EXHIBIT 2.1
----------
AGREEMENT AND PLAN OF MERGER
among
EBRO PULEVA, S.A.,
EBRO PULEVA PARTNERS G.P.
and
RIVIANA FOODS INC.
dated as of
July 23, 2004
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TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER.................................................................1
ARTICLE I THE OFFER..........................................................................2
Section 1.1 The Offer.....................................................................2
Section 1.2 Company Actions...............................................................4
ARTICLE II THE MERGER........................................................................6
Section 2.1 The Merger....................................................................6
Section 2.2 Effective Time................................................................6
Section 2.3 Effects of the Merger.........................................................6
Section 2.4 Charter and By-laws; Directors and Officers...................................6
Section 2.5 Conversion of Shares..........................................................7
Section 2.6 Exchange of Certificates......................................................8
Section 2.7 Stock Plans..................................................................10
Section 2.8 Further Assurances...........................................................10
Section 2.9 Closing......................................................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB................................11
Section 3.1 Organization.................................................................11
Section 3.2 Authority....................................................................11
Section 3.3 Consents and Approvals; No Violations........................................11
Section 3.4 Information Supplied.........................................................12
Section 3.5 Interim Operations of Sub....................................................12
Section 3.6 Brokers......................................................................12
Section 3.7 Financing....................................................................12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................12
Section 4.1 Organization, Standing and Power.............................................13
Section 4.2 Capital Structure............................................................14
Section 4.3 Authority....................................................................15
Section 4.4 Consents and Approvals; No Violation.........................................16
Section 4.5 SEC Documents and Other Reports..............................................17
Section 4.6 Information Supplied.........................................................17
Section 4.7 Absence of Certain Changes or Events.........................................18
Section 4.8 Permits and Compliance; Contracts............................................18
Section 4.9 Tax Matters..................................................................20
Section 4.10 Actions and Proceedings.....................................................21
Section 4.11 Employee Benefits...........................................................22
Section 4.12 Liabilities.................................................................24
Section 4.13 Labor Matters; Worker Safety Laws...........................................25
Section 4.14 Intellectual Property.......................................................26
Section 4.15 Title to Assets and Related Matters.........................................27
Section 4.16 Environmental Matters.......................................................29
Section 4.17 State Takeover Statutes.....................................................29
Section 4.18 Required Vote of Company Stockholders.......................................30
Section 4.19 Brokers.....................................................................30
Section 4.20 Insurance...................................................................31
Section 4.21 Warranties and Product Liability............................................31
Section 4.22 Opinion of Financial Advisor................................................31
Section 4.23 Absence of Certain Business Practices.......................................31
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS.........................................32
Section 5.1 Conduct of Business by the Company Pending the Merger........................32
Section 5.2 No Solicitation..............................................................36
ARTICLE VI ADDITIONAL AGREEMENTS............................................................39
Section 6.1 Stockholder Meeting..........................................................39
Section 6.2 Access to Information........................................................40
Section 6.3 Directors....................................................................40
Section 6.4 Fees and Expenses............................................................41
Section 6.5 Reasonable Best Efforts; Cooperation.........................................41
Section 6.6 Public Announcements.........................................................42
Section 6.7 State Takeover Statutes......................................................42
Section 6.8 Indemnification..............................................................42
Section 6.9 Notification of Certain Matters..............................................43
Section 6.10 Employee Matters............................................................43
Section 6.11 Regulatory Approvals........................................................44
Section 6.12 Section 16 Matters..........................................................44
Section 6.13 Standstill Agreements.......................................................45
Section 6.14 FIRPTA Certification........................................................45
ARTICLE VII CONDITIONS PRECEDENT TO THE MERGER..............................................45
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger...................45
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..............................................46
Section 8.1 Termination..................................................................46
Section 8.2 Effect of Termination........................................................47
Section 8.3 Amendment....................................................................49
Section 8.4 Waiver.......................................................................49
ARTICLE IX GENERAL PROVISIONS...............................................................49
Section 9.1 Non-Survival of Representations and Warranties...............................49
Section 9.2 Notices......................................................................49
Section 9.3 Interpretation; Certain Definitions..........................................50
Section 9.4 Counterparts.................................................................54
Section 9.5 Entire Agreement; No Third-Party Beneficiaries...............................54
Section 9.6 Governing Law................................................................54
Section 9.7 Assignment...................................................................54
Section 9.8 Severability.................................................................54
Section 9.9 Specific Performance;........................................................55
EXHIBIT INDEX
Exhibit A - Conditions of the Offer
Exhibit B-1 Significant Shareholders
Exhibit B-2 Form of Shareholder Agreement
Exhibit C-1 Surviving Corporation - Amendments to Restated Certificate of
Incorporation of the Company
Exhibit C-2 Surviving Corporation - By-Laws
Exhibit C-3 Surviving Corporation - Directors
INDEX OF DEFINED TERMS
Acceptance Date...................................................................................................3
Active Subsidiary................................................................................................14
Agreement.........................................................................................................1
Antitrust Condition..............................................................................................ii
Cash Payment......................................................................................................9
Certificate of Merger.............................................................................................6
Certificates......................................................................................................8
Closing...........................................................................................................6
Closing Date......................................................................................................6
COBRA............................................................................................................23
Code..............................................................................................................9
Company...........................................................................................................1
Company Common Stock..............................................................................................1
Company Financial Advisor.........................................................................................4
Company Form 10-K................................................................................................24
Company Owned Real Property......................................................................................50
Company Permits..................................................................................................19
Company Plan.....................................................................................................22
Company Preferred Stock..........................................................................................14
Company Property.................................................................................................26
Company Proxy Statement...........................................................................................5
Company Real Property Leases.....................................................................................50
Company SEC Documents............................................................................................17
Company Securities...............................................................................................15
Compensation Agreement...........................................................................................22
Constituent Corporations..........................................................................................1
DGCL..............................................................................................................3
Disclosure Schedule..............................................................................................11
Dissenting Shares.................................................................................................7
Dormant Subsidiaries.............................................................................................24
Effective Time....................................................................................................6
ERISA............................................................................................................22
ERISA Affiliate..................................................................................................22
Exchange Act......................................................................................................2
GAAP.............................................................................................................17
Governmental Entity...............................................................................................9
Group............................................................................................................15
Hazardous Substances.............................................................................................29
HSR Act..........................................................................................................12
Independent Directors............................................................................................40
Information Statement.............................................................................................5
Intellectual Property............................................................................................26
Knowledge....................................................................................................19, 23
Leased Real Property.............................................................................................50
Material Adverse Effect..........................................................................................12
Merger............................................................................................................1
Merger Consideration..............................................................................................7
Minimum Condition................................................................................................44
Offer.............................................................................................................1
Offer Conditions..................................................................................................2
Offer Documents...................................................................................................3
Offer Price.......................................................................................................1
Offer to Purchase.................................................................................................3
Options..........................................................................................................10
Organizational Documents.........................................................................................12
Outside Date......................................................................................................3
Owned Property...................................................................................................26
Parent............................................................................................................1
Parent Benefit Plan..............................................................................................43
Paying Agent......................................................................................................8
Permitted Encumbrances...........................................................................................51
Person............................................................................................................4
Proxy Statement...................................................................................................5
Real Property....................................................................................................52
Related Party....................................................................................................34
Representatives...................................................................................................8
Schedule 14D-9....................................................................................................4
Schedule TO.......................................................................................................3
SEC...............................................................................................................3
Securities Act...................................................................................................17
Shares............................................................................................................1
Significant Stockholders..........................................................................................1
State Takeover Approvals.........................................................................................12
Stock Plan.......................................................................................................10
Stockholder Agreements............................................................................................1
Stockholder Meeting..............................................................................................12
Sub...............................................................................................................1
Subsidiary........................................................................................................6
Superior Proposal.................................................................................................4
Surviving Corporation.............................................................................................6
Takeover Proposal................................................................................................35
Tax Return.......................................................................................................20
Taxes.............................................................................................................8
Trade Secrets....................................................................................................26
Welfare Plan.....................................................................................................23
Worker Safety Laws...............................................................................................25
AGREEMENT AND PLAN OF
MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 23, 2004 (this "Agreement"),
among Ebro Puleva, S.A., a "sociedad anonima" organized under the laws of Spain
("Parent"), Ebro Puleva Partners G.P., a
Delaware general partnership whose
general partners are Parent and Herba Foods S.L., a "sociedad limitada"
organized under the laws of Spain ("Sub"), and Riviana Foods Inc., a
Delaware
corporation (the "Company") (Sub and the Company being hereinafter collectively
referred to as the "Constituent Corporations"). Capitalized terms not defined in
the context of the Section of this Agreement in which such terms first appear
shall have the meanings set forth in Section 9.3(b).
WITNESSETH:
WHEREAS, the respective Boards of Directors of Parent and the Company
and the general partners of the Sub have determined that the acquisition of the
Company by Parent is in the best interests of their respective corporations and
stockholders and have approved such acquisition on the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all of the outstanding shares
(the "Shares") of Common Stock, par value $1.00 per share, of the Company (the
"Company Common Stock") at a purchase price of $25.75 per Share the "Offer
Price"), net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, the Board of Directors of the Company has adopted resolutions
approving the Offer and the Merger (as defined below) and recommending that
holders of Shares accept the Offer and that the Company's stockholders approve
this Agreement and the transactions contemplated hereby;
WHEREAS, the respective Boards of Directors of Parent and the Company
and the general partners of the Sub have approved and declared advisable the
merger of Sub and the Company (the "Merger"), upon the terms and subject to the
conditions set forth herein, whereby each issued and outstanding Share not owned
directly or indirectly by Parent or the Company will be converted into the right
to receive the Offer Price; and the Boards of Directors of the Company and the
general partners of the Sub have approved and adopted this Agreement and the
transactions contemplated hereby;
WHEREAS, in order to induce Parent and Sub to enter into this
Agreement, concurrently herewith Parent, Sub and certain of the stockholders of
the Company set forth on Exhibit B-1 hereto (collectively, the "Significant
Stockholders") are entering into Stockholder Agreements dated as of the date
hereof (the "Stockholder Agreements") in the form attached hereto as Exhibit
B-2, pursuant to which each of the Significant Shareholders has agreed, among
other things, to tender all of their shares of Company Common Stock owned by
such Significant
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Shareholder into the Offer and to take certain other actions in furtherance of
the Merger and to grant an irrevocable proxy to the Parent with respect thereto;
and
WHEREAS, Parent, Sub and Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and to prescribe various conditions to the Offer and the
Merger as set forth herein.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
THE OFFER
Section 1.1 THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article VIII and none of the events set forth in
Exhibit A shall have occurred, as promptly as practicable but in no event later
than seven (7) business days following the public announcement by Parent and the
Company of the Offer and Merger, Sub shall, and Parent shall cause Sub to,
commence, within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (together with the rules and regulations thereunder, the
"Exchange Act"), the Offer at the Offer Price. The obligation of Sub to, and of
Parent to cause Sub to, consummate the Offer and accept for payment, and pay
for, any Shares tendered and not withdrawn pursuant to the Offer shall be
subject to the conditions set forth in Exhibit A (the "Offer Conditions") (any
of which may be waived in whole or in part by Parent and Sub in their sole
discretion, except as expressly provided in the Offer Conditions) and to the
rights of Parent and Sub to terminate this Agreement as provided in Section 8.1.
The conditions to the Offer set forth in Exhibit A are for the sole benefit of
Parent and Sub and may be asserted by Parent and Sub regardless of the
circumstances giving rise to any such conditions (other than as a result of any
action or inaction of Parent or Sub that constitutes a breach of this
Agreement). The initial expiration date of the Offer shall be the twentieth
(20th) business day following commencement of the Offer. The Offer Price shall
be net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions of the Offer. Parent and Sub expressly reserve the
right, in their sole discretion, to modify the terms of the Offer, except that,
without the consent of the Company, Sub shall not (i) reduce the number of
Shares subject to the Offer, (ii) reduce the Offer Price, (iii) impose any
material conditions to the Offer other than the Offer Conditions or modify the
Offer Conditions (other than to waive any Offer Conditions to the extent
permitted by this Agreement); (iv) except as provided in the next sentence,
extend the Offer beyond any scheduled expiration date; (v) change the form of
consideration payable in the Offer (other than adding consideration); or (vi)
amend any other material terms of the Offer in a manner adverse to the holders
of Shares. Notwithstanding the foregoing, Sub may, without the consent of the
Company (i) extend the Offer, if at the scheduled or extended expiration date of
the Offer any of the Offer Conditions shall not be satisfied or waived, until
such time as such conditions are
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satisfied or waived; provided, however, that notwithstanding anything herein to
the contrary, if any of the conditions to the Offer are not satisfied or waived
on any scheduled expiration date of the Offer, Parent and Sub shall be required
to extend the Offer until such condition or conditions are satisfied or waived
unless such condition or conditions could not reasonably be expected to be
satisfied by the Outside Date; provided, further, that in no event shall Parent
and Sub be required to extend the expiration date of the Offer beyond the
Outside Date; (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer; (iii) extend the Offer
for any reason on one or more occasions for an aggregate period of not more than
15 business days beyond the latest expiration date that would otherwise be
permitted under clauses (i) and (ii) of this sentence if there shall not have
been tendered a sufficient number of Shares to enable the Merger to be effected
without a meeting of the Company's stockholders in accordance with Section 253
of the General Corporation Law of the State of
Delaware, as amended (the
"DGCL"); and (iv) after the Acceptance Date, for one or more subsequent offering
periods of up to an additional twenty (20) business days in the aggregate
pursuant to Rule 14d-11 of the Exchange Act, in each case subject to the right
of Parent, Sub or the Company to terminate this Agreement pursuant to the terms
hereof. Subject to the foregoing and applicable law and upon the terms and
subject to the conditions of the Offer, Sub shall, and Parent shall cause it to,
accept for payment, as promptly as permitted under applicable securities laws,
and pay for (after giving effect to any required withholding tax), as promptly
as practicable after the date on which Sub first accepts shares for payment
pursuant to the Offer (such date, regardless of whether Parent and Sub elect to
provide for one or more subsequent offering periods pursuant to Rule 14d-11 of
the Exchange Act, the "Acceptance Date") all shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer.
(b) The Offer shall be made by means of an offer to purchase
(the "Offer to Purchase") subject to the Offer Conditions set forth in Exhibit
A. On the date of commencement of the Offer, Parent and Sub shall file with the
SEC a Tender Offer Statement on Schedule TO (together with all supplements or
amendments thereto, the "Schedule TO") with respect to the Offer, which shall
contain as an exhibit or incorporate by reference the Offer to Purchase and a
related letter of transmittal and summary advertisement (such Schedule TO and
the documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "Offer Documents"), and
Parent and Sub shall cause to be disseminated the Offer Documents to holders of
Shares as and to the extent required by applicable federal securities laws.
Parent and Sub agree that the Offer Documents shall comply in all material
respects with the Exchange Act and the Offer Documents, on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no covenant is made by Parent or Sub with respect to information supplied
by the Company or any of its stockholders specifically for inclusion or
incorporation by reference in the Offer Documents. Each of Parent, Sub and the
Company agrees to correct promptly any information provided by it for use in the
Offer Documents if and to the extent that the Offer Documents shall be, or have
become, false or misleading in any material respect, and Parent and Sub further
agree to take all steps necessary to cause the Schedule TO, as so corrected, to
be filed with the SEC and the other Offer Documents, as so corrected, to be
3
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given
reasonable opportunity to review and comment upon the Offer Documents prior to
their filing with the SEC or dissemination to the stockholders of the Company.
Parent and Sub agree to provide the Company and its counsel any comments Parent,
Sub or their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments and to cooperate
with the Company and its counsel in responding to any such comments.
Section 1.2 COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer
and represents and warrants that the Board of Directors of the Company, at a
meeting duly called and held on July 22, 2004, at which all directors were
present (in person or by telephone), duly and unanimously adopted resolutions:
(i) approving and adopting this Agreement, including the Offer, the Merger and
the other transactions contemplated hereby; (ii) taking all action necessary to
render the provisions of Section 203 of the DGCL and other state takeover
statutes inapplicable to the Offer, the Merger, this Agreement, the Stockholder
Agreements and the transactions contemplated hereby and thereby as contemplated
by Section 4.17 hereof; (iii) determining that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are
advisable, fair to, and in the best interests of, the Company and the Company's
stockholders and that the consideration to be paid for each Share in the Offer
and the Merger is fair to the holders of Shares; and (iv) recommending that
holders of Shares accept the Offer, tender their Shares pursuant to the Offer
and approve this Agreement and the transactions contemplated hereby, including
the Merger. The Company hereby consents to the inclusion in the Offer Documents
of the recommendations of the Board of Directors of the Company described in
this Section 1.2(a); provided, however, that the Company's Board of Directors
may withdraw, modify or amend the recommendation if it determines in good faith
only after consultation with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. (the "Company Financial
Advisor") and receipt of and based upon advice from outside legal counsel to the
Company that the Board of Directors is required by fiduciary duties to the
Company's stockholders under applicable law to withdraw, modify or amend its
recommendations in response to a Superior Proposal as provided in Section 5.2
below. The Company represents and warrants to Parent and Sub that it has been
advised by each of its directors and executive officers that each such person
intends to tender all Shares owned by such person pursuant to the Offer.
(b) On the date on which the Offer Documents are filed with
the SEC, the Company shall file with the SEC a Tender Offer
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (together with any amendments or supplements thereto, the "Schedule
14D-9") that will comply in all material respects with the provisions of all
applicable federal securities laws and that will contain the recommendations of
the Board of Directors of the Company and the opinion of the Company Financial
Advisor, in each case, described in Section 1.2(a), and the Company shall cause
to be disseminated the Schedule 14D-9 along with the Offer Documents to holders
of Shares as and to the extent required by applicable federal securities laws.
On the date filed with the SEC and on the date first published, sent or given to
the Company's stockholders, the Schedule 14D-9 shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated
4
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
covenant is made by the Company with respect to information supplied by Parent
or Sub specifically for inclusion in the Schedule 14D-9. Each of the Company,
Parent and Sub agrees to correct promptly any information provided by it for use
in the Schedule 14D-9 if and to the extent that such information shall be, or
has become, false or misleading in any material respect, and the Company further
agrees to take all steps necessary to amend or supplement the Schedule 14D-9 and
to cause the Schedule 14D-9, as so corrected, to be filed with the SEC and
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. Parent and its counsel shall be given
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
its filing with the SEC or dissemination to holders of Shares. The Company
agrees to provide Parent and its counsel any comments the Company or its counsel
may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments and to cooperate with Parent, Sub
and their counsel in responding to any such comments.
(c) The Company hereby consents to the inclusion of the
recommendations of the Board of Directors of the Company and the opinion of the
Company Financial Advisor, in each case, described in Section 1.2(a) in, as
necessary, the proxy statement (including the form of proxies) ("Proxy
Statement") or information statement ("Information Statement") relating to the
vote of the Company's stockholders with respect to this Agreement (as amended,
supplemented or modified, the Proxy Statement and the Information Statement,
together the "Company Proxy Statement").
(d) In connection with the Offer and the Merger, the Company
shall cause its transfer agent or agents to furnish Sub promptly with mailing
labels containing the names and addresses of the record holders of Shares as of
a recent date and of those Persons becoming record holders subsequent to such
date, together with copies of all lists of stockholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Shares and any
securities convertible into Shares, and shall furnish to Sub such information
and assistance (including updated lists of stockholders, security position
listings and computer files) as Parent may reasonably request in communicating
the Offer to the record and beneficial holders of Shares. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Merger, Parent and Sub and their agents shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Offer and the Merger and, if this
Agreement shall be terminated, will, upon request, deliver, and will use their
reasonable efforts to cause their agents to deliver, to the Company all copies
of such information then in their possession or control.
5
ARTICLE II
THE MERGER
Section 2.1 THE MERGER. Upon the terms and subject to the conditions
hereof, and in accordance with the DGCL, Sub shall be merged with and into the
Company at the Effective Time (as hereinafter defined). Upon the Merger, the
separate partnership existence of Sub shall cease, and the Company shall
continue as the surviving corporation (the "Surviving Corporation") and shall
succeed to and assume all the rights and obligations of Sub in accordance with
the DGCL. Notwithstanding anything to the contrary herein, at the election of
Parent, any direct or indirect wholly-owned Subsidiary (as hereinafter defined)
of Parent may be substituted for Sub as a constituent corporation in the Merger.
In such event, the parties agree to execute an appropriate amendment to this
Agreement, in form and substance reasonably satisfactory to Parent and the
Company, in order to reflect such substitution.
Section 2.2 EFFECTIVE TIME. If all the conditions to the Merger set
forth in Article VII of this Agreement have been fulfilled or waived and this
Agreement shall not have been terminated as provided in Article VIII hereof, the
parties hereto shall cause a certificate of merger, or if applicable, a
certificate of ownership and merger, (the "Certificate of Merger") to be
properly executed and filed in accordance with the DGCL and the terms of this
Agreement on the Closing Date and shall cause all other filings and records
required by applicable law in connection with the Merger. The Merger shall
become effective when the Certificate of Merger executed in accordance with the
relevant provisions of the DGCL, is filed with the Secretary of State of the
State of
Delaware; provided, however, that, upon mutual written consent of the
Company and the Sub, the Certificate of Merger may provide for a later date and
time of effectiveness of the Merger. When used in this Agreement, the term
"Effective Time" shall mean the date and time at which the Certificate of Merger
is accepted for record or such later date and time of effectiveness of the
Merger established by the Certificate of Merger. The Certificate of Merger shall
be filed on the date of the Closing (as defined below).
Section 2.3 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the property, rights, privileges,
powers and franchises of the Company and Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Sub shall
become the debts, liabilities and duties of the Surviving Corporation.
Section 2.4 CHARTER AND BY-LAWS; DIRECTORS AND OFFICERS.
(a) At the Effective Time, the Restated Certificate of
Incorporation of the Company (the "Company Charter"), as amended as set forth on
Exhibit C-1, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law. At the Effective Time, the Restated By-laws of Company, in the
form attached hereto as Exhibit C-2, shall be the By-laws of the Surviving
Corporation until thereafter changed or amended as provided therein or by the
Company Charter.
(b) At the Effective Time the initial directors of the
Surviving Corporation shall be those persons set forth on Exhibit C-3 hereto,
until the earlier of their resignation, removal or death or until their
respective successors are duly elected and qualified, as the case
6
may be. The officers of the Company at the Effective Time shall be the initial
officers of the Surviving Corporation, until the earlier of their resignation,
removal or death or until their respective successors are duly elected and
qualified, as the case may be.
Section 2.5 CONVERSION OF SHARES. As of the Effective Time, by virtue
of the Merger and without any action on the part of Sub, the Company or the
holders of any securities of the Constituent Corporations:
(a) Each issued and outstanding partnership interest of Sub,
shall be canceled and converted into and thereafter represent one validly
issued, fully paid and nonassessable share of common stock of the Surviving
Corporation, par value $1.00 per share, which newly issued shares shall
constitute all of the issued and outstanding capital stock of the Surviving
Corporation.
(b) All Shares that are held in the treasury of the Company
and all Shares owned by Parent or by any Subsidiary of Parent immediately prior
to the Effective Time shall be canceled, and no capital stock of Parent or other
consideration shall be delivered in exchange therefor.
(c) Subject to the provisions of Section 2.5(d), each Share
issued and outstanding immediately prior to the Effective Time (other than
shares to be canceled in accordance with Section 2.5(b) and other than
Dissenting Shares (as defined in Section 2.5(d)) shall be canceled and converted
into the right to receive from the Surviving Corporation the Offer Price in
cash, without interest (the "Merger Consideration"), upon surrender of the
certificate representing such Share as provided in Section 2.6 of this
Agreement. All such Shares, when so converted, shall no longer be outstanding
and shall automatically be canceled and retired, and each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration.
(d) Notwithstanding any provision of this Agreement to the
contrary, if required by the DGCL but only to the extent required thereby,
Shares that are issued and outstanding immediately prior to the Effective Time
that have not been voted for adoption of this Agreement and are held by holders
who have properly exercised appraisal rights with respect thereto in accordance
with Section 262 of the DGCL (the "Dissenting Shares") will not be converted
into the right to receive the Merger Consideration, and holders of such Shares
will be entitled to receive payment of the appraised value of such Shares in
accordance with the provisions of such Section 262 unless and until such holders
fail to perfect, or effectively withdraw or lose, their rights to appraisal and
payment under the DGCL. If, after the Effective Time, any such holder fails to
perfect, or effectively withdraws or loses, such right, then such Shares will
thereupon be treated as if they had been converted into, at the Effective Time,
the right to receive the Merger Consideration, without any interest thereon,
pursuant to Section 2.5(c). Prior to the Effective Time, the Company will give
Parent prompt written notice and copies of (i) any demands received by the
Company for appraisals of Shares and (ii) all written and electronic
communications between the Company and its representatives, on the one hand, and
the dissenting stockholders and their representatives, on the other hand
relating thereto.
7
The Company shall give Parent the opportunity to participate in and direct all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to any demands for appraisal or offer to settle, settle or otherwise
negotiate any such demands. Each Dissenting Share, if any, shall be canceled
after payment in respect thereof made to the holder thereof pursuant to the
DGCL.
Section 2.6 EXCHANGE OF CERTIFICATES.
(a) Prior to the Effective Time, Parent shall designate a
United States bank or trust company (or such other Person or Persons as shall be
reasonably acceptable to Parent and the Company) to act as paying agent in the
Merger (the "Paying Agent"), and from time to time on, prior to or after the
Effective Time, Parent shall make available, or cause the Surviving Corporation
to make available, to the Paying Agent cash in amounts and at the times
necessary for the payment of the Merger Consideration upon surrender of
certificates representing Shares as part of the Merger pursuant to Section 2.5.
Such funds shall be invested by the Paying Agent as directed by Parent. Any and
all profits resulting from, or interest or income earned on or produced by, such
investments shall be payable as directed by Parent.
(b) As soon as reasonably practicable after the Effective
Time, the Paying Agent shall mail to each holder of record of a certificate or
certificates (the "Certificates") that immediately prior to the Effective Time
represented Shares which were converted into the right to receive the Merger
Consideration, (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 delivery of the Certificates to the Paying Agent and shall be in a
form and have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration as provided in Section 2.5. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly completed and validly executed, and such other documents as may be
reasonably required by the Paying Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor a check representing the amount of
cash, without interest, into which the Shares theretofore represented by such
Certificate shall have been converted pursuant to Section 2.5, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, payment may be made to a Person other than the Person in whose
name the Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and otherwise
accompanied by all documents required to evidence and effect such transfer and
the Person requesting such payment shall pay any transfer or other Taxes
required by reason of the payment to a Person other than the registered holder
of such Certificate or establish to the satisfaction of the Surviving
Corporation that such Tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 2.6, each Certificate (other than Certificates
representing Dissenting Shares or Shares to be cancelled in accordance with
Section 2.5(b) above) shall be deemed for all purposes at any time after the
Effective Time to represent only the right to receive upon such surrender the
amount of cash, without interest, into which the Shares theretofore represented
by such Certificate shall have been converted pursuant to Section 2.5. No
interest will be paid or will accrue on the cash payable upon the surrender of
any Certificate.
8
Parent (or any affiliate thereof) or the Paying Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Shares such amounts as Parent or the Paying Agent is
required to deduct and withhold with respect to the making of such payment under
the Code (as hereinafter defined) or under any provisions of state, local or
foreign Tax law. To the extent that amounts are so withheld by Parent or the
Paying Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the Person in respect of which such deduction
or withholding was made by Parent or the Paying Agent.
(c) All cash paid upon the surrender of Certificates in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the Shares theretofore
represented by such Certificates. At the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
Shares that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation or
the Paying Agent for any reason, then they shall be canceled and exchanged as
provided in this Article II.
(d) Promptly following the date that is six months after the
Effective Time, the Paying Agent shall deliver to Parent all cash, certificates
and other documents in its possession relating to the transactions contemplated
hereby, and the Paying Agent's duties shall terminate. Thereafter, each holder
of a Certificate (other than Certificates representing Dissenting Shares and
Certificates representing Shares to be canceled pursuant to Section 2.5(b))
shall look only to the Surviving Corporation (subject to abandoned property,
escheat or similar laws) and only as general creditors thereof, with respect to
any Merger Consideration that may be payable, without interest thereon, upon due
surrender of the Certificates held by such holder.
(e) Notwithstanding the foregoing, none of Parent, Sub, the
Company or the Paying Agent shall be liable to any Person in respect of any cash
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any Certificates shall not have been surrendered
prior to seven years after the Effective Time (or immediately prior to such
earlier date on which any payment pursuant to this Article II would otherwise
escheat to or become the property of any Governmental Entity (as hereinafter
defined)), then the cash payment in respect of such Certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interests of any Person previously
entitled thereto.
(f) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent or
the Paying Agent, the posting by such Person of a bond, in such reasonable
amount as Parent or the Paying Agent may direct as indemnity against any claim
that may be made against them with respect to such Certificate, the Paying Agent
will pay in exchange for such lost, stolen or destroyed Certificate the amount
of cash to which the holders thereof are entitled pursuant to this Article II.
9
Section 2.7 STOCK PLANS. Immediately prior to the Effective Time, each
then outstanding stock option or similar right (collectively, the "Options"),
whether or not then vested or exercisable, shall be (or, if not previously
vested and exercisable, shall become), consistent with the plans and agreements
applicable to such Options (each, a "Stock Plan"), vested and exercisable and
such Options as of the Effective Time shall be canceled by the Company, and each
then vested Option shall no longer be exercisable but shall entitle the holder
thereof, in cancellation and settlement therefor, to a payment in cash by the
Company (subject to any applicable withholding taxes) (and, if necessary, Parent
shall provide funds to the Company sufficient for such payments), promptly
following the Effective Time, equal to the product of (a) the total number of
Shares subject to such vested Option and (b) the excess, if any, of the Merger
Consideration over the exercise price per Share subject to such vested Option
(such amounts payable hereunder being referred to as the "Cash Payment"). All
Stock Plans and any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any Subsidiary of the Company shall terminate as of the Effective
Time. The Company shall take all actions necessary to effectuate the provisions
of this Section 2.7, including obtaining all necessary consents to ensure that,
after the Effective Time, holders of Options will have no rights in respect of
such Options other than the rights of the holders of vested Options to receive
the Cash Payment in cancellation and settlement thereof. The Cash Payment shall
be made by check representing the applicable cash amount, without interest.
Section 2.8 FURTHER ASSURANCES. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger or (b)
otherwise to carry out the purposes of this Agreement, then the Surviving
Corporation and its proper officers and directors or their designees shall be
authorized to execute and deliver, in the name and on behalf of either of the
Constituent Corporations, all such deeds, bills of sale, assignments and
assurances and to do, in the name and on behalf of either Constituent
Corporation, all such other acts and things as may be necessary, desirable or
proper to vest, perfect or confirm the Surviving Corporation's right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry out
the purposes of this Agreement.
Section 2.9 CLOSING. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (a) at the
offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, 1301 Avenue of the Americas, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇ on the date that the last of the conditions set forth in Article VII
of this Agreement (other than (i) those that are waived by the party or parties
for whose benefit such conditions exist and (ii) any such conditions which, by
their terms, are not capable of being satisfied until the Closing Date) are
satisfied; or (b) at such other place, time and/or date as the parties hereto
may otherwise agree. The date upon which the Closing shall occur is referred to
herein as the "Closing Date."
10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 3.1 ORGANIZATION. Parent is a "sociedad anonima" duly organized
and in good legal standing under the laws of Spain. Sub is a general partnership
duly formed, validly existing and in good standing under the laws of the State
of
Delaware.
Section 3.2 AUTHORITY. On or prior to the date of this Agreement, the
Board of Directors of Parent and the general partners of Sub have declared the
Merger advisable and have approved and adopted this Agreement in accordance with
applicable law. Each of Parent and Sub has all requisite corporate or
partnership power and authority to execute and deliver this Agreement and the
Stockholder Agreements, and each of Parent and Sub has all requisite corporate
or partnership power and authority to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by Parent and Sub of
this Agreement and the Stockholder Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate or partnership action (including Board or general partner
action) on the part of Parent and Sub, and no other corporate or partnership
proceeding is necessary for the execution and delivery by Parent or Sub of this
Agreement or the Stockholder Agreements, the performance by Parent or Sub of
their respective obligations hereunder and thereunder and the consummation by
Parent and Sub of the transactions contemplated hereby and thereby, subject, in
the case of this Agreement, to the filing of the Certificate of Merger as
required by the DGCL. This Agreement has been duly executed and delivered by
Parent and Sub, and (assuming the valid authorization, execution and delivery of
this Agreement by the Company and the validity and binding effect hereof on the
Company) this Agreement constitutes the valid and binding obligation of each of
Parent and Sub enforceable against them in accordance with its terms.
Section 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth
on Schedule 3.3 of the Disclosure Schedule, assuming that all consents,
approvals, authorizations and other actions described in this Section 3.3 have
been obtained and all filings and obligations described in this Section 3.3 have
been made or satisfied, the execution and delivery of this Agreement and the
Stockholder Agreements do not, and the consummation of the transactions
contemplated hereby and thereby and compliance with the provisions hereof and
thereof will not, result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give to others a right of termination,
cancellation or acceleration of any obligation or result in the loss of a
benefit under, or result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets of Parent or Sub under, any
provision of (a) the Organizational Documents of Parent and of Sub, each as
amended to date, (b) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Parent or Sub or (c) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or Sub or any
of their respective properties or assets, other than, in the case of clauses (b)
and (c), any such violations, defaults,
11
rights, liens, security interests, charges or encumbrances that, individually or
in the aggregate, would not have a Material Adverse Effect on Parent or Sub,
materially impair or delay the ability of Parent or Sub to perform their
respective obligations hereunder or under the Stockholder Agreements or prevent
or materially delay the consummation by Parent or Sub of any of the transactions
contemplated hereby or thereby. No filing or registration with, or
authorization, consent or approval of, any domestic (federal and state), foreign
or supranational court, commission, governmental body, regulatory agency,
authority or tribunal (a "Governmental Entity") is required by or with respect
to Parent or Sub in connection with the execution and delivery by Parent or Sub
of this Agreement or of the Stockholder Agreements or is necessary for the
consummation by Parent or Sub of the Offer, the Merger and the other
transactions contemplated by this Agreement or the Stockholder Agreements,
except for (i) in connection, or in compliance, with the Exchange Act, (ii) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware; (iii) such filings, authorizations, orders and approvals as may be
required by state takeover laws (the "State Takeover Approvals"); (iv) such
filings required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇
(▇▇▇ "▇▇▇ ▇▇▇"); (v) filings and approvals required under applicable foreign or
multi-international antitrust laws and regulations; and (vi) such other
consents, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, have a Material Adverse Effect on Parent, materially impair or delay
the ability of Parent or Sub to perform its obligations hereunder or under the
Stockholder Agreements or prevent or materially delay the consummation by Parent
or Sub of any of the transactions contemplated hereby or thereby.
Section 3.4 INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (a) the Offer Documents, (b) the Schedule 14D-9, (c) the
information to be filed by the Company in connection herewith pursuant to Rule
14f-1 under the Exchange Act (if required) and (d) the Company Proxy Statement
(if required) will (except to the extent revised or superseded by amendments or
supplements contemplated hereby), (i) in the case of clauses (a), (b) and (c) at
the respective times such documents are filed with the SEC or first published,
sent or given to the Company's stockholders, or (ii) in the case of clause (d),
at the time such document is first mailed to the Company's stockholders or at
the time of the Stockholder Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Offer Documents will comply in
all material respects with the requirements of the Exchange Act. Notwithstanding
the foregoing, no representation or warranty is made by Parent or Sub with
respect to statements made or incorporated by reference therein based on
information supplied by the Company or any Subsidiary of the Company
specifically for inclusion or incorporation by reference therein.
Section 3.5 INTERIM OPERATIONS OF SUB. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
12
Section 3.6 BROKERS. No broker, investment banker, financial advisor or
other Person, other than Bear ▇▇▇▇▇▇▇, the fees and expenses of which will be
paid by Parent, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent or Sub.
Section 3.7 FINANCING. Parent has or will have available to it at the
time required the funds necessary to consummate the Offer and the Merger in
accordance with the terms of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub that, except as
set forth in the Disclosure Schedule delivered to Parent and Sub at the time of
execution of this Agreement (the "Disclosure Schedule"), it being agreed that
disclosure of any item on the Disclosure Schedule shall be deemed to be
disclosed with respect to the Section of this Agreement to which such item is
correspondingly numbered and all other Sections of this Agreement to which the
relevance of such item is reasonably apparent from the face of the Disclosure
Schedule:
Section 4.1 ORGANIZATION, STANDING AND POWER. The Company 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
carry on its business as now being conducted. Each Subsidiary of the Company is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate (in the
case of a Subsidiary that is a corporation) or other power and authority to
carry on its business as now being conducted. The Company and each of its
Subsidiaries are duly qualified to do business, and are in good standing, in
each jurisdiction where the character of their properties owned or held under
lease or the nature of their activities makes such qualification necessary,
except where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. A list of all
Subsidiaries of the Company, together with the jurisdiction of incorporation of
each Subsidiary of the Company, the percentage of the outstanding capital stock
of each Subsidiary owned by the Company and each other Subsidiary of the Company
and the name of any Person other than the Company or another Subsidiary of the
Company that owns capital stock of the Subsidiary of the Company, is set forth
in Section 4.1 of the Disclosure Schedule. The Company has heretofore furnished
to Parent a complete and correct copy of the Certificate of Incorporation of the
Company and the charter documents of each Active Subsidiary and the By-laws of
the Company and each Active Subsidiary, as applicable and as currently in
effect, all stock records and all corporate minute books and records of the
Company and each Active Subsidiary. The corporate minute books and records of
the Company and each Active Subsidiary accurately reflect, in all material
respects, all action taken by the stockholders or the Board of Directors or any
committee thereof of the Company and each Active Subsidiary and contain true and
complete copies, in all material respects, of all resolutions adopted by the
13
stockholders or the Board of Directors or any committee thereof of the Company
and any Active Subsidiary. No other similar organizational documents are
applicable to or binding upon the Company or any Active Subsidiary. Except as
set forth in Section 4.1 of the Disclosure Schedule, the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exercisable for any equity or similar interest in, any
corporation, partnership, limited liability company, joint venture or other
legal entity. There are no current or prospective obligations of the Company or
any of its Subsidiaries to provide funds to, or make any investment in (in the
form of a loan, capital contribution or otherwise), or to assume any liability
or obligation of, any other Person. The Dormant Subsidiaries have either no or
de minimis operations and revenues.
Section 4.2 CAPITAL STRUCTURE.
(a) The authorized capital stock of the Company consists of
24,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock, par value $1.00 per share ("Company Preferred Stock").
(b) As of the date hereof:
(i) 14,529,823 Shares (excluding the Shares held in
treasury) were issued and outstanding, all of which were duly
authorized, validly issued, fully paid and nonassessable and free of
preemptive or similar rights;
(ii) no shares of Company Preferred Stock were issued
and outstanding;
(iii) except for 1,353,077 Shares held in the
treasury of the Company, no Shares or shares of Company Preferred Stock
were held in the treasury of the Company or by Subsidiaries of the
Company; and
(iv) 1,388,120 Shares were issuable upon exercise of
outstanding Options granted under the Stock Plans as set forth on
Section 4.2(b)(iv) of the Disclosure Schedule.
(c) Except as described on Section 4.2(c) of the Disclosure
Schedule, there are no options, warrants, calls, rights or agreements to which
the Company or any of its Subsidiaries is a party or by which any of them is
bound obligating the Company or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, any shares of capital stock or
other voting securities or securities convertible into or exchangeable for
capital stock or voting securities of or other equity interests in the Company
or any of its Subsidiaries or equity equivalents, interests in ownership or
earnings of the Company (including stock appreciation rights, phantom stock or
stock-based performance units) or other similar rights (collectively, "Company
Securities") or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right or agreement, and
there are no outstanding contractual rights to which the Company or any of its
Subsidiaries is a party the
14
value of which is based on the value of any Company Securities. Except as
described on Schedule 4.2(c) of the Disclosure Schedule, there are no programs
in place or outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any capital stock or other voting
securities of the Company or any Company Securities or to vote or dispose of any
shares of the capital stock or other voting securities of any of the
Subsidiaries of the Company. Each outstanding share of Common Stock is, and each
share of Common Stock that may be issued pursuant to the exercise of outstanding
Options, when issued in accordance with the respective terms thereof, will be,
duly authorized, validly issued, fully paid and nonassessable and free of
preemptive and similar rights and registration rights
(d) Each outstanding share of capital stock of each Subsidiary
of the Company is duly authorized, validly issued, fully paid and nonassessable
and free of preemptive or similar rights and, except as set forth in Section
4.2(d) of the Disclosure Schedule, owned by the Company or a wholly-owned
Subsidiary of the Company, free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
voting rights, charges and other encumbrances of any nature whatsoever. There
are no existing options, calls, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock or other equity interests or securities of any Subsidiary of the
Company.
(e) Except as described on Section 4.2(e) of the Disclosure
Schedule, there are no stockholders agreements, voting trusts or other
agreements or understandings to which the Company or any Subsidiary of the
Company is a party or by which the Company or any Subsidiary of the Company is
bound relating to the issued or unissued capital stock of the Company or any
Subsidiary of the Company (including any such agreements or understandings that
may limit in any way the solicitation of proxies by or on behalf of the Company
from, or the casting of votes by, the stockholders of the Company with respect
to the Merger) or granting to any Person or group of Persons the right to elect,
or to designate or nominate for election, a director to the Board of Directors
of the Company or any Subsidiary of the Company. The following information for
each Active Subsidiary of the Company is listed in the Disclosure Schedule, if
applicable: (i) its name and jurisdiction of incorporation or organization, (ii)
the location of its principal executive office, (iii) the names and positions of
its senior officers, and (iv) the names of its directors.
Section 4.3 AUTHORITY. On or prior to the date of this Agreement, the
Board of Directors of the Company has unanimously approved the Offer and
declared the Merger advisable and fair to and in the best interest of the
Company and its stockholders, approved and adopted this Agreement and the
transactions contemplated hereby in accordance with the DGCL, resolved to
recommend the acceptance of the Offer by the Company's stockholders and directed
that this Agreement be submitted to the Company's stockholders for approval, if
applicable. The Company has all requisite corporate power and authority to enter
into this Agreement and, subject to approval of the Merger by the stockholders
of the Company, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby have been duly authorized by
all necessary corporate action (including Board action) on the part of the
Company, and no other corporate proceeding is necessary for the execution and
delivery by the
15
Company of this Agreement, the performance by the Company of its obligations
hereunder and the consummation by the Company of the transactions contemplated
hereby, subject to (A) approval of the Merger by the stockholders of the Company
and (B) the filing of the Certificate of Merger as required by the DGCL. This
Agreement has been duly executed and delivered by the Company and (assuming the
valid authorization, execution and delivery of this Agreement by Parent and Sub
and the validity and binding effect of this Agreement on Parent and Sub)
constitutes the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.
Section 4.4 CONSENTS AND APPROVALS; NO VIOLATION. Assuming that all
consents, approvals, authorizations and other actions described in this Section
4.4 have been obtained and all filings and obligations described in this Section
4.4 have been made, except as set forth in Section 4.4 of the Disclosure
Schedule, the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give to others a right of
termination, cancellation or acceleration of any obligation or result in the
loss of a material benefit under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Company or any of its Subsidiaries under, any provision of (a) the
Organizational Documents of the Company or any of the Company's Subsidiaries,
(b) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or license applicable
to the Company or any of its Subsidiaries or (c) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its Subsidiaries or any of their respective properties or assets, other than, in
the case of clauses (b) or (c), any such violations, defaults, rights, liens,
security interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company, impair or
delay the ability of the Company to perform its obligations hereunder or prevent
or delay the consummation by the Company of any of the transactions contemplated
hereby. No filing or registration with, or authorization, consent or approval
of, any Governmental Entity is required by or with respect to the Company or any
of its Subsidiaries in connection with the execution and delivery by the Company
of this Agreement or is necessary for the consummation by the Company of the
Offer, the Merger and the other transactions contemplated by this Agreement,
except for (i) in connection, or in compliance, with the provisions of the
Exchange Act or the HSR Act, (ii) the filing of the Certificate of Merger with
the Secretary of State of the State of
Delaware, (iii) such filings,
authorizations, orders and approvals as may be required in connection with State
Takeover Approvals, (iv) the approvals and filings set forth in Section 4.4 of
the Disclosure Schedule, (v) applicable requirements, if any, of Blue Sky Laws
or the NASDAQ National Market and (vi) such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, impair or delay the ability of the Company to
perform its obligations hereunder or prevent or delay the consummation by the
Company of any of the transactions contemplated hereby.
16
Section 4.5 SEC DOCUMENTS AND OTHER REPORTS.
(a) The Company has timely filed all forms, reports,
schedules, proxy statements, registration statements and other documents
required to be filed with the SEC since July 1, 2001 (collectively, the "Company
SEC Documents"). Except as set forth in Section 4.5 of the Disclosure Schedule,
the Company SEC Documents, including any financial statements or schedules
included or incorporated by reference therein) (a) at the time they became
effective, in the case of registration statements, or when filed, in the case of
any other Company SEC Document, complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the Exchange Act, as the case may be, and (b) do not (except to the extent
revised or superseded by a subsequent filing with the SEC), and did not at the
time they were filed, 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 light of the circumstances under which they were made,
not misleading except to the extent revised or superseded by a subsequent filing
with the SEC prior to the date hereof. The consolidated financial statements
(including, in each case, any notes thereto) of the Company included in the
Company SEC Documents complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with United States generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
quarterly statements, the omission of full footnote disclosures to such
financial statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto) and fairly presented in all material respects the
consolidated financial position of the Company and its Subsidiaries at the
respective dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein, none of which were or are material in amount).
Except as disclosed in the Company SEC Documents, the Company has not, since
July 31, 2001, made any change in the accounting practices or policies applied
in the preparation of financial statements.
(b) Section 4.5(b) of the Company Disclosure Schedule sets
forth the (i) consolidated unaudited balance sheet of the Company and its
Subsidiaries as of June 27, 2004 and (ii) consolidated unaudited statements of
operations of the Company and its Subsidiaries for the three (3) month and
twelve (12) month periods ended on June 27, 2004. The balance sheet and
statement of operations set forth in Section 4.5(b) of the Company Disclosure
Schedule comply in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
GAAP applied on a consistent basis during the period involved (except as may be
indicated therein or in the notes thereto) and present fairly in all material
respects the consolidated financial position of the Company and its consolidated
Subsidiaries as of June 27, 2004 and the consolidated results of their
operations for the period (subject to normal year-end audit adjustments and any
other adjustments described therein and the fact that they do not or will not,
as the case may be, contain all of the footnote disclosures required by GAAP).
Section 4.6 INFORMATION SUPPLIED. The Schedule 14D-9, when filed with
the SEC and first published, sent or given to stockholders of the Company, will
comply in all material respects with the Exchange Act. Neither the Schedule
14D-9 nor any of the information provided by or on behalf of the Company
specifically for inclusion in the Schedule TO or the Offer
17
Documents will, at the respective times the Schedule 14D-9, the Schedule TO and
the Offer Documents or any amendments or supplements thereto are filed with the
SEC or first published, sent or given to stockholders of the Company, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, no representation or warranty is made
by the Company with respect to written information supplied by Parent or Sub
specifically for inclusion in the Schedule 14D-9. The Company Proxy Statement
will comply in all material respects with the applicable requirements of the
Exchange Act and the DGCL, except that no representation or warranty is made by
the Company with respect to written information supplied by Parent or Sub
specifically for inclusion in the Company Proxy Statement. The Company Proxy
Statement will not, at the time the Company Proxy Statement (or any amendment or
supplement thereto) is filed with the SEC or first sent to stockholders, at the
time of the Stockholders Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Section 4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Company SEC Documents filed with the SEC prior to the date of this
Agreement or as set forth in Section 4.7 of the Disclosure Schedule, since March
28, 2004: (a) the business of the Company and its Subsidiaries has been
conducted in the ordinary course of business consistent with past practice; (b)
the Company and its Subsidiaries have not incurred any material liability or
obligation (indirect, direct or contingent), or entered into any material oral
or written agreement or other transaction, that is not in the ordinary course of
business or that would result in a Material Adverse Effect on the Company, (c)
the Company and its Subsidiaries have not sustained any damage, destruction,
loss or interference with their business or properties (whether or not covered
by insurance) that has had or would have a Material Adverse Effect on the
Company, (d) other than any changes in the ordinary course of the Company's
business and consistent with past practice of the Company, there has not been
any material changes in the amount or terms of the indebtedness of the Company
and its Subsidiaries from that described in the Company SEC Documents filed
prior to the date hereof, and (e) there has been no event causing a Material
Adverse Effect on the Company, nor any development that, individually or in the
aggregate, would reasonably be expected to result in a Material Adverse Effect
on the Company or any of its Subs and (f) neither the Company nor any of its
Subsidiaries has taken any action, or failed to take any action, which if such
action or failure occurred during the period from the date of this Agreement to
the Closing Date would constitute a breach or violation of Section 5.1.
Section 4.8 PERMITS AND COMPLIANCE; CONTRACTS.
(a) Except as set forth in Section 4.8 of the Disclosure
Schedule, and except with respect to Environmental Permits (as defined in
Section 4.16 of this Agreement), which are addressed exclusively in Section
4.16(b) of this Agreement, each of the Company and its Subsidiaries holds all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any Governmental
Entity necessary
18
for the Company or any of its Subsidiaries to own, lease and operate its
properties or to carry on its business as it is now being conducted (the
"Company Permits"), except as would not reasonably be expected to have a
Material Adverse Effect. No suspension or cancellation of any material Company
Permits is pending or, to the Knowledge of the Company, threatened. The Company
and its Subsidiaries are in compliance in all material respects with (i) their
respective Organizational Documents, (ii) all applicable foreign, federal, state
and local laws, ordinances, administrative or governmental rules or regulations,
(iii) all orders, decrees and judgments of any Governmental Entity having
jurisdiction over the Company or any of its Subsidiaries and (iv) all Company
Permits.
(b) Each material written or oral contract, instrument or
other agreement, guarantee, license, lease or other agreement to which the
Company or any of its Subsidiaries is a party (each, a "Contract") is valid and
binding on the Company (or, to the extent a Subsidiary is a party, such
Subsidiary) and, to the Knowledge of the Company, each other party thereto, and
each Contract is in full force and effect, and the Company and each Subsidiary
and, to the Knowledge of the Company, each other party thereto has performed in
all material respects the obligations required to be performed by such party to
date under each Contract. Except as set forth in the Company SEC Documents filed
prior to the date of this Agreement, no event of material default or event that,
but for the giving of notice or the lapse of time or both, would constitute an
event of material default exists or, upon the consummation by the Company of the
transactions contemplated by this Agreement, will exist under any Contract
(including, without limitation, any indenture, mortgage, loan agreement, note or
other agreement or instrument for borrowed money, any guarantee of any agreement
or instrument for borrowed money or any lease, contractual license or other
similar agreement or instrument) to which the Company or any of its Subsidiaries
is a party or by which the Company or any such Subsidiary is bound or to which
any of the properties, assets or operations of the Company or any such
Subsidiary is subject.
(c) As of the date hereof, except as set forth in Section 4.8
of the Disclosure Schedule, neither the Company nor any of its Subsidiaries is a
party to or bound by, and neither they or any of their assets or properties
subject to, any Contracts required to be disclosed in the Company SEC Documents
which are either not filed or not publicly available without redaction as an
exhibit to one or more Company SEC Documents filed with the SEC prior to the
date hereof.
(d) Except as set forth in Section 4.8 of the Disclosure
Schedule or the Company SEC Documents, neither the Company nor any of its
Subsidiaries is a party to, or bound by, any written or oral: (i) Contract
obligating the Company or its Subsidiaries to pay or receive an amount in excess
of $500,000 (excluding purchase and sale orders entered into by the Company or
its Subsidiaries in the ordinary course of business); (ii) Contract containing
provisions which are in effect as of the date hereof which restrict in any
manner the Company's right to compete with any other person or entity, the
Company's right to sell to or purchase from any other person or entity, the
right of any other party to compete with the Company, or the ability of such
person or entity to employ any of the Company's employees; (iii) secrecy or
confidentiality agreements (except for secrecy and confidentiality agreements
which (A) are terminable at will at any time by the Company, (B) do not provide
for any payment of
19
consideration and (C) do not contain any "standstill" provision or similar
restriction on the Company's ability to negotiate an acquisition of another
entity); (iv) other than as set forth in the Disclosure Schedule,
distributorship, non-employee commission or marketing agent, representative or
franchise agreement providing for the marketing and/or sale of the products or
services of the Company or any of its Subsidiaries; (v) Contract pursuant to
which the Company acquired the ownership or control of any material interest
(with respect to value) in a partnership, corporation, limited liability
company, joint venture or other entity or similar arrangement other than as
otherwise disclosed herein; (vi) Contract containing change of control
provisions relating to the Company; or (vii) any other Contract not entered into
in the ordinary course of business.
Section 4.9 TAX MATTERS.
(a) Except as otherwise set forth in Section 4.9(a) of the
Disclosure Schedule: (i) the Company and each of its Subsidiaries have filed
with the appropriate Governmental Entity all material Tax Returns (as
hereinafter defined) required to have been filed, and such Tax Returns are
correct and complete in all material respects; (ii) all Taxes due and owing by
the Company and each of its Subsidiaries have been timely paid; (iii) the most
recent financial statements contained in the Company SEC Documents provide an
adequate accrual for the payment of Taxes for the periods covered by such
Company SEC Documents; (iv) the Company and each of its Subsidiaries have
complied with all material rules and regulations relating to the withholding of
Taxes and the remittance of withheld Taxes; (v) neither the Company nor any of
its Subsidiaries has requested any extension of time within which to file any
Tax Return in respect of any taxable year, which Tax Return has not since been
filed; and (vi) there are no outstanding waivers, agreements or comparable
consents that have been given by the Company or any of its Subsidiaries or with
respect to any Tax Return of the Company or any of its Subsidiaries regarding
the statute of limitations with respect to any Taxes or Tax Returns of the
Company or any of its Subsidiaries.
(b) Except as otherwise set forth in Section 4.9(b) of the
Disclosure Schedule, to the Knowledge of the Company: (i) no issues have been
raised by any Governmental Entity in connection with the Tax Returns of the
Company or any of its Subsidiaries; (ii) no claim has ever been made by a
Governmental Entity in a jurisdiction where any of the Company and its
Subsidiaries does not file Tax Returns that it is or may be subject to taxation
in that jurisdiction; (iii) no power of attorney has been granted by or with
respect to the Company or any of its Subsidiaries with respect to any matter
relating to Taxes; (iv) there is no action, suit, investigation, audit, claim,
assessment or other administrative or court proceedings pending or proposed or
threatened that could affect materially the liability for Taxes of the Company
or any of its Subsidiaries or against the Company or any of its Subsidiaries;
and (v) there are no encumbrances or liens for Taxes upon the assets of the
Company or any of its Subsidiaries except for liens relating to current Taxes
not yet due and payable.
(c) Except as otherwise set forth in Section 4.9(c) of the
Disclosure Schedule: (i) none of the Company or any of its Subsidiaries has been
a member of any group of corporations filing Tax Returns on a consolidated,
combined, unitary or similar basis (other than a group the common parent of
which is the Company) or has any liability for the Taxes of any
20
Person (other than the Company and its Subsidiaries); (ii) neither the Company
nor any of its Subsidiaries is a party to, or is bound by, any Tax sharing, Tax
indemnity, cost sharing, or similar agreement, policy or practice relating to
Taxes; (iii) the Company has made available to Parent copies of all material Tax
Returns filed by the Company or any of its Subsidiaries for any of the taxable
periods that remains open, as of the date hereof, for examination or assessment
of Tax; and (iv) neither the Company nor any of its Subsidiaries is or has been
a United States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(d) Except as otherwise set forth in Section 4.9(d) of the
Disclosure Schedule: (i) neither the Company nor any of its Subsidiaries has
made any payments, or is a party to an agreement (including this Agreement) that
under any circumstances could or will obligate it to make payments (either
before, on, or after the Closing Date) that will not be deductible because of
Section 162(m) or Section 280G of the Code (or any corresponding provision of
state, local or foreign tax law); (ii) none of the indebtedness of the Company
or any of its Subsidiaries constitutes (a) "corporate acquisition indebtedness"
(as defined in Section 279(b) of the Code) with respect to which any interest
deductions may be disallowed under Section 279 of the Code or (b) an "applicable
high yield discount obligation" under Section 163(i) of the Code; and (iii)
neither the Company nor any of its Subsidiaries has participated in an
international boycott as defined in Code Section 999.
(e) Except as otherwise set forth in Section 4.9(e) of the
Disclosure Schedule: the Company and each of its Subsidiaries will not be
required to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof) ending after
the date of the Closing as a result of any (i) change in method of accounting
for a taxable period ending on or prior to the Closing Date; (ii) "closing
agreement" as described in Section 7121 of the Code (or any corresponding or
similar provision of state, local or foreign income Tax law) executed on or
prior to the Closing Date; (iii) deferred intercompany gain or any excess loss
account described in Treasury Regulations under Code Section 1502 (or any
corresponding or similar provision of state, local or foreign income Tax law);
(iv) installment sale or open transaction disposition made on or prior to the
date of the Closing or (v) prepaid amount received on or prior to the date of
the Closing.
(f) During the five-year period ending on the date hereof,
neither the Company nor any of its Subsidiaries was either a "distributing
corporation" or a "controlled corporation" in a distribution of stock intended
to be governed by Section 355 of the Code.
(g) Neither the Company nor any of its Subsidiaries has
engaged in any "listed transaction" within the meaning of Treasury Regulation
Section 1.6011-4(b)(2).
Section 4.10 ACTIONS AND PROCEEDINGS. There are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental Entity against or
affecting the Company or any of its Subsidiaries, or against or affecting any of
the present or former directors, officers, employees, consultants, agents or
stockholders of the Company or any of its Subsidiaries with respect to the
Company or any of its Subsidiaries, any of the properties, assets or business of
the Company or any of its Subsidiaries or any Company Plan, that, individually
or in the aggregate,
21
would reasonably be expected to have a Material Adverse Effect on the Company or
could prevent or delay the consummation of the transactions contemplated
hereunder. Except as set forth in Section 4.10 of the Disclosure Schedule, there
are no actions, suits or claims or legal, administrative or arbitrative
proceedings or investigations (including claims for workers' compensation)
pending or, to the Knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries or any of its or their present or former
directors, officers, employees, consultants, agents or stockholders with respect
to the Company or any of its Subsidiaries, or any of the properties, assets or
business of the Company or any of its Subsidiaries or any Company Plan, that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company or could prevent or delay the
consummation of the transactions contemplated hereunder.
Section 4.11 EMPLOYEE BENEFITS.
(a) Each material Company Plan is listed in Section 4.11(a) of
the Disclosure Schedule. With respect to each such Company Plan, the Company has
provided to Parent a true and correct copy of (i) the most recent annual report
(Form 5500) filed with the IRS, (ii) all documents, including trust agreements,
insurance and annuity contracts and administration agreements, (iii) a written
summary of the Company Plan if the Company Plan is unwritten, (iv) the most
recent summary plan description and other written explanations of each Company
Plan provided to participants, beneficiaries and parties thereto, (v) the most
recent determination letter issued by the IRS, (vi) any request for a
determination letter currently pending before the IRS and (vii) all
correspondence with the IRS, the Department of Labor, or the SEC relating to any
outstanding controversy.
(b) Each Company Plan complies, in form and operation, in all
material respects with ERISA, the Code and all other applicable statutes and
governmental rules and regulations. Except as set forth on Section 4.11(b) of
the Disclosure Schedule, neither the Company nor any ERISA Affiliate or any
Subsidiary of the Company currently maintains, contributes to or has any
liability or potential liability under, or at any time during the past six years
has maintained or contributed to, any pension plan which is subject to Section
412 of the Code, Section 302 of ERISA or Title IV of ERISA. Except as set forth
on Section 4.11(b) of the Disclosure Schedule, neither the Company nor any ERISA
Affiliate or any Subsidiary of the Company currently maintains, contributes to
or has any liability or potential liability under, or at any time during the
past six years has maintained or contributed to, any "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA).
(c) Each material Compensation Agreement is listed in Section
4.11(c) of the Disclosure Schedule. With respect to each such Compensation
Agreement, the Company has provided the Parent a true and complete copy of (i)
all documents, including trust agreements and insurance and annuity contracts,
(ii) a written summary if the Compensation Agreement is unwritten and (iii) the
most recent written explanations provided to participants, beneficiaries and
parties thereto.
22
(d) With respect to each Company Plan and Compensation
Agreement, all payments due to or from any such Company Plan or Compensation
Agreement (or from the Company or any of its Subsidiaries with respect to any
such Company Plan or Compensation Agreement) have been made. All Company Plans
(other than a prototype plan) that are intended to be qualified or exempt under
Section 401(a) of the Code or exempt from Tax under Section 501(a) of the Code
have received a favorable determination letter from the IRS or a timely
application for such determination letter is now pending. Except as set forth in
Section 4.11(d) of the Disclosure Schedule, neither the Company nor any ERISA
Affiliate or any Subsidiary of the Company has any liability or obligation under
any welfare plan to provide benefits after termination of employment to any
Person other than as required by Part 6 of Title I of ERISA or any similar state
law (together, "COBRA") and the Company, any ERISA Affiliate and any Subsidiary
of the Company may at any time amend, modify or terminate such post-termination
coverage or benefits.
(e) There are no pending or, to the Company's Knowledge,
threatened, material claims, lawsuits, arbitrations or audits asserted or
instituted against, or related to, any Company Plan or Compensation Agreement,
any fiduciary (as defined by Section 3(21) of ERISA) of any Company Plan, the
Company or any of its Subsidiaries, or any employee or administrator thereof, in
connection with the existence, operation or administration of a Company Plan or
Compensation Arrangement, other than routine claims for benefits.
(f) Except as set forth on Section 4.11(f) of the Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions provided for herein will (either alone or in
conjunction with any other event) (i) cause or result in the accelerated
vesting, funding or delivery of, or increase the amount or value of, any
material payment or benefit to any employee, officer or director of the Company
or any of its Subsidiaries, (ii) cause or result in the funding of any Company
Plan or Compensation Arrangement or (iii) cause or result in a limitation on the
right of the Company or any of its Subsidiaries to amend, merge, terminate or
receive a reversion of assets from any Company Plan or related trust. Without
limiting the generality of the foregoing, no amount paid or payable by the
Company or any of its Subsidiaries in connection with the transactions provided
for herein (either solely as a result thereof or as a result of such
transactions in conjunction with any other event) will be an "excess parachute
payment" within the meaning of Section 280G of the Code.
(g) As used herein,
23
(i) "Company Plan" means a "pension plan" (as defined
in Section 3(2) of ERISA), a "welfare plan" (as defined in Section 3(1)
of ERISA), and any other written or oral bonus, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, restricted stock, stock
appreciation right, holiday pay, vacation, severance, medical, dental,
vision, disability, death benefit, sick leave, fringe benefit,
insurance or other plan, trust, policy, arrangement or understanding
(a) maintained by the Company, any ERISA Affiliate or any Subsidiary of
the Company, or (b) as to which the Company, any ERISA Affiliate or any
Subsidiary of the Company has contributed or may have any liability
(including any such arrangement sponsored or required by any government
or any statute or other law), in either case (a) or (b), for the
benefit of any prior or present employee, officer, director or
consultant of the Company, any ERISA Affiliate or any Subsidiary of the
Company (or spouse, dependent or other beneficiary of any such
individual);
(ii) "Compensation Agreement" means a written or oral
agreement, arrangement or understanding of any kind (including any
employment, consulting, compensation, deferred compensation,
termination or severance agreement, arrangement or understanding) with
or for the benefit of any prior or present employee, officer, director
or consultant of the Company, any ERISA Affiliate or any Subsidiary of
the Company as to which the Company, any ERISA Affiliate or any
Subsidiary of the Company is a party or may have any liability, except
for any Company Plan; and
(iii) "ERISA Affiliate" means any trade or business
(whether or not incorporated) that would be considered a single
employer with the Company or any of its Subsidiaries pursuant to
Section 414 (b), (c), (m) or (o) of the Code and the regulations
promulgated under those sections or pursuant to Section 4001(b) of
ERISA and the regulations promulgated thereunder, or with any trade or
business described in this clause (iii).
(h) Section 4.11(f) of the Disclosure Schedule contains a list
of all Company Plans and Compensation Agreements containing change of control or
similar provisions.
Section 4.12 LIABILITIES. Except as (i) fully reflected or reserved
against in the audited consolidated financial statements of the Company and its
Subsidiaries at June 29, 2003, including the notes thereto, contained in the
Annual Report on Form 10-K of the Company for the fiscal year ended June 29,
2003 (the "Company Form 10-K"), (ii) fully reflected or reserved against in the
unaudited consolidated financial statements of the Company and its Subsidiaries
at March 28, 2004, including the notes thereto, contained in the Quarterly
Report on Form 10-Q of the Company for the quarterly period ended March 28, 2004
or (iii) set forth on Section 4.12 of the Disclosure Schedule, the Company and
its Subsidiaries have no liabilities or obligations of any nature (whether
accrued, absolute, fixed, contingent or otherwise) other than liabilities or
obligations incurred in the ordinary course of business consistent with past
practice. There are no revenues, material liabilities or obligations of any
nature in the Dormant Subsidiaries.
24
Section 4.13 LABOR MATTERS; WORKER SAFETY LAWS.
(a) Except as set forth in Section 4.13(a) of the Disclosure
Schedule: (i) neither the Company nor any of its Subsidiaries is presently, nor
has any of them in the past 10 years been, a party to or bound by any collective
bargaining agreement, labor contract or similar agreement with any labor
organization or employee associations applicable to employees of the Company or
any of its Subsidiaries; (ii) neither the Company nor any of its Subsidiaries
has engaged in any unfair labor practice, and there is no unfair labor practice
complaint or grievance pending or, to the Knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect; (iii) in the past
three years, there has been no labor strike, dispute, slowdown, stoppage or
similar labor activity and no such action is pending or, to the Knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries;
(iv) to the Knowledge of the Company, there are no efforts in progress by labor
unions to organize any employees who are not now represented by recognized
collective bargaining agents; and (v) neither the Company nor any of its
Subsidiaries is delinquent in payments which have become due to any of its
employees for any wages, salaries, commissions, bonuses, benefits or other
compensation for any services performed by them to the date of this agreement or
documents required to be reimbursed to such employees.
(b) Except as set forth in Section 4.13(b) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to any
Contract with any current or former officer or director of the Company or any
Subsidiary, or any independent contractor relating to the employment or service
of any such Person that is likely to result in any material liability to or
obligation of the Company or any Subsidiary after the Effective Time. The
Company has delivered to Parent true and complete copies of all such Contracts
or detailed descriptions of individual Contracts (or, in the case of any
Contract that is not in writing, a description of the terms and conditions of
such Contract), and the Company and its Subsidiaries have been in compliance in
all material respects with the terms and conditions of all such Contracts.
(c) The properties, assets and operations of the Company and
its Subsidiaries are in compliance in all material respects with all applicable
federal, state, local and foreign laws, rules and regulations, orders, decrees,
judgments, permits and licenses relating to public and worker health and safety
(collectively, "Worker Safety Laws"). With respect to such properties, assets
and operations, there are no events, conditions, circumstances, activities,
practices, incidents, actions or plans of the Company or any of its Subsidiaries
that may interfere with or prevent compliance or continued compliance in all
material respects with applicable Worker Safety Laws.
(d) The Company and its Subsidiaries are in compliance in all
material respects with all applicable laws and orders applicable to such entity
or the employees or other persons providing services to or on behalf of such
entity, as the case may be, relating to the employment of labor, including all
such laws and orders relating to discrimination, civil rights, immigration,
safety and health, workers' compensation, wages, withholding, hours, employment
standards and classification, including the WARN Act, the California WARN Act
(California Labor Code Section 1400, et seq.), Title VII of the Civil Rights Act
of 1964, Age
25
Discrimination in Employment Act, Americans with Disabilities Act, Equal Pay
Act, Health Insurance Portability and Accessibility Act, ERISA and Family and
Medical Leave Act.
(e) Except as set forth in Section 4.13(e) of the Disclosure
Schedule, with respect to any employees of the Company and its Subsidiaries,
there are no pending or, to the Company's Knowledge, as of the date hereof,
threatened discrimination complaints relating to race, color, national origin,
sex, religion, age, marital status, or handicap against the Company and its
Subsidiaries.
(f) As of the date hereof, no management employee of the
Company or any Subsidiary has given notice to the Company or any of its
Subsidiaries and, to the Company's Knowledge, no such employee intends to
terminate his or her employment with the Company or any of its Subsidiaries.
Section 4.14 INTELLECTUAL PROPERTY
(a) As used herein, "Intellectual Property" shall mean,
collectively: (x) all U.S. and non-U.S. registered, unregistered and pending (i)
trade names, trade dress, trademarks, service marks, assumed names, business
names and logos, internet domain names and URLs and all registrations and
applications therefor, (ii) copyrights and all registrations and applications
therefor, (iii) utility and design patents, registered designs and invention
disclosures, and all grants, registrations and applications therefor; and (y)
all (i) trade secrets, inventions, processes, formulae, know-how, concepts,
ideas and research and development (collectively, "Trade Secrets"), (ii) web
sites and web pages and related items, and all intellectual property and
proprietary rights incorporated therein, and (iii) other intellectual property
and proprietary rights ("Other Intellectual Property"). "Material Intellectual
Property" shall mean any Intellectual Property which is material to the business
of the Company or any of its Subsidiaries.
(b) Section 4.14 of the Disclosure Schedule sets forth a
complete and accurate list of (i) all Material Intellectual Property in which
the Company or any of its Subsidiaries has an ownership interest (indicating the
owner thereof), including all applications, registrations and grants with
respect thereto (collectively, the "Owned Property"), provided that such list
need not identify Trade Secrets or non-material unregistered copyrights and need
not identify Other Intellectual Property or trade dress, (ii) all Material
Intellectual Property (other than the Owned Property) which is used in or
relates to the business of the Company (including the business of any
Subsidiary), indicating the owner or licensor thereof, and (iii) all licenses,
assignments, distribution or other agreements with respect to the Material
Intellectual Property referred to in clauses (i) and (ii) above. The
Intellectual Property included in clauses (i) and (ii) above is collectively
referred to herein as the "Company Property".
(c) Except as set forth in Section 4.14 of the Disclosure
Schedule, the Company or a Subsidiary is the sole and exclusive owner of each
item of the Owned Property, and is listed in the records of the appropriate U.S.
and/or non-U.S. governmental agencies as the sole and exclusive owner of record
for each registration, grant and application listed in Section 4.14 of the
Disclosure Schedule.
26
(d) To the Knowledge of the Company, no act has been done or
omitted to be done by the Company or any Subsidiary, or any licensee thereof,
which has had or could reasonably be expected to have the effect of impairing or
dedicating to the public, or entitling any U.S. or non-U.S. Governmental Entity
or any other Person to cancel, forfeit, modify or consider abandoned, any Owned
Property, or give any Person any rights with respect thereto (other than
pursuant to an IP Contract listed in Section 4.14 of the Company Disclosure
Schedule). All of the Company Property and all of the Company's or a
Subsidiary's rights in the Company Property which are material to the business
of the Company or the relevant Subsidiary are valid and enforceable. Neither the
Company nor any Subsidiary has any knowledge of any facts or claims which cause
or would cause any such Company Property to be invalid or unenforceable, and
neither the Company nor any Subsidiary has received any notice that any Person
may bring such a claim.
(e) Except as set forth in Section 4.14 of the Disclosure
Schedule, the Company and each of its Subsidiaries owns, free and clear of any
lien or encumbrance, or otherwise has the valid right to use through a Contract
listed in Section 4.14 of the Disclosure Schedule or otherwise as described in
Section 4.14 of the Disclosure Schedule, free and clear of any royalty or other
payment obligations (except for royalties payable in respect of off-the-shelf
computer software at standard commercial rates) and otherwise on commercially
reasonable terms, any and all Material Intellectual Property that is used in or
is necessary for the conduct of the business of the Company or any Subsidiary as
currently conducted.
(f) To the Knowledge of the Company, except as set forth in
Section 4.14 of the Disclosure Schedule none of the Company, any of its
Subsidiaries or the business of the Company or any Subsidiary as currently
conducted or as contemplated to be conducted, is in conflict with or in
violation or infringement of, or has violated or infringed, nor has the Company
or any of its Subsidiaries received any notice of any conflict with or violation
or infringement of, nor are proceedings or claims pending, nor have any such
proceedings or claims been instituted or asserted in writing against the Company
or any of its Subsidiaries, nor are any proceedings threatened, alleging any
violation, nor is there any valid basis for any such proceeding or claim, of any
rights or asserted rights of any other Person with respect to any Intellectual
Property of such other Person.
(g) Except as set forth in Section 4.14 of the Disclosure
Schedule, no proceedings or claims in which the Company or any of its
Subsidiaries alleges that any Person is infringing upon, or otherwise violating,
any Owned Property (or, to the Company's Knowledge, with respect to Company
Property which is not Owned Property) are pending, and none have been served by,
instituted or asserted by the Company or any such Subsidiary, nor are any
proceedings threatened alleging any such violation or infringement.
Section 4.15 TITLE TO ASSETS AND RELATED MATTERS
(a) The Company and its Subsidiaries possess good and
marketable title to all of the assets and properties (other than Real Property)
that it owns or uses and that are reflected on the Company's consolidated
balance sheet (or in the footnotes related thereto) as of June 29, 2003,
contained in the Company Form 10-K, or that were thereafter acquired (except for
assets
27
and properties sold, consumed or otherwise disposed of in the ordinary course of
business since such date), in each case, free and clear of any and all liens
(statutory or otherwise), encumbrances, charges, claims, restrictions, options
to purchase, sale contracts, pledges, security interests or impositions, except
for liens to secure indebtedness reflected on the Company's consolidated balance
sheet as of June 29, 2003, contained in the Company Form 10-K or in Section 4.15
of the Company Disclosure Schedule.
(b) The Company has insurable fee simple title to the Company
Owned Real Property free and clear of any and all mortgages, liens (statutory or
otherwise), encumbrances, charges, claims, restrictions, easements, rights of
way, covenants, options to purchase, sale contracts, pledges, security interests
or impositions, except for Permitted Encumbrances.
(c) Each of the Real Property Leases (i) constitutes the valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms and (ii) is, to the Knowledge of the Company,
enforceable against the other parties to each Company Real Property Lease in
accordance with its terms. The Company (i) has in all material respects
performed all the obligations required to be performed by it to the date hereof
under the Company Real Property Leases, is not in default thereunder and
possesses and quietly enjoys the Leased Real Property, and, to the Knowledge of
the Company, the Leased Real Property is not subject to any encumbrances, use or
occupancy restrictions, reservations or limitations, other than Permitted
Encumbrances and (ii) has no Knowledge of any material default or state of facts
which, with notice or lapse of time or both, would constitute a material default
on the part of the Company, or to the Knowledge of the Company any other party,
in the performance of any obligation to be performed or paid by any party under
the Company Real Property Leases.
(d) None of the improvements comprising the Real Property or
the businesses conducted by the Company or its Subsidiaries thereon, are, to the
Knowledge of the Company, in violation of any building line or use or occupancy
restriction, limitation, condition or covenant of record or any zoning or
building law, code or ordinance, public utility or other easements or other
applicable law, except for violations which would not reasonably be expected to
have a Material Adverse Effect on the Company. As of the date hereof, to the
Knowledge of the Company, no material expenditures are required to be made by
the Company or any of its Subsidiaries for the repair or maintenance of any
improvements on the Real Property other than routine repairs and maintenance in
the ordinary course of business. Neither the Company nor its Subsidiaries are in
default under any material agreement relating to the Real Property nor, to the
Knowledge of the Company, is any other party thereto in default thereunder.
(e) There are no condemnation proceedings pending against the
Company or, to the Knowledge of the Company, threatened with respect to any
portion of the Real Property.
(f) To the Knowledge of the Company, the buildings and other
facilities located on the Real Property are free of any material latent
structural or engineering defects or any material latent structural or
engineering defects.
28
Section 4.16 ENVIRONMENTAL MATTERS.
(a) The representations and warranties contained in this
Section 4.16 shall be the sole and exclusive representations and warranties of
the Company with respect to matters relating to Hazardous Substances,
Environmental Laws, and Environmental Permits. For purposes of this Agreement,
the following terms shall have the following meanings: (i) "Hazardous
Substances" means (A) petroleum and petroleum products, by-products or breakdown
products, radioactive materials, asbestos-containing materials and
polychlorinated biphenyls, and (B) any toxic or hazardous chemicals, materials,
substances, pollutants, contaminants, or wastes regulated by any applicable
Environmental Law; (ii) "Environmental Law" means any applicable United States
federal, state or local or foreign law, statute, ordinance, rule, regulation or
other requirement of any Governmental Entity in effect as of the date hereof,
including any applicable binding judicial or administrative order, decree or
judgment, relating to pollution or protection of the environment, health or
safety or natural resources, including those relating to the use, handling,
transportation, treatment, storage, generation, release, or threatened release
of Hazardous Substances; and (iii) "Environmental Permit" means any permit,
approval, identification number, license or other authorization required under
any applicable Environmental Law.
(b) Except as set forth in Schedule 4.16 of the Disclosure
Schedule or as would not reasonably be expected to have a Material Adverse
Effect, (i) each of the Company and its Subsidiaries holds all Environmental
Permits necessary for the Company or any of its Subsidiaries to own, lease and
operate its properties or to carry on its business as it is now being conducted,
(ii) no suspension or cancellation of any material Environmental Permits is
pending or, to the Knowledge of the Company, threatened, and (iii) the Company
and its Subsidiaries are in compliance in all material respects with applicable
Environmental Laws and applicable Environmental Permits.
(c) Except as set forth in Section 4.16 of the Disclosure
Schedule, to the Knowledge of the Company, neither the Company nor any of its
Subsidiaries has stored, used, released, transported, or disposed of any
Hazardous Substances on, under, from or at any location currently or formerly
owned, leased, occupied or operated by the Company or any of its Subsidiaries or
any other location in material violation of applicable Environmental Laws,
except as would not reasonably be expected to have a Material Adverse Effect on
the Company.
(d) Except as disclosed in Section 4.16 of the Disclosure
Schedule, there are no suits, actions, claims, proceedings or investigations by
any Governmental Entity or any other Person pending, or to the Knowledge of the
Company, threatened against the Company relating to alleged releases or disposal
by the Company of Hazardous Substances, or alleged noncompliance by the Company
with applicable Environmental Laws or Environmental Permits.
(e) Except as disclosed in Section 4.16 of the Disclosure
Schedule, to the current actual knowledge of the Company, there are no Hazardous
Substances present in, on, under, or emanating from any real property currently
or formerly occupied, leased, or owned by the Company or any of its
Subsidiaries, that would require the Company to perform or fund the performance
by a third party of any reporting, investigation, and/or response activities,
except as would not reasonably be expected to have a Material Adverse Effect.
For the purposes of this Section 4.16(e) and Section 4.16(f), "current actual
knowledge of the Company" shall mean the current, actual knowledge, without
obligation to conduct any inquiry or investigation, and
29
without imputing knowledge of any information (including without limitation
information that may be available in public or private records), of the
following individuals: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇., W. ▇▇▇▇▇ ▇▇▇▇▇, E. ▇▇▇▇▇ ▇▇▇, ▇▇., and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
(f) Except as disclosed in Section 4.16 of the Disclosure
Schedule, to the current actual knowledge of the Company, the Company has not
received any written notices from any Governmental Entity or potentially
responsible party ("PRP") under the federal Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA"), or any state analogues
thereof, designating it as a PRP for the remediation of any facility (as that
term is defined in CERCLA).
(g) The Company and its Subsidiaries have provided or made
available to Parent copies of personnel and environmental assessments, audit
reports, or other similar studies or analyses currently in the possession of the
Company or any of its Subsidiaries relating to any real property currently or
formerly owned, leased or occupied by the Company or any of its Subsidiaries.
Section 4.17 STATE TAKEOVER STATUTES. The Board of Directors of the
Company has approved the Offer, the Merger, this Agreement and the transactions
contemplated by the Stockholder Agreements, and such approval is sufficient to
render inapplicable to the Offer, the Merger, this Agreement, the Stockholder
Agreements and the transactions contemplated hereby and thereby the limitations
on business combinations contained in including Section 203 of the DGCL or any
applicable anti-takeover provision in the Company's Certificate of Incorporation
or By-laws. To the Company's knowledge, no other "control share acquisition,"
"fair price" or other anti-takeover laws or regulations enacted under state or
federal laws in the United States apply to this Agreement, the Stockholder
Agreements or any of the transactions contemplated hereby and thereby. The
Company does not have a "shareholders rights plan" or other arrangement of
similar effect.
Section 4.18 REQUIRED VOTE OF COMPANY STOCKHOLDERS. The affirmative
vote of the holders of a majority of Shares entitled to vote is required to
approve this Agreement and the transactions contemplated hereby; provided,
however, that no such vote shall be required if the Merger is subject to Section
253 of the DGCL. No other vote of the holders of any class or series of the
Company's capital stock is required by law, the Certificate of Incorporation or
the By-laws of the Company or otherwise in order for the Company to approve this
Agreement and the transactions contemplated hereby, including the Merger. The
Company's Board of Directors has duly adopted resolutions approving the
recommendations contemplated by Section 1.2(a) above.
Section 4.19 BROKERS. Except as set forth in Section 4.19 of the
Disclosure Schedule, no broker, investment banker, financial advisor or other
Person, other than the Company Financial Advisor, the fees and expenses of which
will be paid by the Company, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or any of its Subsidiaries. The Company has heretofore furnished to
Parent true
30
and complete copies of all agreements and other arrangements between the Company
and the Company Financial Advisor.
Section 4.20 INSURANCE. Section 4.20 of the Disclosure Schedule sets
forth a true and complete list of all domestic insurance policies carried by or
covering the Company and its Subsidiaries with respect to their businesses,
assets and properties, together with, in respect of each such policy, the name
of the insurer, the policy number, the type of policy, the amount of coverage
and the deductible. All such policies are in full force and effect, and no
notice of cancellation has been received by the Company or its Subsidiaries with
respect to any such policy. All premiums due on such policies have been paid in
a timely manner, and the Company and its Subsidiaries have complied in all
material respects with the terms and provisions of such policies. The insurance
coverage provided by such policies is adequate and customary for the industry in
which the Company and its Subsidiaries operate.
Section 4.21 WARRANTIES AND PRODUCT LIABILITY. The Company has made
available to Parent copies of all material agreements containing outbound
warranties with respect to the Company's products and services. Except as set
forth in Section 4.21 of the Disclosure Schedule, there are no material claims
or proceedings pending or, to the Knowledge of the Company, threatened against
the Company or any of its Subsidiaries with respect to the quality of or absence
of defects in such products or services nor are there any facts known to the
Company relating to the quality of or absence of defects in such products or
services which, if known by a potential claimant or Governmental Entity, would
be reasonably likely to give rise to a material claim or proceeding.
Section 4.22 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of the Company Financial Advisor, dated as of the date hereof, to the
effect that, as of such date, the Offer Price to be received for each Share by
the holders of Shares pursuant to the Offer and the Merger is fair, from a
financial point of view, to such holders (other than the Parent and its
affiliates).
Section 4.23 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company
nor any of its Subsidiaries, nor any director, officer, employee or agent of the
Company or any Subsidiary, nor any other Person acting on its behalf, directly
or indirectly, has, to the Company's knowledge, (i) used any funds for unlawful
contributions or unlawful expenses relating to political activity or (ii) made
any unlawful payment to foreign or domestic government officials or employees or
to foreign or domestic political parties or companies or violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended.
31
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.
(a) Except as otherwise permitted by this Agreement, during
the period from the date of this Agreement through the Effective Time, the
Company shall, and shall cause each of its Subsidiaries to:
(i) carry on its business in the ordinary course of
its business consistent with past practice and take no action which
would reasonably be expected to adversely affect its ability to
consummate the transactions contemplated by this Agreement;
(ii) use commercially reasonable efforts to preserve
intact its current business organizations and goodwill, keep available
the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business
dealings with it; and
(iii) comply in all material respects with all laws
and regulations applicable to it or any of its properties, assets or
business.
(b) Without limiting the generality of the foregoing, between
the date of this Agreement and the Effective Time, the Company shall not, and
shall not permit any of its Subsidiaries to, without the prior written consent
of Parent:
(i) (A) other than the Special Dividend and any
dividends paid by wholly-owned Subsidiaries, declare, set aside or pay
any dividends on, or make any other actual, constructive or deemed
distributions in respect of, any of its capital stock, or otherwise
make any payments to its stockholders in their capacity as such, (B)
other than in the case of any Subsidiary, split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for
shares of its capital stock or (C) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any other
securities thereof or any rights, warrants or options to acquire any
such shares or other securities;
(ii) issue, reissue, deliver, sell, pledge, grant,
dispose of or otherwise encumber any shares of its capital stock, any
other voting securities or equity equivalent or any securities
convertible into, or any rights, warrants or options (including options
under the Stock Plans) to acquire any such shares, voting securities,
equity equivalent or convertible securities or any other ownership
interest (including stock appreciation rights, phantom stock and
stock-based performance units), except in the ordinary course of
business consistent with past practice;
32
(iii) amend its Organizational Documents;
(iv) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the
assets of or any equity interest in, or by any other manner, any
business or any corporation, limited liability company, partnership,
association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets;
(v) sell, lease, pledge or otherwise dispose of or
encumber, or agree to sell, lease, pledge or otherwise dispose of or
encumber, any of its assets with a fair market value in excess of
$100,000 individually or $500,000 in the aggregate, other than sales of
inventory that are in the ordinary course of business consistent with
past practice;
(vi) incur any indebtedness for borrowed money,
guarantee any such indebtedness or make any loans, advances or capital
contributions to, or other capital contributions or investments in, any
other Person, other than (A) in the ordinary course of business
consistent with past practices or (B) indebtedness, loans, advances,
capital contributions and investments between the Company and any of
its wholly-owned Subsidiaries or between any of such wholly-owned
Subsidiaries, in each case in the ordinary course of business
consistent with past practices;
(vii) alter (through merger, liquidation,
reorganization, restructuring or in any other fashion) the corporate
structure or ownership of the Company or any of its Subsidiaries or
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its Subsidiaries (other than the Merger);
(viii) reclassify, combine, split, subdivide or
redeem, purchase or otherwise acquire, directly or indirectly, any
shares of capital stock of the Company or any of its Subsidiaries or
any securities convertible into or exercisable for any such shares of
its capital stock or securities, other than pursuant to Options
outstanding as of the date hereof in accordance with their respective
terms;
(ix) make any change to accounting methods, policies
or procedures used by it as of the date hereof (other than actions
required to be taken by GAAP);
(x) except as set forth in Section 5.1(b)(x) of the
Disclosure Schedule, enter into, amend or terminate any agreement or
contract (A) having a term in excess of 12 months and that is not
terminable by the Company or a Subsidiary without penalty or premium by
notice of 60 days or less or (B) outside the ordinary course of
business consistent with past practice, which involves or is expected
to involve payments of $100,000 individually or $500,000 in the
aggregate or more during the term thereof (provided that in the case of
agreements or contracts with any customer, the margins anticipated from
any such agreement or contract shall be consistent in all material
33
respects with historical margins); enter into, amend or terminate any
other agreement or contract material to the Company and its
Subsidiaries, taken as a whole; or purchase any real property, or make
or agree to make any new capital expenditure or expenditures (other
than the purchase of real property or capital expenditures set forth on
Section 5.1(b)(x) of the Disclosure Schedule) that are in excess of
$100,000 individually or $500,000 in the aggregate and not modify or
amend, or terminate a waiver or release or assign any material rights
or claims with respect to, any material agreement or arrangement to
which it is a party;
(xi) Except as set forth on Section 5.1(b)(xi) of the
Disclosure Schedule (A) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction of any such claims, liabilities or obligations in the
ordinary course of business consistent with past practice or in
accordance with their terms, (B) cancel any material indebtedness
(individually or in the aggregate) or waive any claims or rights of
substantial value or (C) waive the benefits of, or agree to modify in
any manner, any confidentiality, standstill or similar agreement to
which it is a party;
(xii) promptly deliver to Parent true and correct
copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Agreement;
(xiii) not modify, extend the term or forgive or
cancel any outstanding loans owed to the Company or any of its
Subsidiaries by any current or former directors, officers, employees,
consultants or independent contractors of such entities;
(xiv) except as set forth in Section 5.(b)(xiv) of
the Disclosure Schedule, not make any loans, advances or capital
contributions to, or investments in any other Person;
(xv) not alter, amend or revoke any tax election or
method of accounting with respect to taxes or settle or compromise any
material tax claim;
(xvi) maintain insurance on its tangible assets and
its business in such amounts and against such risks and losses as are
currently in effect;
(xvii) except as required in accordance with GAAP,
not revalue any of its assets, including, without limitation, writing
down the value of its inventory or writing off notes or accounts
receivables other than in the ordinary course of business consistent
with past practice;
(xviii) pursuant to or within the meaning of any
bankruptcy law, not (A) commence a voluntary case, (B) consent to the
entry of an order for relief against it in an involuntary case, (C)
consent to the appointment of a custodian of it or for all or
34
substantially all of its property or (D) make a general assignment for
the benefit of its creditors;
(xix) other than in the ordinary course of business,
not amend, modify, assign, terminate, reject, cancel or fail to
exercise a right of renewal or extension, with respect to any material
Contract relating to Intellectual Property;
(xx) not settle any legal proceedings, whether now
pending or hereafter made or brought, except to the extent of any
accruals therefor in the Company's Financial Statements;
(xxi) except as set forth on Section 5.1(b)(xxi) of
the Disclosure Schedule, not apply any of its assets or properties to
the direct or indirect payment, discharge, satisfaction or reduction of
any amount payable directly or indirectly, to or for the benefit of any
Related Party or enter into any transaction with a Related Party
(except for payment of salary and other customary expense
reimbursements made in the ordinary course of business to Related
Parties who are employees, directors or officers of the Company and its
Subsidiaries. "Related Party" means any affiliate, associate,
shareholder, officer, director, employee or agent of the Company or any
Subsidiary or any member of his or her family by blood or marriage;
(xxii) except as set forth on Section 5.1(b)(xxii) of
the Disclosure Schedule, not (A) increase any compensation or enter
into or amend any employment, severance, retention or similar
compensation agreement or arrangements with any of its present or
future officers, directors or employees, (B) grant any severance or
termination package to any director, officer, employee or consultant
other than rights set forth on the Disclosure Schedule, (C) hire any
new employee who shall have, or terminate the employment of any current
employee who has, an annual salary in excess of $70,000, (D) adopt any
new employee benefit plan (including any stock option, stock benefit or
stock purchase plan) or amend, except as required by applicable law (in
which case the Company should provide prompt written notice to Parent
following such adoption), any existing benefit plan in any material
respect, except for changes which are not more favorable to
participants in such plans; and (E) grant any stock option or other
equity or incentive awards to any director, officer, employee,
consultant or other service provider and (F) other than in the ordinary
course of business, enter into any transaction with any director or
executive officer of the Company or any of its Subsidiaries or any
immediate family member of any such director or executive except in the
ordinary course of business, hire any additional consultants or
independent contractors or enter into or extend the term of any
consulting or independent contractor relationship;
(xxiii) authorize, recommend, propose or announce an
intention to do, or enter into any contract, agreement, commitment or
arrangement to do, any of the foregoing; or
35
(xxiv) take any action that would cause any
representation or warranty in this Agreement to become untrue or
incorrect or any action that would result in any of the conditions set
forth in Exhibit A not being satisfied.
Section 5.2 NO SOLICITATION.
(a) The Company shall not, nor shall it permit any of its
affiliates to, nor shall it authorize or permit any officer, director or
employee of or any financial advisor, attorney or other advisor, consultant,
agent or representative of (collectively, the "Representatives"), the Company or
any of its affiliates to, directly or indirectly (A) solicit, initiate,
encourage or facilitate the making of, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes or may reasonably
be expected to lead to, any Takeover Proposal (including by taking any action
that would make Section 203 of the DGCL inapplicable to any Takeover Proposal),
(B) participate in any way in discussions or negotiations regarding, or furnish
or disclose to any Person any information with respect to the Company or any of
its Subsidiaries in connection with, or take any other action to cooperate in
any way with respect to, any Takeover Proposal, (C) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent or Sub the approval
and recommendation of the Offer, the Merger or this Agreement, (D) approve or
recommend, or propose to approve or recommend, any Takeover Proposal or (E)
enter into any agreement, letter of intent or similar document contemplating or
otherwise relating to any Takeover Proposal; provided, however, that nothing
contained in this Section 5.2(a) shall prohibit the Company or its directors
from:
36
(i) participating in discussions or negotiations
with, or furnishing or disclosing nonpublic information to (subject to
Section 5.2(b) below), any Person in response to an unsolicited, bona
fide and written Takeover Proposal that is submitted to the Company by
such Person after the date of this Agreement and prior to the
Acceptance Date if (A) none of the Company, any of its affiliates or
any of the Representatives shall have violated any of the provisions of
this Section 5.2, (B) a majority of the members of the Board of
Directors of the Company determines in good faith, after having
consulted with the Company Financial Advisor or other independent
nationally recognized financial advisor (x) that such Person is
reasonably capable of consummating such Takeover Proposal taking into
account the legal, financial, regulatory and other aspects of such
Takeover Proposal and (y) that such Takeover Proposal is reasonably
likely to lead to a Superior Proposal, (C) a majority of the members of
the Board of Directors of the Company determines in good faith, after
having taken into account the advice of its outside legal counsel, that
failing to take such action is reasonably likely to constitute a breach
of its fiduciary duties to the Company's stockholders under applicable
law, as such duties would exist in the absence of this Section 5.2, (D)
at least two business days prior to furnishing or disclosing any
nonpublic information to such Person, the Company furnishes such
information to Parent (to the extent such information has not been
previously delivered or made available by the Company to Parent), and
(E) all action of the Board of Directors of the Company is taken in
accordance with the DGCL and applicable
Delaware law; or
(ii) approving or recommending, or entering into (and
in connection therewith, withdrawing or modifying the approval and
recommendation of the Offer, the Merger and this Agreement), a
definitive agreement with respect to an unsolicited, bona fide and
written Takeover Proposal that is submitted to the Company after the
date of this Agreement and prior to the Acceptance Date if (A) none of
the Company, any of its affiliates or any of the Representatives have
violated any of the provisions of this Section 5.2, (B) the Company
provides Parent with written notice at least four business days prior
to any meeting of the Board of Directors of the Company at which such
Board of Directors will consider whether such Takeover Proposal
constitutes a Superior Proposal, during which four-business day period
the Company shall cause the Company Financial Advisor (or another
independent nationally recognized financial advisor) and its legal
advisors to negotiate in good faith with Parent and its advisors in an
effort to make such adjustments in the terms and conditions of this
Agreement as would enable the Company to proceed with the transactions
contemplated herein on such adjusted terms, (C) notwithstanding having
complied with its obligations pursuant to clause (B) above, the Board
of Directors of the Company after having consulted with the Company
Financial Advisor or other independent nationally recognized financial
advisor, makes the determination that such Takeover Proposal
constitutes a Superior Proposal, (D) a majority of the members of the
Board of Directors of the Company determines in good faith, after
having taken into account the advice of its outside legal counsel, that
failing to take such action is reasonably likely to constitute a breach
of its fiduciary duties to the Company's stockholders under applicable
law, (E) all action of the Board of Directors of the Company is taken
in accordance with the DGCL and applicable
Delaware law, (F) the
Company does not approve or recommend or enter into a definitive
37
agreement with respect to such Takeover Proposal at any time before the
day that is the fourth business day after Parent receives written
notice from the Company stating that the Board of Directors of the
Company has determined such Takeover Proposal constitutes a Superior
Proposal and fulfills its obligations under (B) above and (G)
simultaneously with the earlier of the (1) withdrawal or modification
in any manner adverse to Parent or Sub of the approval and
recommendation of the Offer, the Merger or this Agreement or (2) the
approval or recommendation of, or execution of a definitive agreement
with respect to, any such Superior Proposal, the Company makes the
payments to the Parent required to be made pursuant to Section 8.2(b);
or
(iii) complying with Rule 14e-2 promulgated under the
Exchange Act with regard to a tender offer or exchange offer in
accordance with the foregoing; or
(iv) upon an unsolicited request, referring a third
party to this Section 5.2(a) or making a copy of this Section 5.2(a)
available to any third party.
(b) In addition to the obligations of the Company set forth in
Section 5.2(a), on the date of receipt thereof, the Company shall advise Parent
of any request for information or of any Takeover Proposal, or any inquiry,
proposal, discussions or negotiation with respect to any Takeover Proposal, the
terms and conditions of such request, Takeover Proposal, inquiry, proposal,
discussion or negotiation, and the Company shall promptly provide to Parent
copies of any written materials received by the Company in connection with any
of the foregoing and the identity of the Person making any such Takeover
Proposal or such request, inquiry or proposal or with whom any discussions or
negotiations are taking place. Prior to furnishing nonpublic information to, or
entering into discussions or negotiations with, any other Person, the Company
shall enter into a customary confidentiality agreement with such Person (if the
Company has not already entered into a customary confidentiality agreement with
such Person), it being understood that such confidentiality agreement (i) shall
not include any provision calling for any exclusive right to negotiate with such
party or having the effect of prohibiting the Company from satisfying its
obligations hereunder and (ii) shall be no less favorable to the Company than
the Company's confidentiality agreement with the Parent, dated May 4, 2004. The
Company shall keep Parent informed of the status and general progress (including
amendments or proposed amendments) of any such request or Takeover Proposal and
keep Parent informed as to the details of any information requested of or
provided by the Company and as to the details of all discussions or
negotiations. The Company shall promptly provide to Parent any nonpublic
information the Company provided to any other Person in connection with any
Takeover Proposal that was not previously provided to Parent, such information
to be provided no later than the date of provision of such information to such
other party.
(c) Nothing contained in this Section 5.2 shall prohibit Sub
from purchasing the Shares pursuant to the Offer or consummating the Merger.
38
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 STOCKHOLDER MEETING.
(a) The Company will duly call, give notice of, convene and
hold a meeting of stockholders (the "Stockholder Meeting") for the purpose of
considering the approval of this Agreement and at such meeting call for a vote
and cause proxies to be voted in respect of the approval and adoption of this
Agreement (if such meeting is required). The Stockholder Meeting shall be held
as soon as practicable following the purchase of Shares pursuant to the Offer,
and, subject to Section 5.2(a)(iii) above the Company will, through its Board of
Directors, recommend to its stockholders the approval of this Agreement, not
withdraw or modify such recommendation, use its reasonable best efforts to
solicit from stockholders of the Company proxies in favor of the Merger and take
all other action necessary or, in the reasonable opinion of Parent, advisable to
secure any vote of stockholders required by the DGCL. The record date for the
Stockholder Meeting shall be a date subsequent to the date on which Parent or
Sub becomes a record holder of Company Common Stock purchased pursuant to the
Offer.
(b) The Company shall, at Parent's request, as soon as
practicable following the consummation of the Offer if the Stockholder Meeting
is required and if required by the Exchange Act, prepare and file a preliminary
Proxy Statement with the SEC and shall use its reasonable best efforts to
respond to any comments of the SEC or its staff and to cause the Proxy Statement
to be mailed to the Company's stockholders as promptly as practicable after
responding to all such comments to the satisfaction of the staff. Prior to such
filing, the Company shall afford Parent and its counsel a reasonable opportunity
to review and comment on the proposed form of the Company Proxy Statement, and
neither the Company Proxy Statement, nor any amendment or supplement to the
Company Proxy Statement, will be made by the Company without the approval of
Parent, which approval shall not be unreasonably withheld. The Company shall
notify Parent promptly of the receipt of any comments from the SEC or its staff
and of any request by the SEC or its staff for amendments or supplements to the
Proxy Statement or for additional information and will supply Parent with copies
of all correspondence between the Company or any of its representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. If, at any time prior to the Stockholder Meeting, there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, then upon learning of such event shall promptly inform the
Parent and, subject to the following sentence, the Company shall promptly
prepare and mail to its stockholders such an amendment or supplement. Parent and
the Company shall cooperate in the preparation of the Proxy Statement or any
amendment or supplement thereto, including the supply of any information
required to be included in the Proxy Statement regarding Parent or Sub.
(c) Parent agrees to cause all Shares purchased pursuant to
the Offer and all other Shares owned by Parent or any subsidiary of Parent to be
voted in favor or approval of the Merger.
39
(d) Notwithstanding the foregoing, if Sub, or any other direct
or indirect Subsidiary of Parent, shall acquire at least 90 percent of the
outstanding Shares and, provided that the conditions set forth in Article VII
shall have been satisfied or waived, the Company shall, at the request of
Parent, take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
Section 6.2 ACCESS TO INFORMATION. The Company shall, and shall cause
each of its Subsidiaries to, afford to the accountants, counsel, financial
advisors and other representatives of Parent reasonable access to, during normal
business hours, and permit them to make such inspections as they may reasonably
require of, during the period from the date of this Agreement through the
Effective Time, all of their respective properties, books, contracts,
commitments and records (including accounting records and Tax Returns and the
work papers of independent accountants, if available and subject to the consent
of such independent accountants), and during such period, the Company shall, and
shall cause each of its Subsidiaries to, (a) furnish promptly to Parent a copy
of each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of federal or state securities
laws, (b) furnish promptly to Parent all other information concerning its
business, properties and personnel as Parent may reasonably request and (c)
promptly make available to Parent, appropriate personnel of the Company and its
Subsidiaries and the Representatives in connection with such inspections. All
information obtained by Parent pursuant to this Section 6.2 shall be kept
confidential in accordance with the Confidentiality Agreement, dated May 4,
2004, between Parent and the Company.
Section 6.3 DIRECTORS. Promptly upon acceptance for payment and payment
for any Shares by Sub pursuant to the Offer, Parent shall be entitled, to the
fullest extent permitted by law, to designate at its option up to that number of
directors, rounded to the nearest whole number, of the Board of Directors of the
Company, subject to compliance with Section 14(f) of the Exchange Act and Rule
4350 of the NASD Manual, as will give Parent representation on the Board of
Directors of the Company equal to the product of the total number of directors
on the Board of Directors of the Company (giving effect to the directors
appointed or elected pursuant to this sentence) multiplied by the percentage
that the aggregate number of Shares beneficially owned by Parent or any
affiliate of Parent (including for purposes of this Section 6.3 such Shares as
are accepted for payment and paid for pursuant to the Offer) bears to the number
of Shares then outstanding. In furtherance thereof, concurrently with such
acceptance for payment and payment for such Shares, the Company shall promptly
take all actions necessary to cause Parent's designees to be elected or
appointed to the Board of Directors of the Company in accordance with the terms
of this Section 6.3, including increasing the size of the Board of Directors of
the Company and/or securing the resignations of such number of directors as is
necessary to enable Parent's designees to be elected to the Board of Directors
of the Company in accordance with the terms of this Section 6.3. At such time,
the Company shall also cause, if requested by Parent, (a) each committee of the
Board of Directors of the Company, (b) the board of directors of each of the
Subsidiaries and (c) each committee of such Subsidiaries' board, to include
persons designated by Parent constituting up to the same percentage (rounded up
to the next whole number) of each such committee or board as Parent's designees
constitute on the Board of Directors of the Company. Notwithstanding the
foregoing, in the event that Parent's
40
designees are appointed or elected to the Board of Directors of the Company,
such Board of Directors shall have until the Effective Time at least three
directors who are directors on the date hereof and who are neither officers of
the Company nor designees, affiliates or associates (within the meaning of the
federal securities laws) of Parent (three or more of such directors, the
"Independent Directors"); provided, however, that in such event, if the number
of Independent Directors shall be reduced below three for any reason whatsoever,
the remaining Independent Director(s) shall designate a person or persons to
fill such vacancy or vacancies, each of whom shall be determined to be and
Independent Director for purposes of this Agreement; provided, further, that if
no Independent Directors remain, the other directors shall designate three
persons to fill the vacancies who shall be neither an officer, designee,
Affiliate or associate (as defined in Rule 12b-2 under the Exchange Act) of the
Company nor an officer, designee, Affiliate or associate of Parent, and such
persons shall be deemed to be Independent Directors for purposes of this
Agreement. Subject to applicable law, the Company shall promptly take all action
necessary to effect any such election or appointment, including mailing to its
stockholders the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing
with the mailing of the Schedule 14D-9 (provided that Sub shall have provided to
the Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). Parent will supply the
Company any information with respect to itself and its nominees, officers,
directors and affiliates required by Section 14(f) and Rule 14f-1.
Notwithstanding anything in this Agreement to the contrary, following the time
directors designated by Parent constitute a majority of the Board of Directors
of the Company and prior to the Effective Time, the affirmative vote of a
majority of the Independent Directors shall be required to (i) amend or
terminate this Agreement on behalf of the Company, (ii) exercise or waive any of
the Company's rights or remedies hereunder or (iii) to the extent a decision of
the Company, extend the time for performance of Parent's or Sub's obligations
hereunder, and such affirmative majority vote shall be sufficient to take any
such action.
Section 6.4 FEES AND EXPENSES. Except as provided in Section 8.2(b),
whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby,
including the fees and disbursements of counsel, financial advisors and
accountants, shall be paid by the party incurring such costs and expenses.
Without limiting the generality of the foregoing, all costs and expenses of the
Company incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Company. An estimate of the Company's
fees and expenses related to the Offer and Merger as of the date hereof is
disclosed in Section 4.12 of the Disclosure Schedule.
Section 6.5 REASONABLE BEST EFFORTS; COOPERATION.
(a) Upon the terms and subject to the conditions hereof, each
of the parties hereto shall use reasonable best efforts to obtain in a timely
manner all necessary waivers, consents and approvals and to effect all necessary
registrations and filings, and to use all reasonable best efforts to take, or
cause to be taken, all other actions and to do, or cause to be done, all other
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including, (a)
41
cooperating in responding to inquiries from, and making presentations to,
regulatory authorities and customers, (b) defending against and responding to
any action, suit, proceeding, or investigation, whether judicial or
administrative, challenging or relating to this Agreement or the transactions
contemplated hereby, including seeking to have any stay or temporary restraining
order entered, by any court or other Governmental Entity vacated or reversed,
(c) cooperating in the preparation and filing of the Offer Documents, the
Schedule TO, the Schedule 14D-9 and the Company Proxy Statement and (d) promptly
making all regulatory filings and applications and any amendments thereto as are
necessary for the consummation of the transactions contemplated by this
Agreement, including, without limitation those required by the HSR Act. No party
to this Agreement shall consent to any voluntary delay in the consummation of
the Offer or the Merger at the behest of any Governmental Entity without the
prior written consent of the other parties to this Agreement, which consent
shall not be unreasonably withheld or delayed.
(b) Each party hereto shall use commercially reasonable
efforts to not take any action, or enter into any transaction, that would cause
any of its representations or warranties contained in this Agreement to be
untrue or result in a breach of any covenant made by it in this Agreement.
Section 6.6 PUBLIC ANNOUNCEMENTS. Parent, Sub and the Company will not
issue any press release with respect to the transactions contemplated by this
Agreement or otherwise issue any written public statements with respect to such
transactions without the prior written approval of the other parties (which
approval shall not to be unreasonably withheld or delayed), except as may be
required by applicable law or by obligations pursuant to any listing agreement
with any national securities exchange on which such party's securities are
listed, and in such case shall use all reasonable efforts to consult with and
obtain the approval of the other party prior to such release or announcement
being issued.
Section 6.7 STATE TAKEOVER STATUTES. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation shall become applicable to the transactions contemplated hereby or by
the Stockholder Agreements, then the parties hereto shall promptly grant such
approvals as may be reasonably necessary and take such actions as are necessary
to render such statute or regulation inapplicable to all of the foregoing.
Section 6.8 INDEMNIFICATION. From and after the Effective Time, Parent
shall cause the Surviving Corporation, to the extent permitted by applicable
law, to indemnify and hold harmless all past and present officers and directors
of the Company and of its Subsidiaries to the same extent and in the same manner
such Persons are indemnified as of the date of this Agreement by the Company
pursuant to the DGCL and/or the Organizational Documents of the Company and its
Subsidiaries for acts or omissions occurring at or prior to the Effective Time
and shall advance, to the fullest extent permitted by Delaware law, reasonable
litigation expenses incurred by such officers and directors in connection with
defending any action arising out of such acts or omissions. In addition to the
foregoing, Parent or the Surviving Corporation shall maintain in effect for not
less than six (6) years after the Effective Time the policies of directors' and
officers' liability insurance maintained by the Company on the date of this
Agreement or
42
policies having comparable coverage, terms and conditions provided, however,
that Parent shall not be required to pay a per annum premium in excess of 200%
of the per annum premium that the Company currently pays for its existing policy
of directors' and officers' liability insurance (it being understood that, if
the premium required to be paid by Parent for such policy would exceed such 200%
amount, then the coverage of such policy shall be reduced to the maximum amount
that may be obtained for a per annum premium of such 200% amount).
Section 6.9 NOTIFICATION OF CERTAIN MATTERS. The Parent and the Company
shall give prompt written notice to the other party of (a) any occurrence, or
non-occurrence, of any event the occurrence, or non occurrence, of which would
be likely to cause (i) any representation or warranty contained in this
Agreement and made by it to be untrue or inaccurate in any material respect,
(ii) any condition set forth in Exhibit A to be unsatisfied at any time from the
date hereof to the date Parent or Sub purchases Shares pursuant to the Offer,
(iii) any covenant, condition or agreement contained in this Agreement and made
by it not to be complied with or satisfied in all material respects, (b) any
failure of the Parent or the Company, as the case may be, to comply in a timely
manner with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder and (c) any change or event that would be
reasonably likely to have a Material Adverse Effect on the Company; provided,
however, that the delivery of any notice pursuant to this Section 6.9 shall not
limit or otherwise affect the remedies available to the party receiving such
notice. The Company shall give prompt notice to Parent of any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement.
Section 6.10 EMPLOYEE MATTERS.
(a) The Company will, and will cause its Subsidiaries to, and
from and after the Effective Time the Surviving Corporation will, honor, in
accordance with their respective terms the employment and severance agreements
between the Company or any of its Subsidiaries and any officer, director or
employee of the Company or any of its Subsidiaries specified in Section 6.10 of
the Disclosure Schedule.
(b) From and after the date hereof, all communications with
employees and directors relating to the Company Plans, including the Stock
Plans, shall be subject to Parent's comment and approval prior to distribution,
which shall not be unreasonably withheld or delayed, and the Company shall
cooperate with and assist Parent in providing necessary or desirable
communications to the employees and directors of the Company regarding the
transactions contemplated hereby.
(c) For a period of 24 months following the Effective Time,
Parent shall or shall cause the Surviving Corporation to either continue the
existing Company Plans or provide benefits to employees of the Company and its
subsidiaries under substitute plans or arrangements that are no less favorable,
in the aggregate, to such employees than those provided under the current
Company Plans; provided, however, that neither Parent, Sub nor the Surviving
Corporation shall have any obligation to continue any current equity
compensation plan or current incentive compensation plan after the Effective
Time.
43
(d) With respect to any Parent Benefit Plan in which the
Company's or its subsidiaries' employees participate effective as of the Closing
Date, Parent shall, or shall cause the Surviving Corporation to: (A) waive all
limitations as to pre-existing conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the employees
under any Parent Benefit Plan in which such employees may be eligible to
participate after the Effective Time, (B) provide each employee with credit for
any co-payments and deductibles paid prior to the Effective Time in satisfying
any applicable deductible or out-of-pocket requirements under any Parent Benefit
Plan in which such employees may be eligible to participate after the Effective
Time, and (C) recognize all service of the employees with the Company or any
subsidiary for all purposes (excluding for benefit accrual) in any Parent
Benefit Plan in which such employees may be eligible to participate after the
Effective Time, to the same extent taken into account under a comparable Company
Plan immediately prior to the Closing Date; provided, however, that such service
shall not be recognized to the extent that such recognition would result in a
duplication of benefits.
Section 6.11 REGULATORY APPROVALS. Each party shall use all reasonable
efforts to file, as soon as practicable after the date of this Agreement, all
notices, reports and other documents required to be filed by such party with any
Governmental Entity with respect to the Offer, the Merger and the other
transactions contemplated by this Agreement, and to submit promptly any
additional information requested by any such Governmental Entity. Without
limiting the generality of the foregoing, the Company and Parent shall, promptly
after the date of this Agreement, prepare and file any notifications required
under any applicable antitrust laws in connection with the Offer, the Merger or
the other transactions contemplated by this Agreement. The Company and Parent
shall respond as promptly as practicable to any inquiries or requests received
from any antitrust authority or other Governmental Entity in connection with
antitrust or related matters. Each of the Company and Parent shall (a) give the
other party prompt notice of the commencement or threat of commencement of any
proceeding by or before any Governmental Entity with respect to the Offer, the
Merger or any of the other transactions contemplated by this Agreement, (b) keep
the other party informed as to the status of any such proceeding or threat, and
(c) promptly inform the other party of any communication to or from any
Governmental Entity regarding the Offer, the Merger or any of the other
transactions contemplated by this Agreement. Except as may be prohibited by any
Governmental Entity or by any law, (y) each party will consult and cooperate
with the other, and will consider in good faith the views of the other, in
connection with any analysis, appearance, presentation, memorandum, brief,
proceeding under or relating to any foreign, federal or state antitrust or fair
trade law, and (z) in connection with any such proceeding, each party will
permit authorized representatives of the other to be present at each meeting or
conference relating to any such proceeding and to have access to and be
consulted in connection with any document, opinion or proposal made or submitted
to any Governmental Entity in connection with any such proceeding.
Section 6.12 SECTION 16 MATTERS. The board of directors of the Company
shall adopt a resolution in advance of the Effective Time providing that the
disposition by the officers and directors of Company Common Stock, Options or
other equity securities of the Company pursuant to the Offer, the Merger or the
other transactions contemplated by this Agreement is intended to be exempt from
liability pursuant to Rule 16b-3 under the Exchange Act.
44
Section 6.13 STANDSTILL AGREEMENTS. Effective immediately following the
date of this Agreement, the Company hereby waives and releases all the
standstill and other similar restrictions which may be or may be deemed to be in
effect with respect to the Parent.
Section 6.14 FIRPTA CERTIFICATION. On the Acceptance Date and
immediately prior to the Effective Time, the Company shall provide to Parent a
certification that stock in the Company is not a U.S. real property interest
because the Company is not, and has not been, a "United States real property
holding corporation" within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Such
certification shall be in accordance with Treasury Regulation Section
1.1445-2(c)(3)(i). The Company shall timely deliver to the Internal Revenue
Service the notification required under Treasury Regulation Section
1.897-2(h)(2).
ARTICLE VII
CONDITIONS PRECEDENT TO THE MERGER
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 Effective Time of the following conditions
(unless waived in accordance with the provisions of this Agreement):
(a) This Agreement (including the Merger) shall have been
approved and adopted by the affirmative vote of the stockholders of the Company
(unless the vote of stockholders is not required under the DGCL) as required by
the DGCL and the Certificate of Incorporation of the Company;
(b) Parent shall have made, or caused to be made, the Offer,
and Parent or Sub shall have previously accepted for payment and paid for Shares
pursuant to the Offer in an amount sufficient to satisfy the Minimum Condition
of the Offer (as defined herein)and otherwise pursuant to the Offer (provided
that the purchase of Shares pursuant to the Offer shall not be a condition to
the obligations of Parent and Sub hereunder if Sub shall fail to accept payment
and pay for Shares pursuant to the Offer in violation of the terms thereof or of
this Agreement); and
(c) No court or other Governmental Entity having jurisdiction
over the Company or Parent, or any of their respective Subsidiaries, shall have
enacted, issued, promulgated, enforced or entered any statute, law, rule,
regulation, executive order, decree, injunction, ruling or other order (whether
temporary, preliminary or permanent), or taken any other action, that has the
effect of (i) making the Merger illegal or directly or indirectly restraining,
prohibiting or restricting the consummation of the Merger or (ii) materially
changing the terms or conditions of the Agreement.
45
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 TERMINATION. This Agreement may be terminated and the Offer
and Merger abandoned at any time prior to the Effective Time, whether before or
after approval of the matters presented in connection with Merger by the
stockholders of the Company (with any termination by Parent also being an
effective termination by Sub):
(a) by mutual written consent of Parent and the Company;
(b) by either of Parent or the Company if any statute, law,
rule or regulation shall have been promulgated that prohibits the consummation
of the Offer or the Merger or if any Governmental Entity having jurisdiction
over Parent, Sub or the Company shall have issued an executive order, decree,
injunction, ruling or other order or taken any other action (which order,
decree, injunction or ruling or other action each party hereto shall use its
reasonable best efforts to have vacated or reversed in accordance with Section
6.5), in each case permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and non-appealable;
(c) by either of Parent or the Company if the Offer is
terminated or withdrawn pursuant to its terms (including pursuant to the
conditions set forth in Exhibit A) or the Offer shall have expired without Sub
having purchased any Shares pursuant thereto; provided, however, that Parent may
not terminate this Agreement pursuant to this Section 8.1(c) if Parent or Sub
shall have materially breached this Agreement and the Company may not terminate
this Agreement pursuant to this Section 8.1(c) if the Company shall have
materially breached this Agreement;
(d) by the Company (i) if the Board of Directors of the
Company shall have approved or recommended, or the Company shall have executed
or entered into a definitive agreement with respect to, a Superior Proposal in
compliance with Section 5.2(a)(ii); provided, however, that such termination
under this clause (i) shall not be effective until the Company has made the
payments required by Section 8.2(b); or (ii) if Parent, Sub or any of their
affiliates shall have failed to commence the Offer in accordance with Section
1.1; provided, however, that the Company may not terminate this Agreement
pursuant to this clause (ii) if such failure to have commenced the Offer shall
have been caused by the Company's failure to perform any of its obligations
under this Agreement;
(e) by Parent or Sub if any of the following have occurred:
(i) the Company or any of its affiliates or Representatives violates any of the
provisions of Section 5.2; (ii) the Board of Directors of the Company recommends
to the Company's stockholders any Takeover Proposal or Superior Proposal; (iii)
the Company enters into any agreement, letter of intent or similar document
(excluding a confidentiality agreement with terms no more favorable to the
Company than those contained in the Confidentiality Agreement) contemplating or
otherwise relating to any Takeover Proposal or Superior Proposal; (iv) the Board
of Directors of the
46
Company or any committee thereof shall have withdrawn, or modified or changed,
or publicly proposed to withdraw, modify or change, in a manner adverse to
Parent or Sub (including by amendment of the Schedule 14D-9) its approval or
recommendation of the Offer, this Agreement or the Merger or shall have approved
or recommended or publicly proposed to approve or recommend a Takeover Proposal;
or (v) the Company shall have failed to include in the Schedule 14D-9 its
recommendation of the Offer;
(f) by Parent or the Company if the Acceptance Date shall not
have occurred prior to October 31, 2004 (the "Outside Date"); provided, however,
that the right to terminate this Agreement under this Section 8.1(f) will not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Acceptance
Date to occur on or before such date;
(g) (i) by the Company, if Parent or Sub shall have breached
or failed to perform in any material respect any of its representations,
warranties, covenants or agreements contained in this Agreement, which breach or
failure to perform is not capable of being cured on or before the Outside Date
and (ii) by the Parent or Sub, if the Company shall have breached or failed to
perform any of its representations, warranties, covenants or agreements
contained in this Agreement, such that the conditions set forth in clauses (c)
and (d) of the Offer Conditions are not capable of being satisfied on or before
the Outside Date; or
(h) by Parent if (1) the failure to satisfy the Minimum
Condition is the sole reason the Offer has not been consummated by September 7,
2004 (the "Minimum Condition Target Date"), and (2) on or after the Minimum
Condition Target Date, (X) Parent provides written notice requesting a reduction
of the Minimum Condition to an amount not less than a majority of the
outstanding shares of the Company, on a fully diluted basis, and (Y) the Company
does not agree in writing to such reduction within five (5) business days
(including the date the Company received such notice) following the Company's
receipt of such notice.
The right of any party hereto to terminate this Agreement pursuant to
this Section 8.1 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any Person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement..
Section 8.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either
Parent or the Company, as provided in Section 8.1, this Agreement shall
forthwith become void and have no effect, without any liability or obligation
hereunder on the part of the Company, Parent, Sub or their respective officers
or directors (except for the last sentence of Section 6.2 and the entirety of
Section 6.4 and this Section 8.2, which shall survive the termination);
provided, however, that the termination of this Agreement shall not relieve any
party from any liability for any breach of this Agreement.
(b) IF,
47
(i) The Company terminates this Agreement pursuant to
Section 8.1(d)(i);
(ii) Parent or Sub terminates this Agreement pursuant
to Section 8.1(e)(ii),
(iii), (iv) or (v); or (iii) The Company or Parent
terminates this Agreement pursuant to Section 8.1(c) or Section 8.1(f)
or the Parent or Sub terminates this Agreement pursuant to Section
8.1(e)(i) and in the case of a termination pursuant to this clause
(iii)(A) at any time after the date of this Agreement and prior to such
termination a Takeover Proposal shall have been publicly announced or
otherwise publicly communicated to the stockholders of the Company
generally and (B) prior to the date which is nine months following the
date of such termination, the Company shall enter into a definitive
agreement with respect to a Takeover Proposal or a Takeover Proposal is
consummated,
THEN, the Company shall pay to Parent (less any amount paid pursuant to
Section 8.2(c) below) a non-refundable fee in immediately available
funds in an amount equal to $3,000,000 as follows:
(x) in the case of clause (i) above, upon
termination of this Agreement, if such
payment shall not have earlier been made
simultaneously with the taking of such
action as required by Section 5.2(a)(ii)(G);
(y) in the case of clause (ii) above, upon
termination of this Agreement; or
(z) in the case of clause (iii) above, upon the
entering into of a definitive agreement with
respect to, or the consummation of, a
Takeover Proposal prior to the date which is
nine months following the date of such
termination.
The parties acknowledge that the agreements contained in this
Section 8.2(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these
agreements the Parent would not have entered into this
Agreement.
(c) If Parent terminates this Agreement in accordance with
Section 8.1(h), then upon such termination the Company shall, upon presentation
of invoices or other reasonable supporting documentation, promptly reimburse
Parent for its reasonable out of pocket costs incurred in connection with the
transactions contemplated by this Agreement (including, without limitation, the
reasonable fees and expenses of Parent's legal counsel, accountants and
financial advisors) up to an amount not to exceed $3,000,000; provided, however,
that the parties hereby acknowledge and agree that in no event shall the
aggregate amount payable to Parent upon termination of this Agreement pursuant
to Section 8.2(b) and this Section 8.2(c) exceed $3,000,000.
48
Section 8.3 AMENDMENT. Subject to Section 6.3, this Agreement may be
amended by the parties hereto by or pursuant to action taken by their respective
Board of Directors at any time prior to the Effective Time (notwithstanding any
stockholder approval); provided, however, that, after approval of the Merger by
the stockholders of the Company, no amendment may be made that by law requires
further approval by such stockholders without such further approval. 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, subject to
Section 6.3, the parties hereto may (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein that may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party hereto to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of those rights.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall terminate at the Effective Time.
Notwithstanding the foregoing, and without limitation, the agreements set forth
in Section 2.6, Section 6.8, Section 6.10(a) and Section 8.2(b) shall survive
the Effective Time indefinitely (except to the extent a shorter period of time
is explicitly specified therein).
Section 9.2 NOTICES. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be personally
delivered; sent by telecopier or facsimile transmission; or sent to the Parties
at their respective addresses indicated herein by registered or certified U.S.
mail, return receipt requested and postage prepaid, or by private overnight mail
courier service, as follows:
(a) If to the Company, to:
Riviana Foods Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
(with a copy to)
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ Chase Tower
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Parent or Sub, to:
Ebro Puleva, ▇.▇.
▇▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Chief Financial Officer
Facsimile: ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
(with a copy to)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
or to such other person or address as any party shall have specified by notice
in writing to the other party. If personally delivered, such communication shall
be deemed delivered upon actual receipt; if sent by telecopier or facsimile
transmission, such communication shall be deemed delivered the day of the
transmission, or if the transmission is not made on a business day, the first
business day after transmission (and sender shall bear the burden of proof of
delivery); if sent by overnight courier pursuant to this paragraph, such
communication shall be deemed delivered upon receipt; and if sent by U.S. mail
pursuant to this paragraph, such communication shall be deemed delivered as of
the date of delivery indicated on the receipt issued by the relevant postal
service, or, if the addressee fails or refuses to accept delivery, as of the
date of such failure or refusal.
Section 9.3 INTERPRETATION; CERTAIN DEFINITIONS.
(a) When a reference is made in this Agreement to a Section,
such reference shall be to a Section of this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." Each Section of this Agreement is qualified by
the matters set forth with respect to such Section in the Disclosure Schedule to
the extent specified therein and such other
50
Sections of this Agreement to the extent a matter in such Section is disclosed
in such a way to make its relevance called for by such other Section readily
apparent from the information set forth on the face of the Schedule.
(b) For purposes of this Agreement, the following terms have
the meaning specified in this Section 9.3.
Any reference to "$" or "dollars" in this Agreement shall mean U.S.
Dollars.
"Active Subsidiary" means the following Subsidiaries of the Company:
Riviana International, Inc., Pozuelo, S.A., Distribuidora Tropical, S.A.,
Riviana De Panama S.A., Riviana De Centroamerica, Alimentos ▇▇▇▇ DE Guatemala,
S.A., Envases Industriales, S.A., S&B Herba Foods Limited, Riviana Foods
Limited, ▇▇▇▇▇▇ ▇▇▇▇ & Sons Limited, ▇▇▇▇▇ & Company Limited, N. & C. Boost
N.V., Boost Distribution C.V., Euryza GMBH, Herto N.V., Riviana (Puerto Rico)
Inc., Rivland Partnership, South LaFourche Farm Partnership, S-TECS, L.L.C.,
J-TECS, L.L.C.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Owned Real Property" means the real property listed on Section
4.15 of the Company Disclosure Schedule.
"Company Real Property Leases" means those leases listed on Section
4.15 of the Company Disclosure Schedule.
"Disclosure Schedule" shall have the meaning set forth in the
introductory paragraph of Article IV.
"Dormant Subsidiaries" means any Subsidiary which is not an Active
Subsidiary and that has no or de minimis operations and revenue.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Knowledge" or "Knowledge of the Company" means the actual knowledge,
after reasonable inquiry, of the directors and executive officers of the Company
and the Subsidiaries.
"Leased Real Property" means the real property subject to the Company
Real Property Leases.
"Material Adverse Effect" means, when used with respect to the Company
or Parent, as the case may be, any change, effect, condition, factor or
circumstance that is or would reasonably be expected to be materially adverse to
the business, operations, properties or results of operations, and condition
(financial or otherwise), with all such matters being considered in the
aggregate, of the Company and its Subsidiaries, taken as a whole, or Parent and
its Subsidiaries, taken as a whole, as the case may be; provided, however, that
(i) with respect to a party hereto
51
there shall be disregarded any adverse change, effect, condition, factor or
circumstance after the date hereof resulting from or relating to (A) general
business or economic conditions; (B) conditions generally affecting the industry
in which the Company competes; (C) the announcement or pendency of the Offer,
the Merger or any other transaction contemplated by this Agreement; and (D) any
national or international political or social conditions, including without
limitation the engagement by the United States or Spain in hostilities, whether
or not pursuant to the declaration of a national emergency or war or the
occurrence of any military or terrorist attack upon the United States or Spain
or any of their respect territories, possessions or diplomatic or consular
offices, or upon any military installation, equipment or personnel or the United
States or Spain (except to the extent, in the case of clauses (A) and (D) above,
such changes, effects, conditions, factors or circumstances that have a
materially disproportionate adverse effect on the Company as compared to any
other company that competes in the Company's industry); and (ii) with respect to
the Company and its Subsidiaries only, there shall be disregarded any adverse
change, effect, condition, factor or circumstance resulting from compliance with
any limitation on the Company's and its Subsidiaries' operations imposed by this
Agreement.
"Organizational Documents" means (a) with respect to a corporation, the
articles or certificate of incorporation and bylaws of such entity, (b) with
respect to a limited partnership, the certificate of limited partnership (or
equivalent document) and partnership agreement or similar operational agreement,
and (c) with respect to a limited liability company, the articles of
organization (or equivalent document) and regulation, limited liability company
agreement or similar operational agreement and (d) with respect to a general
partnership, the partnership agreement.
"Permitted Encumbrances" means (a) the liens to secure indebtedness
reflected on the Company's consolidated balance sheet as of June 29, 2003,
contained in the Company Form 10-K; (b) standby fees and real estate taxes for
the current and subsequent years, and subsequent assessments for prior years due
to a change in land usage or ownership; (c) (i) any discrepancies, conflicts or
shortages in area or boundary lines, or any encroachments, if any overlapping of
improvements, (ii) existing building and zoning ordinances, (iii) covenants,
restrictions, conditions, reservations, exceptions, encroachments and easements,
(iv) oil, gas, mineral and royalty conveyances, and Company Real Property
Leases, (v) the encumbrances referred to in Section 4.15 of the Company
Disclosure Schedule, (vi) rights of parties in possession, and (vii) all such
matters of record that a current examination of the real property records of the
counties or parishes in which the Company Owned Real Property is located would
reveal, in all cases, provided same do not materially interfere with the
existing use of the property in question and are not violated by the
consummation of the transactions contemplated by the Agreement and do not
materially and adversely affect the value or marketability of, or materially
impair the existing use of, the property affected thereby.
"Person" means an individual, corporation, partnership, association,
trust, any unincorporated organization or group (within the meaning of Section
13(d)(3) of the Exchange Act).
"Real Estate" means, with respect to the Company or any of its
Subsidiaries, as applicable, all of the fee or leasehold ownership right, title
and interest of such Person, in and to
52
all real estate and improvement owned or leased by any such Person and that is
used by any such Person in connection with the operation of its business.
"Real Property" means the Company Owned Real Property and the Leased
Real Property.
"Subsidiary" means any corporation, partnership, limited liability
company, joint venture or other legal entity of which Parent or the Company, as
the case may be, (either alone or through or together with any other Subsidiary)
(i) owns, directly or indirectly, 50% or more of the stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
legal entity, (ii) in the case of partnerships, serves as a general partner
(excluding partnerships the general partnership interests of which held by such
Person or any Subsidiary of such Person do not have a majority of the voting
interests in such partnership), (iii) in the case of a limited liability
company, serves as managing member or (iv) otherwise has the ability to elect a
majority of the directors, trustees or managing members thereof.
"Superior Proposal" means a bona fide written proposal made by a third
party to acquire all of the issued and outstanding Shares pursuant to a tender
offer or a merger or to acquire all of the properties and assets of the Company
on terms and conditions that a majority of the members of the Board of Directors
of the Company determines in good faith, after consulting with the Company
Financial Advisor or another independent outside nationally recognized financial
advisor and taking into account all the terms and conditions of such proposal
and all other facts and circumstances (including, without limitation, the cash
component of the offer, any expense reimbursement provisions, termination fees
and conditions to and anticipated timing of closing), is more favorable to the
Company's stockholders from a financial point of view than the transactions
contemplated hereby, is reasonably likely to be consummated and is made by a
third party that the Company reasonably believes has the financial capability to
consummate such Superior Proposal.
"Takeover Proposal" means any proposal or offer from any Person (in
each case, whether or not in writing and whether or not delivered to the
stockholders of the Company generally) relating to (i) any direct or indirect
acquisition or purchase whether by merger, reorganization, acquisition, tender
offer, share exchange, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving any purchase of 15% or
more of the net revenue, net income or assets of the Company or any of its
Subsidiaries or of 15% or more of any class of equity securities of the Company
or any of its Subsidiaries or (ii) any other transaction, the consummation of
which would reasonably be expected to impede, interfere with, prevent or
materially delay the Offer or the Merger or which would reasonably be expected
to dilute materially the benefits to Parent of the transactions contemplated
hereby.
"Taxes" means any federal, state, local or foreign income, gross
receipts, property, sales, use, license, excise, franchise, employment, payroll,
severance, stamp, occupation, withholding, alternative or add-on minimum, ad
valorem, value-added, transfer or estimated tax, or other tax, custom, duty,
governmental fee or any other like assessment or charge, together with any
interest or penalty thereon.
53
"Tax Return" means any return, report or similar statement (including
the attached schedules) required to be filed with respect to any Tax, including
any information return, claim for refund, amended return or declaration of
estimated Tax.
Section 9.4 COUNTERPARTS. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties. This Agreement may be executed
by facsimile signature of the parties hereto.
Section 9.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement (including the documents and the instruments referred to herein)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof; and there are no conditions to this Agreement that are
not set forth herein. Except with respect to Section 6.8 (which is intended to
be for the benefit of the persons identified therein, and may be enforced by
such persons), 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 9.6 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 9.7 ASSIGNMENT. Subject to Section 2.1, neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party (except that Parent may assign its
rights and Sub may assign its rights, interest and obligations to any affiliate
of Parent without the consent of the Company, provided, however, that no such
assignment shall relieve Parent of any liability for any breach by such
assignee). Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
Section 9.8 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other terms, conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated by this Agreement may be
consummated as originally contemplated to the fullest extent possible.
54
Section 9.9 SPECIFIC PERFORMANCE; JURISDICTION AND VENUE. The parties
hereto agree that legal damages would be inadequate and that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties hereto shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof (without the posting of any bond or security),
such remedy being in addition to any other remedy to which any party is entitled
at law or in equity. Each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the transaction
contemplated by this Agreement in any court other than a federal or state court
sitting in the State of Delaware. Each party hereto waives any right to a trial
by jury in connection with any such action, suit or proceeding.
[Signature Page Follows]
55
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement and Plan of Merger to be signed by their respective officers thereunto
duly authorized all as of the date first written above.
EBRO PULEVA, S.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Title: CEO
-----------------------------------
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Title: CFO
-----------------------------------
EBRO PULEVA PARTNERS G.P.
By: Ebro Puleva, S.A., General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Title: CEO
-----------------------------------
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Title: CFO
-----------------------------------
RIVIANA FOODS INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
------------------------------------
Title: Chief Executive Officer
-----------------------------------
56
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares, and, subject to
the terms and conditions of this Agreement, may delay the acceptance for payment
of any tendered Shares and amend or terminate the Offer if (i) there shall not
have been validly tendered and not withdrawn prior to the expiration of the
Offer such number of Shares that would constitute at least sixty six and
two-thirds percent (66 2/3%) of all shares of Common Stock that in the aggregate
are outstanding determined on a fully diluted basis (assuming the exercise of
all options to purchase Company Common Stock and the conversion or exchange of
all securities convertible or exchangeable into, Shares outstanding at the
expiration date of the Offer) (the "Minimum Condition"); provided, however, that
Parent and Sub shall not waive or reduce the Minimum Condition without the prior
written consent of the Company or (ii) at any time after the date of this
Agreement and prior to payment for any such Shares (whether or not any Shares
have theretofore been accepted for payment or paid pursuant to the Offer), any
of the following events shall occur or conditions shall exist:
(a) (x) there shall have been any action taken, or any
statute, rule, regulation, legislation, interpretation, judgment, order or
injunction, proposed, sought, promulgated, enacted, entered, enforced, issued,
amended or deemed applicable to Parent, Sub, the Company, any other affiliate of
Parent or the Company, the Offer or the Merger, by any Governmental Entity that
would or, in the reasonable, good faith judgment of Parent, would be expected
to, directly or indirectly, (i) make illegal by the acceptance for payment of,
or payment for or purchase of any or all of the Shares pursuant to the Offer, or
otherwise restrict, make more costly or prohibit the making of the Offer or the
consummation of the Offer or the Merger, (ii) result in a material delay in or
restrict the ability of Sub to accept for payment, pay for or purchase any or
all of the Shares pursuant to the Offer or to effect the Merger, (iii) render
Sub unable to accept for payment or pay for or purchase any or all of the Shares
pursuant to the Offer, (iv) impose material limitations on the ability of
Parent, Sub or any of their respective affiliates to acquire or hold, transfer
or dispose of, or effectively to exercise all rights of ownership of, any or all
of the Shares, including, the right to vote any Shares on an equal basis with
all other Shares on all matters properly presented to the stockholders of the
Company, or (v) impose any material limitations on the ability of Parent, Sub or
any of their respective affiliates effectively to control the business or
operations of the Company, Parent, Sub or any of their respective affiliates or
(y) there shall have been instituted or pending any action, proceeding or
counterclaim by any Governmental Entity, challenging the making of the Offer or
the acquisition by Sub of the Shares pursuant to the Offer or the consummation
of the Merger, or seeking to, directly or indirectly, impose or result in any of
the consequences referred to in subclauses (i) through (v) in clause (x) above;
or (z) there shall have been threatened in writing any action, proceeding or
counterclaim by any Governmental Entity, challenging the making of the Offer or
the acquisition by Sub of the Shares pursuant to the Offer or the consummation
of the Merger, or seeking to, directly or indirectly, impose or result in any of
the consequences
i
referred to in subclauses (i) through (v) in clause (x) above that has a
reasonable probability of success;
(b) the Board of Directors of the Company or any committee
thereof (i) shall have withdrawn, or modified or amended in a manner adverse to
Parent or Sub (including by amendment of the Schedule 14D-9) its approval or
recommendation of the Agreement or the transactions contemplated hereby,
including the Offer or the Merger, (ii) shall have approved or recommended, or
announced a neutral position with respect to, any Takeover Proposal or (iii)
shall have adopted any resolution to effect any of the foregoing;
(c) any of the representations and warranties of the Company
set forth in the Agreement and in any document executed and delivered in
connection herewith, when read without any exception or qualification as to
materiality or "Material Adverse Effect," shall not be true and correct, as if
such representations and warranties were made at the time of such determination
(except as to any such representation or warranty which speaks as of a specific
date, which must be untrue or incorrect as of such specific date) except where
the failure to be so true and correct, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect;
(d) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any obligation,
agreement or covenant of the Company to be performed or complied with by it
under this Agreement;
(e) any Person or "group" (as defined in Section 13(d)(3) of
the Exchange Act), other than (i) Parent, Sub, their affiliates or any group of
which any of them is a member or (ii) the Significant Stockholders (so long as
such stockholders do not breach any of the provisions of the Stockholder
Agreement), shall have acquired or entered into a definitive agreement or
agreement in principle to acquire beneficial ownership (as determined pursuant
to Rule 13d-3 promulgated under the Exchange Act) of 25% or more of then
outstanding Shares or shall have been granted any option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of 25% or more of then
outstanding Shares;
(f) this Agreement shall have been terminated in accordance
with its terms or any event shall have occurred that gives Parent or Sub the
right to terminate the Agreement or not consummate the Merger;
(g) any waiting period under any applicable antitrust or
competition law or regulation (including the HSR Act) or other applicable law
shall not have expired or been extended, terminated or any consent required
under any applicable antitrust or competition law or regulation or other
applicable law shall not have been obtained (the "Antitrust Condition"); or
(h) all consents, authorizations, orders and approvals of (or
filings or registrations with) any Governmental Entity required in connection
with the execution, delivery and performance of this Agreement, shall not have
been obtained or made, except for (i) filings with the Secretary of State in
connection with the effectiveness of the Merger and any other
ii
documents required to be filed at or after the Effective Time or (ii) any
consents, authorizations, orders, approvals, filings or registrations that the
failure to obtain, individually or in the aggregate, would not have (A) a
Material Adverse Effect on the Company or (B) the effect of making the Offer or
Merger illegal under any applicable law.
The foregoing conditions are for the sole benefit of Parent or Sub and
(except for the Minimum Condition and the Antitrust Condition) may be waived by
Parent or Sub in whole or in part at any time and from time to time, in their
sole discretion, subject to the terms of this Agreement. The failure by Parent
or Sub at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances, and each such right shall be deemed an
ongoing right that may be asserted at any time and from time to time.
Capitalized terms used but not defined in this Exhibit A shall have the
meanings assigned to such terms in the Agreement to which it is attached, except
that the term "Agreement" shall be deemed to refer to the Agreement to which
this Exhibit A is attached.
iii