terms of the indebtedness of Parent and its
subsidiaries as described in the notes to the financial statements incorporated
in Parent's March 31, 2000 Form 10-Q.
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SECTION 4.9 Litigation. There is no suit, claim, action,
proceeding or investigation pending or, to the knowledge of Parent, threatened
against Parent or any Subsidiary of Parent before any governmental entity that
would reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect, and, except as disclosed to Parent, to the knowledge of
Parent, there are no existing facts or circumstances that would reasonably be
expected to result in such a suit, claim, action, proceeding or investigation.
Except as disclosed to Parent, Parent is not aware of any facts or circumstances
which would reasonably be expected to result in the denial of insurance coverage
under policies issued to Parent and its Subsidiaries in respect of such suits,
claims, actions, proceedings and investigations for which Parent has a
reasonable expectation of obtaining insurance coverage, except in any case as
would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect or as a result of the execution of this Agreement
and consummation of transactions hereunder. Except as disclosed in Schedule 4.9,
neither Parent nor any Subsidiary of Parent is subject to any outstanding order,
writ, injunction or decree which would reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
SECTION 4.10 INTELLECTUAL PROPERTY. Except as would not reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect, (i) Parent and its Subsidiaries own or possess adequate licenses or
other valid rights to use all patents, patent applications, patent rights,
trademarks, trademark rights, trade names, trade dress, trade name rights,
copyrights and copyright registrations and applications, copyright rights,
service marks, trade secrets, applications for trademarks and for service marks,
know- how and other proprietary rights and information used or held for use in
connection with the respective businesses of Parent and its Subsidiaries as
currently conducted (collectively, the "PARENT IP"), free and clear of all liens
other than those in favor of PNC Bank, National Association ("PNC"), and (ii)
Parent is unaware of any assertion or claim challenging the ownership, use or
validity of any of the foregoing. The licenses associated with the Parent IP are
valid and binding obligations of Parent, enforceable in accordance with their
terms, and there are no material breaches or defaults thereunder. The conduct of
the respective businesses of Parent and its Subsidiaries as currently conducted
does not infringe upon any patent, patent right, license, trademark, trademark
right, trade dress, trade name, trade name right, service ▇▇▇▇, copyright or
copyright right of any third party that would reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. To the
knowledge of Parent, there are no infringements of any proprietary rights owned
by or licensed by or to Parent or any Subsidiary of Parent that could reasonably
be expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
SECTION 4.11 TAXES. Except for such matters that would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect, (i) Parent and each of its Subsidiaries has timely
filed or shall timely file all returns and reports required to be filed by it
with any taxing authority, taking into account any extension of time to file
granted to or obtained on behalf of Parent and its Subsidiaries, (ii) all taxes
shown to be payable on such returns or reports have been or will be paid, (iii)
as of the date hereof, no
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deficiencies for any amount of tax have been asserted or assessed by any taxing
authority against Parent or any Subsidiary of Parent that are not adequately
reserved for and (iv) the most recent financial statements contained in the
Parent SEC Reports reflect an adequate reserve in accordance with GAAP for all
taxes payable by Parent and its Subsidiaries for all taxable periods and
portions thereof accrued through the date of such financial statements.
SECTION 4.12 Interested Party Transactions. Except for
transactions of the type described in the Parent SEC Reports which have occurred
since March 31, 2000 in the ordinary course of business, since March 31, 2000,
no executive officer, director or stockholder of Parent or any of its
Subsidiaries has engaged in any business dealings with Parent or any of its
Subsidiaries (other than any such business dealings that would not required to
be disclosed in a proxy statement satisfying the requirements of Regulation 14A
promulgated under the Exchange Act filed on the date hereof).
SECTION 4.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31,
2000, except with respect to the proposed sale of the Hospitality Services
Group, or without the actual knowledge, after reasonable inquiry, of the persons
identified in Section 6.15, there has not been (i) any change that would result
in a Parent Material Adverse Effect, (ii) any event or occurrence which, insofar
as can be reasonably foreseen, would in the future result in a Parent Material
Adverse Effect, or (iii) any entry into a commitment or transaction material to
Parent and its Subsidiaries taken as a whole (including any merger, acquisition,
borrowing of money or sales of assets), except in the ordinary course of
business consistent with past practice.
SECTION 4.14 REGISTRATION STATEMENT AND PROXY STATEMENT. None of
the information to be supplied by Parent or its Subsidiaries for inclusion in
(i) the Registration Statement or (ii) Joint Proxy Statement/Prospectus will, in
the case of the Proxy Statement, at the time of the mailing of the Proxy
Statement, and at the time of the meetings of stockholders of Parent and Cereus
to be held in connection with the Transactions, or, in the case of the
Registration Statement, as amended or supplemented, at the time it becomes
effective and at the time of such meetings of the stockholders of Cereus and
Parent, 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 are made,
not misleading. The Joint Proxy Statement/ Prospectus will, as of its mailing
date, comply as to form in all material respects with all applicable laws,
including the provisions of the Securities Act and the Exchange Act and the
rules and regulations promulgated thereunder, except that no representation is
made by Parent with respect to information supplied by Cereus or the
stockholders of Cereus for inclusion in the Joint Proxy Statement/Prospectus.
SECTION 4.15 REORGANIZATION. None of Parent or its Subsidiaries
has taken or agreed or intends to take any action or has any knowledge of any
fact or circumstance that would prevent the Merger from constituting a
reorganization within the meaning of Section 368(a) of the Code.
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SECTION 4.16 BROKERS AND FINDERS. Parent has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of Parent to pay any finder's fees, brokerage or agent
commissions or other like payments in connection with the Transactions, except
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. ("▇▇▇▇▇▇ ▇▇▇▇▇▇"), whose fees and expenses will be
paid by Parent in accordance with Parent's agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇, based
upon arrangements made by or on behalf of Parent and previously disclosed to
Cereus.
SECTION 4.17 OPINION OF FINANCIAL ADVISOR. ▇▇▇▇▇▇ ▇▇▇▇▇▇ has
rendered an opinion to the Board of Directors of Parent to the effect that, as
of the date hereof, the Exchange Ratio is fair to the holders of Parent Common
Stock from a financial point of view; it being understood and acknowledged by
Parent that such opinion has been rendered for the benefit of the Board of
Directors of Parent and is not intended to, and may not, be relied upon by
Cereus, its affiliates or their respective Subsidiaries. ▇▇▇▇▇▇ ▇▇▇▇▇▇ has
authorized the inclusion of its opinion in the Joint Proxy Statement/Prospectus.
SECTION 4.18 HAZARDOUS SUBSTANCES AND HAZARDOUS WASTE.
(a) There is not now, nor has there ever been,
any disposal, release or threatened release of Hazardous Material (as defined
below) on, from or under properties now or ever owned or leased by or to Parent
or its Subsidiaries (the "Parent Properties") and there has not been generated
by or on behalf of Parent or its Subsidiaries any Hazardous Material that would
result in a material adverse effect to the business of Parent or its
Subsidiaries, taken as a whole. No Hazardous Material has been disposed of or
allowed to be disposed of by Parent or its Subsidiaries, by any other party, on
or off any of the Parent Properties during the period that Parent or its
Subsidiaries owned or leased the property which may give rise under applicable
Environmental Law to a clean-up responsibility, personal injury liability or
property damage claim against Parent or its Subsidiaries or Parent or its
Subsidiaries being named a potentially responsible party for any such clean-up
costs, personal injuries or property damage or create any cause of action by any
third party against Parent or its Subsidiaries. For purposes of this subsection,
the terms "disposal," "release," and "threatened release" shall have the
definitions assigned thereto by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended. The term "Hazardous
Material" means any material or substance which is (i) defined as a "hazardous
waste" or a "hazardous substance" under applicable Law, (ii) designated as a
"hazardous substance" pursuant to Section 311 of the Federal Water Pollution
Control Act, (iii) defined as a "hazardous waste" pursuant to Section 1004 of
the Federal Resource Conservation and Recovery Act, or (iv) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended. The term
"Environmental Laws" means any law, statute, ordinance, rule or regulation of
any governmental authority for which the primary purpose is to control pollution
and protect the environment, including the statutes referenced above in this
paragraph.
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(b) None of Parent or its Subsidiaries'
operations at the Parent Properties is (or, with respect to past Parent
Properties and Parent Properties of former Subsidiaries, was at the time of
disposition) in violation of any Environmental Law (with respect to past Parent
Properties and Parent Properties of former Subsidiaries, Environmental Laws in
effect at the time of disposition) relating to industrial hygiene or to the
environmental conditions on, under or about such Parent Properties, including
without limitation soil and ground water condition and there are (or at the time
of disposition were) no underground tanks or related piping, conduits or related
structures used by Parent or its Subsidiaries in the conduct of its business at
such properties. During the period that Parent or its Subsidiaries owned or
leased the Parent Properties, neither Parent nor its Subsidiaries nor any third
party used, generated, manufactured or stored on, under or about such Parent
Properties or transported to or from such Parent Properties any Hazardous
Material.
SECTION 4.19 DISCLOSURE. To the knowledge of Parent and Cereus
Acquiring Sub, the representations and warranties of Parent and Cereus Acquiring
Sub in this Agreement do not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained herein
not misleading.
ARTICLE V
Conduct of Business Pending the Merger
SECTION 5.1 TRANSITION MATTERS.
(a) Upon the execution and delivery of the
Original Agreement, Cereus and Parent established a committee (the "Steering
Committee") for the purpose of, to the extent permitted by applicable laws,
facilitating the full exchange of information concerning the business,
operations, capital spending, budgets, and financial results of Parent and
Cereus between such date and the Closing Date (the "Interim Period") and
otherwise facilitating the efficient transition and combination of the
respective businesses of Parent and Cereus as promptly as practicable following
the Closing. The Steering Committee presently and at all times shall consist of
two individuals to be designated from time to time by the Chairman of the Board
of Directors of Parent and two individuals to be designated from time to time by
the Chairman of the Board of Directors of Cereus and will be chaired by Cereus;
provided, however, that on or before September 1, 2000, the Board of Directors
of Parent shall take all actions necessary to cause ▇▇▇▇▇▇ ▇. ▇▇▇▇ to be elected
Chief Executive Officer of Parent, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to be elected President and
Chief Operating Offer of Parent and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to be elected Chief
Financial Officer and Executive Vice President of Parent, and upon the
effectiveness of such elections the Steering Committee shall be dissolved for so
long as they serve in such capacities. All material decisions of the Steering
Committee, which shall be dissolved as of the Closing, shall be mutually agreed
upon by Parent and Cereus.
(b) If this Agreement shall be terminated
pursuant to Section 8.1 and, at the time of such termination, Cereus shall be
entitled to receive a termination fee
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under Section 8.5, then Parent shall reimburse Cereus for the costs incurred by
Cereus in connection with making its personnel available to Parent during the
Interim Period in fulfillment of the purposes of this Section 5.1 in an amount
equal to $12,500 per week or any part thereof. Reimbursement by Parent to Cereus
under this Section 5.1(b) shall be made simultaneous with the payment of any
such termination fee.
(c) Parent shall indemnify and hold harmless
Cereus and those employees of Cereus who render services to Parent during the
Interim Period under this Agreement (including those employees who serve on the
Steering Committee or who are elected to be officers of Parent) from and against
any claims or liabilities asserted against them relating to their services to
Parent hereunder (and Parent hereby forever releases Cereus and such persons
from any claims by or liabilities to Parent arising from or relating to such
services), provided that (i) such claims or liabilities did not result from acts
or omissions (x) not in good faith or (y) which involve intentional misconduct
or a knowing violation of law and (ii) such services were rendered in a manner
reasonably and in good faith believed to be in or not opposed to the best
interests of Parent.
(d) During the Interim Period, Cereus shall
cause all of its employees made available to Parent pursuant to this Agreement
to use their best efforts to (i) avoid doing anything to the competitive
disadvantage of Parent vis-a-vis Cereus, (ii) not use to the advantage of Cereus
any confidential information of Parent obtained while performing services for or
on behalf of Parent, (iii) not solicit any employees of Parent to terminate
their relationship with Parent, and (iv) if requested by Parent to do so, cause
each such employee of Cereus to execute confidentiality and non-solicitation
agreements in customary form in accordance with the foregoing.
SECTION 5.2 CONDUCT OF BUSINESS BY PARENT AND CEREUS PENDING THE
MERGER. Subject to Section 5.1 above, or except as otherwise contemplated by
this Agreement, after the date hereof and prior to the Closing Date or earlier
termination of this Agreement, each of the Companies shall, and shall cause each
of their Subsidiaries to:
(a) conduct their respective businesses in the
ordinary and usual course of business and consistent with the immediate past
practice;
(b) not (i) amend or propose to amend their
respective Articles of Incorporation or Bylaws (or comparable organizational
documents), (ii) split, combine or reclassify their outstanding capital stock,
(iii) declare, set aside or pay any dividend or distribution payable in cash,
stock, property or otherwise, except for the payment of dividends or
distributions to a Company by a wholly-owned Subsidiary of such Company, or (iv)
repurchase any shares of their outstanding capital stock;
(c) not issue, sell, pledge or dispose of, or
agree to issue, sell, pledge or dispose of, any additional shares of, or any
options, warrants or rights of any kind to acquire any shares of, their capital
stock of any class or any debt or equity securities
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convertible into or exchangeable for such capital stock, except that (i) each
Company may (A) grant options to non-executive employees and (B) issue shares
upon the exercise of outstanding options and warrants or pursuant to existing
agreements, and (ii) Cereus may issue, agree to issue and sell shares of Cereus
Common Stock and warrants to acquire shares of Cereus Common Stock, provided
that the aggregate consideration therefor does not exceed $15 million, and
provided further that Cereus shall give to the Chairman of the Board of Parent
reasonable prior notice of such transaction or transactions;
(d) not (i) assume, incur or become contingently
liable with respect to any indebtedness for borrowed money other than (A)
borrowings in the ordinary course of business (other than pursuant to credit
facilities) or borrowings under the existing credit facilities of each Company
(the "EXISTING CREDIT FACILITIES") up to the existing borrowing limit on the
date hereof or (B) borrowings to refinance existing indebtedness on terms which
are reasonably acceptable to the other Company, (ii) redeem, purchase, acquire
or offer to purchase or acquire any shares of its capital stock or any options,
warrants or rights to acquire any of its capital stock or any security
convertible into or exchangeable for its capital stock other than pursuant to an
employee stock incentive plan of a Company, (iii) take or fail to take any
action which action or failure to take action would cause either Company or
their stockholders (except to the extent that any stockholders receive cash in
lieu of fractional shares) to recognize gain or loss for federal income tax
purposes as a result of the consummation of the Merger or would otherwise cause
the Merger not to qualify as a reorganization under Section 368(a) of the Code,
(iv) make any acquisition of any assets or businesses other than expenditures
for current assets in the ordinary course of business and expenditures for fixed
or capital assets in the ordinary course of business and (v) sell, pledge,
dispose of or encumber any material assets or businesses, or enter into any
binding contract, agreement, commitment or arrangement with respect to any of
the foregoing;
(e) use all reasonable efforts to preserve
intact their respective business organizations and goodwill, keep available the
services of their respective present officers and key employees, and preserve
the goodwill and business relationships with customers and others having
business relationships with them and not engage in any action, directly or
indirectly, with the intent to adversely impact the Transactions;
(f) not enter into or amend any employment,
severance, special pay arrangement with respect to termination of employment or
other similar arrangements or agreements with any directors, officers or key
employees, except in the ordinary course and consistent with past practice;
(g) not adopt, enter into or amend any pension
or retirement plan, trust or fund, except as required to comply with changes in
applicable law and not adopt, enter into or amend in any material respect any
bonus, profit sharing, compensation, stock option, deferred compensation, health
care, employment or other employee benefit plan, agreement, trust, fund or
arrangement for the benefit or welfare of any employees or retirees generally,
other than in the ordinary course of business;
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(h) use commercially reasonable efforts to
maintain with financially responsible insurance companies insurance on its
tangible assets and its businesses in such amounts and against such risks and
losses as are consistent with past practice; and
(i) not make, change or revoke any material tax
election or make any material agreement or settlement regarding taxes with any
taxing authority.
SECTION 5.3 ACQUISITION TRANSACTIONS.
(a) Each Company shall not, directly or
indirectly, and shall instruct its officers, directors, employees, Subsidiaries,
agents or advisors or other representatives (including any investment banker,
attorney or accountant retained by it), not to, directly or indirectly, solicit,
initiate or knowingly encourage (including by way of furnishing nonpublic
information), or take any other action knowingly to facilitate, any inquiries or
the making of any proposal or offer (including any proposal or offer to its
stockholders) that constitutes, or may reasonably be expected to lead to, any
Competing Transaction (as defined in Section 5.3(b)), or enter into or maintain
or continue discussions or negotiate with any person in furtherance of such
inquiries , or agree to or endorse any Competing Transaction, or authorize or
permit any of the officers, directors or employees of the Company or any
Subsidiary, or any investment banker, financial advisor, attorney, accountant or
other representative retained by the Company or any Subsidiary, to take any such
action; provided, however, that (i) nothing contained in this Section 5.3(a)
shall prohibit the Board of Directors of the Company from complying with Rule
14e-2 promulgated under the Exchange Act with regard to a tender or exchange
offer not made in violation of this Section 5.3(a), and (ii) if, after receiving
the written opinion of outside legal counsel, the Board of Directors of the
Company determines in good faith that failing to do so would violate its
fiduciary duties, nothing contained in this Section 5.3(a) shall prohibit the
Board of Directors of the Company from considering and negotiating (including
furnishing nonpublic information) an unsolicited bona fide written acquisition
proposal (the "UNSOLICITED BID") and from approving or recommending to the
stockholders of the Company such Unsolicited Bid which (A) was not received in
violation of this Section 5.3(a), (B) if executed or consummated would be a
Competing Transaction, (C) is not subject to financing or financing is, in the
good faith judgment of the Board of Directors of the Company after consultation
with its financial advisors, highly likely of being obtained, and (D) the Board
of Directors of the Company determines in good faith, after receiving the
written opinion of its financial advisor to such effect, that such Unsolicited
Bid is highly likely to result in a transaction more favorable, from a financial
point of view, to the Company's stockholders than the Merger. Each Company shall
use its best efforts to notify the other Company promptly, and in no event later
than one day after receipt, if any proposal or offer, or any inquiry or contact
with any person with respect thereto, regarding a Competing Transaction is made.
The Company immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to a Competing Transaction. Subject to the fiduciary duties of the Board of
Directors
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of the Company, the Company shall not release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which it is a
party. The Company shall use its best efforts to ensure that its officers,
directors, employees, subsidiaries, agents and advisors or other representatives
(including any investment banker, attorney or accountant retained by it) are
aware of the restrictions described in this Section 5.3.
(b) For purposes of this Section 5.3, the term
"COMPETING TRANSACTION" shall mean any of the following involving either Company
or any Subsidiary of either Company whose business constitutes 25% or more of
the net revenues, net income or assets of such Company and its Subsidiaries,
taken as a whole, as the case may be (other than the Merger contemplated by this
Agreement or the sale of the Hospitality Assets):
(i) any merger, consolidation, share
exchange, business combination or other similar transaction;
(ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 15% or more of the assets of
such party and its Subsidiaries, taken as a whole, in a single transaction or
series of related transactions except for the sale of inventory in the ordinary
course of business; or
(iii) any tender offer or exchange offer
for 15% or more of the outstanding voting securities of such party or the filing
of a registration statement under the Securities Act in connection therewith.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 ACCESS TO INFORMATION.
(a) Subject to applicable law, Cereus and its
Subsidiaries shall afford to Parent and its respective accountants, counsel,
financial advisors and other representatives (the "PARENT REPRESENTATIVES") and
Parent and its Subsidiaries shall afford to Cereus and its accountants, counsel,
financial advisors and other representatives (the "CEREUS REPRESENTATIVES") full
access during normal business hours with reasonable notice throughout the period
prior to the Effective Time to all of their respective properties, books,
contracts, commitments and records (including, but not limited to, tax returns)
and, during such period, shall furnish promptly to one another (i) a copy of
each report, schedule and other document filed or received by any of them
pursuant to the requirements of federal or state securities laws or filed by any
of them with the SEC in connection with the Transactions and (ii) such other
information concerning their respective businesses, properties and personnel as
either Company shall reasonably request; provided, however, that no
investigation pursuant to this Section 6.1 shall amend or modify any
representations or warranties made herein or the conditions to the obligations
of the respective parties to consummate the Merger. Cereus and its Subsidiaries
shall hold and shall use their reasonable best efforts to cause the Cereus
Representatives to hold, and Parent and its
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Subsidiaries shall hold and shall use their reasonable best efforts to cause
Parent Representatives to hold, in strict confidence all nonpublic documents and
information furnished to each Company, in connection with the Transactions
contemplated by this Agreement, except that (i) Cereus and Parent may disclose
such information as may be necessary in connection with seeking the Cereus
Required Statutory Approvals, Cereus Stockholders' Approval, Parent Required
Statutory Approvals and Parent Stockholders' Approval and (ii) each of Cereus
and Parent may disclose any information that it is required by law or judicial
or administrative order to disclose.
(b) In the event that this Agreement is
terminated in accordance with its terms, each Company shall promptly redeliver
to the other all nonpublic written material provided pursuant to this Section
6.1 and shall not retain any copies, extracts or other reproductions in whole or
in part of such written material. In such event, all documents, memoranda, notes
and other writings prepared by a Company based on the information in such
material shall be destroyed (and each Company shall use their respective
reasonable best efforts to cause their advisors and representatives to similarly
destroy their documents, memoranda and notes), and such destruction (and
reasonable best efforts) shall be certified in writing by an authorized officer
supervising such destruction.
SECTION 6.2 REGISTRATION STATEMENT AND PROXY STATEMENT. Parent
shall file with the SEC as soon as is reasonably practicable after the date
hereof the Registration Statement and shall use all reasonable efforts to have
the Registration Statement declared effective by the SEC as promptly as
practicable. Parent shall also take any action required to be taken under
applicable state blue sky or securities laws in connection with the issuance of
Parent Common Stock pursuant to this Agreement and shall use all reasonable
efforts to obtain required approvals and clearance with respect thereto. Parent,
Cereus Acquiring Sub and Cereus shall promptly furnish to each other all
information, and take such other actions, as may reasonably be requested in
connection with any action by any of them in connection with the foregoing
sentence. The information provided and to be provided by Parent and Cereus,
respectively, for use in the Joint Proxy Statement/Prospectus shall not 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.
SECTION 6.3 STOCKHOLDERS' APPROVALS.
(a) Subject to the fiduciary duties of the Board
of Directors of Cereus under applicable law, Cereus shall, as promptly as
practicable, submit this Agreement and the Transactions for the approval of its
stockholders at a meeting of stockholders and shall use its best efforts to
obtain stockholder approval and adoption (the "CEREUS STOCKHOLDERS' APPROVAL")
of this Agreement and the Transactions. Subject to the fiduciary duties of the
Board of Directors of Cereus under applicable law, such meeting of stockholders
shall be held as soon as practicable following the date upon which the
Registration Statement becomes effective. Subject to the fiduciary duties of
the Board of
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Directors of Cereus under applicable law, Cereus shall, through its Board of
Directors, recommend to its stockholders approval of the Transactions.
(b) Subject to the fiduciary duties of the Board
of Directors of Parent under applicable law, Parent shall, as promptly as
practicable, submit this Agreement and the Transactions for the approval of its
shareholders at a meeting of shareholders and shall use its best efforts to
obtain stockholder approval and adoption (the "Parent Stockholders' Approval")
of this Agreement and the Transactions. Subject to the fiduciary duties of the
Board of Directors of Parent under applicable law, such meeting of stockholders
shall be held as soon as practicable following the date upon which the
Registration Statement becomes effective. Subject to the fiduciary duties of the
Board of Directors of Parent under applicable law, Parent shall, through its
Board of Directors, recommend to its stockholders approval of the Transactions.
SECTION 6.4 COMPLIANCE WITH THE SECURITIES ACT. Cereus shall use
its best efforts to cause each officer, each director and each other person who
is an "affiliate," of Cereus, as that term is used in paragraphs (c) and (d) of
Rule 145 under the Securities Act ("RULE 145"), to deliver to Parent, at or
prior to the Effective Time a written agreement (an "AFFILIATE AGREEMENT") to
the effect that such person will not offer to sell, sell or otherwise dispose of
any shares of Parent Common Stock issued in the Merger, except, in each case,
pursuant to an effective registration statement or in compliance with Rule 145,
as amended from time to time, or in a transaction which, in the opinion of legal
counsel satisfactory to Parent, is exempt from the registration requirements of
the Securities Act.
SECTION 6.5 EXPENSES AND FEES. Expenses (as defined in this
Section 6.5) incurred in connection with this Agreement and the Transactions
shall be paid by the party incurring such Expenses, except that those Expenses
incurred in connection with printing and filing the Registration Statement and
the Joint Proxy Statement/Prospectus shall be shared equally by Parent and
Cereus. For purposes of this Agreement, the term "EXPENSES" shall mean, with
respect to any party hereto, all reasonable out-of-pocket expenses (including
all fees and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates, but excluding any allocation
of overhead) incurred by such party or on its behalf in connection with or
related to the authorization, preparation, negotiation, execution and
performance of its obligations pursuant to this Agreement and the consummation
of the Merger, the preparation, printing, filing and mailing of the Registration
Statement, and the Joint Proxy Statement/Prospectus, the solicitation of
stockholder or shareholder approvals, any filings made under the HSR Act and all
other matters related to the Closing.
SECTION 6.6 AGREEMENT TO COOPERATE.
(a) Subject to the terms and conditions herein
provided and subject to the fiduciary duties of the respective Boards of
Directors of each Company, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
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regulations to consummate and make effective the Transactions, including using
its reasonable efforts to obtain all necessary or appropriate waivers, consents
or approvals of third parties required in order to preserve material contractual
relationships of each Company and their respective Subsidiaries, all necessary
or appropriate waivers, consents and approvals and SEC "no-action" letters to
effect all necessary registrations, filings and submissions and to lift any
injunction or other legal bar to the Merger (and, in such case, to proceed with
the Merger as expeditiously as possible).
(b) Without limitation of the foregoing, each of
Parent and Cereus undertakes and agrees to file as soon as practicable, and in
any event prior to August 15, 2000, a Notification and Report Form under the HSR
Act with the FTC and the Antitrust Division. Each of Parent and Cereus shall (i)
respond as promptly as practicable to any inquiries received from the FTC or the
Antitrust Division for additional information or documentation and to all
inquiries and requests received from any State Attorney General or other
governmental authority in connection with antitrust matters and (ii) not extend
any waiting period under the HSR Act or enter into any agreement with the FTC or
the Antitrust Division not to consummate the Transactions, except with the prior
written consent of the other parties hereto. Each party shall promptly notify
the other party of any communication to that party from the FTC, the Antitrust
Division, any State Attorney General or any other governmental entity and permit
the other party to review in advance any proposed communication to any of the
foregoing.
(c) In the event any litigation is commenced by
any person or entity relating to the Transactions, either party shall have the
right, at its own expense, to participate therein, and each Company will not
settle any such litigation without the consent of the other, which consent will
not be unreasonably withheld.
(d) In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and/or directors of Parent, Cereus and the
Surviving Corporation shall take all such necessary action.
(e) Following the Effective Time, Parent shall
conduct its business, and shall cause the Surviving Corporation to conduct its
business, in a manner which would not jeopardize the characterization of the
Merger as a reorganization described in Sections 368(a)(1)(A) and 368(a)(2)(E)
of the Code. In this regard, Parent shall cause the Surviving Corporation to
continue its historic business or use a significant portion of its historic
business assets in a business within the meaning of Section 368 of the Code.
Moreover, Parent does not have any present plan or intent to (a) sell or
otherwise dispose of the stock of the Surviving Corporation except for transfers
of stock to corporations controlled (within the meaning of Section 368(c) of the
Code) by Parent, (b) reacquire any of its stock issued in connection with the
Merger, (c) cause the Surviving Corporation to issue shares of stock of the
Surviving Corporation that would result in Parent losing "control" (within the
meaning of Section 368(c) of the Code) of the Surviving Corporation, or (d) take
or refrain from taking, or permit the Surviving Corporation to take or refrain
from taking, any other action that might otherwise cause the Merger not to be
treated as a reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code. Parent and Cereus
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Acquiring Sub will provide Cereus with certain factual representations of Parent
and Cereus Acquiring Sub reasonably requested by Cereus as necessary to confirm
that Parent and Cereus Acquiring Sub will not take any action on or after the
Effective Time that would jeopardize the tax free nature of the Merger.
SECTION 6.7 PUBLIC STATEMENTS. Each Company shall consult with
each other prior to issuing any press release or any written public statement
with respect to this Agreement or the Transactions and shall not issue any such
press release or written public statement prior to such consultation.
SECTION 6.8 NOTIFICATION OF CERTAIN MATTERS. Each of Parent and
Cereus agrees to give prompt notice to each other of, and to use commercially
reasonable efforts to remedy, (i) the occurrence or failure to occur of any
event which occurrence or failure to occur would be likely to cause any of its
representations or warranties in this Agreement to be untrue or inaccurate in
any material respect on the Closing Date and (ii) any material failure on its
part to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it thereunder; provided, however, that the
delivery of any notice pursuant to this Section 6.8 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
SECTION 6.9 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) The indemnification provisions of the
Certificate of Incorporation and Bylaws of the Surviving Corporation as in
effect at the Effective Time shall not be amended, repealed or otherwise
modified for a period of three years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at the Effective
Time were directors, officers, employees or agents of Cereus. Parent hereby
guaranties unconditionally the satisfaction of all such rights to
indemnification.
(b) In the event the Surviving Corporation or
Parent or any of their successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then and in each such case,
proper provisions shall be made so that the successors and assigns of the
Surviving Corporation or Parent shall assume the obligations of the Surviving
Corporation or the Parent, as the case may be, set forth in this Section 6.9.
(c) For a period of six years after the
Effective Time, Parent shall cause to be maintained in effect for each director
and officer of Cereus and its Subsidiaries as of the Effective Time, liability
insurance coverage with respect to matters arising at or prior to the Effective
Time, in such amounts and containing such terms and conditions that are not
materially less advantageous to such parties than the coverage applicable to
such individuals immediately prior to the Effective Time.
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(d) The rights of each indemnified party
hereunder shall be in addition to, and not in limitation of, any other rights
such indemnified party may have under the charter or Bylaws of Cereus, any
indemnification agreement, under the DGCL, or otherwise. The provisions of this
Section 6.9 shall survive the consummation of the Merger and expressly are
intended to benefit each of the indemnified parties.
SECTION 6.10 CORRECTIONS TO THE JOINT PROXY STATEMENT/ PROSPECTUS
AND REGISTRATION STATEMENT. Prior to the date of approval of the Merger by their
respective stockholders, each of Cereus and Parent shall correct promptly any
information provided by it to be used specifically in the Joint Proxy
Statement/Prospectus and Registration Statement that shall have become false or
misleading in any material respect and shall take all steps necessary to file
with the SEC and have declared effective or cleared by the SEC any amendment or
supplement to the Joint Proxy Statement/Prospectus or the Registration Statement
so as to correct the same and to cause the Joint Proxy Statement/Prospectus as
so corrected to be disseminated to the stockholders of Cereus and Parent, in
each case to the extent required by applicable law.
SECTION 6.11 LISTING. Parent shall use its reasonable best efforts
to effect, at or before the Effective Time, authorization for listing on NASDAQ,
upon official notice of issuance, of the shares of Parent Common Stock to be
issued pursuant to the Merger or to be reserved for issuance upon the exercise
of stock options.
SECTION 6.12 PARENT BOARD OF DIRECTORS. At and after the Effective
Time, the Board of Directors of Parent shall include the same members of the
Board of Directors of Cereus as existed immediately prior to the Effective Time,
and will also include (a) one individual designated by Parent and acceptable to
Cereus, and (b) the current Chairman of the Board of Directors of Parent (who
shall serve as Chairman of the Board of Directors of Parent at and after the
Effective Time). At the Effective Time, Parent shall secure the resignation of
each other member of its Board of Directors.
SECTION 6.13 BRIDGE FACILITY. On or around June 12, 2000, Parent
and Cereus entered into a commitment letter substantially in the form attached
hereto as Exhibit 6.13 (the "BRIDGE FACILITY"). Prior to Closing, Cereus will
execute amended loan documents (the "CEREUS AMENDED LOAN DOCUMENTS") to provide
an additional $5 million in borrowing availability thereunder to Parent (the
"ADDITIONAL CEREUS LOAN") on terms substantially similar to the original
borrowing availability under the Bridge Facility; provided, however, that
Cereus' obligation to execute the Cereus Amended Loan Documents shall be
conditioned upon:
(i) PNC amending Parent's Undrawn Availability covenant, as
described in Section 6.10 of Parent's Credit Agreement with
PNC dated March 14, 2000, as amended (the "PNC CREDIT
AGREEMENT"), to reflect a $1 million amount, and
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(ii) PNC amending the financial covenants set forth in Sections
6.5, 7.6 and 7.11 of the PNC Credit Agreement in a manner
satisfactory to Cereus in the exercise of its reasonable
discretion (together with (i) above, the "PNC CONDITIONS").
SECTION 6.14 EMPLOYMENT AGREEMENTS. At the Closing, Parent shall
execute and deliver to each of ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ (each an "Executive") an executive employment agreement with Parent in
substantially the same form as each Executive has with Cereus on the date
hereof; it being understood that, in the case of ▇▇. ▇▇▇▇, he shall not serve as
Chairman of the Board of Directors of Parent.
SECTION 6.15 EXECUTIVE OFFICERS OF PARENT. Effective at or
immediately prior to the Effective Time, the Board of Directors of Parent shall
take all actions necessary (if any) to cause (i) ▇▇▇▇▇▇ ▇. ▇▇▇▇ to be elected as
Chief Executive Officer of Parent, (ii) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to be elected as
President and Chief Operating Officer of Parent, and (iii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to
be elected as Chief Financial Officer and Executive Vice President of Parent.
SECTION 6.16 CORPORATE NAME. Parent shall take all action
necessary, including amending the Parent's Articles of Incorporation, in order
to effect and implement, as of the Effective Time the change of the corporate
name of Parent to such other name as Parent and Cereus may agree, provided that
such other name shall not be Eltrax Systems, Inc. or any name similar thereto.
ARTICLE VII
CONDITIONS
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) the Cereus's Stockholders' Approval and the
Parent Stockholders' Approval;
(b) Intentionally omitted;
(c) the Registration Statement shall have been
declared effective by the SEC in accordance with the provisions of the
Securities Act, and no stop order suspending such effectiveness shall have been
issued and remain in effect and no proceeding for that purpose shall have been
instituted by the SEC or any state regulatory authorities;
(d) the shares of Parent Common Stock issuable
in the Merger and those to be reserved for issuance upon exercise of stock
options shall have been authorized for listing on the NASDAQ upon official
notice of issuance;
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(e) no preliminary or permanent injunction or
other order or decree by any federal or state court which prevents the
consummation of the Merger shall have been issued and remain in effect (each
party agreeing to use its reasonable efforts to have any such injunction, order
or decree lifted);
(f) no statute, rule or regulation shall have
been enacted by any state or federal government or governmental agency in the
United States which would prevent the consummation of the Merger or make the
Merger illegal;
(g) the waiting period applicable to the
consummation of the Transactions under the HSR Act shall have expired or been
terminated; and
(h) all governmental waivers, consents, orders
and approvals legally required for the consummation of the Merger and the
Transactions, including, but not limited to, the Cereus Required Statutory
Approvals and the Parent Required Statutory Approvals, and all consents from
lenders, lessors, or other third parties required to consummate the Merger,
shall have been obtained and be in effect at the Effective Time, except where
the failure to obtain the same would not be reasonably likely, individually or
in the aggregate, to have a material adverse effect on the business, operations,
properties, assets, liabilities, condition (financial or other) or results of
operations of Cereus, Parent and their Subsidiaries, taken as a whole, following
the Effective Time.
SECTION 7.2 ADDITIONAL CONDITIONS TO OBLIGATION OF CEREUS TO
EFFECT THE MERGER. Unless waived by Cereus, the obligation of Cereus to effect
the Merger shall be subject to the fulfillment at the Closing Date of the
following additional conditions:
(a) Parent and Cereus Acquiring Sub shall each
have performed their obligations contained in this Agreement required to be
performed on or prior to the Closing Date and the representations and warranties
of Parent and Cereus Acquiring Sub contained in this Agreement shall be true and
correct on and as of the date made and (except to the extent that such
representations and warranties speak as of an earlier date) on and as of the
Closing Date as if made at and as of such date, except for such failures to
perform or to be true and correct that would not reasonably be expected to
result in a Parent Material Adverse Effect, and Cereus shall have received a
certificate of the Chairman of the Board of Parent to that effect;
(b) Cereus and each of the directors of Parent
shall have entered into a proxy agreement substantially in the form attached
hereto as Exhibit 7.2, pursuant to which, among other things, each such director
has granted to Cereus a proxy to vote all of the shares of Parent Common Stock
held by such director in favor of the Merger;
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(c) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, legal counsel to
Cereus, shall have issued its opinion, such opinion dated on or about the date
of the Closing, addressed to Cereus, and reasonably satisfactory to it, based
upon certain representations of Cereus, Parent and Cereus Acquiring Sub and
certain assumptions, to the effect that: (i) the Merger will qualify as a
tax-free "reorganization" under Section 368(a) of the Code, (ii) no gain or loss
will be recognized by Parent or Cereus by reason of the Merger, (iii) no gain or
loss will be recognized by any stockholder of Cereus upon the exchange of Cereus
Common Stock solely for Parent Common Stock in the Merger, (iv) the basis of the
Parent Common Stock received by each Cereus stockholder who exchanges Cereus
Common Stock for Parent Common Stock in the Merger will be the same as the
stockholder's basis in the Cereus Common Stock surrendered in exchange therefor
(subject to any adjustments required as the result of receipt of cash in lieu of
a fractional share of Parent Common Stock), (v) the holding period of the Parent
Common Stock received by each Cereus stockholder in the Merger will include the
holding period of the Cereus Common Stock surrendered in exchange therefor,
provided that such shares of Cereus Common Stock were held as a capital asset by
such stockholder at the Effective Time, and (vi) cash received by each Cereus
stockholder in lieu of a fractional share interest of Parent Common Stock as
part of the Merger will be treated as having been received as a distribution in
full payment in exchange for the fractional share interest of Parent Common
Stock which such stockholder would otherwise be entitled to receive and will
qualify as capital gain or loss (assuming the Cereus Common Stock was a capital
asset in such stockholder's hands at the Effective Time), which opinion shall
not have been withdrawn or modified in any material respect; and
(d) Cereus shall not have received pursuant to
Section 262 written notice of intent to demand payment in connection with the
Transaction with respect to more than 350,000 shares of Cereus Common Stock.
SECTION 7.3 ADDITIONAL CONDITIONS TO OBLIGATION OF PARENT TO
EFFECT THE MERGER. Unless waived by Parent, the obligation of Parent to effect
the Merger shall be subject to the fulfillment at the Closing Date of the
following additional conditions:
(a) Cereus shall have performed obligations
contained in this Agreement required to be performed on or prior to the Closing
Date and the representations and warranties of Cereus contained in this
Agreement shall be true and correct on and as of the date made and (except to
the extent that such representations and warranties speak as of an earlier date)
on and as of the Closing Date as if made at and as of such date except for such
failures to perform or to be true and correct that would not reasonably be
expected to result in a Cereus Material Adverse Effect, and Parent shall have
received a certificate of the Chief Executive Officer of Cereus to that effect;
and
(b) Parent and each of the directors of Cereus
shall have entered into a proxy agreement substantially in the form attached
hereto as Exhibit 7.3, pursuant to which, among other things, each such director
has granted to Parent a proxy to vote all of the shares of Cereus Common Stock
held by such director in favor of the Merger.
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ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.1 TERMINATION. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any requisite adoption and approval of this Agreement, as follows:
(a) by mutual written consent duly authorized by
the Boards of Directors of each of Parent and Cereus;
(b) by either Parent or Cereus, if the Effective
Time shall not have occurred on or before December 31, 2000; provided, however,
that in the event that the Effective Time has not occurred by such time solely
due to the failure to satisfy the condition specified in Section 7.1(g) or
7.1(h), then such date may be extended, at the option of Parent or Cereus, until
January 31, 2001; and provided further, however, that the right to terminate
this Agreement under this Section 8.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement shall have caused,
or resulted in, the failure of the Effective Time to occur on or before such
date;
(c) by either Parent or Cereus, if any
injunction, order or decree of the type described in Section 7.1(e) hereof shall
have been entered and shall have become final and nonappealable, provided that
the party seeking to terminate this Agreement pursuant to this Section 8.1(c)
shall have used its best efforts to prevent the entry of and to remove such
injunction, order or decree;
(d) by Cereus, if prior to the Parent
Stockholders' Approval, (i) the Board of Directors of Parent withdraws, modifies
or changes its recommendation of the issuance of the Parent Common Stock in the
Merger or shall have resolved to do so; or (ii) the Board of Directors of Parent
shall have recommended to the shareholders of Parent a Competing Transaction or
shall have resolved to do so;
(e) by Parent if, prior to the Cereus
Stockholders' Approval, (i) the Board of Directors of Cereus withdraws, modifies
or changes its recommendation of this Agreement or the Merger or shall have
resolved to do so, or (ii) the Board of Directors of Cereus shall have
recommended to the stockholders of Cereus a Competing Transaction or shall have
resolved to do so;
(f) by (i) Cereus if this Agreement and the
Merger shall fail to receive the requisite votes for the Parent Stockholders'
Approval or (ii) Parent if this Agreement and the Merger shall fail to receive
the requisite votes for the Cereus Stockholders' Approval;
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(g) by Cereus, upon a breach of any
representation, warranty, covenant or agreement on the part of Parent and Cereus
Acquiring Sub set forth in this Agreement, or if any representation or warranty
of Parent shall have become untrue, incomplete or incorrect, in either case such
that the conditions set forth in Section 7.2(a) would not be satisfied (a
"TERMINATING PARENT BREACH"); provided, however, that if such Terminating Parent
Breach is curable by Parent through the exercise of its reasonable efforts
within 30 days after written notice of such default specifying in reasonable
detail the nature of such default is given to Parent by Cereus, and for so long
as Parent continues to exercise such reasonable efforts, Cereus may not
terminate this Agreement under this Section 8.1(g); and provided further,
however, that the preceding proviso shall not in any event be deemed to extend
any date set forth in Section 8.1(b); and provided further, however, that Cereus
may not terminate this Agreement under this Section 8.1(g) by reason of any
breach of the representations and warranties in Section 4.13 that is caused by,
or that results from, any action or inaction of any of Cereus's representatives
on the Steering Committee;
(h) by Parent, upon breach of any
representation, warranty, covenant or agreement on the part of Cereus set forth
in this Agreement, or if any representation or warranty of Cereus shall have
become untrue, incomplete or incorrect, in either case such that the conditions
set forth in Section 7.3(a) would not be satisfied (a "TERMINATING CEREUS
BREACH"); provided, however, that if such Terminating Cereus Breach is curable
by Cereus through the exercise of its reasonable efforts within 30 days after
written notice of such default specifying in reasonable detail the nature of
such default is given to Cereus by Parent, and for so long as Cereus continues
to exercise such reasonable efforts, Parent may not terminate this Agreement
under this Section 8.1(h); and provided further, however, that the preceding
proviso shall not in any event be deemed to extend any date set forth in Section
8.1(b);
(i) by Parent at any time if Cereus materially
breaches the terms of the loan agreements, including, without limitation, the
Cereus Amended Loan Documents, executed pursuant to the Bridge Facility;
(j) by Parent, if ▇▇▇▇▇▇ ▇. ▇▇▇▇ does not
execute the executive employment agreement referenced in Section 6.14; or
(k) by Parent, if the PNC Conditions have been
satisfied and Cereus has failed to execute the Cereus Amended Loan Documents
within ten (10) business days of such satisfaction.
SECTION 8.2 EFFECT OF TERMINATION. Except as provided in Section
8.5, in the event of termination of this Agreement pursuant to Section 8.1, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of any party hereto or any of its affiliates or any of its
or their officers or directors, and all rights and obligations of each party
hereto shall cease, subject to the remedies of the parties hereto set forth in
Section 8.5(b); provided, however, that nothing herein shall relieve any party
hereto from liability for the willful or intentional breach of any of its
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representations and warranties or the willful or intentional breach of any of
its covenants or agreements set forth in this Agreement.
SECTION 8.3 AMENDMENT. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after the Cereus Stockholders' Approval and the Parent Stockholders' Approval,
no amendment may be made, except such amendments that have received the
requisite stockholder approval and such amendments as are permitted to be made
without stockholder approval under the Minnesota Business Corporation Act and
the DGCL, as applicable. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.4 WAIVER. At any time prior to the Effective Time, any
party hereto may (a) extend the time for or waive compliance with the
performance of any obligation or other act of any other party hereto or (b)
waive any inaccuracy in the representations and warranties contained herein or
in any document delivered pursuant hereto. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
SECTION 8.5 TERMINATION FEES AND EXPENSES.
(a) In the event that Cereus shall terminate
this Agreement pursuant to (A) Section 8.1(f)(i); (B) Section 8.1(d); or (C)
Section 8.1(b) and at the time of any such termination pursuant to subpart (A),
(B) or (C) hereof there shall exist or be proposed a Competing Transaction with
respect to Parent and, within 12 months thereafter, Parent shall enter into a
definitive agreement with respect to any Competing Transaction or any Competing
Transaction shall be consummated, then Parent shall pay to Cereus an amount
equal to $5.0 million plus all of Cereus's Expenses, as evidenced by reasonable
documentation, up to an aggregate of $1.0 million, promptly after the execution
and delivery of such agreement or the consummation of such Competing
Transaction.
(b) In the event that Parent shall terminate
this Agreement pursuant to (A) Section 8.1(f)(ii); (B) Section 8.1(e); or (C)
Section 8.1(b) and at the time of any such termination pursuant to subpart (A),
(B) or (C) hereof there shall exist or be proposed a Competing Transaction with
respect to Cereus and, within 12 months thereafter, Cereus shall enter into a
definitive agreement with respect to any Competing Transaction or any Competing
Transaction shall be consummated, then Cereus shall pay to Parent an amount
equal to $5.0 million plus all of Parent's Expenses, as evidenced by reasonable
documentation, up to an aggregate of $1.0 million, promptly after the execution
and delivery of such agreement or the consummation of such Competing
Transaction.
(c) In the event that Cereus shall terminate
this Agreement pursuant to Section 8.1(g) or Section 8.1(f)(i) and Parent is not
otherwise entitled to payment pursuant to Section 8.5(a), then Parent shall pay
to Cereus within two business days after such termination an amount equal to
$2.5 million plus all of Cereus's Expenses, as evidenced
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by reasonable documentation, up to an aggregate of $1.0 million; provided,
however, that, in the event both Parent and Cereus would otherwise be entitled
to payments under this Section 8.5 in connection with the termination of this
Agreement pursuant to both Sections 8.5(f)(i) and (f)(ii), neither party shall
be required to make any payment under this Section 8.5.
(d) In the event that Parent shall terminate
this Agreement pursuant to Section 8.1(h) or Section 8.1(f)(ii) and Cereus is
not otherwise entitled to payment pursuant to Section 8.5(b), then Cereus shall
pay to Parent within two business days after such termination an amount equal to
$2.5 million plus all of Parent's Expenses, as evidenced by reasonable
documentation, up to an aggregate of $1.0 million; provided, however, that, in
the event both Cereus and Parent would otherwise be entitled to payments under
this Section 8.5 in connection with the termination of this Agreement pursuant
to both Sections 8.5(f)(i) and (f)(ii), neither party shall be required to make
any payment under this Section 8.5.
(e) Any payment required to be made pursuant to
this Section 8.5 shall be made not later than the date of the entry into an
agreement referred to therein and two business days after delivery to the paying
party of notice of demand for payment and shall be made by wire transfer of
immediately available funds to an account designated by the other Company in the
notice of demand for payment delivered pursuant to this Section 8.5(c). In no
event shall either Company be entitled to collect amounts pursuant to this
Section 8.5 relating to more than one specified event.
(f) Except to the extent provided in the loan
agreements executed pursuant to the Bridge Facility, the fees set forth in this
Section 8.5 shall constitute the sole and exclusive remedy for any loss,
liability, damage or claim arising out of or in connection with any
nonperformance of a covenant, breach, failure of a condition precedent or
termination of this Agreement.
ARTICLE IX
General Provisions
SECTION 9.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No
representations, warranties or obligations in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Merger, and
after the Effective Date of the Merger neither Parent nor Cereus, or their
respective officers or directors shall have any further obligation with respect
thereto, except for the representations, warranties and agreements contained in
Articles II and IX and in Sections 1.4, 1.5, 1.6, 5.1(b), 5.1(c), 5.1(d), 6.1,
6.5, 6.6 (including any factual representations set forth in a certificate
delivered to Cereus pursuant thereto) and 6.9, all of which shall survive the
Merger.
SECTION 9.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
mailed by registered or
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certified mail (return receipt requested) or sent via confirmed facsimile to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to Cereus, to:
Cereus Technology Partners, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
with a copy to:
▇▇▇▇▇▇ & Hardin LLP
2700 International Tower
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Parent, to:
Eltrax Systems, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chairman of the Board
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Jaffe, Raitt, Heuer & ▇▇▇▇▇, Professional Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(c) If to Cereus Acquiring Sub, to:
Solemn Acquisition Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chairman of the Board
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Jaffe, Raitt, Heuer & ▇▇▇▇▇, Professional Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.3 INTERPRETATION. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. In this Agreement, unless a
contrary intention appears, (i) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision, (ii) reference to any Article
or Section means such Article or Section hereof, and (iii) the words "including"
shall be deemed to be followed by the words "without limitation". No provision
of this Agreement shall be interpreted or construed against any party hereto
solely because such party or its legal representative drafted such provision.
SECTION 9.4 GOVERNING LAW. This agreement shall be governed in
all respects, including validity, interpretation and effect, by the laws of the
State of Delaware applicable to contracts executed and to be performed wholly
within such state.
SECTION 9.5 ARBITRATION. Any controversy or claim arising out of
or relating to this agreement, or the making, performance or interpretation
hereof, including without limitation alleged fraudulent inducement hereof, will
be settled by binding arbitration in Georgia, by a panel of three arbitrators,
of which Parent will choose one arbitrator, Cereus will choose one arbitrator,
and those arbitrators will choose the third arbitrator, who will act as chairman
of the panel. The arbitrators will select the rules and procedures under which
the arbitration will be conducted. Judgment upon any arbitration award may be
entered in any court having jurisdiction thereof and the parties consent to the
jurisdiction of the courts of the State of Georgia for this purpose.
SECTION 9.6 COUNTERPARTS, TELECOPIED SIGNATURES. This Agreement
may be executed in two or more counterparts, each of which shall be deemed to be
an original, but all of which shall constitute one and the same agreement. Any
signature delivered by a party by facsimile transmission shall be deemed to be
an original signature hereto.
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SECTION 9.7 PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 9.8 MISCELLANEOUS. This Agreement (including the exhibits
attached hereto and the documents and instruments referred to herein): (a)
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof; and (b) shall not be assigned by operation
of law or otherwise, except that Cereus Acquiring Sub may assign this Agreement
to any other wholly-owned Subsidiary of Parent.
[Signatures on following page]
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IN WITNESS WHEREOF, Parent, Cereus Acquiring Sub and Cereus have caused
this Agreement to be signed and delivered by their respective officers as of the
date first written above.
CEREUS TECHNOLOGY PARTNERS, INC.
By:
-------------------------------
Its: Chief Executive Officer
SOLEMN ACQUISITION CORPORATION
By:
-------------------------------
Its: President
ELTRAX SYSTEMS, INC.
By:
-------------------------------
Its: Chief Executive Officer
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