EXHIBIT (D) (1)
AGREEMENT AND PLAN OF MERGER
dated as of December 12, 2001
by and among
SDL plc
Arctic Inc.
and
ALPNET, Inc.
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to
which it is attached but is inserted for convenience only.
Page
No.
----
ARTICLE I THE MERGER................................................................................1
1.01. The Merger...................................................................................1
1.02. Closing......................................................................................2
1.03. Effective Time...............................................................................2
1.04. Certificate of Incorporation and By-Laws of the Surviving Corporation........................2
1.05. Directors and Officers of the Surviving Corporation..........................................2
1.06. Effects of the Merger........................................................................2
1.07. Further Assurances...........................................................................2
ARTICLE II CONVERSION OF SHARES.....................................................................3
2.01. Conversion of Capital Stock..................................................................3
2.02. Exchange of Certificates.....................................................................4
2.03. Dissenters Rights............................................................................5
2.04. The Offer....................................................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................8
3.01. Organization and Qualification...............................................................8
3.02. Capital Stock................................................................................9
3.03. Authority Relative to this Agreement........................................................10
3.04. Non-Contravention; Approvals and Consents...................................................10
3.05. SEC Reports and Financial Statements........................................................11
3.06. Absence of Certain Changes or Events........................................................12
3.07. Absence of Undisclosed Liabilities..........................................................12
i
Page
No.
----
3.08. Legal Proceedings...........................................................................12
3.09. Information Supplied........................................................................12
3.10. Compliance with Laws and Orders.............................................................13
3.11. Compliance with Agreements; Certain Agreements..............................................13
3.12. Taxes.......................................................................................14
3.13. Employee Benefit Plans; ERISA...............................................................15
3.14. Labor Matters...............................................................................17
3.15. Environmental Matters.......................................................................18
3.16. Intellectual Property; Proprietary Rights; Employee Restrictions............................19
3.17. Assets......................................................................................20
3.18. Insurance...................................................................................21
3.19. Affiliate Arrangements......................................................................21
3.20. Vote Required...............................................................................21
3.21. Opinion of Financial Advisor................................................................21
3.22. Ownership of Parent Common Stock............................................................21
3.23. Control Share Acquisition Act Not Applicable................................................22
3.24. Books and Records...........................................................................22
3.25. Consequences of Consummation of the Merger..................................................22
3.26. No Bankruptcy or Insolvency.................................................................22
3.27. Internal Controls...........................................................................22
3.28. Investment Company Act .....................................................................22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB........................................23
4.01. Organization and Qualification..............................................................23
4.02. Authority Relative to this Agreement........................................................23
4.03. Non-Contravention; Approvals and Consents...................................................23
ii
Page
No.
----
4.04. Information Supplied........................................................................24
4.05. Vote Required...............................................................................25
4.06. Financing...................................................................................25
4.07 Legal Proceedings............................................................................25
4.08 Compliance with Laws and Orders..............................................................25
4.09 Compliance with Agreements; Certain Agreements...............................................25
ARTICLE V COVENANTS................................................................................26
5.01. Covenants of the Company....................................................................26
5.02. No Company Solicitations....................................................................29
5.03. Third Party Standstill Arrangements.........................................................30
5.04. Conduct of Business of Sub..................................................................30
5.05. Takeover Statutes...........................................................................30
ARTICLE VI ADDITIONAL AGREEMENTS...................................................................30
6.01. Access to Information; Confidentiality......................................................30
6.02. Preparation of Proxy Statement..............................................................31
6.03. Approval of Sharesholders...................................................................31
6.04. Regulatory and Other Approvals..............................................................32
6.05. Directors' and Officers' Indemnification and Insurance......................................33
6.06. Expenses....................................................................................34
6.07. Brokers or Finders..........................................................................34
6.08. Conveyance Taxes............................................................................35
6.09. Option Cancellations........................................................................35
6.10 Non-Solicitation of Employees................................................................35
ARTICLE VII CONDITIONS.............................................................................35
7.01. Conditions to Each Party's Obligation to Effect the Merger..................................35
iii
Page
No.
----
7.02. Conditions to Obligation of Parent and Sub to Effect the Merger.............................36
7.03. Conditions to Obligation of the Company to Effect the Merger................................37
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER.....................................................38
8.01. Termination.................................................................................38
8.02. Effect of Termination.......................................................................39
8.03. Amendment...................................................................................40
8.04. Waiver......................................................................................40
ARTICLE IX GENERAL PROVISIONS......................................................................40
9.01. Non-Survival of Representations, Warranties, Covenants and Agreements.......................40
9.02. Notices.....................................................................................41
9.03. Entire Agreement; Incorporation of Exhibits.................................................42
9.04. Public Announcements........................................................................42
9.05. No Third Party Beneficiary..................................................................42
9.06. No Assignment; Binding Effect...............................................................42
9.07. Headings....................................................................................43
9.08. Invalid Provisions..........................................................................43
9.09. Governing Law; Consent to Jurisdiction......................................................43
9.10. Enforcement of Agreement ...................................................................43
9.11. Certain Definitions.........................................................................43
9.12. Counterparts................................................................................44
iv
GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the meanings
ascribed to them in the corresponding Sections of this Agreement listed below:
"affiliate" -- Section 9.11(a)
"Agreement" -- Preamble
"Antitrust Division" -- Section 6.05
"beneficially" -- Section 9.11(b)
"business day" -- Section 9.11(c)
"CERCLA" -- Section 3.15(b)
"Certificate of Merger" -- Section 1.03
"Certificates" -- Section 2.02(b)
"Closing" -- Section 1.02
"Closing Date" -- Section 1.02
"Code" -- Section 2.02(g)
"Common Stock Trust" -- Section 2.02(e)(ii)
"Company" -- Preamble
"Company Affiliates" -- Section 6.04
"Company Alternative Transaction" -- Section 5.02
"Company Common Stock" -- Section 2.01(b)
"Company Financial Advisor" -- Section 3.21
"Company Financial Statements" -- Section 3.05
"Company Insurance Policies" -- Section 3.18
"Company Option Plans" -- Section 2.01(d)
"Company Permits" -- Section 3.10
"Company Plans" -- Section 3.13(a)
"Company Preferred Stock" -- Section 3.02(a)
"Company SEC Reports" -- Section 3.05
"Company Shareholders' Approval" -- Section 6.03(b)
"Company Shareholders' Meeting" -- Section 6.03(b)
"Constituent Corporations" -- Section 1.01
"Contracts" -- Section 3.04(a)
"Control," "Controlling,"
"Controlled by" and
"Under Common Control with" -- Section 9.11(a)
"Effective Time" -- Section 1.03
"Employee Option" -- Section 2.01(d)
"Environmental Law" -- Section 3.15(e)(i)
"Environmental Permits" -- Section 3.15(a)
"ERISA" -- Section 3.13(a)
"Excess Shares" -- Section 2.02(e)
"Exchange Act" -- Section 3.04(b)
"Exchange Agent" -- Section 2.02(a)
"Exchange Fund" -- Section 2.02(a)
"Exchange Ratio" -- Section 2.01(c)
v
"FTC" -- Section 6.05
"Governmental or Regulatory Authority" -- Section 3.04(a)
"group" -- Section 9.11(h)
"Hazardous Material" -- Section 3.15(e)(ii)
"HSR Act" -- Section 3.04(b)
"Indemnified Liabilities" -- Section 6.06(a)
"Indemnified Parties" -- Section 6.06(a)
"Intellectual Property Rights" -- Section 3.16(d)
"knowledge" -- Section 9.11(e)
"laws" -- Section 3.04(a)
"Lien" -- Section 3.02(b)
"material", "material adverse
effect" and "materially adverse" -- Section 9.11(f)
"Maximum Amount" -- Section 6.08(c)
"Merger" -- Preamble
"Merger Consideration" -- Section 2.01(c)
"Options" -- Section 3.02(a)
"orders" -- Section 3.04(a)
"Parent" -- Preamble
"Parent Proposal" -- Preamble
"Parent Shareholders' Approval" -- Section 6.03(a)
"Parent Shareholders' Meeting" -- Section 6.03(a)
"person" -- Section 9.11(h)
"Proxy Statement" -- Section 3.09
"Representatives" -- Section 9.11(i)
"SEC" -- Section 3.04(b)
"Secretary of State" -- Section 1.03
"Securities Act" -- Section 3.04(b)
"Shareholders' Meetings" -- Section 6.03(b)
"Sub" -- Preamble
"Sub Common Stock" -- Section 2.01(a)
"Subsidiary" -- Section 9.11(j)
"Superior Company Transaction" -- Section 6.03(b)
"Surviving Corporation" -- Section 1.01
"Surviving Corporation Common Stock" -- Section 2.01(a)
"taxes" -- Section 3.12(f)
"Utah Code" -- Section 1.01
vi
This AGREEMENT AND PLAN OF MERGER dated as of December ___, 2001 (the
"Agreement") is made and entered into by and among SDL plc, a company organized
under the laws of England and Wales ("Parent"), Arctic Inc., a Utah corporation
which is wholly owned directly or indirectly by Parent ("Sub"), and ALPNET,
Inc., a Utah corporation (the "Company").
WHEREAS, the Board of Directors of the Company has determined that the
business combination transaction on the terms set forth herein in which Sub
would merge with and into the Company and the Company would become a
wholly-owned subsidiary of Parent (the "Merger") is fair to and in the best
interests of the Company and its shareholders and has approved this Agreement
and the Merger and the other transactions contemplated hereby and has
recommended that the shareholders of the Company adopt this Agreement;
WHEREAS, the Board of Directors of Parent has determined that the
Merger is fair to and in the best interests of Parent and its shareholders and
has approved this Agreement and the Merger and the other transactions
contemplated hereby in the Merger (the "Parent Proposal");
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
WHEREAS, in furtherance of such Merger, Parent proposes (i) 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 the outstanding shares of
Company Common Stock (as defined in Section 2.01(b)) for the Merger
Consideration (as defined in Section 2.01(c)), upon the terms and subject to the
conditions set forth in this Agreement and (ii) to cause Sub to subsequently
merge with and into the Company so that the Company would become a wholly-owned
subsidiary of Parent (the "Merger");"
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined in Section 1.03), Sub shall be
merged with and into the Company in accordance with Chapter 10a of the Utah
Revised Business Corporations Act (the "Utah Code"). At the Effective Time, the
separate existence of Sub shall cease and the Company shall continue as the
surviving corporation in the Merger (the "Surviving Corporation"). The Company
and Sub are sometimes referred to herein as the "Constituent Corporations". As a
result of the Merger, the outstanding shares of capital stock of the Constituent
Corporations shall be converted or canceled in the manner provided in Article
II.
1
1.02 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
8.01, and subject to the satisfaction or waiver (where applicable) of the
conditions set forth in Article VII, the closing of the Merger (the "Closing")
will take place at the offices of Dechert, 2 ▇▇▇▇▇▇▇▇▇' ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ at
10:00 a.m., local time, on the business day following satisfaction of the
condition set forth in Section 7.01(a), unless another date, time or place is
agreed to in writing by the parties hereto (the "Closing Date"). At the Closing
there shall be delivered to Parent, Sub and the Company the certificates and
other documents and instruments required to be delivered under Article VII.
1.03 Effective Time. At the Closing, a certificate of merger (the
"Certificate of Merger") shall be duly prepared and executed by the Surviving
Corporation and thereafter delivered to the Secretary of State of the State of
Utah (the "Secretary of State") for filing, as provided in the Utah Code as soon
as practicable on the Closing Date. The Merger shall become effective at the
time of the filing of the Certificate of Merger with the Secretary of State (the
date and time of such filing being referred to herein as the "Effective Time").
1.04 Articles of Incorporation and By-Laws of the Surviving
Corporation. At the Effective Time, (i) the Articles of Incorporation of Sub as
in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Articles of Incorporation and (ii) the By-Laws of Sub as in
effect immediately prior to the Effective Time shall be the By-Laws of the
Surviving Corporation until thereafter amended as provided by law, the Articles
of Incorporation of the Surviving Corporation and such By-Laws.
1.05 Directors and Officers of the Surviving Corporation. The directors
of Sub and the officers of Sub immediately prior to the Effective Time shall,
from and after the Effective Time, be the directors and officers, respectively,
of the Surviving Corporation until their successors shall have been duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's Articles of Incorporation and
By-Laws.
1.06 Effects of the Merger. Subject to the foregoing, the effects of
the Merger shall be as provided in the applicable provisions of the Utah Code.
1.07 Further Assurances. Each party hereto will, either prior to or
after the Effective Time, execute such further documents, instruments, deeds,
bills of sale, assignments and assurances and take such further actions as may
reasonably be requested by one or more of the others to consummate the Merger,
to vest the Surviving Corporation with full title to all assets, properties,
privileges, rights, approvals, immunities and franchises of either of the
Constituent Corporations or to effect the other purposes of this Agreement.
2
ARTICLE II
CONVERSION OF SHARES
2.01. Conversion and Cancellation of Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of the holder
thereof:
(a) Capital Stock of Sub. Each issued and outstanding share of the
common stock, no par value, of Sub ("Sub Common Stock") shall be converted into
and become one fully paid and nonassessable share of common stock, no par value,
of the Surviving Corporation ("Surviving Corporation Common Stock"). Each
certificate representing outstanding shares of Sub Common Stock shall at the
Effective Time represent an equal number of shares of Surviving Corporation
Common Stock.
(b) Cancellation of Stock Owned by Parent and Subsidiaries. All shares
of common stock, of no par value, of the Company ("Company Common Stock") that
are owned by Parent, Sub or any other wholly-owned Subsidiary (as defined in
Section 9.11(h)) of Parent or the Company or any wholly owned Subsidiaries of
the Company shall be canceled and retired and shall cease to exist and no Merger
Consideration or other consideration shall be paid or delivered in exchange
therefor.
(c) Merger Consideration. Each issued and outstanding share of Company
Common Stock (other than shares to be canceled in accordance with 2.01(b), if
any, and Dissenting Shares as defined in Section 2.03) shall be converted into
the right to receive $0.21 in cash (the "Merger Consideration"). All shares of
Company Common Stock converted into the Merger Consideration in accordance with
this Section 2.01(c) shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, 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, upon the
surrender of such certificate in accordance with Section 2.02, without interest.
(d) Treatment of Options. At the Effective Time each of the employee
stock option plans set forth on Schedule 3.02 (the "Company Option Plans") shall
terminate and each option to purchase shares of Company Common Stock outstanding
thereunder at the Effective Time (an "Employee Option") pursuant to the Company
Stock Option Plans shall terminate; provided, however, any holder of an Employee
Option under the Company Stock Option Plans shall have the right, immediately
prior to the Effective Time, to exercise such Employee Option in whole or in
part whether or not the applicable vesting requirements have been satisfied.
3
2.02. Exchange of Certificates.
(a) Exchange Agent. At the Effective Time, Parent shall make available
to the Surviving Corporation for deposit with a bank or trust company designated
before the Closing Date by Parent and reasonably acceptable to the Company (the
"Exchange Agent") the Merger Consideration to be held for the benefit of and
distributed to such holders in accordance with this Section. The Exchange Agent
shall agree to hold such Merger Consideration (such Merger Consideration being
referred to as the "Exchange Fund") for delivery as contemplated by this Section
and upon such additional terms as may be agreed upon by the Exchange Agent, the
Company and Parent.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock (the "Certificates") whose shares are converted pursuant to Section
2.01(c) 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 Exchange Agent and shall be in such form and have such other
provisions as the Surviving Corporation may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Exchange Agent, together with such letter of transmittal duly executed
and completed in accordance with its terms, the holder of such Certificate shall
be entitled to receive in exchange therefor the portion of the Merger
Consideration which such holder has the right to receive pursuant to the
provisions of this Article II, and the Certificate so surrendered shall
forthwith be canceled. In no event shall the holder of any Certificate be
entitled to receive interest on any portion of the Merger Consideration to be
received in the Merger. In the event of a transfer of ownership of Company
Common Stock which is not registered in the transfer records of the Company, the
portion of the Merger Consideration which is payable with respect to such shares
of Company Common Stock may be paid to a transferee if the Certificate
representing such Company Common Stock is presented to the Exchange Agent
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.02(b), each Certificate shall be
deemed at any time after the Effective Time for all corporate purposes of the
Company to represent only the right to receive that portion of the Merger
Consideration payable in connection therewith pursuant to the Merger.
(c) No Further Ownership Rights in Company Common Stock. The Merger
Consideration paid upon the surrender for exchange of Certificates in accordance
with the terms hereof shall be deemed to have been paid at the Effective Time in
full satisfaction of all rights pertaining to the shares of Company Common Stock
represented by such Certificates. From and after 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 of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Section.
4
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the shareholders of the Company for six (6)
months after the Effective Time shall be delivered to the Surviving Corporation,
upon demand, and any shareholders of the Company who have not theretofore
complied with this Article II shall thereafter look only to the Surviving
Corporation (subject to abandoned property, escheat and other similar laws) as
general creditors for payment of the Merger Consideration. Neither Parent nor
the Surviving Corporation shall be liable to any holder of shares of Company
Common Stock for any portion of the Merger Consideration or other cash delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
(e) Withholding Rights. Parent and the Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as the Company and Parent is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended (the "Code"), or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by the Company or Parent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by Parent.
2.03. Dissenters Rights. (i) Notwithstanding any provision of this
Agreement to the contrary, each outstanding share of Company Common Stock the
holder of which has not voted in favor of the Merger, has perfected such
holder's right to an appraisal of such holder's shares in accordance with the
applicable provisions of the Utah Code and has not effectively withdrawn or lost
such right to appraisal (a "Dissenting Share"), shall not be converted into or
represent a right to receive the Merger Consideration pursuant to Section
2.01(c), but the holder thereof shall be entitled only to such rights as are
granted by the applicable provisions of the Utah Code; provided, however, that
any Dissenting Share held by a person at the Effective Time who shall, after the
Effective Time, withdraw the demand for appraisal or lose the right of
appraisal, in either case pursuant to the Utah Code, shall be deemed to be
converted into, as of the Effective Time, the right to receive the Merger
Consideration pursuant to Section 2.01(c).
(ii) The Company shall give Parent (x) prompt notice of any written
demands for appraisal, withdrawals of demands for appraisal and any other
instruments served pursuant to the applicable provisions of the Utah Code
relating to the appraisal process received by the Company and (y) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the Utah Code. The Company will not voluntarily make any
payment with respect to any demands for appraisal and will not, except with the
prior written consent of Parent, settle or offer to settle any such demands
which consent shall not be unreasonably withheld.
2.04. The Offer. (a) Subject to the conditions of this Agreement, as
promptly as reasonably practicable, 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 (such Act and the rules and regulations promulgated thereunder
being referred to herein as the "Exchange Act") the Offer. The obligations of
Sub to, and of Parent to cause Sub to, commence the Offer and accept
5
for payment, and pay for, any shares of Company Common Stock tendered pursuant
to the Offer are subject to the conditions set forth in Exhibit A attached
hereto. Sub expressly reserves the right to waive any condition to the Offer or
amend or modify the terms of the Offer, except that, without the written consent
of the Company, Sub shall not (i) reduce the number of shares of Company Common
Stock subject to the Offer, (ii) reduce the Merger Consideration per share of
Company Common Stock to be paid pursuant to the Offer, (iii) waive the Minimum
Tender Condition, add to the conditions set forth in Exhibit A or modify any
condition set forth in Exhibit A in any manner adverse to the holders of Company
Common Stock, or (iv) change the form of consideration payable in the Offer.
Parent and Sub agree that if all of the conditions to the Offer are not
satisfied on any scheduled expiration date of the Offer then, provided that all
such conditions are reasonably capable of being satisfied, Sub shall extend the
Offer from time to time until such conditions are satisfied or waived, provided
that Sub shall not be required to extend the Offer beyond February 10, 2002. On
the terms and subject to the conditions of the Offer and this Agreement, Sub
shall, and Parent shall cause Sub to, pay for all shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer that Sub becomes
obligated to purchase pursuant to the Offer promptly after the expiration of the
Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall file
with the SEC a Tender Offer Statement on Schedule TO with respect to the Offer,
which shall contain an offer to purchase and a related letter of transmittal
(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"). Parent and Sub agree that the Offer Documents shall comply as to
form in all material respects with the Exchange Act, and the rules and
regulations promulgated thereunder and the Offer Documents, on the date first
published, sent or given to the Company's shareholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation or warranty is made by Parent or Sub with respect to
information supplied by the Company or any of its shareholders specifically for
inclusion or incorporation by reference in the Offer Documents. Each of Parent,
Sub and the Company shall promptly correct any information provided by it for
use in the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect, and each of Parent and Sub
shall take all steps necessary to amend or supplement the Offer Documents and to
cause the Offer Documents as so amended or supplemented to be filed with the SEC
and the Offer Documents as so amended or supplemented to be disseminated to the
Company's shareholders, 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 shareholders of the Company. Parent and Sub
shall provide the Company and its counsel in writing with 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.
(c) Parent shall provide or cause to be provided to Sub on a timely
basis the funds necessary to accept for payment, and purchase any shares of
Company Common Stock that Sub becomes obligated to accept for payment, and
purchase pursuant to the Offer.
6
(d) The Company hereby approves of and consents to the Offer, the
Merger and the other transactions contemplated by this Agreement. The Company
hereby represents that the Company's Board of Directors (the "Board of
Directors"), at a meeting duly called and held, has (i) determined that this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, are fair to and in the best interest of the Company and its
shareholders, (ii) approved this Agreement and the transactions contemplated
hereby, including the Offer, the Merger and the Stock Option Agreement dated the
date hereof by and between the Company and Sub (the "Option Agreement"), and
(iii) resolved to recommend that the Company's shareholders accept the Offer and
tender their Shares pursuant to the Offer, and approve and adopt this Agreement
and the Merger. The Company further represents that ▇.▇. ▇▇▇▇▇▇▇▇ & Co. has
rendered to the Board of Directors its written opinion (a copy of which has been
furnished to Parent prior to the execution and delivery of this Agreement by the
Company) to be included in the Schedule 14D-9 (as defined below), to the effect
that the consideration to be received by the holders of the shares of Company
Common Stock pursuant to each of the Offer and the Merger is fair to the holders
of such shares from a financial point of view. The Company has been advised that
all of its directors and executive officers intend to tender their shares of
Company Common Stock pursuant to the Offer.
(e) On the date the Offer Documents are filed with the SEC, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 with respect to the Offer (such Schedule 14D-9, as amended or supplemented
from time to time, the "Schedule 14D-9") describing the recommendation of the
Board of Directors of the Company to the Company's shareholders that they accept
the Offer, tender their shares pursuant to the Offer and approve this Agreement
and shall mail the Schedule 14D-9 to the holders of Company Common Stock. The
Schedule 14D-9 shall comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder and, on the date filed with the SEC and on the date first published,
sent or given to the Company's shareholders, shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation or warranty 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 shall promptly correct any information provided
by it for use in the Schedule 14D-9 if and to the extent that such information
shall have become false or misleading in any material respect, and the Company
shall take all steps necessary to amend or supplement the Schedule 14D-9 and to
cause the Schedule 14D-9 as so amended or supplemented to be filed with the SEC
and disseminated to the Company's shareholders, 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 shareholders of the
Company. The Company shall provide Parent and its counsel in writing with any
comments the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments.
(f) In connection with the Offer and the Merger, the Company shall
cause its transfer agents to furnish Sub promptly with mailing labels containing
the names and addresses of the record holders, the consenting beneficial owners
and the names and addresses of the brokers representing the non-consenting
beneficial holders of Company Common Stock as of
7
a recent date and of those persons becoming record holders subsequent to such
date, together with copies of all lists of shareholders, security position
listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Company Common Stock,
and shall furnish to Sub such information and assistance (including updated
lists of shareholders, security position listings and computer files) as Parent
may reasonably request in communicating the Offer to the Company's shareholders
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 Offer, the Merger and the other transactions contemplated by
this Agreement, Parent and Sub shall hold in confidence the information
contained in any such labels, listings and files, shall use such information
only in connection with the Offer and the Merger and, if this Agreement shall be
terminated, shall, upon request, deliver to the Company all copies of such
information then in their possession.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
3.01. Organization and Qualification. Each of the Company and its
Subsidiaries is a corporation or a partnership duly incorporated or organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization and has full power and authority to conduct its
business as and to the extent now conducted and to own, use and lease its assets
and properties except for such failures to be in good standing or to have such
power and authority which, individually or in the aggregate, are not having and
could not be reasonably expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole or on the ability of the Company
to consummate the transactions contemplated hereby. Each of the Company and its
Subsidiaries is duly qualified, licensed or admitted to do business and is in
good standing in each jurisdiction in which the ownership, use or leasing of its
assets and properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary, except for such failures to be
so qualified, licensed or admitted and in good standing which, individually or
in the aggregate, are not having and could not be reasonably expected to have a
material adverse effect (as defined in Section 9.11(e)) on the Company and its
Subsidiaries taken as a whole or on the ability of the Company to consummate the
transactions contemplated hereby. Schedule 3.01 sets forth (i) the name and
jurisdiction of incorporation or organization of each Subsidiary of the Company,
(ii) its authorized capital stock or other equity or ownership interests, (iii)
the number of issued and outstanding shares of capital stock or other equity or
ownership interests in each Subsidiary, and (iv) the record owners of such
capital stock, shares or other equity or ownership interests. The record owners
of such capital stock, shares or other equity or ownership interests shown in
Schedule 3.01 own such capital stock, shares, or equity or ownership interests
free and clear of all Liens and no person holds any option, warrant, right, put
or call with respect to nor has any right to acquire any interest in any such
capital stock, shares or equity or ownership interests. Except for interests in
the Subsidiaries of the Company and as disclosed in Schedule 3.01, the Company
does not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, trust, limited liability
company, joint venture or other entity or organization. The Company has
previously delivered or made
8
available to Parent true, correct and complete copies of the articles of
incorporation and bylaws (or other comparable organizational documents) of the
Company and each of its Subsidiaries.
3.02. Capital Stock. (a) The authorized capital stock of the Company
consists solely of 100,000,000 shares of Common Stock and 4,000,000 shares of
Preferred Stock with the following authorized series: 459,411 shares of $2.55
convertible, voting, non-cumulative 10% preferred stock, series B, without par
value ("Series B Preferred Stock"); 584,257 shares of $3.09 convertible, voting,
non-cumulative 10% preferred stock, series C, without par value ("Series C
Preferred Stock"); and 87,339 shares of $2.81 convertible, voting,
non-cumulative 10% preferred stock, series D, without par value ("Series D
Preferred Stock"). As of September 30, 2001 there was 32,519,558 shares of
Company Common Stock issued and outstanding. As of the date hereof, no shares of
the Series B, C, or D Preferred Stock are issued and outstanding. 5,533,535
shares of Common Stock were reserved for issuance under stock option plans that
provide for the grant of options to purchase shares of Company Common Stock to
non-employee directors, officers and employees of the Company (the "Company
Option Plans") and 2,956,251 shares of Common Stock were reserved for issuance
under all other options, warrants and convertible notes granted and/or issued by
the Company. Since September 30, 2001, there has been no change in the number of
issued and outstanding shares of Company Common Stock or shares of Company
Common Stock reserved for issuance, except for shares that have been issued upon
the exercise of options previously granted under the Company Option Plans and
which are listed in Schedule 3.02. All of the issued and outstanding shares of
Company Common Stock are, and all shares reserved for issuance will be, upon
issuance in accordance with the terms specified in the instruments or agreements
pursuant to which they are issuable, duly authorized, validly issued, fully paid
and nonassessable. Except pursuant to this Agreement and except as set forth in
this Section 3.02 or in Schedule 3.02, there are no outstanding subscriptions,
options, warrants, rights, calls, (including "phantom" stock rights), preemptive
rights or other contracts, commitments, understandings or arrangements,
including any right of conversion or exchange under any outstanding security,
instrument or agreement (together, "Options"), obligating the Company or any of
its Subsidiaries to issue or sell any shares of capital stock of the Company or
any Subsidiary or to grant, extend or enter into any Option with respect
thereto.
(b) Except as disclosed in Schedule 3.02, (x) all of the outstanding
shares of capital stock or other equity or ownership interests of each
Subsidiary of the Company are duly authorized, validly issued, fully paid and
nonassessable and (y) all of the outstanding shares of capital stock or other
equity or ownership interests of each Subsidiary of the Company are owned,
beneficially and of record, by the Company or a Subsidiary which is wholly
owned, directly or indirectly, by the Company, free and clear of any liens,
claims, mortgages, encumbrances, pledges, security interests, equities and
charges of any kind (each, a "Lien"). Except as disclosed in Schedule 3.02,
there are no (i) outstanding Options obligating the Company or any of its
Subsidiaries to issue or sell any shares of capital stock or other equity or
ownership interests of any Subsidiary of the Company (other than an Option in
favor of a wholly-owned Subsidiary of the Company ) or to grant, extend or enter
into any such Option or (ii) voting trusts, proxies or other commitments,
understandings, restrictions or arrangements in favor of any person other than
the Company or a Subsidiary wholly owned, directly or indirectly, by the Company
with respect to the voting of or the right to participate in dividends or other
earnings on any capital stock or other equity or ownership interests of any
Subsidiary.
9
(c) Except as disclosed in Schedule 3.02, there are no outstanding
contractual obligations of the Company or any Subsidiary of the Company to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
any capital stock or other equity or ownership interests of any Subsidiary of
the Company or to provide funds to, acquire any securities of or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
person.
3.03. Authority Relative to this Agreement. The Company has full
corporate power and authority to enter into this Agreement and commence the
Offer, to perform its obligations hereunder and to consummate the transactions
contemplated hereby subject to obtaining the Company Shareholders' Approval (as
defined in Section 6.03(b)). The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of the Company; the Board of Directors of the Company has recommended
adoption of this Agreement by the shareholders of the Company and directed that
this Agreement be submitted to the shareholders of the Company for their
consideration, and no other corporate proceedings on the part of the Company or
its shareholders are necessary to authorize the execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby, other than obtaining the Company
Shareholders' Approval. This Agreement has been duly and validly executed and
delivered by the Company and, subject to the obtaining of the Company
Shareholders' Approval, constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms subject to
applicable bankruptcy laws and principles of equity.
3.04. Non-Contravention; Approvals and Consents. (a) Except as
disclosed in Schedule 3.04, the execution and delivery of this Agreement by the
Company do not, and the performance by the Company of its obligations hereunder
and the consummation of the transactions contemplated hereby will not, conflict
with, result in a violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, result in or give to any person any
right of payment or reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of any Lien upon any of
the assets or properties of the Company or any of its Subsidiaries under, any of
the terms, conditions or provisions of (i) the certificates or articles of
incorporation or bylaws (or other comparable organizational documents) of the
Company or any of its Subsidiaries or (ii) to the best of the Company's
knowledge, subject to the obtaining of the Company Shareholders' Approval and
the taking of the actions described in paragraph (b) of this Section, (x) any
statute, law, rule, regulation or ordinance (together, "laws"), or any judgment,
decree, order, writ, permit or license (together, "orders"), of any government,
court, tribunal, arbitrator, authority, agency, commission, stock exchange,
self-regulatory organization, official or other instrumentality of the United
States, any foreign country, supranational organization or any domestic or
foreign state, county, city or other political subdivision, including, without
limitation, the SEC or the Internal Revenue Service, (a "Governmental or
Regulatory Authority") applicable to the Company or any of its Subsidiaries or
any of their respective assets or properties, or (y) any note, bond, mortgage,
security agreement, indenture, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind (together,
"Contracts") to which the Company or
10
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective assets or properties is bound, excluding
from the foregoing clause (y) conflicts, violations, breaches, defaults,
terminations, modifications, accelerations and creations and impositions of
Liens which, individually or in the aggregate, could not be reasonably expected
to have a material adverse effect on the Company and its Subsidiaries taken as a
whole, or on the ability of the Company to consummate the transactions
contemplated by this Agreement.
(b) Except (i) for the filing of the Schedule 14D-9, (ii) for the
filing of the proxy statement or information statement (the "Proxy Statement")
relating to the Company Shareholders' Meeting (as defined in Section 6.03(b)),
as amended or supplemented from time to time, with the SEC pursuant to the
Exchange Act, (iii) for the filing of the Certificate of Merger and other
appropriate merger documents required by the Act with the Secretary of State and
appropriate documents with the relevant authorities of other states in which the
Constituent Corporations are qualified to do business and (iv) as disclosed in
Schedule 3.04, no consent, approval, authorization or action of, filing with or
notice to any Governmental or Regulatory Authority or other public or private
third party is necessary or required under any of the terms, conditions or
provisions of any law or order of any Governmental or Regulatory Authority or
any Contract to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective assets
or properties is bound for the execution and delivery of this Agreement by the
Company, the performance by the Company of its obligations hereunder or the
consummation of the transactions contemplated hereby, other than such consents,
approvals, actions, filings and notices which the failure to make or obtain, as
the case may be, individually or in the aggregate, could not be reasonably
expected to have a material adverse effect on the Company and its Subsidiaries
taken as a whole, or on the ability of the Company to consummate the
transactions contemplated by this Agreement.
3.05. SEC Reports and Financial Statements. The Company delivered or
has made available to Parent prior to the execution of this Agreement a true,
correct and complete copy of each form, report, schedule, registration
statement, definitive proxy statement and other document (together with all
amendments thereof and supplements thereto) filed by the Company or any of its
Subsidiaries with the SEC since December 31, 1998 (as such documents have since
the time of their filing been amended or supplemented, the "Company SEC
Reports"), which are all the documents that the Company and its Subsidiaries
were required to file with the SEC since such date. As of their respective
dates, the Company SEC Reports and any Company SEC Reports filed prior to the
Effective Time (i) complied as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(ii) did not contain any untrue statement of a material fact or omit to state a
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. The audited consolidated financial statements and unaudited
interim consolidated financial statements (including, in each case, the notes,
if any, thereto) included in the Company SEC Reports filed prior to the
Effective Time (the "Company Financial Statements") complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, were in accordance with the books and records of the Company
and its Subsidiaries, were prepared in accordance with U.S. generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto and except with
respect to unaudited statements as
11
permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of
the unaudited interim financial statements, to normal, recurring year-end audit
adjustments (which are not individually or in the aggregate, material)) the
consolidated assets, liabilities and financial position of the Company and its
consolidated Subsidiaries as at the respective dates thereof and the
consolidated results of their operations and cash flows and changes in financial
position for the respective periods then ended. Each Subsidiary of the Company
is treated as a consolidated Subsidiary of the Company in the Company Financial
Statements for all periods covered thereby.
3.06. Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, (a) since
December 31, 2000 there has not been any change, event or development having, or
that would have, individually or in the aggregate, a material adverse effect on
the Company and its Subsidiaries taken as a whole, and (b) except as disclosed
in Schedule 3.06, between such date and the date hereof (i) since December 31,
2000 the Company and its Subsidiaries have conducted their respective businesses
only in the ordinary course consistent with past practice and (ii) since
September 30, 2001 neither the Company nor any of its Subsidiaries has taken any
action which, if taken after the date hereof, would constitute a breach of any
provision of clause (ii) of Section 5.01(b).
3.07. Absence of Undisclosed Liabilities. Except as disclosed in
Schedule 3.07 and to the extent reflected in or specifically reserved against in
the balance sheet for the period ended December 31, 2000 included in the Company
Financial Statements or as disclosed in Company SEC Reports filed since December
31, 2000 and prior to the date hereof, neither the Company nor any of its
Subsidiaries had at such date, or has incurred since that date, any liabilities
or obligations (whether absolute, accrued, contingent, fixed or otherwise, or
whether due or to become due) of any nature, except liabilities or obligations
(i) which were incurred in the ordinary course of business consistent with past
practice; (ii) which exceed $100,000 individually or $500,000 in the aggregate,
or (iii) which have been incurred in connection with this Agreement and the
transactions contemplated hereby.
3.08. Legal Proceedings. Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement or in Schedule 3.08, (i) there are no
actions, suits, arbitrations or proceedings pending or, to the knowledge of the
Company, threatened against, relating to or affecting, nor are there any
Governmental or Regulatory Authority investigations or audits pending or to the
knowledge of the Company threatened against, relating to or affecting, the
Company, any of its Subsidiaries or any of their respective assets and
properties which, individually or in the aggregate, could be reasonably expected
to have a material adverse effect on the Company and its Subsidiaries taken as a
whole, or on the ability of the Company to consummate the transactions
contemplated by this Agreement, and (ii) neither the Company nor any of its
Subsidiaries is subject to any order of any Governmental or Regulatory Authority
which, individually or in the aggregate, is having or could be reasonably
expected to have a material adverse effect on the Company and its Subsidiaries
taken as a whole, or on the ability of the Company to consummate the
transactions contemplated by this Agreement.
3.09. Information Supplied. The Proxy Statement, the Schedule 14D-9 and
any other documents to be filed by the Company with the SEC or any other
Governmental or Regulatory Authority in connection with the Merger, the Offer
and the other transactions
12
contemplated hereby will (in the case of the Proxy Statement, the Schedule 14D-9
and any such other documents filed with the SEC under the Exchange Act) comply
as to form in all material respects with the requirements of the Exchange Act
and will not, on the date of its filing or at the date it is mailed to
shareholders of the Company and, in the case of the Proxy Statement, at the time
of the Company Shareholders' 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, except that no representation is made
by the Company with respect to information supplied in writing by or on behalf
of Parent or Sub expressly for inclusion therein.
3.10. Compliance with Laws and Orders. The Company and each Subsidiary
of the Company is in compliance with all applicable laws of all Governmental or
Regulatory Authorities applicable to them except when such failure to comply,
individually or in the aggregate, are not having and could not be reasonably
expected to have a material adverse effect on the Company and its Subsidiaries
taken as a whole or on the ability of the Company to consummate the transactions
contemplated hereby. The Company and its Subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals of all Governmental and
Regulatory Authorities necessary for the lawful conduct of their respective
businesses (the "Company Permits"), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which, individually or in
the aggregate, are not having and could not be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole.
The Company and its Subsidiaries are in compliance with the terms of the Company
Permits, except failures so to comply which, individually or in the aggregate,
are not having and could not be reasonably expected to have a material adverse
effect on the Company and its Subsidiaries taken as a whole. Except as disclosed
in the Company SEC Reports filed prior to the date of this Agreement, the
Company and its Subsidiaries are not in violation of or default under any law or
order of any Governmental or Regulatory Authority, except for such violations or
defaults which, individually or in the aggregate, are not having and could not
be reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Company to consummate the
transactions contemplated hereby.
3.11. Compliance with Agreements; Certain Agreements. (a) Except as
disclosed in the Company SEC Reports filed prior to the date of this Agreement,
neither the Company nor any of its Subsidiaries nor, to the knowledge of the
Company, any other party thereto is in breach or violation of, or in default in
the performance or observance of any term or provision of, and no event has
occurred which, with notice or lapse of time or both, could be reasonably
expected to result in a default under, (i) the certificates or articles of
incorporation or bylaws (or other comparable charter documents) of the Company
or any of its Subsidiaries or (ii) any Contract to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
or any of their respective assets or properties is bound, except in the case of
clause (ii) for breaches, violations and defaults which, individually or in the
aggregate, are not having and could not be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries taken as a whole or
on the ability of the Company to consummate the transactions contemplated
hereby.
13
(b) Except as disclosed in Schedule 3.11(b) or in the Company SEC
Reports filed prior to the date of this Agreement or as provided for in this
Agreement, as of the date hereof and the Effective Time, neither the Company nor
any of its Subsidiaries is a party to any oral or written (i) consulting
agreement not terminable on thirty (30) days' or less notice, (ii) union or
collective bargaining agreement, (iii) agreement with any executive officer or
other key employee of the Company or any of its Subsidiaries the benefits of
which are contingent or vest, or the terms of which are materially altered or
the benefits of which will be increased, upon the occurrence of a transaction
involving the Company or any of its Subsidiaries of the nature contemplated by
this Agreement, (iv) agreement with respect to any executive officer or other
key employee of the Company or any of its Subsidiaries providing any term of
employment or compensation guarantee or (v) agreement or plan, including any
stock option, stock appreciation right, restricted stock or stock purchase plan,
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement except in the case of clauses (i) and (ii) where such agreements,
individually or in the aggregate, are not having and could not be reasonably
expected to have a material adverse effect on the Company and its Subsidiaries
taken as a whole or on the ability of the Company to consummate the transactions
contemplated hereby.
3.12. Taxes. Except as set forth on Schedule 3.12 and except for such
matters that would not, individually or in the aggregate, reasonably be expected
to have a material adverse effect on the Company and its Subsidiaries taken as a
whole:
(a) The Company and its subsidiaries (i) have duly filed all Tax
Returns (including, but not limited to, those filed on a consolidated, combined
or unitary basis) required to have been filed by the Company or its
subsidiaries, all of which Tax Returns are true and correct; (ii) have within
the time and manner prescribed by applicable law paid or, prior to the Effective
Time, will pay all Taxes required to be paid in respect of the periods covered
by such Tax Returns or otherwise due to any Taxing Authority; (iii) have
established or, prior to the Effective Time, will establish, in accordance with
their normal accounting practices and procedures, accruals and reserves that are
adequate for the payment of all Taxes not yet due and payable and attributable
to any period preceding the Effective Time; (iv) are not delinquent in the
payment of any Tax; and (v) have not received written notice of any deficiencies
for any Tax from any Taxing Authority against the Company or any of its
subsidiaries, which deficiency has not been satisfied. Neither the Company nor
any of its subsidiaries is the subject of any currently ongoing Tax audit except
as set forth on Schedule 3.12(a). With respect to any taxable period ended prior
to December 31, 1996, all federal income Tax Returns including the Company or
any of its subsidiaries have been audited by the Internal Revenue Service or are
closed by the applicable statute of limitations. There are no liens with respect
to Taxes upon any of the properties or assets, real or personal, tangible or
intangible, of the Company or any of its subsidiaries (other than liens for
Taxes not yet due). Since 1996, no claim has been made in writing by a Taxing
Authority in a jurisdiction where the Company or its subsidiaries do not file
Tax Returns that the Company or any of its subsidiaries is or may be subject to
taxation by that jurisdiction. Neither the Company nor any of its subsidiaries
has filed an election under Section 341(f) of the Code to be treated as a
consenting corporation.
14
(b) Neither the Company nor any of its subsidiaries is obligated by any
contract, agreement or other arrangement to indemnify any other person with
respect to Taxes. Neither the Company nor any of its subsidiaries is now or has
ever been a party to or bound by any contract, agreement or other arrangement
(whether or not written and including, without limitation, any arrangement
required or permitted by applicable law (including pursuant to Treasury
Regulation Section 1.1502-6 or any analogous provision of state, local or
foreign law)) which (i) requires the Company or any of its subsidiaries to make
any Tax payment to (other than payments made prior to December 31, 2000) or for
the account of any other person, (ii) affords any other person the benefit of
any net operating loss, net capital loss, investment Tax credit, foreign Tax
credit, charitable deduction or any other credit or Tax attribute which could
reduce Taxes (including, without limitation, deductions and credits related to
alternative minimum Taxes) of the Company or any of its subsidiaries, or (iii)
requires or permits the transfer or assignment of income, revenues, receipts or
gains to the Company or any of its subsidiaries from any other person.
(c) The Company and its subsidiaries have withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder or other third
party.
(d) For purposes of this Agreement, (i) "Tax" (and, with correlative
meaning, "Taxes") means any federal, state, local or foreign income, gross
receipts, property, sales, use, license, excise, franchise, employment, payroll,
premium, withholding, alternative or added minimum, ad valorem, value added,
inventory, transfer or excise tax, or any other tax, custom, duty, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any Taxing Authority, (ii) "Tax Return" means
any return, report or similar statement required to be filed with respect to any
Tax (including any attached schedules), including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
Tax, and (iii) "Taxing Authority" means the Internal Revenue Service or any
other federal, state, local or foreign governmental authority responsible for
the collection of Taxes or the administration of the laws related to Taxes.
3.13. Employee Benefit Plans; ERISA. (a) Schedule 3.13 contains a true
and complete list of each "employee benefit plan" (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, without limitation, multiemployer plans within the meaning
of ERISA Section 3(37)), stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus, incentive,
deferred compensation and all other employee benefit plans, agreements,
programs, policies or other arrangements, whether or not subject to ERISA
(including any funding mechanism therefor now in effect or required in the
future as a result of the transactions contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, under which any
employee or former employee of the Company or any ERISA Affiliate (as defined
below) has any present or future right to benefits or under which the Company or
any ERISA Affiliate has any present or future liability except where the failure
to list such employee benefit plans, individually or in the aggregate, are not
having and could not be reasonably expected to have a material adverse effect on
the Company and its Subsidiaries taken as a whole. "ERISA
15
Affiliate means (i) any corporation included with Company in a controlled group
of corporations within the meaning of Section 414(b) of the Code; (ii) any trade
or business (whether or not incorporated) which is under common control with
Company within the meaning of Section 414(c) of the Code; (iii) any member of an
affiliated service group of which Company is a member within the meaning of
Section 414(m) of the Code; or (iv) any other person or entity treated as an
affiliate of Company under Section 414(o) of the Code. All such plans,
agreements, programs, policies and arrangements shall be collectively referred
to as the "Company Plans".
(b) With respect to each Company Plan, the Company has made available
to Parent prior to the execution and delivery of this Agreement a current,
accurate and complete copy (or, to the extent no such copy exists, an accurate
description) thereof and, to the extent applicable: (i) any related trust
agreement or other funding instrument; (ii) the most recent determination
letter, if applicable; (iii) any summary plan description and other Company
authorized written communications by the Company or any of its Subsidiaries to
their employees concerning the extent of the benefits provided under a Company
Plan; and (iv) for the three most recent fiscal years (A) the Form 5500 and
attached schedules, (B) audited financial statements, (C) actuarial valuation
reports and (D) attorney's response to an auditor's request for information. All
contributions to and payments from any Company Plan which is a "pension plan"
within the meaning of ERISA Section 3 have been timely and fully made.
(c) Except as specifically set forth on Schedule 3.13: (i) each Company
Plan has been established and administered in all material respects in
accordance with its terms, and in compliance with the applicable provisions of
ERISA, the Code and other applicable laws, rules and regulations; (ii) each
Company Plan which is intended to be qualified within the meaning of Code
Section 401(a) has been so qualified at all times since its inception and has
received a favorable determination letter as to its qualification, and to the
knowledge of Company nothing has occurred, whether by action or failure to act,
that could reasonably be expected to cause the loss of such qualification; (iii)
no event has occurred and no condition exists that would subject the Company or
any ERISA Affiliate, to any material tax, fine, lien, penalty or other liability
imposed by ERISA, the Code or other applicable laws, rules and regulations; (iv)
for each Company Plan with respect to which a Form 5500 has been filed, no
material change has occurred with respect to the matters covered by the most
recent Form since the date thereof; (v) no material "prohibited transaction" (as
such term is defined in ERISA Section 406 and Code Section 4975) has occurred
with respect to any Company Plan; (vi) no Company Plan provides retiree welfare
benefits and neither the Company nor any of its Subsidiaries has any obligations
to provide any retiree welfare benefits; and (vii) each trust related to a
Company Plan which is intended to be exempt from taxation under Code Section
501(a) has been so exempt at all times since its inception, and nothing has
occurred, whether by action or failure to act, that could reasonably be expected
to cause the loss of such exemption.
(d) No Company Plan (or prior plan subject to ERISA) is now or at any
time has been subject to Title IV of ERISA nor constituted a multiemployer plan
(within the meaning of ERISA Section 3(37) or Section 4001(a)(3)).
(e) With respect to any Company Plan: (i) no actions, suits or claims
(other than routine claims for benefits in the ordinary course) are pending or,
to the knowledge of the
16
Company, threatened, and (ii) to the Company's knowledge, no facts or
circumstances exist that could reasonably be expected to give rise to any such
actions, suits or claims.
(f) Except as set forth on Schedule 3.13(f), no Company Plan exists
that could result in the payment to any present or former employee of the
Company or any of its Subsidiaries of any money or other property or accelerate
or provide any other rights or benefits to any present or former employee of the
Company or any of its Subsidiaries as a result of the transactions contemplated
by this Agreement, whether or not such payment would constitute a parachute
payment within the meaning of Code Section 280G (whether in connection with a
termination of employment or otherwise).
(g) None of the assets of any Company Plan is invested in any property
constituting "employer real property" or an "employer security" within the
meaning of Section 407 of ERISA.
(h) Any insurance premium under any insurance policy related to a
Company Plan for any period up to and including the Closing Date shall have been
paid or accrued on or before the Closing Date, and, with respect to any such
insurance policy or premium payment obligation, neither the Company, any
Subsidiary nor the Parent or Surviving Corporation shall be subject to a
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability.
(i) With respect to each Company Plan that is a "group health plan"
within the meaning of Section 607 of ERISA and that is subject to Section 4980B
of the Code, the Company and each of its Subsidiaries comply with the
continuation coverage and certification requirements of the Code and ERISA in
all material respects. Schedule 3.13(i) sets forth those participants currently
receiving COBRA benefits through the Company .
(j) No employee or former employee is entitled to receive or has been
entitled to receive compensation in excess of the amount permitted as a
deduction under section 162(m) of the Code.
(k) The Company and each of its Subsidiaries maintain policies or
practices, on the proper classification for all employees, leased employees,
consultants and independent contractors, for all purposes (including, without
limitation, for all tax purposes and for purposes of determining eligibility to
participate in any Company Plan.)
3.14. Labor Matters. Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement or in Schedule 3.14, there are no
controversies pending or, to the knowledge of the Company, threatened between
the Company or any of its Subsidiaries and any representatives of its employees,
except as would not, individually or in the aggregate, have a material adverse
effect on the Company and its Subsidiaries taken as a whole, and, to the
knowledge of the Company, there are no material organizational efforts presently
being made involving any of the now unorganized employees of the Company or any
of its Subsidiaries. Since December 31, 1997, there has been no work stoppage,
strike or other concerted action by employees of the Company or any of its
Subsidiaries except as is not having or could not be
17
reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
3.15. Environmental Matters. (a) Each of the Company and its
Subsidiaries has obtained all licenses, permits, authorizations, approvals and
consents from Governmental or Regulatory Authorities which are required under
any applicable Environmental Law (as defined below) in respect of its business
or operations ("Environmental Permits"), except for such failures to have
Environmental Permits which, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole. Each of such Environmental Permits is in full
force and effect and each of the Company and its Subsidiaries is in compliance
with the terms and conditions of all such Environmental Permits and with any
applicable Environmental Law, except for such failures to be in compliance
which, individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the Company and its Subsidiaries taken as a
whole.
(b) To the knowledge of the Company, no site or facility now or
previously owned, operated or leased by the Company or any of its Subsidiaries
is listed or proposed for listing on the National Priorities List promulgated
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, and the rules and regulations thereunder ("CERCLA"), or
on any similar state or local list of sites requiring investigation or clean-up.
(c) No Liens have arisen under or pursuant to any Environmental Law on
any site or facility owned, operated or leased by the Company or any of its
Subsidiaries, other than any such Liens on real property not individually or in
the aggregate material to the Company and its Subsidiaries taken as a whole, and
no action of any Governmental or Regulatory Authority has been taken or, to the
knowledge of the Company, is in process which could subject any of such
properties to such Liens, and neither the Company nor any of its Subsidiaries
would be required to place any notice or restriction relating to the presence of
Hazardous Materials at any such site or facility owned by it in any deed to the
real property on which such site or facility is located.
(d) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by, or which are in the possession
of, the Company or any of its Subsidiaries in relation to any site or facility
now or previously owned, operated or leased by the Company or any of its
Subsidiaries which have not been delivered to Parent prior to the execution of
this Agreement.
(e) As used herein:
(i) "Environmental Law" means any law or order of any Governmental
or Regulatory Authority relating to the regulation or protection of human
health, safety or the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata), or otherwise relating to the manufacture, processing,
18
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes; and
(ii) "Hazardous Material" means (A) any petroleum or petroleum
products, flammable explosives, radioactive materials, asbestos in any form that
is or could become friable, urea formaldehyde foam insulation and transformers
or other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls (PCBs); (B) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants" or words of similar import under any Environmental Law; and
(C) any other chemical or other material or substance, exposure to which is now
or hereafter prohibited, limited or regulated by any Governmental or Regulatory
Authority under any Environmental Law.
3.16. Intellectual Property; Proprietary Rights; Employee Restrictions.
(a) All Intellectual Property Rights used by the Company or its Subsidiaries in
their respective businesses are owned by the Company or such Subsidiaries by
operation of law or have been validly assigned or licensed to the Company or
such Subsidiaries or the Company or such Subsidiary otherwise has the right to
use such Intellectual Property Rights in its business as currently conducted
except (i) as set forth on Schedule 3.16, or (ii) for such failures that could
not reasonably be expected to have, either individually or in the aggregate, a
material adverse effect on the Company or its Subsidiaries taken as a whole. The
Company or its Subsidiaries have exclusive ownership of or a license to use all
Intellectual Property Rights used by the Company or its Subsidiaries in the
Company's and its Subsidiaries' businesses as presently conducted, including all
other registered Intellectual Property Rights used in connection with or
contained in all versions of the Company's or any of its Subsidiary's World Wide
Web sites and all licenses, assignments and releases of Intellectual Property
Rights of others without which the Company or its Subsidiaries could not offer
the services they currently offer or has obtained any licenses, releases or
assignments reasonably necessary to use all third parties' Intellectual Property
Rights in works embodied in its services, except, for such failures as, either
individually or in the aggregate, have not had and could not reasonably be
expected to have a material adverse effect on the Company and its Subsidiaries
taken as a whole. The business activities or products of the Company and its
Subsidiaries do not, to the best of the Company's knowledge, infringe any
Intellectual Property Rights of others. To the knowledge of the Company, except
as set forth on Schedule 3.16 the Company and its Subsidiaries have not received
any notice or other claim from any person asserting that any of the Company's or
its Subsidiaries present activities infringe or may infringe any Intellectual
Property Rights of such person.
(b) Except as set forth on Schedule 3.16 and as have not had and could
not reasonably be expected to have a material adverse effect on the Company and
its Subsidiaries taken as a whole, (i) the Company has the right to use all
trade secrets, customer lists, hardware designs, programming processes, software
and other information required for its services or its business as presently
conducted or contemplated by the Company and its Subsidiaries; (ii) each of the
Company and its Subsidiaries has taken all reasonable measures to protect and
preserve the security and confidentiality of its trade secrets and other
confidential information; (iii) all employees and consultants of the Company or
its Subsidiaries involved in the design, review,
19
evaluation or development of products or Intellectual Property Rights have
executed nondisclosure and assignment of inventions agreements to protect the
confidentiality of the Company's and its Subsidiaries' trade secrets and other
confidential information and to vest in the Company and its Subsidiaries, as
applicable, exclusive ownership of such Intellectual Property Rights; (iv) to
the knowledge of the Company, all trade secrets and other confidential
information of the Company and its Subsidiaries are not part of the public
domain or knowledge, nor, to the knowledge of the Company, have they been
misappropriated by any person having an obligation to maintain such trade
secrets or other confidential information in confidence; or (v) to the knowledge
of the Company, no employee or consultant of the Company or any of its
Subsidiaries has used any trade secrets or other confidential information of any
other person in the course of their work for the Company or any such Subsidiary.
(c) To the knowledge of the Company, no university, government agency
(whether federal or state) or other organization sponsored research and
development conducted by the Company or any of its Subsidiaries or has any claim
of right to or ownership of or other encumbrance upon any of the Intellectual
Property Rights of them, except for such claims or other encumbrances that would
not reasonably be expected to have a material adverse effect on the Company and
its Subsidiaries taken as a whole. The Company is not aware of any infringement
by others of its copyrights or other Intellectual Proprietary Rights in any of
its technology or services, or any violation of the confidentiality of any of
its proprietary information. To the Company's knowledge, the Company and its
Subsidiaries are not making unlawful use of any confidential information or
trade secrets of any past or present employees except as set forth on Schedule
3.08. For the purposes of this Section 3.16, and except where the context
otherwise requires, Intellectual Property Rights also includes any and all
intellectual property rights, licenses, databases, computer programs and other
computer software user interfaces, know-how, trade secrets, customer lists,
proprietary technology, processes and formulae, source code, object code,
algorithms, architecture, structure, display screens, layouts, development
tools, instructions, templates, marketing materials created by the Company or
its Subsidiaries, inventions, trade dress, logos and designs.
(d) For purposes of this Section 3.16, "Intellectual Property Rights"
means patents and patent rights, trademarks and trademark rights, trade names
and trade name rights, service marks and service ▇▇▇▇ rights, service names and
service name rights, domain names, URL addresses, copyrights and copyright
rights and all pending applications for and registrations of any of the
foregoing.
3.17 Assets. The assets, properties, rights and Contracts, including
(as applicable) title or leaseholds thereto, of the Company and its
Subsidiaries, taken as a whole, are sufficient to permit the Company and its
Subsidiaries to conduct their business as currently being conducted with only
such exceptions as are not reasonably likely to have a material adverse effect
on the Company and its Subsidiaries taken as a whole. All material real property
owned by the Company and its Subsidiaries is owned free and clear of all Liens,
except (i) those reflected or reserved against in the latest balance sheet or
notes thereto included in the Company Financial Statements, (ii) taxes and
general and special assessments not in default and payable without penalty or
interest, and (iii) Liens that do not materially adversely interfere with any
20
present use of such property or would not interfere with or materially detract
from the sale of such property.
3.18. Insurance. Schedule 3.18 sets forth a complete and accurate list
of all material policies of insurance of the Company and its Subsidiaries
currently in force, including surety bonds or other credit support therefor (the
"Company Insurance Policies"), the current annual premiums for each Company
Insurance Policy and the types of risk covered and limits of coverage. All
Company Insurance Policies are in full force and effect and all premiums due
thereon have been paid. The Company has complied in all respects with the terms
and provisions of the Company Insurance Policies, except where such failure is
not expected to have a material adverse effect on the Company or its
Subsidiaries taken as a whole The Company has never applied for and been refused
or denied any policy of insurance with respect to securities liability or fraud,
director and officer liability, product liability matters, matters arising by
reason of clinical trials, environmental matters or workmen's compensation.
Except as set forth on Schedule 3.18, the Company's insurance coverage is in
kind and amount based on current industry practice and past history and practice
of the Company and its Subsidiaries.
3.19. Affiliate Arrangements. Except as disclosed in Schedule 3.19,
neither the Company nor any of its Subsidiaries is a party to any Contract,
arrangement, understanding or other commitment or pending or proposed
transaction with any director or officer of the Company or any of its
Subsidiaries or any affiliates of any such persons (other than compensation
arrangements entered into in the ordinary course of business and other than as
disclosed in the Company SEC Reports filed prior to the date of this Agreement
and employee health, welfare and benefit plans available generally to the
employees of the Company and its Subsidiaries or any Investments).
3.20. Vote Required. The affirmative vote of a majority of the
outstanding shares of Company Common Stock entitled to vote at the Company
Shareholders' Meeting (as defined in Section 6.03(a)) with respect to the
adoption of this Agreement is the only vote of the holders of any class or
series of the capital stock of the Company required to adopt this Agreement,
approve the Merger, commence the Offer and any other transactions contemplated
hereby. Without limiting the foregoing, the Company Board of Directors has taken
all reasonably necessary actions to ensure that approval of only a majority of
the outstanding shares of Company Common Stock is required to approve the
Merger, the Offer and any other transaction contemplated hereby under the Utah
Code and the Company's Articles of Incorporation and By-Laws.
3.21. Opinion of Financial Advisor. The Company has received the
opinion of ▇.▇. ▇▇▇▇▇▇▇▇ & Co. (the "Company Financial Advisor"), dated the date
hereof, to the effect that, as of the date hereof, the consideration to be
received in the Merger by the shareholders of the Company is fair from a
financial point of view to the shareholders of the Company, and a true and
complete copy of such opinion has been delivered to Parent prior to the
execution of this Agreement.
3.22. Ownership of Parent Common Stock. As of the date hereof, the
Company and its Subsidiaries beneficially own no ordinary shares of Parent
("Parent Common Stock").
21
3.23. Control Share Acquisition Act Not Applicable. The provisions of
Title 61 Chapter 6 of the Utah Code (the Control Share Acquisition Act) do not
and will not, apply to this Agreement, the Offer, the Merger, any acquisition of
Company Common Stock by Parent Sub or their affiliates or the other transactions
contemplated hereby.
3.24 Books and Records. The minute books and other records of the
Company, all of which have been made available to Parent, are complete and
correct in all material respects and have been maintained in accordance with
sound business practices and the requirements of Section 13(b)(2) of the
Exchange Act, including the maintenance of an adequate system of internal
controls. The Company minute books contain in all material respects accurate and
complete records of all meetings held of, and corporate action taken by, the
shareholders, the Board of Directors and committees of the board of directors of
the Company, and no meeting of any such shareholders, Board of Directors or
committee has been held for which minutes have not been prepared and are not
contained in such minute books. At the Closing, all of those books and records
will be in the possession of the Company.
3.25. Consequences of Consummation of the Merger. Except as otherwise
stated in the Schedules, the consummation of the Merger will not give rise to a
right of termination of any agreement for the employment of any director,
officer or senior employee of the Company.
3.26 No Bankruptcy or Insolvency. No petition has been filed by or
against the Company or any Subsidiary of the Company under any bankruptcy,
insolvency, reorganization, liquidation, moratorium or similar law nor to the
knowledge of the Company has such action or similar action been threatened. No
trustee or receiver over the Company or any Subsidiary of the Company or their
respective assets has been appointed and no application or petition for such
appointment has been made or filed nor to the knowledge of the Company has any
person threatened any such or similar action.
3.27. Internal Controls. The Company and the Subsidiaries of the
Company have each (a) maintained and kept books, records and accounts, which, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of their respective assets and (b) devised and maintained a system
of internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary (A) to
permit preparation of financial statements in conformity with U.S. generally
accepted accounting principles, consistently applied and (B) to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action in taken with respect to any
differences.
3.28 Investment Company Act. As of the date hereof, neither the Company
nor any of its Subsidiaries is an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940 (the "1940 Act"), or is
22
subject to registration under the 1940 Act or the Investment Advisers Act of
1940 (the "Advisers Act").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
4.01. Organization and Qualification. Each of Parent and its
Subsidiaries (including Sub) is a corporation or company duly incorporated or
organized, validly existing under the laws of its jurisdiction of incorporation
or organization and has full power and authority to conduct its business as and
to the extent now conducted and to own, use and lease its assets and properties,
except for such failures to be so incorporated or organized, existing and in
good standing or to have such power and authority which, individually or in the
aggregate, are not having and could not be reasonably expected to have a
material adverse effect on Parent and its Subsidiaries taken as a whole. Sub was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement, has engaged in no other business activities and has conducted
its operations only as contemplated hereby. Each of Parent and its Subsidiaries
is duly qualified, licensed or admitted to do business in each jurisdiction in
which the ownership, use or leasing of its assets and properties, or the conduct
or nature of its business, makes such qualification, licensing or admission
necessary, except for such failures to be so qualified, licensed or admitted
which, individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect on Parent or Sub's ability
to consummate the transactions contemplated hereby.
4.02. Authority Relative to this Agreement. Each of Parent and Sub has
full corporate power and authority to enter into this Agreement and, subject to
obtaining the Parent Shareholders' Approval (as defined in Section 6.03(a)), to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by each of Parent and Sub and the consummation by each of Parent and Sub of the
transactions contemplated hereby have been duly and validly approved by their
respective Boards of Directors and by Parent in its capacity as the sole
shareholder of Sub and no other corporate proceedings on the part of either of
Parent or Sub or their shareholders are necessary to authorize the execution,
delivery and performance of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated hereby, other
than obtaining the Parent Shareholders' Approval. Assuming the accuracy of the
representations and warranties set forth in Section 3.28, this Agreement has
been duly and validly executed and delivered by each of Parent and Sub and,
subject to obtaining the Parent Shareholders' Approval, constitutes a legal,
valid and binding obligation of each of Parent and Sub enforceable against each
of Parent and Sub in accordance with its terms.
4.03. Non-Contravention; Approvals and Consents.
(a) Except as disclosed in Schedule 4.03, the execution and delivery of
this Agreement by each of Parent and Sub do not, and the performance by each of
Parent and Sub of its obligations hereunder and the consummation of the
transactions contemplated hereby will not, conflict with, result in a violation
or breach of, constitute (with or without notice or lapse of time
23
or both) a default under, result in or give to any person any right of payment
or reimbursement, termination, cancellation, modification or acceleration of, or
result in the creation or imposition of any Lien upon any of the assets or
properties of Parent or any of its Subsidiaries under, any of the terms,
conditions or provisions of (i) the certificates or articles of incorporation or
bylaws (or other comparable organizational documents) of Parent or any of its
Subsidiaries, or (ii) subject to obtaining the Parent Shareholders' Approval and
the taking of the actions described in paragraph (b) of this Section, (x) any
laws or orders of any Governmental or Regulatory Authority applicable to Parent
or any of its Subsidiaries or any of their respective assets or properties, or
(y) any Contracts to which Parent or any of its Subsidiaries is a party or by
which Parent or any of its Subsidiaries or any of their respective assets or
properties is bound, excluding from the foregoing clauses (x) and (y) conflicts,
violations, breaches, defaults, terminations, modifications, accelerations and
creations and impositions of Liens which, individually or in the aggregate,
could not be reasonably expected to have a material adverse effect on the
ability of Parent and Sub to consummate the transactions contemplated by this
Agreement.
(b) Except (i) for the filing of the Proxy Statement and the Offer
Documents with the SEC pursuant to the Exchange Act, (ii) for the filing of the
Certificate of Merger and other appropriate merger documents required by the
Utah Code with the Secretary of State and appropriate documents with the
relevant authorities of other states in which the Constituent Corporations are
qualified to do business and (iii) as disclosed in Schedule 4.03, no consent,
approval or action of, filing with or notice to any Governmental or Regulatory
Authority or other public or private third party is necessary or required under
any of the terms, conditions or provisions of any law or order of any
Governmental or Regulatory Authority or any Contract to which Parent or any of
its Subsidiaries is a party or by which Parent or any of its Subsidiaries or any
of their respective assets or properties is bound for the execution and delivery
of this Agreement by each of Parent and Sub, the performance by each of Parent
and Sub of its obligations hereunder or the consummation of the transactions
contemplated hereby, other than such consents, approvals, actions, filings and
notices which the failure to make or obtain, as the case may be, individually or
in the aggregate, could not be reasonably expected to have a material adverse
effect on the ability of Parent and Sub to consummate the transactions
contemplated by this Agreement.
4.04. Information Supplied. The Offer Documents and any other documents
to be filed by Parent with the SEC or any other Governmental or Regulatory
Authority in connection with the Offer, the Merger and the other transactions
contemplated hereby will (in the case of the Offer Documents and any such other
documents filed with the SEC under the Exchange Act) comply as to form in all
material respects with the requirements of the Exchange Act and will not, on the
date of its filing or, in the case of the Offer Document, at the time it is
mailed to shareholders of the Company, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by Parent or Sub with respect to information supplied in
writing by or on behalf of the Company and its Subsidiaries and information
incorporated by reference therein from documents filed by the Company or any of
its Subsidiaries with the SEC.
24
4.05. Vote Required. The affirmative votes of the necessary majority of
the votes cast by holders of Parent Common Stock at the Parent Shareholders'
Meeting (as defined in Section 6.03(a)) is the only vote of the holders of any
class or series of the capital stock of Parent required to approve the
transactions contemplated hereby.
4.06. Financing. Parent has and will have sufficient financial
resources to consummate the Offer and the Merger.
4.07. Legal Proceedings. There are no actions, suits, arbitrations or
proceedings pending or, to the knowledge of the Parent, threatened against,
relating to or affecting, nor are there any Governmental or Regulatory Authority
investigations or audits pending or to the knowledge of the Parent threatened
against, relating to or affecting, the Parent, any of its Subsidiaries or any of
their respective assets and properties which, individually or in the aggregate,
could be reasonably expected to have a material adverse effect on the ability of
the Parent to consummate the transactions contemplated by this Agreement, and
neither the Parent nor any of its Subsidiaries is subject to any order of any
Governmental or Regulatory Authority which, individually or in the aggregate, is
having or could be reasonably expected to have a material adverse effect on the
ability of the Parent to consummate the transactions contemplated by this
Agreement.
4.08. Compliance with Laws and Orders. The Parent and each Subsidiary
of the Parent is in compliance with all applicable laws of all Governmental or
Regulatory Authorities applicable to them except when such failure to comply,
individually or in the aggregate, are not having and could not be reasonably
expected to have a material adverse effect on the ability of the Parent to
consummate the transactions contemplated by this Agreement. The Parent and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental and Regulatory Authorities necessary for the
lawful conduct of their respective businesses (the "Parent Permits"), except for
failures to hold such permits, licenses, variances, exemptions, orders and
approvals which, individually or in the aggregate, are not having and could not
be reasonably expected to have a material adverse effect on ability of the
Parent to consummate the transactions contemplated by this Agreement. The Parent
and its Subsidiaries are in compliance with the terms of the Parent Permits,
except failures so to comply which, individually or in the aggregate, are not
having and could not be reasonably expected to have a material adverse effect on
the Parent and its Subsidiaries taken as a whole. Except as disclosed in the
Parent Securities Reports filed prior to the date of this Agreement, the Parent
and its Subsidiaries are not in violation of or default under any law or order
of any Governmental or Regulatory Authority, except for such violations or
defaults which, individually or in the aggregate, are not having and could not
be reasonably expected to have a material adverse effect on the ability of the
Parent to consummate the transactions contemplated hereby.
4.09. Compliance with Agreements; Certain Agreements. (a) Except as
publicly disclosed prior to the date of this Agreement, neither the Parent nor
any of its Subsidiaries nor, to the knowledge of the Parent, any other party
thereto is in breach or violation of, or in default in the performance or
observance of any term or provision of, and no event has occurred which, with
notice or lapse of time or both, could be reasonably expected to result in a
25
default under, (i) the charter documents of the Parent or any of its
Subsidiaries or (ii) any Contract to which the Parent or any of its Subsidiaries
is a party or by which the Parent or any of its Subsidiaries or any of their
respective assets or properties is bound, except in the case of clause (ii) for
breaches, violations and defaults which, individually or in the aggregate, are
not having and could not be reasonably expected to have a material adverse
effect on the ability of the Parent to consummate the transactions contemplated
hereby.
ARTICLE V
COVENANTS
5.01. Covenants of the Company. (a) At all times from and after the
date hereof until the Effective Time, the Company covenants and agrees as to
itself and its Subsidiaries that (except as expressly contemplated or permitted
by this Agreement, or to the extent that Parent shall otherwise previously
consent in writing) that the Company and each of its Subsidiaries shall conduct
their respective businesses only in, and none of the Company, and such
Subsidiaries shall take any action except in, the ordinary course consistent
with past practice.
(b) Without limiting the generality of paragraph (a) of this Section,
(i) the Company and its Subsidiaries shall comply in all material respects with
all laws and orders of all Governmental or Regulatory Authorities applicable to
them, (ii) the Company shall not, nor shall it permit any of its Subsidiaries
to, except as otherwise expressly provided for in this Agreement or as approved
by Parent in writing:
(A) amend or propose to amend its certificate or articles of
incorporation or bylaws (or other comparable corporate charter documents);
(B) (w) declare, set aside or pay any dividends on or make other
distributions in respect of any of its capital stock (x) split, combine,
reclassify or take similar action with respect to any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, (y) adopt a
plan of complete or partial liquidation or resolutions providing for or
authorizing such liquidation or a dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization or (z) directly or
indirectly redeem, repurchase or otherwise acquire any shares of its capital
stock or any Option with respect thereto;
(C) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any Option with respect
thereto (other than (y) the issuance of Company Common Stock pursuant to Options
outstanding on the date of this Agreement and in accordance with their present
terms, and (z) the issuance by a wholly-owned Subsidiary of its capital stock to
its parent corporation or to another wholly-owned Subsidiary of its parent
corporation);
(D) modify or amend any right of any holder of outstanding shares of
capital stock or Options with respect thereto;
26
(E) acquire (by merging or consolidating with, or by purchasing any
equity interest in or assets with a fair market value of $10,000 individually or
in the aggregate of, or by any other manner) any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any such assets;
(F) sell, lease, grant any security interest in or otherwise dispose
of or encumber any of its material assets or properties or any shares of capital
stock or equity or other interests in any Subsidiaries or Investments;
(G) except to the extent required by applicable law, (x) permit any
material change in (A) any pricing (except in the ordinary course of business
consistent with past practice,) marketing, purchasing, investment, accounting,
financial reporting, inventory, credit (except in the ordinary course of
business consistent with past practice,) allowance or tax practice or policy or
(B) any method of calculating any bad debt, contingency or other reserve for
accounting, financial reporting or tax purposes, or (y) make any material tax
election or settle or compromise any material income tax liability with any
Governmental or Regulatory Authority;
(H) (x) incur (which shall be deemed to include entering into credit
agreements, lines of credit or similar arrangements until borrowings are made
under such arrangements) any indebtedness for borrowed money or guarantee any
such indebtedness or (y) voluntarily purchase, cancel, prepay or otherwise
provide for a complete or partial discharge in advance of a scheduled repayment
date with respect to, or waive any right under, any indebtedness for borrowed
money other than in the ordinary course of its business consistent with past
practice;
(I) enter into, adopt, amend in any material respect (except as may
be required by applicable law) or terminate any Company Plan or, as the case may
be, or other agreement, arrangement, plan or policy between such party or one of
its Subsidiaries and one or more of its directors, officers or employees, or,
increase in any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any agreement,
arrangement, plan or policy in effect as of the date hereof, other than in
respect to any employee who is not a director or officer in the ordinary course
of business consistent with past practice;
(J) enter into any Contract or amend or modify any existing
Contract, or engage in any new transaction with (a) any Person not an affiliate
of the Company which such Contract obligates the Company to expend $5,000, other
than Contracts with any customer of the Company which obligate the Company to
expend $100,000. and (b) any affiliate of the Company or any of its
Subsidiaries;
(K) make any capital expenditures or commitments for additions to
plant, property or equipment constituting capital assets in excess of $5,000
individually or $25,000 in the aggregate;
27
(L) incur any indebtedness for borrowed money with respect to
Automated Language Processing Systems Ltd. or Alpnet Canada Inc other than
utilizing the existing CIBC bank line for amounts up to C$2,000,000 in the
aggregate. For any use of the CIBC bank line over and above such aggregate
amount the prior written consent of Parent must be obtained by Company.
(M) make any material change in the lines of business in which it
participates or is engaged; or
(N) enter into any Contract, commitment or arrangement to do or
engage in any of the foregoing.
(c) Advice of Changes. Each party shall confer on a regular and
frequent basis with the other with respect to its business and operations and
other matters relevant to the Merger, and shall promptly advise the other,
orally and in writing, of any change or event, including, without limitation,
any complaint, investigation or hearing by any Governmental or Regulatory
Authority (or communication indicating the same may be contemplated) or the
institution or threat of litigation, having, or which, insofar as can be
reasonably foreseen, could have, a material adverse effect on the Company, and
its Subsidiaries taken as a whole or on the ability of the Company or Parent, as
the case may be, to consummate the transactions contemplated hereby; provided
that no party shall be required to make any disclosure to the extent such
disclosure would constitute a violation of any applicable law.
(d) Notice and Cure. Each of Parent and the Company will notify in
writing the other of, and will use all commercially reasonable efforts to cure
before the Closing, any event, transaction or circumstance, as soon as practical
after it becomes known to such party, that causes or will cause any covenant or
agreement of Parent or the Company under this Agreement to be breached in any
material respect or that renders or will render untrue any representation or
warranty of Parent or the Company contained in this Agreement in any material
respect. Each of Parent and the Company also will notify the other in writing
of, and will use all commercially reasonable efforts to cure, before the
Closing, any material violation or breach, as soon as practical after it becomes
known to such party, of any representation, warranty, covenant or agreement made
by Parent or the Company. No notice given pursuant to this paragraph, which has
been cured prior to the time the condition contained in Section 8.01(b)(iii) is
required to be fulfilled, shall have any effect on the representations,
warranties, covenants or agreements contained in this Agreement for purposes of
determining satisfaction of any condition contained herein.
(e) Fulfillment of Conditions. Subject to the terms and conditions of
this Agreement, each of Parent and the Company will take or cause to be taken
all commercially reasonable steps necessary or desirable and proceed diligently
and in good faith to satisfy each condition to the other's obligations contained
in this Agreement and to consummate and make effective the transactions
contemplated by this Agreement, and neither Parent nor the Company will, nor
will it permit any of its Subsidiaries to, take or fail to take any action that
could be reasonably expected to result in the non-fulfillment of any such
condition.
28
5.02. No Company Solicitations. Prior to the Effective Time, the
Company agrees (a) that neither it nor any of its Subsidiaries or other
affiliates shall, and they shall use their reasonable best efforts to cause
their respective Representatives (as defined in Section 9.11(g)) not to,
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to Company shareholders) with respect to a
merger, consolidation or other business combination including the Company or any
of its Subsidiaries, or any acquisition or similar transaction (including,
without limitation, a tender or exchange offer) involving the purchase of all or
any significant portion of the assets of the Company and its Subsidiaries taken
as a whole or 10% or more of the outstanding shares of Company Common Stock (any
such transaction, other than the transactions contemplated by this Agreement,
being hereinafter referred to as a "Company Alternative Transaction"), or (u)
engage in any negotiations concerning (v) provide any confidential information
or data to (w) have any discussions with any person relating to, (x) enter into
any contract agreement, understanding or arrangement relating to, (y) consummate
or (z) otherwise facilitate any effort or attempt to make or implement, a
Company Alternative Transaction; (b) that it will immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
person with respect to any of the foregoing, and it will take the necessary
steps to inform such person with respect to any of the foregoing; and (c) that
it will notify Parent immediately if any such inquiries, proposals or offers are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with it by any person;
provided, however, that nothing contained in this Section 5.02 or in Section
6.03(b) shall prohibit the Board of Directors of the Company from (i) furnishing
information to or entering into discussions or negotiations with any person with
sufficient financial resources to consummate the applicable proposed Company
Alternative Transaction that makes a bona fide unsolicited written proposal not
subject to any financing condition for a Company Alternative Transaction if, and
only to the extent that, (A) the Board of Directors of the Company concludes in
good faith that such proposal if consummated is reasonably likely to result in a
Superior Company Transaction (as defined in Section 6.03(b)), and that such
Company Alternative Transaction is reasonably likely to be consummated (B) the
Board of Directors of the Company, based upon the advice of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇, determines in good faith that the failure to so act is reasonably
likely to result in the Board of Directors breaching its fiduciary duties to
shareholders imposed by law, (C) the Company shall have entered into a
confidentiality and standstill agreement with such person in customary form
which names Parent and Sub as an intended beneficiary and which is reasonably
acceptable to Parent, (D) prior to furnishing such information to, or entering
into discussions or negotiations with, such person, the Company provides written
notice to Parent to the effect that it is furnishing information to, or entering
into discussions or negotiations with, such person, which notice shall identify
such person and the proposed terms of such Company Alternative Transaction in
reasonable detail, and (E) the Company keeps Parent informed of the status and
all material information with respect to any such discussions or negotiations,
including all written correspondence and draft and executed agreements; and (ii)
to the extent required, complying with Rule 14e-2 promulgated under the Exchange
Act with regard to any proposal relating to a Company Alternative Transaction.
Nothing in this Section 5.02 or in Section 6.03(b) shall (x) permit the Company
to terminate this Agreement (except in accordance with Section 8.01), (y) permit
the Company to enter into any agreement with respect to a Company Alternative
Transaction for so long as this Agreement remains in effect (other than a
29
confidentiality and standstill agreement under the circumstances described
above), or (z) affect any other obligation of the Company under this Agreement.
5.03. Third Party Standstill Agreements. During the period from the
date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it is a party. During such period, the Company
shall reasonably enforce, to the fullest extent permitted under applicable law,
the provisions of any such agreement, including, but not limited to, by
obtaining injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court having jurisdiction.
5.04. Conduct of Business of Sub. Prior to the Effective Time, except
as may be required by applicable law and subject to the other provisions of this
Agreement, Parent shall cause Sub to (a) perform its obligations under this
Agreement in accordance with its terms, (b) not incur directly or indirectly any
material liabilities or obligations other than those incurred in connection with
the Merger, (c) not engage directly or indirectly in any business or activities
of any type or kind and not enter into any agreements or arrangements with any
person, or be subject to or bound by any obligation or undertaking, which is not
contemplated by this Agreement and (d) not create, grant or suffer to exist any
Lien upon its properties or assets which would attach to any properties or
assets of the Surviving Corporation after the Effective Time.
5.05. Takeover Statutes. If any "fair price", "moratorium", "control
share acquisition" or other form of anti-takeover statute or regulation shall
become applicable to the transactions contemplated hereby, the Company and the
members of the Board of Directors of the Company shall grant such approvals and
take such actions as are reasonably necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and thereby and otherwise act to eliminate or minimize the
effects of such statute or regulation on the transactions contemplated hereby
and thereby.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01. Access to Information; Confidentiality. Each of the Company and
Parent shall, and shall cause each of its Subsidiaries to, throughout the period
from the date hereof to the Effective Time, (i) provide the other party and its
Representatives with full access, upon reasonable prior notice and during normal
business hours, to all officers, employees, agents, lawyers and accountants of
the Company or Parent, as the case may be, and its Subsidiaries and their
respective assets, properties, books and records, but only to the extent that
such access does not unreasonably interfere with the business and operations of
the Company or Parent, as the case may be, and its Subsidiaries, and (ii)
furnish promptly to such persons (x) a copy of each report, statement, schedule
and other document filed or received by the Company or Parent, as the case may
be, or any of its Subsidiaries pursuant to the requirements of federal or state
securities laws and each material report, statement, schedule and other document
filed with any other Governmental or Regulatory Authority, and (y) all other
information and data (including, without limitation, copies of Contracts,
Company Plans and other books and records) concerning the business and
operations of the Company or Parent, as the case may be, and its Subsidiaries as
30
the other party or any of such other persons reasonably may request. No
investigation pursuant to this paragraph or otherwise shall affect any
representation or warranty contained in this Agreement or any condition to the
obligations of the parties hereto.
6.02. Preparation of Proxy Statement. Company and Parent shall, as
promptly as practicable following the expiration of the Offer, if required,
prepare and file with the SEC the Proxy Statement and the Company shall use all
reasonable efforts to respond as promptly as practicable to any comments of the
SEC with respect thereto and to cause the Proxy Statement to be mailed to the
Company's shareholders as promptly as practicable following the expiration of
the Offer. Company shall promptly notify Parent upon the receipt of any comments
from the SEC or its staff or any request from the SEC or its staff for
amendments or supplements to the Proxy Statement and shall provide Parent with
copies of all correspondence between Company and its representatives, on the one
hand, and the SEC and its staff, on the other hand. Notwithstanding the
foregoing, prior to filing or mailing the Proxy Statement (or any amendment or
supplement thereto) or responding to any comments of the SEC with respect
thereto, Company (i) shall provide Parent an opportunity to review and comment
on such document or response, (ii) shall include in such document or response
all comments reasonably proposed by Parent and (iii) shall not file or mail such
document or respond to the SEC prior to receiving Parent's approval, which
approval shall not be unreasonably withheld or delayed.
6.03. Approval of Shareholders. (a) Parent shall, through its Board of
Directors, duly call, give notice of, convene and hold a meeting of its
shareholders (the "Parent Shareholders' Meeting") for the purpose of voting on
the Parent Proposal (the "Parent Shareholders' Approval"), Parent shall, through
its Board of Directors, include in the circular to shareholders convening the
Parent Shareholders' Meeting the recommendation of the Board of Directors of
Parent that the shareholders of Parent approve the Parent Proposal.
(b) The Company shall, through its Board of Directors, duly call, give
notice of, convene and hold a meeting of its shareholders (the "Company
Shareholders' Meeting" and, together with the Parent Shareholders' Meeting, the
"Shareholders Meetings") for the purpose of voting on the adoption of this
Agreement (the "Company Shareholders' Approval"), and shall use its reasonable
best efforts to solicit proxies from Company shareholders in order to obtain the
Company Shareholders' Approval. Except as provided in the next sentence, the
Company shall, through its Board of Directors, include in the Proxy Statement
the recommendation of the Board of Directors of the Company that the
shareholders of the Company adopt this Agreement. The Board of Directors of the
Company shall be permitted to (a) not recommend to the Company's shareholders
that they give the Company Shareholders' Approval or (b) withdraw or modify in a
manner adverse to Parent its recommendation to the Company's shareholders that
they give the Company Shareholders' Approval (including in connection with its
recommendation of a Superior Company Transaction), but in either case only (x)
if and to the extent that (i) a bona fide unsolicited written proposal for a
Superior Company Transaction not subject to any financing condition is pending
at such time from a person with sufficient financial resources to consummate
such pending Superior Company Transaction and (ii) the Board of Directors of the
Company determines in its good faith judgment that it is necessary to so fail to
recommend, or to so withdraw or modify its recommendation, in order to comply
with its fiduciary duties to shareholders under applicable law, which
determination shall be based upon the advice of
31
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ and (y) the Company and its Subsidiaries and
other affiliates and their Representatives shall have complied with their
obligations under Section 5.02 with respect to such Superior Company
Transaction. "Superior Company Transaction" means any Company Alternative
Transaction which (i) relates to at least 50% of the outstanding shares of
Company Common Stock or all or substantially all of the assets of the Company
and its Subsidiaries taken as a whole, (ii) is not conditioned on the receipt of
financing, (iii) is made by a person who the Board of Directors of the Company
has reasonably concluded in good faith will have adequate financial resources
to, and will not encounter significant regulatory obstacles in order to,
consummate such Company Alternative Transaction (iv) involves only the payment
of cash and (v) is on terms that the Board of Directors of the Company
determines in its good faith judgment, taking into account all relevant factors,
(including the advice of Company Financial Advisor or a successor approved by
Parent, which approval shall not be unreasonably withheld, and all the terms and
conditions of the Company Alternative Transaction, including any break-up fees,
expense reimbursement provisions and conditions to consummation) are more
favorable and provide greater value to all of the Company's shareholders than
this Agreement and the Merger taken as a whole.
(c) Parent and the Company shall coordinate and cooperate with respect
to the timing of the Shareholders' Meetings. Parent shall vote the shares of
Company Common Stock owned by Parent, and shall use its best efforts to cause
its Subsidiaries and other affiliates to vote the shares of Company Common Stock
owned by its Subsidiaries and other affiliates, in favor of the adoption of this
Agreement. The Company shall vote the shares of Parent Common Stock owned by the
Company, and shall use its best efforts to cause its Subsidiaries and other
affiliates to vote the shares of Parent Common Stock owned by its Subsidiaries
and other affiliates, in favor of the Parent Proposal.
6.04. Regulatory and Other Approvals. Subject to the terms and
conditions of this Agreement and without limiting the provisions of Sections
6.02 and 6.03, prior to consummation of the Offer Company will , as promptly as
practicable, (a) obtain all consents, approvals or actions of, make all filings
with and give all notices to Governmental or Regulatory Authorities or any other
public or private third parties listed on Schedule 3.04 or required of the
Company or any of their Subsidiaries to consummate the Merger or the Offer and
the other matters contemplated hereby, and (b) provide such other information
and communications to such Governmental or Regulatory Authorities or other
public or private third parties as the other party or such Governmental or
Regulatory Authorities or other public or private third parties may request in
connection therewith. In addition to and not in limitation of the foregoing,
each of the parties, as applicable, will (x) take promptly all actions necessary
to make any filings required of Parent and the Company or their affiliates under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended ("HSR
Act"), (y) comply at the earliest practicable date with any request for
additional information received by such party or its affiliates from the Federal
Trade Commission (the "FTC") or the Antitrust Division of the Department of
Justice (the "Antitrust Division") pursuant to the HSR Act, and (z) cooperate
with the other party in connection with such party's filings under the HSR Act
and in connection with resolving any investigation or other inquiry concerning
the Merger or the other matters contemplated by this Agreement commenced by
either the FTC or the Antitrust Division or state attorneys general; provided,
however, that nothing herein shall obligate Parent to agree to hold separate,
sell or otherwise
32
dispose of any Subsidiary or Investment of Parent or of the Company or any
assets or properties thereof.
6.05. Directors' and Officers' Indemnification and Insurance. (a) Until
the third anniversary of the Effective Time and for so long thereafter as any
claim for indemnification asserted on or prior to such date has not been fully
adjudicated, the Surviving Corporation shall indemnify, defend and hold harmless
each person who is now, or has been at any time prior to the date hereof or who
becomes prior to the Effective Time, a director or officer of the Company or any
of its Subsidiaries (the "Indemnified Parties") against (i) all losses, claims,
damages, costs and expenses (including reasonable attorneys' fees), liabilities,
judgments and settlement amounts that are paid or incurred in connection with
any claim, action, suit, proceeding or investigation (whether civil, criminal,
administrative or investigative and whether asserted or claimed prior to, at or
after the Effective Time) that is based on, or arises out of, the fact that such
Indemnified Party is or was a director or officer of the Company or any of its
Subsidiaries and relates to or arises out of any action or omission occurring at
or prior to the Effective Time ("Indemnified Liabilities"), and (ii) all
Indemnified Liabilities based on, or arising out of, or pertaining to this
Agreement or the transactions contemplated hereby, in each case to the full
extent a corporation is permitted under applicable law to indemnify its own
directors or officers, as the case may be; provided that the Surviving
Corporation shall not be liable for any settlement of any claim effected without
its written consent; and provided, further, that the Surviving Corporation shall
not be liable for any Indemnified Liabilities which occur as a result of the
Indemnified Party's criminal or fraudulent actions. Without limiting the
foregoing, in the event that any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Party (whether arising prior to
or after the Effective Time), (w) the Surviving Corporation will pay expenses in
advance of the final disposition of any such claim, action, suit, proceeding or
investigation to each Indemnified Party to the full extent permitted by
applicable law; provided that the person to whom expenses are advanced provides
any undertaking required by applicable law to repay such advance if it is
ultimately determined that such person is not entitled to indemnification; (x)
the Indemnified Parties shall retain counsel satisfactory to the Surviving
Corporation; (y) the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; and (z) the Surviving Corporation shall use all
commercially reasonable efforts to assist in the defense of any such matter. Any
Indemnified Party wishing to claim indemnification under this Section, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify the Surviving CORPORATION, but the failure so to notify the Surviving
Corporation shall not relieve the Surviving Corporation from any liability which
it may have under this paragraph except to the extent such failure materially
prejudices the Surviving Corporation. The Indemnified Parties as a group may
retain only one law firm to represent them with respect to each such matter
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Parties in which case, the Indemnified Parties may retain more than one law
firm.
(b) Except to the extent required by law, until the third anniversary
of the Effective Time, Parent will not take any action, as a stockholder of the
Surviving Corporation, so as to amend, modify or repeal the provisions for
indemnification of directors, officers or employees contained in the
certificates or articles of incorporation or bylaws (or other
33
comparable charter documents) of the Surviving Corporation and its Subsidiaries
(which as of the Effective Time shall be the same for such individuals as those
maintained by the Company and its Subsidiaries on the date hereof) in such a
manner as would adversely affect the rights of any individual who shall have
served as a director, officer or employee of the Company or any of its
Subsidiaries prior to the Effective Time to be indemnified by such corporations
in respect of their serving in such capacities prior to the Effective Time; it
being understood and agreed that no restriction shall apply to any liquidation
or dissolution of the Surviving Corporation or any bankruptcy proceeding
involving the Surviving Corporation.
(c) The Surviving Corporation shall, until the third anniversary of the
Effective Time and for so long thereafter as any claim for insurance coverage
asserted on or prior to such date has not been fully adjudicated, cause to be
maintained in effect, to the extent available, the policies of directors' and
officers' liability insurance maintained by the Company and its Subsidiaries as
of the date hereof (or policies of at least the same coverage and amounts
containing terms that are no less advantageous to the insured parties) with
respect to claims arising from facts or events that occurred on or prior to the
Effective Time; provided that, in no event shall the Surviving Corporation be
obligated to expend in order to maintain or procure insurance coverage pursuant
to this paragraph any amount per annum in excess of 115% of the aggregate
premiums payable by the Company and its Subsidiaries for the current fiscal year
(on an annualized basis) for such purpose (the "Maximum Amount"), and if the
Surviving Corporation is unable to obtain the insurance required by this Section
6.06 for the Maximum Amount, then it shall obtain as much comparable insurance
as possible for an annual premium equal to the Maximum Amount.
(d) The provisions of this Section are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and each party entitled
to insurance coverage under paragraph (c) above, respectively, and his or her
heirs and legal representatives, and shall be in addition to any other rights an
Indemnified Party may have under the certificate of incorporation or bylaws of
the Surviving Corporation or any of its Subsidiaries, under applicable law or
otherwise.
6.06. Expenses. Except as set forth in Section 8.02, whether or not the
Merger is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such cost or expense, except that the expenses incurred in connection
with printing and mailing the Proxy Statement, as well as any filing fees
relating thereto, shall be shared equally by Parent and the Company.
6.07. Brokers or Finders. Each of Parent and the Company represents, as
to itself and its affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any broker's
or finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement except the Company Financial
Advisor, whose fees and expenses will be paid by the Company in accordance with
the Company's agreement with such firm (a true and complete copy of which has
been delivered by the Company to Parent prior to the execution of this
Agreement), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, whose fees and expenses will be paid by Parent
in accordance with Parent's agreement with such firm and each of Parent and the
Company shall indemnify and hold the other harmless from and against
34
any and all claims, liabilities or obligations with respect to any other such
fee or commission or expenses related thereto asserted by any person on the
basis of any act or statement alleged to have been made by such party or its
affiliate.
6.08. Conveyance Taxes. The Company and Parent shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated by this Agreement that are
required or permitted to be filed on or before the Effective Time.
6.09. Option Cancellations. At the request of Parent, the Company (or,
if appropriate, any committee administering any Options or plans or agreements
relating thereto) will use its reasonable best efforts to make adjustments to
the terms of all outstanding employee stock Options to purchase shares of
Company Common Stock, whether or not presently exercisable, granted by the
Company or any Company Subsidiary under any Option or plan or agreement related
thereto in order to provide that each such Option outstanding immediately prior
to the Effective Time shall be canceled or exercised.
6.10. Non-Solicitation of Employees. Parent and Sub agree that, until
the Effective Time, or if the transactions contemplated by this Agreement are
not consummated for two years after the termination of the Letter of Intent,
they will not, and will not permit any of their employees, affiliates or agents
to directly or indirectly solicit, induce or hire away, or assist any third
party in soliciting, diverting or hiring away, any key employee of ALPNET;
provided that, it shall not be a breach of this section 6.11 if any key employee
of ALPNET applies for employment with Parent or Sub as a result of an employment
advertisement placed by Parent or Sub.
ARTICLE VII
CONDITIONS
7.01. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:
(a) Shareholder Approval. This Agreement shall have been adopted by the
requisite vote of the shareholders of the Company under the Utah Code. The
shareholders of Parent shall have approved the Parent Proposal, this Agreement
and the Offer by the requisite vote of such shareholders under applicable law.
(b) No Injunctions or Restraints. No court of competent jurisdiction or
other competent Governmental or Regulatory Authority shall have enacted, issued,
promulgated, enforced or entered any law or order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making
illegal or otherwise restricting, preventing or prohibiting consummation of the
Merger or the other transactions contemplated by this Agreement.
35
7.02. Conditions to Obligation of Parent and Sub to Effect the Merger.
The obligation of Parent and Sub to effect the Merger is further subject to the
fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by Parent and
Sub in their sole discretion):
(a) Representations and Warranties. Each of the representations and
warranties made by the Company in this Agreement shall be true and correct in
all material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall be
true and correct in all respects giving effect to such standard) as of the
Closing Date as though made on and as of the Closing Date or, in the case of
representations and warranties made as of a specified date earlier than the
Closing Date, on and as of such earlier date, except as affected by the
transactions contemplated by this Agreement.
(b) Performance of Obligations. The Company shall have performed and
complied with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by the Company at
or prior to the Closing.
(c) Governmental and Regulatory and Other Consents and Approvals. Other
than the filing provided for by Section 1.03, all consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
or any other public or private third parties required of Parent, the Company or
any of their Subsidiaries to consummate the Merger and the other matters
contemplated hereby, the failure of which to be obtained or taken could be
reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole or Parent and its Subsidiaries taken as a whole or
to materially diminish the value of the transactions contemplated by this
Agreement to Parent, or on the ability of Parent and the Company to consummate
the transactions contemplated hereby, shall have been obtained, all in form and
substance reasonably satisfactory to Parent.
(d) Proceedings. All proceedings to be taken on the part of the Company
in connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Parent, and Parent shall have received copies of all such documents
and other evidences as Parent may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
(e) Net Debt. The Company's net external debt shall not exceed $14
million. For purposes of this Agreement, net external debt shall include all
overdrafts, borrowings, indebtedness for borrowed money, loans, debt, hire
purchase, finance leases and similar commitments to third parties (other than
trade payables, accrued payroll and related benefits, accrued charges relating
to restructuring or related activities, other accrued expenses and income taxes
payable, incurred in the ordinary course of business consistent with past
practice) owed by the Company or its Subsidiaries to any person other than the
Company or its Subsidiaries less all cash balances held by the Company or its
Subsidiaries with any person other than the Company or its Subsidiaries. Any
reduction in cash balances arising from restructuring actions taken prior
36
to closing, upon the mutual agreement of Company and Parent, evidenced by the
prior written consent of Parent that such actions are to be excluded from the
calculation of net external debt, shall be excluded from the calculation of net
external debt.
(f) Net Assets. The net assets of the Company and its subsidiaries on a
consolidated basis shall not be less than $5 million. Any reduction in net
assets arising from restructuring actions taken prior to the Closing, upon the
mutual agreement of the Company and Parent, shall be excluded from the
calculation of net assets.
7.03. Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger is further subject to the
fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by the Company
in its sole discretion):
(a) Representations and Warranties. Each of the representations and
warranties made by Parent and Sub in this Agreement shall be true and correct in
all material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall be
true and correct in all respects giving effect to such standard) as of the
Closing Date as though made on and as of the Closing Date or, in the case of
representations and warranties made as of a specified date earlier than the
Closing Date, on and as of such earlier date, except as affected by the
transactions contemplated by this Agreement.
(b) Performance of Obligations. Parent and Sub shall have performed and
complied with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by Parent or Sub
at or prior to the Closing.
(c) Proceedings. All proceedings to be taken on the part of Parent and
Sub in connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Company, and the Company shall have received copies of all such
documents and other evidences as the Company may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
(d) Purchase of Shares in the Offer. Sub shall have previously accepted
for payment and paid for the shares of Company Common Stock validly tender
pursuant to the Offer.
(e) Governmental and Regulatory and Other Consents and Approvals. Other
than the filing provided for by Section 1.03, all consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
or any other public or private third parties required of Parent, the Company or
any of their Subsidiaries to consummate the Merger and the other matters
contemplated hereby, the failure of which to be obtained or taken could be
reasonably expected to have a material adverse effect on the ability of the
Company to consummate the transactions contemplated hereby or to materially
diminish the value of the transactions contemplated by this Agreement to Parent,
or on the ability of Parent and the
37
Company to consummate the transactions contemplated hereby, shall have been
obtained, all in form and substance reasonably satisfactory to Parent.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01. Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether prior to or after the Company Shareholders' Approval or
the Parent Shareholders' Approval:
(a) By mutual written agreement of the parties hereto duly authorized
by action taken by or on behalf of their respective Boards of Directors;
(b) By either the Company or Parent upon notification to the
non-terminating party by the terminating party:
(i) by either Parent or the Company if (A) as a result of the
failure of any of the conditions set forth in Exhibit A, the Offer shall have
terminated or expired in accordance with its terms without Sub having purchased
any shares of Company Common Stock pursuant to the Offer or (B) Sub shall not
have accepted for payment any shares of Company Common Stock pursuant to the
Offer prior to February 10, 2002; provided, however, that the right to terminate
this Agreement pursuant to this Section 8.01(b)(i) shall not be available to any
party whose failure to perform any of its obligations under this Agreement
results in the failure of the Offer to be consummated by such time;
(ii) if the Company Shareholders' Approval shall not be obtained by
reason of the failure to obtain the requisite vote upon a vote held at a meeting
of such shareholders, or any adjournment thereof, called therefor, provided that
the Company shall have no right to terminate this Agreement if such failure is
due to delay or default on the part of the Company;
(iii) if there has been a material breach of any representation,
warranty, covenant or agreement on the part of the non-terminating party set
forth in this Agreement, which breach has not been cured within thirty (30) days
following receipt by the non-terminating party of written notice of such breach
from the terminating party;
(iv) if any court of competent jurisdiction or other competent
Governmental or Regulatory Authority shall have issued an order making illegal
or otherwise restricting, preventing or prohibiting the Merger and such order
shall have become final and nonappealable; or
(v) if the Parent Shareholders' Approval shall not be obtained with
respect to the Parent Proposal by reason of the failure to obtain the requisite
vote upon a vote held at a meeting of such shareholders, or any adjournment
thereof, called therefor, unless such failure is due to delay or default on the
part of Parent.
38
(c) By the Company if the Board of Directors of the Company shall
have determined in good faith, based upon the advice of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇, that failure to terminate this Agreement is reasonably likely to
result in the Board of Directors breaching its fiduciary duties to shareholders
under applicable law by reason of the pendency of an unsolicited, bona fide
proposal for a Superior Company Transaction, but only if the Company and its
Subsidiaries and other Representatives of the Company shall have complied with
their obligations under Section 5.02; provided, however, that the Company may
not terminate this Agreement pursuant to this clause (c) unless five business
days shall have elapsed after delivery to Parent of a written notice of such
determination by such Board of Directors; or
(d) By Parent if (x) the Board of Directors of the Company (or any
committee thereof) shall have (i) failed to recommend or withdrawn or modified
in a manner adverse to Parent its approval or recommendation of this Agreement,
the Offer and the Merger, (ii) recommended or taken no position with respect to
a proposal for a Company Alternative Transaction or (iii) following the
announcement or making of a proposal for a Company Alternative Transaction,
failed to reconfirm its recommendation of this Agreement and the Merger within
96 hours following a written request for such reconfirmation by Parent or (y)
there shall have occurred the entry by a court having jurisdiction in the
premises of (i) a decree or order for relief in respect of the Company or any
Subsidiary in an involuntary case or proceeding under any applicable federal or
state or foreign bankruptcy, insolvency, reorganization or other similar law or
(ii) a decree or order adjudging the Company or any Subsidiary a bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company or any
Subsidiary under any applicable federal or state or foreign law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any Subsidiary or of any substantial part of
its property, or ordering the winding up or liquidation of its affairs.
8.02. Effect of Termination. (a) If this Agreement is validly
terminated by either the Company or Parent pursuant to Section 8.01, this
Agreement will forthwith become null and void and there will be no liability or
obligation on the part of either the Company or Parent (or any of their
respective Representatives or affiliates), except (i) that the provisions of
Sections 6.06 and 6.07 and this Section 8.02 will continue to apply following
any such termination, (ii) that nothing contained herein shall relieve any party
hereto from liability for breach of its representations, warranties, covenants
or agreements contained in this Agreement and (iii) as provided in paragraph (b)
below.
(b) If (x) the Company shall have terminated this Agreement pursuant
to Section 8.01(c) or (y) Parent shall have terminated this Agreement pursuant
to Section 8.01(b)(iii) or Section 8.01(d) then, in either of such cases, the
Company shall pay Parent a termination fee of $300,000 payable by wire transfer
of immediately available funds on the tenth business day following any such
termination.
(c) If following the public announcement of a proposal for a Company
Alternative Transaction by any person, the Company shall have terminated this
Agreement pursuant to Section 8.01(b)(i) or 8.01(b)(ii), and, within twelve (12)
months after any
39
termination described in this sentence, the Company or any of its Subsidiaries
shall have entered into a binding agreement providing for the consummation of
(and which in fact is consummated pursuant to such binding agreement), or shall
have consummated a Company Alternative Transaction, then, in any such cases, the
Company shall pay Parent a termination fee of $300,000. Any fee payable under
this Section 8.02(c) shall be paid by wire transfer of immediately available
funds concurrent with or prior to the consummation of such Company Alternative
Transaction. (d)Each of Parent and the Company acknowledges that the agreements
contained in the preceding paragraph is an integral part of the transactions
contemplated by this Agreement and that, without these agreements, neither
Parent nor the Company would enter into this Agreement; accordingly, if the
Company fails promptly to pay the amount due pursuant to either paragraph, and
in order to obtain such payment, Parent commences a suit which results in a
judgment against the Company for the amounts set forth in such paragraph, Parent
shall be entitled to have its cost and expenses (including reasonable attorneys'
fees and expenses) reimbursed in connection with such suit, together with
interest on the amount of the fee at the prime rate of The Chase Manhattan Bank
in effect on the date such payment was required to be made.
8.03. Amendment. This Agreement may be amended, supplemented or
modified by action taken by or on behalf of the respective Boards of Directors
of the parties hereto at any time prior to the Effective Time, whether prior to
or after the Company Shareholders' Approval or the Parent Shareholders' Approval
shall have been obtained, but after such adoption and approval only to the
extent permitted by applicable law. No such amendment, supplement or
modification shall be effective unless set forth in a written instrument duly
executed by or on behalf of each party hereto.
8.04. Waiver. At any time prior to the Effective Time any party
hereto, by action taken by or on behalf of its Board of Directors, may to the
extent permitted by applicable law (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties or compliance with the
covenants or agreements of the other parties hereto contained herein or in any
document delivered pursuant hereto or (iii) waive compliance with any of the
conditions of such party contained herein. No such extension or waiver shall be
effective unless set forth in a written instrument duly executed by or on behalf
of the party extending the time of performance or waiving any such inaccuracy or
non-compliance. No waiver by any party of any term or condition of this
Agreement, in any one or more instances, shall be deemed to be or construed as a
waiver of the same or any other term or condition of this Agreement on any
future occasion.
ARTICLE IX
GENERAL PROVISIONS
9.01. Non-Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements contained
in this Agreement or in any instrument delivered pursuant to this Agreement
shall not survive the Merger but shall terminate at the Effective Time, except
for the agreements contained in Article I and Article II, in Sections 6.06, 6.07
and 6.08, and this Article IX.
40
9.02. Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid or by recognized overnight courier) to the parties at the following
addresses or facsimile numbers:
If to Parent or Sub, to:
SDL PLC
SDL International
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile Number: ▇▇▇ (▇)▇▇▇▇ ▇▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
With a required copy to:
DECHERT
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
Facsimile: 44 207 353 3683
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇/▇▇▇▇▇ ▇▇▇▇▇▇
If to the Company, to:
ALPNET INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇/▇▇▇▇ ▇▇▇▇▇▇▇
With a required copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
Gateway Tower East Suite 900
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇/▇▇▇▇▇▇ ▇. ▇▇▇▇
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail or recognized overnight courier in the manner described above to
41
the address as provided in this Section, be deemed given upon receipt (in each
case regardless of whether such notice, request or other communication is
received by any other person to whom a copy of such notice, request or other
communication is to be delivered pursuant to this Section). Any party from time
to time may change its address, facsimile number or other information for the
purpose of notices to that party by giving notice specifying such change to the
other parties hereto.
9.03. Entire Agreement; Incorporation of Exhibits. (a) This
Agreement supersedes all prior discussions and agreements among the parties
hereto with respect to the subject matter hereof, other than the Confidentiality
Agreement, the Promissory Note, the Security and Pledge Agreement, the Guarantee
Agreement, the two Pledge Agreements regarding the Canadian subsidiaries and any
related documents, which shall survive the execution and delivery of this
Agreement in accordance with its terms, and contains, together with the
Confidentiality Agreement, the sole and entire agreement among the parties
hereto with respect to the subject matter hereof.
(b) The schedules and any Exhibit attached to this Agreement and
referred to herein are hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein.
9.04. Public Announcements. Except as otherwise required by law or
the rules of any applicable securities exchange or national market system, so
long as this Agreement is in effect, Parent and the Company will not, and will
not permit any of their respective Representatives to, issue or cause the
publication of any press release or make any other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld. Parent and
the Company will cooperate with each other in the development and distribution
of all press releases and other public announcements with respect to this
Agreement and the transactions contemplated hereby, and will furnish the other
with drafts of any such releases and announcements as far in advance as
practicable.
9.05. No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and except as provided in Section
6.06(d), it is not the intention of the parties to confer third-party
beneficiary rights upon any other person.
9.06. No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto and any attempt to
do so will be void, except that Sub may assign any or all of its rights,
interests and obligations hereunder to another direct or indirect wholly-owned
Subsidiary of Parent, provided that any such Subsidiary agrees in writing to be
bound by all of the terms, conditions and provisions contained herein. Subject
to the preceding sentence, this Agreement is binding upon, inures to the benefit
of and is enforceable by the parties hereto and their respective successors and
assigns.
42
9.07. Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define, modify or limit
the provisions hereof.
9.08. Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law or
order, and if the rights or obligations of any party hereto under this Agreement
will not be materially and adversely affected thereby, (i) such provision will
be fully severable, (ii) this Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof, and (iii) the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.
9.09. Governing Law; Consent to Jurisdiction. (a) This Agreement
shall be governed by and construed in accordance with the laws of the State of
Utah applicable to a contract executed and performed in such State, without
giving effect to the conflicts of laws principles thereof.
(b) Any suit, action or proceeding seeking to enforce any provision
of, or based on any matter arising out of or in connection with, this Agreement
or the transactions contemplated by this Agreement may be brought against any of
the parties in any federal court located in Salt Lake City, State of Utah or any
Utah state court, and each of the parties hereto hereby consents to the
exclusive jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and waives any objection to
venue laid therein. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the State of Utah.
Without limiting the generality of the foregoing, each party hereto agrees that
service of process upon such party at the address referred to in Section 9.02,
together with written notice of such service to such party, shall be deemed
effective service of process upon such party.
9.10. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specified terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of competent
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
9.11. Certain Definitions. As used in this Agreement:
(a) except as provided in Section 6.04, the term "affiliate," as
applied to any person, shall mean any other person directly or indirectly
controlling, controlled by, or under common control with, that person; for
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by" and "under common control with"), as
applied to any person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
person, whether through the ownership of voting securities, by contract or
otherwise;
43
(b) a person will be deemed to "beneficially" own securities if such
person would be the beneficial owner of such securities under Rule 13d-3 under
the Exchange Act, including securities which such person has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time);
(c) the term "business day" means a day other than Saturday, Sunday
or any day on which banks located in the cities of Salt Lake City, New York and
London are authorized or obligated to close;
(d) the term "knowledge" or any similar formulation of "knowledge"
shall mean, (i) with respect to the Company, the actual knowledge, as of the
date hereof, of the individuals listed in Schedule 9.11(d)(i) and (ii) with
respect to Parent, the knowledge of the individuals listed in Section
9.11(d)(ii);
(e) any reference to any event, change or effect being "material" or
"materially adverse" or having a "material adverse effect" on or with respect to
an entity (or group of entities taken as a whole) means any such event, change
or effect that is material or materially adverse, as the case may be, to the
business, assets, liabilities, condition (financial or otherwise), results of
operations or prospects of such entity (or of such group of entities taken as a
whole); to be deemed "material" or "materially adverse" or having a "material
adverse effect" the damages must exceed $300,000;
(f) the term "person" shall include individuals, corporations,
partnerships, trusts, limited liability companies and other entities and groups
(which term shall include a "group" as such term is defined in Section 13(d)(3)
of the Exchange Act);
(g) the "Representatives" of any entity means such entity's
directors, officers, employees, legal, investment banking and financial
advisors, accountants and any other agents and representatives;
(h) the term "Subsidiary" means, with respect to any Person, any
corporation, partnership, trust, limited liability company, joint venture or
other entity or organization, whether incorporated or unincorporated, of which
more than fifty percent (50%) of either the equity interests in, or the voting
control of, such corporation or other organization is, directly or indirectly
through Subsidiaries or otherwise, beneficially owned by such party; and
9.12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
44
IN WITNESS WHEREOF, each party hereto has caused this Agreement to
be signed by its officer thereunto duly authorized as of the date first above
written.
Attest: SDL PLC
/ s / ▇▇▇▇ ▇▇▇▇▇▇ By: / s / ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------- ----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
Attest: ARCTIC INC.
/ s / ▇▇▇▇ ▇▇▇▇▇▇ By: / s / ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------- ----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
Attest: ALPNET, INC.
/ s / ▇▇▇▇ ▇▇▇▇▇▇ By: / s / ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------- ----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President Finance
& Chief Financial Officer
45
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 of Company Common Stock
promptly after the termination or withdrawal of the Offer), to pay for any
shares of Company Common Stock tendered pursuant to the Offer unless (i) there
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer at least 50.1% of the outstanding shares of Company Common Stock (the
"Minimum Tender Condition"); and (ii) Parent shall have obtained the approval of
its stockholders to the Offer, the Merger and any related transactions or
events. Furthermore, notwithstanding any other term of the Offer or this
Agreement, Sub shall not be required to accept for payment or, subject as
aforesaid, to pay for any shares of Company Common Stock not theretofore
accepted for payment or paid for, and may terminate or amend the Offer or if, as
of the scheduled expiration date of the Offer (as extended) and before the
acceptance of such shares for payment or the payment therefor, any of the
following conditions exists:
(a) Any judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any
court or other Governmental or Regulatory Authority of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect preventing the purchase of shares
of Company Common Stock pursuant to the Offer or the Merger or there
shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or issued by any
Governmental or Regulatory Authority that would be reasonably likely
to result in any of the consequences referred to in paragraph (b)
below;
(b) There shall be pending any suit, action or proceeding by any
Governmental or Regulatory Authority, (i) challenging the
acquisition by Parent or Sub of any shares of Company Common Stock,
seeking to restrain or prohibit consummation of the Offer or the
Merger, or seeking to place limitations on the ownership of shares
of Company Common Stock (or shares of common stock of the Surviving
Corporation) by Parent or Sub, (ii) seeking to prohibit or limit the
ownership or operation by the Company or Parent and their respective
subsidiaries of any material portion of the business or assets of
the Company or Parent and their respective subsidiaries taken as a
whole, or to compel the Company or Parent and their respective
subsidiaries to dispose of or hold separate any material portion of
the business or assets of the Company or Parent and their respective
subsidiaries taken as a whole, as a result of the Offer, the Merger
or any of the other transactions contemplated by this Agreement, or
(iii) seeking to prohibit Parent or any of its subsidiaries from
effectively controlling in any material respect the business or
operations of the Company or Parent and their respective
subsidiaries taken as a whole;
(c) There shall have occurred and continue to exist (i) any general
suspension of trading in, or limitation on prices for, securities on
the New York Stock Exchange for a period in excess
A-1
of ten consecutive trading hours (excluding suspensions or
limitations resulting solely from physical damage or interference
with such exchange not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory) or
(iii) any limitation (whether or not mandatory) by any Governmental
or Regulatory Authority in the United States on the extension of
credit by banks or other financial institutions;
(d) Any representation and warranty of the Company set forth in this
Agreement shall not be materially true and correct, in each case,
(except that where any statement in a representation or warranty
expressly includes a standard of materiality, such statement shall
not be true and correct in all respects giving effect to such
standard) as of the date of this Agreement or as of the scheduled or
extended expiration of the Offer (except to the extent such
representation and warranty is expressly made as of an earlier date,
in which case as of such earlier date);
(e) The Company shall have failed to perform in any material respect its
obligations or to comply in any material respect with its agreements
or covenants required to be performed or complied with by it under
this Agreement;
(f) This Agreement shall have been terminated (i) by the Company in
accordance with its terms, which, in the reasonable judgment of Sub
or Parent, or (ii) by Sub or Parent in accordance with its terms,
which in the sole and reasonable judgment of Sub or Parent, in any
such case, and regardless of the circumstances giving rise to any
such condition (including any action or inaction by Parent or any of
its affiliates), makes it inadvisable to proceed with such
acceptance for payment or payment;
(g) There shall have occurred the entry by a court having jurisdiction
in the premises of (i) a decree or order for relief in respect of
the Company or any Subsidiary in an involuntary case or proceeding
under any applicable federal or state or foreign bankruptcy,
insolvency, reorganization or other similar law or (ii) a decree or
order adjudging the Company or any Subsidiary a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in
respect of the Company or any Subsidiary under any applicable
federal or state or foreign law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or any Subsidiary or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs;
(h) The Company's net external debt shall exceed $14 million. Net
external debt shall include all overdrafts, borrowings, indebtedness
for borrowed money, loans, debt, hire purchase, finance leases and
similar commitments to third parties (other than trade payables,
accrued payroll and related benefits, accrued charges related to
restructuring or related activities, other accrued expenses and
income taxes payable, incurred in the ordinary course of business
consistent with past practice) owed by the Company or its
Subsidiaries to any person other than the Company or its
Subsidiaries less all cash balances held by the Company or its
Subsidiaries with any person other than the Company or its
Subsidiaries. Any reduction in cash balances arising from
restructuring actions taken prior to closing,
A-2
upon the mutual agreement of Company and Parent, evidenced by the
prior written consent of Parent that such actions are to be excluded
from the calculation of net external debt, shall be excluded from
the calculation of net external debt; or
(i) The net assets of the Company and its subsidiaries on a consolidated
basis shall be less than $5 million. Any reduction in net assets
arising from restructuring actions taken prior to the Closing, upon
the mutual agreement of the Company and Parent, shall be excluded
from the calculation of net assets.
The foregoing conditions are for the sole benefit of Sub and Parent and may be
asserted by Sub or Parent regardless of the circumstances giving rise to such
condition or may be waived by Sub and Parent in whole or in part at any time and
from time to time in their sole discretion. The failure by Parent, Sub or any
other affiliate of Parent 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.
The terms in this Exhibit A that are defined in the attached merger agreement
have the meanings set forth therein.
A-3