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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ZEBRA TECHNOLOGIES CORPORATION,
SPRUCE ACQUISITION CORP.,
AND
ELTRON INTERNATIONAL, INC.
DATED AS OF JULY 9, 1998
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TABLE OF CONTENTS
PAGE
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ARTICLE I The Merger; Effective Time; Closing.................... A-2
1.1 The Merger............................................. A-2
1.2 Effective Time......................................... A-2
1.3 Closing................................................ A-2
1.4 Effect of the Merger................................... A-2
ARTICLE II Certificate of Incorporation and By-Laws of the
Surviving Corporation................................ A-2
2.1 Certificate of Incorporation; Name..................... A-2
2.2 By-Laws................................................ A-2
ARTICLE III Directors and Officers of the Surviving Corporation.... A-2
3.1 Directors.............................................. A-2
3.2 Officers............................................... A-3
ARTICLE IV Merger Consideration; Conversion or Cancellation of
Shares in the Merger................................. A-3
4.1 Share Consideration for the Merger; Conversion or
Cancellation of Shares in the Merger................. A-3
4.2 Payment for Shares in the Merger....................... A-4
4.3 Cash For Fractional Parent Shares...................... A-5
4.4 Transfer of Shares after the Effective Time............ A-5
ARTICLE V Representations and Warranties......................... A-5
5.1 Representations and Warranties of Parent and Merger
Sub.................................................. A-5
(a) Corporate Organization and
Qualification......................... A-5
(b) Capitalization.......................... A-6
(c) Fairness Opinion........................ A-6
(d) Authority Relative to this Agreement.... A-6
(e) Present Compliance with Obligations and
Laws.................................. A-7
(f) Consents and Approvals; No Violation.... A-7
(g) Litigation.............................. A-8
(h) SEC Reports; Financial Statements....... A-8
(i) No Liabilities; Absence of Certain
Changes or Events..................... A-8
(j) Brokers and Finders..................... A-9
(k) S-4 Registration Statement and Proxy
Statement/Prospectus.................. A-9
(l) Taxes................................... A-9
(m) Employee Benefits....................... A-10
(n) Parent Intangible Property.............. A-13
(o) Certain Contracts....................... A-14
(p) Accounting Matters...................... A-14
(q) Unlawful Payments and Contributions..... A-15
(r) Listings................................ A-15
(s) Environmental Matters................... A-15
(t) Title to Properties; Liens; Condition of
Properties............................ A-15
(u) Inventories............................. A-16
(v) Accounts Receivable and Payable......... A-16
(w) Labor and Employee Relations............ A-16
(x) Permits................................. A-17
(y) Warranty or Other Claims................ A-17
(z) Powers of Attorney...................... ▇-▇▇
▇-▇
▇
(aa) Insurance............................... A-18
(bb) Corporate Books and Records............. A-18
(cc) Transactions with Affiliates............ A-18
(dd) Disclosure.............................. A-18
5.2 Representations and Warranties of the Company........... A-18
(a) Corporate Organization and
Qualification......................... A-18
(b) Capitalization.......................... A-18
(c) Fairness Opinion........................ A-19
(d) Authority Relative to this Agreement.... A-19
(e) Present Compliance with Obligations and
Laws.................................. A-19
(f) Consents and Approvals; No Violation.... A-19
(g) Litigation.............................. A-20
(h) SEC Reports; Financial Statements....... A-20
(i) No Liabilities; Absence of Certain
Changes or Events..................... A-21
(j) Brokers and Finders..................... A-21
(k) S-4 Registration Statement and Proxy
Statement/Prospectus.................. A-21
(l) Taxes................................... A-22
(m) Employee Benefits....................... A-23
(n) Company Intangible Property............. A-26
(o) Certain Contracts....................... A-26
(p) Accounting Matters...................... A-27
(q) Unlawful Payments and Contributions..... A-27
(r) Listings................................ A-27
(s) Environmental Matters................... A-27
(t) Title to Properties; Liens; Condition of
Properties............................ A-28
(u) Inventories............................. A-28
(v) Accounts Receivable and Payable......... A-29
(w) Labor and Employee Relations............ A-29
(x) Permits................................. A-29
(y) Warranty or Other Claims................ A-30
(z) Powers of Attorney...................... A-30
(aa) Insurance............................... A-30
(bb) Corporate Books and Records............. A-30
(cc) Transactions with Affiliates............ A-30
(dd) Disclosure.............................. A-30
ARTICLE VI Additional Covenants and
Agreements....................... A-31
6.1 Conduct of Business................ A-31
6.2 No Solicitation.................... A-32
6.3 Meeting of Stockholders............ A-34
6.4 Registration Statement............. A-34
6.5 Best Efforts....................... A-35
6.6 Access to Information.............. A-35
6.7 Publicity.......................... A-35
6.8 Indemnification of Directors and
Officers......................... A-35
6.9 Affiliates of the Company and
Parent........................... A-36
6.10 Maintenance of Insurance........... A-36
6.11 Representations and Warranties..... A-36
6.12 Filings; Other Action.............. A-36
6.13 Notification of Certain Matters.... A-36
6.14 Pooling Accounting................. A-37
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6.15 Pooling Letter..................... A-37
6.16 Tax-Free Reorganization
Treatment........................ A-37
6.17 Employment Agreements.............. A-37
6.18 Stockholders Agreements............ A-37
6.19 Board Seat......................... A-37
6.20 Rights Agreement................... A-37
ARTICLE VII Conditions......................... A-38
7.1 Conditions to Each Party's
Obligations...................... A-38
7.2 Conditions to the Obligations of
the Company...................... A-38
7.3 Conditions to the Obligations of
Parent........................... A-39
ARTICLE VIII Termination........................ A-40
8.1 Termination by Mutual Consent...... A-40
8.2 Termination by either the Company
or Parent........................ A-40
8.3 Termination by the Company......... A-40
8.4 Termination by Parent.............. A-41
8.5 Effect of Termination; Termination
Fee.............................. A-41
ARTICLE IX Miscellaneous and General.......... A-42
9.1 Payment of Expenses................ A-42
9.2 Non-Survival of Representations and
Warranties....................... A-42
9.3 Modification or Amendment.......... A-42
9.4 Waiver of Conditions............... A-42
9.5 Counterparts....................... A-42
9.6 Governing Law...................... A-22
9.7 Notices............................ A-42
9.8 Entire Agreement; Assignment....... A-43
9.9 Parties in Interest................ A-43
9.10 Certain Definitions................ A-43
9.11 Obligation of the Company.......... A-44
9.12 Severability....................... A-44
9.13 Specific Performance............... A-44
9.14 Recovery of Attorney's Fees........ A-44
9.15 Captions........................... ▇-▇▇
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▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ Agreement (Company)............................................. Exhibit A-1
Stockholders Agreement (Parent).............................................. Exhibit A-2
Form of Parent Affiliate Letter.............................................. Exhibit B-1
Form of Company Affiliate Letter............................................. Exhibit B-2
Agreement of Merger.......................................................... Exhibit C
Company Representation Letter................................................ Exhibit D-1
Parent Representation Letter................................................. Exhibit D-2
Employment Agreement (A)..................................................... Exhibit E-1
Employment Agreement (B)..................................................... Exhibit E-2
Employment Agreement (C)..................................................... Exhibit ▇-▇
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated July 9, 1998, is by
and among Zebra Technologies Corporation, a Delaware corporation ("Parent"),
Spruce Acquisition Corp., a California corporation and a direct wholly-owned
subsidiary of Parent ("Merger Sub"), and Eltron International, Inc., a
California corporation (the "Company"). Parent, Merger Sub and the Company are
referred to collectively herein as the "Parties."
RECITALS
WHEREAS, the Board of Directors of each of Parent, Merger Sub and the
Company have determined that it is in the best interests of each corporation and
their respective stockholders that the Company and Merger Sub combine into a
single corporation through the merger of Merger Sub with and into the Company
(the "Merger") and, in furtherance thereof, have approved the Merger;
WHEREAS, pursuant to the Merger, among other things, the outstanding shares
of Common Stock of the Company shall be converted into shares of Class B Common
Stock of Parent at the rate determined herein;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, it is intended that the Merger shall be recorded for accounting
purposes as a pooling-of-interests;
WHEREAS, concurrently with the execution hereof, certain holders (each a
"Voting Stockholder and collectively the "Voting Stockholders") of Company
Shares and of Parent Shares (in each case, as defined in Section 4.1(a)) are
entering into a stockholder voting agreement, in each case in the forms attached
as EXHIBIT A-1 and A-2 hereto (each, a "Stockholders Agreement");
WHEREAS, Parent has delivered to the Company a letter identifying all
persons (each, a "Parent Affiliate") who are, at the date hereof, "affiliates"
of Parent for purposes of Rule 145 under the Securities Act of 1933, as amended
(the "Securities Act"), and each Parent Affiliate has delivered to the Company a
letter (each, a "Parent Affiliate Letter") relating to (i) the transfer, prior
to the Effective Time (as defined in Section 1.2), of the Parent Shares (as
defined in Section 4.1(a)) beneficially owned by such Parent Affiliate on the
date hereof, (ii) the transfer of the Parent Shares to be received by such
Parent Affiliate in the Merger and (iii) the obligations of such Parent
Affiliate to deliver to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to Parent, a Parent
Affiliate Letter substantially in the form attached hereto as EXHIBIT B-1;
WHEREAS, the Company has delivered to Parent a letter identifying all
persons (each, a "Company Affiliate") who are, at the date hereof, "affiliates"
of the Company for purposes of Rule 145 under the Securities Act and each
Company Affiliate has delivered to Parent a letter (each, a "Company Affiliate
Letter") relating to (i) the transfer, prior to the Effective Time (as defined
in Section 1.2), of the Company Shares (as defined in Section 4.1(a))
beneficially owned by such Company Affiliate on the date hereof, (ii) the
transfer of the Parent Shares (as defined in Section 4.1(a)) to be received by
such Company Affiliate in the Merger and (iii) the obligations of such Company
Affiliate to deliver to ▇▇▇▇ & ▇▇▇▇▇, counsel to the Company, a Company
Affiliate Letter substantially in the form attached hereto as EXHIBIT B-2;
WHEREAS, certain of the Parties desire to make certain representations,
warranties, covenants and agreements in connection with the Merger.
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NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements set forth herein, the Parties hereby agree as follows:
ARTICLE I
THE MERGER; EFFECTIVE TIME; CLOSING
1.1 THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the General Corporation Law of the State
of California (the "CGCL"), at the Effective Time (as defined in Section 1.2),
Merger Sub shall be merged with and into the Company, the separate corporate
existence of Merger Sub shall thereupon cease and the Company shall be the
successor or surviving corporation. The Company, as the surviving corporation
after the consummation of the Merger, is sometimes hereinafter referred to as
the "Surviving Corporation."
1.2 EFFECTIVE TIME. Subject to the provisions of this Agreement, the
Parties shall cause the Merger to be consummated by filing the agreement of
merger of Merger Sub and the Company (the "Agreement of Merger") with the
Secretary of State of the State of California in such form as required by, and
executed in accordance with, the relevant provisions of the CGCL, as soon as
practicable on or before the Closing Date (as defined in Section 1.3). The
Merger shall become effective upon such filing or at such time thereafter as is
provided in the Agreement of Merger (the "Effective Time"). The Agreement of
Merger is attached hereto as EXHIBIT C.
1.3 CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Article
VIII, the closing of the Merger (the "Closing") shall take place at 10:00 a.m.,
local time, at the offices of counsel for Parent, on the second business day
after the receipt of Requisite Stockholder Approval (as defined in Section 6.3),
provided that on or prior thereto, all of the conditions to the obligations of
the Parties to consummate the Merger as set forth in Article VII have been
satisfied or waived, or such other date, time or place as is agreed to in
writing by the Parties (the "Closing Date").
1.4 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of the
CGCL. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, all the property, rights, privileges, powers and franchises
of the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
2.1 CERTIFICATE OF INCORPORATION; NAME. At the Effective Time, the
Articles of Incorporation of the Company immediately prior to the Effective Time
shall remain the Articles of Incorporation of the Surviving Corporation, and the
name of the Surviving Corporation shall be the Company's name.
2.2 BY-LAWS. At the Effective Time, the by-laws of the Company in effect
immediately prior to the Effective Time shall remain the by-laws of the
Surviving Corporation.
ARTICLE III
DIRECTORS AND OFFICERS
OF THE SURVIVING CORPORATION
3.1 DIRECTORS. The directors of Merger Sub shall include ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and such directors shall be the initial directors of the Surviving Corporation,
until their respective successors have been duly
A-2
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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.
3.2 OFFICERS. The officers of Merger Sub shall be the initial officers of
the Surviving Corporation, until their successors 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.
ARTICLE IV
MERGER CONSIDERATION; CONVERSION OR
CANCELLATION OF SHARES IN THE MERGER
4.1 SHARE CONSIDERATION FOR THE MERGER; CONVERSION OR CANCELLATION OF
SHARES IN THE MERGER. At the Effective Time, the manner of converting or
canceling shares of the Company and Parent shall be as follows:
(a) Each share of Common Stock of the Company (collectively, the
"Company Shares") issued and outstanding immediately prior to the Effective
Time, shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted automatically into the right to receive
nine-tenths (0.90) of one share of Class B Common Stock, $.01 par value per
share, of Parent (collectively, "Parent Shares"). All Company Shares to be
converted into Parent Shares pursuant to this Section 4.1(a) shall, by
virtue of the Merger and without any action on the part of the holders
thereof, cease to be outstanding, be canceled and retired and cease to
exist, and each holder of a certificate representing any such Company Shares
shall thereafter cease to have any rights with respect to such Company
Shares, except the right to receive for each of Company Shares, upon the
surrender of such certificate in accordance with Section 4.2, the number of
Parent Shares specified above. The ratio of Company Shares per share of
Parent Shares is sometimes hereinafter referred to as the "Exchange Ratio."
(b) Each share of Common Stock of Merger Sub issued and outstanding
immediately prior to the Effective Time, shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted
automatically into and exchanged for one (1) validly issued, fully paid and
nonassessable share of Common Stock of the Surviving Corporation. Each stock
certificate representing any shares of Merger Sub shall continue to
represent ownership of such shares of capital stock of the Surviving
Corporation.
(c) Each outstanding option to purchase Company Shares (each, a "Company
Option") issued pursuant to the 1992 Stock Option Plan, 1993 Stock Option
Plan and the 1996 Stock Option Plan of Company and each of the Stock Option
Agreements set forth in Section 5.2(b) of Company Disclosure Schedule
(collectively, the "Company Option Plans") shall be assumed by Parent and
each such assumed option shall be converted into and represent an option to
purchase the number of Parent Shares (a "Substitute Option") (rounded down
to the nearest full share) determined by multiplying (i) the number of
Company Shares subject to such Company Option immediately prior to the
Effective Time by (ii) the Exchange Ratio, at an exercise price per share of
Parent Shares (rounded up to the nearest tenth of a cent) equal to the
exercise price per share of Company Shares immediately prior to the
Effective Time divided by the Exchange Ratio. Parent shall pay cash to
holders of Company Options in lieu of issuing fractional Parent Shares upon
the exercise of Substitute Options for Parent Shares, unless in the judgment
of Parent such payment would adversely affect the ability to account for the
Merger under the pooling of interests method. After the Effective Time,
except as provided above, each Substitute Option shall be subject to the
same terms and conditions as were applicable under the related Company
Option immediately prior to the Effective Time. The Company agrees that it
will not grant any stock appreciation rights or limited stock appreciation
rights and will not permit cash payments to holders of Company Options in
lieu of the substitution therefor
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of Substitute Options, as described herein. As soon as practicable after the
Effective Time, Parent shall deliver to each holder of a Company Option an
appropriate notice setting forth such holder's right to acquire Parent
Shares and Company Option agreements of such holder shall be deemed to be
appropriately amended so that such Company Options shall represent rights to
acquire Parent Shares on substantially the same terms and conditions as
contained in the outstanding Company Options.
(d) The shares of the Company owned by Parent shall automatically cease
to be outstanding, shall be canceled and retired and shall cease to exist.
(e) Parent shall file and use commercially reasonable efforts to cause
there to be effective within one week of the Effective Time a registration
statement on Form S-8 (or any successor form) or other appropriate forms,
with respect to Parent Shares subject to such Company Options and shall use
commercially reasonable efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as
such Company Options remain outstanding.
4.2 PAYMENT FOR SHARES IN THE MERGER. The manner of making payment for
Shares (as defined below) in the Merger shall be as follows:
(a) On or prior to the Closing Date, Parent shall make available to
▇▇▇▇▇▇ Trust and Savings Bank (the "Exchange Agent") for the benefit of the
holders of Company Shares, a sufficient number of certificates representing
the Parent Shares required to effect the delivery of the aggregate
consideration in Parent Shares and cash for the Fractional Securities Fund
(as defined in Section 4.3) required to be issued pursuant to Section 4.1
(collectively, the "Share Consideration" and the certificates representing
the Parent Shares comprising such aggregate Share Consideration being
referred to hereinafter as the "Stock Merger Exchange Fund"). The Exchange
Agent shall, pursuant to irrevocable instructions, deliver the Parent Shares
contemplated to be issued pursuant to Section 4.1 and effect the sales
provided for in Section 4.3 out of the Stock Merger Exchange Fund. The Stock
Merger Exchange Fund shall not be used for any other purpose than as set
forth herein.
(b) Promptly after the Effective Time, the Exchange Agent shall mail to
each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding Company Shares (the
"Certificates") (i) a form of letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent) and (ii) instructions for use in effecting the surrender
of the Certificates for payment therefor. Upon surrender of Certificates for
cancellation to the Exchange Agent, together with such letter of transmittal
duly executed and any other required documents, the holder of such
Certificates shall be entitled to receive for each of the Company Shares
represented by such Certificates the Share Consideration, without interest,
and the Certificates so surrendered shall forthwith be canceled. Until so
surrendered, such Certificates shall represent solely the right to receive
the Share Consideration and any cash in lieu of fractional Parent Shares as
contemplated by Section 4.3 with respect to each of the Company Shares
represented thereby.
(c) No dividends or other distributions that are declared after the
Effective Time on Parent Shares and payable to the holders of record thereof
after the Effective Time will be paid to persons entitled by reason of the
Merger to receive Parent Shares until such persons surrender their
Certificates as provided above. Upon such surrender, there shall be paid to
the person in whose name the Parent Shares are issued any dividends or other
distributions having a record date after the Effective Time and payable with
respect to such Parent Shares between the Effective Time and the time of
such surrender. After such surrender there shall be paid to the person in
whose name the Parent Shares are issued any dividends or other distributions
on such Parent Shares which shall have a record date after the Effective
Time. In no event shall the persons entitled to receive such dividends or
other distributions be entitled to receive interest on such dividends or
other distributions.
▇-▇
▇▇
(▇) If any certificate representing Parent Shares is to be issued in a
name other than that in which the Certificate surrendered in exchange
therefor is registered, it shall be a condition of such exchange that the
Certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange shall
pay to the Exchange Agent any transfer or other taxes required by reason of
the issuance of certificates for such Parent Shares in a name other than
that of the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not applicable.
(e) Notwithstanding the foregoing, neither the Exchange Agent nor any of
the Parties shall be liable to a holder of Company Shares for any Parent
Shares or dividends thereon, or, in accordance with Section 4.3, cash in
lieu of fractional Parent Shares, delivered to a public official pursuant to
applicable escheat law. The Exchange Agent shall not be entitled to vote or
exercise any rights of ownership with respect to the Parent Shares held by
it from time to time hereunder, except that it shall receive and hold all
dividends or other distributions paid or distributed with respect to such
Parent Shares for the account of the persons entitled thereto.
(f) Subject to applicable law, any portion of the Stock Merger Exchange
Fund and the Fractional Securities Fund (as defined in Section 4.3) which
remains unclaimed by the former stockholders of the Company for one (1) year
after the Effective Time shall be delivered to Parent, upon demand of
Parent, and any former stockholder of the Company shall thereafter look only
to Parent for payment of their applicable claim for the Share Consideration
for their Company Shares.
4.3 CASH FOR FRACTIONAL PARENT SHARES. No fractional Parent Shares shall
be issued in the Merger. Each holder of Parent Shares shall be entitled to
receive in lieu of any fractional Parent Shares to which such holder otherwise
would have been entitled pursuant to Section 4.2 (after taking into account all
Parent Shares then held of record by such holder) a cash payment in an amount
equal to the product of (i) the fractional interest of a Parent Share to which
such holder otherwise would have been entitled and (ii) the closing price of a
Parent Share on the NNM on the trading day immediately prior to the Effective
Time (the cash comprising such aggregate payments in lieu of fractional Parent
Shares being hereinafter referred to as the "Fractional Securities Fund").
4.4 TRANSFER OF SHARES AFTER THE EFFECTIVE TIME. No transfers of Company
Shares shall be made on the stock transfer books of the Company after the close
of business on the day prior to the date of the Effective Time.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent and
Merger Sub hereby represent and warrant to the Company that the statements
contained in this Section 5.1 are true and correct, except to the extent set
forth on the disclosure schedule previously delivered by Parent to the Company
(the "Parent Disclosure Schedule"). The Parent Disclosure Schedule shall be
initialed by the Parties and shall be arranged in sections and paragraphs
corresponding to the letter and numbered paragraphs contained in this Section
5.1.
(a) CORPORATE ORGANIZATION AND QUALIFICATION. Each of Parent and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and
is qualified and in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the business
conducted, by it require such qualification, except where failure to so
qualify or be in good standing as a foreign corporation would not have a
Material Adverse Effect (as defined in Section 9.10). Each of Parent and its
subsidiaries has all requisite power and authority (corporate or otherwise)
to own its properties and to carry on its business as it is now being
conducted. All of the subsidiaries of Parent, together with an
organizational
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chart, are set forth in Section 5.1(a) of the Parent Disclosure Schedule.
Parent has heretofore made available to the Company complete and correct
copies of its Certificate of Incorporation and By-Laws, as amended. Merger
Sub is a direct, wholly-owned subsidiary of Parent, was formed solely for
the purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted its operations only as
contemplated hereby.
(b) CAPITALIZATION. The authorized capital stock of Parent consists of
(i) 50,000,000 shares of Class A Common Stock, $0.01 par value per share
("Class A Shares"), of which 19,421,019 shares were issued and outstanding
on July 7, 1998, (ii) 28,358,189 shares of Class B Common Stock, $0.01 par
value per share, of which 4,890,609 were issued and outstanding on July 7,
1998, and (iii) 10,000,000 shares of preferred stock, $.01 par value per
share, none of which are issued or outstanding. All of the outstanding
shares of capital stock of Parent and its subsidiaries have been duly
authorized and validly issued and are fully paid and nonassessable. The
Parent Shares and Class A Shares into which the Parent Shares are
convertible will be, when issued, validly authorized and issued, fully-paid
and non-assessable. Parent has no outstanding stock appreciation rights,
phantom stock or similar rights. No Parent Shares are owned by any
subsidiary of Parent. All outstanding shares of capital stock or other
equity interests of the subsidiaries of Parent are owned by Parent or a
direct or indirect wholly-owned subsidiary of Parent, free and clear of all
liens, pledges, charges, encumbrances, claims and options of any nature.
Except for options outstanding on the date hereof to purchase 656,213 Parent
Shares under the Parent's stock option plans, there are not as of the date
hereof and there will not be at the Effective Time any outstanding or
authorized options, warrants, calls, rights (including preemptive rights),
commitments or any other agreements of any character which Parent or any of
its subsidiaries is a party to, or may be bound by, requiring it to issue,
transfer, grant, sell, purchase, redeem or acquire any shares of capital
stock or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of capital stock of Parent
or any of its subsidiaries. There are not as of the date hereof and there
will not be at the Effective Time any stockholder agreements, voting trusts
or other agreements or understandings to which Parent is a party or to which
it is bound relating to the voting of any shares of the capital stock of
Parent.
(c) FAIRNESS OPINION. The Board of Directors of Parent has received an
opinion from ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C., addressed to its Board of
Directors, to the effect that the Exchange Ratio is fair to Parent from a
financial point of view. As of the date hereof, such opinion has not been
withdrawn, revoked or modified.
(d) AUTHORITY RELATIVE TO THIS AGREEMENT. The Board of Directors of
Merger Sub has declared the Merger advisable and Merger Sub has the
requisite corporate power and authority to approve, authorize, execute and
deliver this Agreement and to consummate the transactions contemplated
hereby (subject to the approval of the Merger by the stockholders of Merger
Sub in accordance with the CGCL). The Board of Directors of Parent has
declared the issuance of Parent Shares advisable and Parent has the
requisite corporate power and authority to approve, authorize, execute and
deliver this Agreement and to consummate the transactions contemplated
hereby (subject to the approval of the issuance of the Parent Shares by the
stockholders of Parent in accordance with the NNM listing requirements).
This Agreement and the consummation by Parent of the transactions
contemplated hereby have been duly and validly authorized by the Boards of
Directors of Parent and Merger Sub and no other corporate proceedings on the
part of Parent or Merger Sub are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby (other than the approval of
the Merger by the stockholders of Merger Sub in accordance with the CGCL and
the approval of the issuance of Parent Shares by the stockholders of Parent
in accordance with the NNM listing requirements). This Agreement has been
duly and validly executed and delivered by Parent and Merger Sub and,
assuming this Agreement constitutes the valid and binding agreement of the
Company constitutes the valid and binding agreement of Parent and Merger
Sub, enforceable against
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Parent and Merger Sub in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general principles of equity.
(e) PRESENT COMPLIANCE WITH OBLIGATIONS AND LAWS. Neither Parent nor
any of its subsidiaries is: (i) in violation of its Certificate of
Incorporation or Bylaws; (ii) in default in the performance of any
obligation, agreement or condition of any debt instrument which (with or
without the passage of time or the giving of notice, or both) affords to any
person the right to accelerate any indebtedness or terminate any right;
(iii) in default under or breach of (with or without the passage of time or
the giving of notice) any other contract to which it is a party or by which
it or its assets are bound; or (iv) in violation of any law, regulation,
administrative order or judicial order, decree or judgment (domestic or
foreign) applicable to it or its business or assets, except where any
violation, default or breach under items (ii), (iii), or (iv) would not,
individually or in the aggregate, have a Material Adverse Effect. The
stockholders of Merger Sub and its subsidiaries will not have appraisal
rights with respect to the Merger.
(f) CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement nor the consummation by Parent of the
transactions contemplated hereby will (i) conflict with or result in any
breach of any provision of the respective Certificate of Incorporation (or
other similar documents) or By-Laws (or other similar documents) of Parent
or any of its subsidiaries; (ii) require any consent, approval,
authorization or permit of, or registration or filing with or notification
to, any governmental or regulatory authority, except (A) in connection with
the applicable requirements, if any, of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (B) pursuant to the
applicable requirements of the Securities Act, and the rules and regulations
promulgated thereunder, and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations promulgated thereunder,
(C) the filing of the Certificate of Merger pursuant to the CGCL and
appropriate documents with the relevant authorities of other states in which
Parent is authorized to do business, (D) as may be required by any
applicable state securities or takeover laws, (E) such filings and consents
as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or the transactions contemplated by this Agreement,
(F) the consents, approvals, orders, authorizations, registrations,
declarations and filings required under the laws of foreign countries, as
set forth in Section 5.1(f) of the Parent Disclosure Schedule or (G) where
the failure to obtain such consent, approval, authorization or permit, or to
make such filing or notification, would not in the aggregate have a Material
Adverse Effect or adversely affect the ability of Parent to consummate the
transactions contemplated hereby; (iii) result in a violation or breach of,
or constitute (with or without notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration or
lien or other charge or encumbrance) under any of the terms, conditions or
provisions of any indenture, note, license, lease, agreement or other
instrument or obligation to which Parent or any of its subsidiaries or any
of their assets may be bound, except for such violations, breaches and
defaults (or rights of termination, cancellation or acceleration or lien or
other charge or encumbrance) as to which requisite waivers or consents have
been obtained or which, in the aggregate, would not have a Material Adverse
Effect or adversely affect the ability of Parent to consummate the
transactions contemplated hereby; (iv) cause the suspension or revocation of
any authorizations, consents, approvals or licenses currently in effect
which would have a Material Adverse Effect; or (v) assuming the consents,
approvals, authorizations or permits and filings or notifications referred
to in this Section 5.1(f) are duly and timely obtained or made and the
approval of the Merger and the approval of this Agreement by Parent's
stockholders has been obtained, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Parent or any of its subsidiaries
or to any of their respective assets, except for violations which would not
in the aggregate have a Material Adverse Effect or adversely affect the
ability of Parent to consummate the transactions contemplated hereby.
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(g) LITIGATION. Except as disclosed in the Parent SEC Reports (as
defined in Section 5.1(h)) there are no actions, suits, investigations or
proceedings pending or, to the knowledge of Parent, threatened against
Parent or any of its subsidiaries that, alone or in the aggregate, (i) if
adversely determined, would be reasonably likely to result in any claims
against or obligations or liabilities of Parent or any of its subsidiaries
that, alone or in the aggregate, would have a Material Adverse Effect, (ii)
question the validity of this Agreement or any action to be taken by Parent
in connection with the consummation of the transactions contemplated hereby
or (iii) would prevent Parent from performing its obligations under this
Agreement, or (iv) would delay, limit or enjoin the transactions
contemplated by this Agreement.
(h) SEC REPORTS; FINANCIAL STATEMENTS.
(i) Since January 1, 1995, Parent has filed all forms, reports and
documents with the Securities and Exchange Commission (the "SEC")
required to be filed by it pursuant to the federal securities laws and
the SEC rules and regulations thereunder, all of which complied in all
material respects with all applicable requirements of the Securities Act
and the Exchange Act and the rules and regulations promulgated thereunder
(collectively, the "Parent SEC Reports"). None of the Parent SEC Reports,
including, without limitation, any financial statements or schedules
included therein, at the time filed contained any untrue statement of a
material fact or omitted 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.
(ii) The consolidated balance sheets and the related consolidated
statements of income, stockholders' equity (deficit) and cash flows
(including the related notes thereto) of Parent included in the Parent
SEC Reports (collectively, "Parent Financial Statements") comply as to
form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior periods (except as otherwise
noted therein), and present fairly the consolidated financial position of
Parent and its consolidated subsidiaries as of their respective dates,
and the consolidated results of their operations and their cash flows for
the periods presented therein (subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments). Since
January 1, 1995, there has not been any material change, or any
application or request for any material change, by Parent or any of its
subsidiaries in accounting principles, methods or policies for financial
accounting purposes that have affected or will affect the Parent
Financial Statements or for tax purposes.
(iii) The books of account of Parent and its subsidiaries are
complete and correct in all material respects and have been maintained on
a materially consistent basis.
(i) NO LIABILITIES; ABSENCE OF CERTAIN CHANGES OR EVENTS. Neither
Parent nor any of its subsidiaries has any material indebtedness,
obligations or liabilities of any kind (whether accrued, absolute,
contingent or otherwise, and whether due or to become due or asserted or
unasserted), and, to the knowledge of Parent, there is no basis for the
assertion of any claim or liability of any nature against Parent or any of
its subsidiaries, except for liabilities (i) which are fully reflected in,
reserved against or otherwise described in the Parent Financial Statements,
or (ii) which have been incurred after December 31, 1997 in the ordinary
course of business. Except as disclosed in the Parent SEC Reports since
December 31, 1997, the business of Parent and its subsidiaries has been
carried on only in the ordinary and usual course and there has not been any
material adverse change in its business, properties, operations, financial
condition or prospects and no event has occurred and no fact or set of
circumstances has arisen which has resulted in or could reasonably be
expected to result in a Material Adverse Effect with respect to Parent and
its subsidiaries. To the knowledge of Parent, no material
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14
customer or supplier of Parent intends to or has threatened to alter
materially its relationship with Parent.
(j) BROKERS AND FINDERS. Except for the fees and expenses payable to
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C., which fees and expenses are reflected in
its agreement with Parent, a true and complete copy of which (including all
amendments) has been furnished to the Company, Parent has not employed any
investment banker, broker, finder, consultant or intermediary in connection
with the transactions contemplated by this Agreement which would be entitled
to any investment banking, brokerage, finder's or similar fee or commission
in connection with this Agreement or the transactions contemplated hereby.
(k) S-4 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS. None of
the information supplied or to be supplied by Parent for inclusion or
incorporation by reference in the S-4 Registration Statement or the Joint
Proxy Statement (as such terms are defined in Section 6.4) will (i) in the
case of the S-4 Registration Statement, at the time it becomes effective or
at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading, or (ii) in the case
of the Joint Proxy Statement, at the time of the mailing of the Joint Proxy
Statement and at the time of the Stockholder Meeting (as such term is
defined in Section 6.3), 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. If at any time prior to the Effective
Time any event with respect to Parent, Merger Sub or any of their respective
affiliates, officers and directors or any of its subsidiaries should occur
which is required to be described in an amendment of, or a supplement to,
the Joint Proxy Statement or the S-4 Registration Statement, such event
shall be so described, and such amendment or supplement shall be promptly
filed with the SEC and, as required by law, disseminated to the stockholders
of Parent. The S-4 Registration Statement will (with respect to Parent and
Merger Sub) comply as to form in all material respects with the requirements
of the Securities Act and the rules and regulations promulgated thereunder.
The Joint Proxy Statement will (with respect to Parent and Merger Sub)
comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations promulgated thereunder.
(l) TAXES.
(i) Parent and each of its subsidiaries has timely filed all federal,
state, local and foreign returns, information statements and reports
relating to Taxes ("Returns") required by applicable Tax law to be filed
by Parent and each of its subsidiaries, except for any such failures to
file that could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Parent. All Taxes owed by
Parent or any of its subsidiaries to a taxing authority, or for which
Parent or any of its subsidiaries is liable, whether to a taxing
authority or to other persons or entities under a Significant Tax
Agreement, as of the date hereof, have been paid and, as of the Effective
Time, will have been paid, except for any such failure to pay that could
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent. Parent has made (A) accruals for Taxes
on the Parent Financial Statements and (B) with respect to periods after
the date of the Parent Financial Statements, provisions on a periodic
basis consistent with past practice on the Parent's or one of its
subsidiaries' books and records or financial statements, in each case
which are adequate to cover any Tax liability of the Parent and each of
its subsidiaries determined in accordance with generally accepted
accounting principles through the date of the Parent Financial Statements
or the date of the provision, as the case may be, except where failures
to make such accruals or provisions could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on
Parent.
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(ii) Except to the extent that any such failure to withhold could not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent, Parent and each of its subsidiaries
have withheld with respect to its employees all federal and state income
taxes, FICA, FUTA and other Taxes required to be withheld.
(iii) There is no Tax deficiency outstanding, proposed or assessed
against Parent or any of its subsidiaries, except any such deficiency
that, if paid, could not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Parent. Neither Parent nor
any of its subsidiaries executed or requested any waiver of any statute
of limitations on or extending the period for the assessment or
collection of any federal or material state Tax.
(iv) No federal or state Tax audit or other examination of Parent or
any of its subsidiaries is presently in progress, nor has Parent or any
of its subsidiaries been notified in writing of any request for such
federal or material state Tax audit or other examination, except in all
cases for Tax audits and other examinations which could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect on Parent.
(v) Neither Parent nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as defined in Section 341(f)(4) of the Code) owned by Parent.
(vi) Neither Parent nor any of its subsidiaries is a party to (A) any
agreement with a party other than Parent or any of its subsidiaries
providing for the allocation or payment of Tax liabilities or payment for
Tax benefits with respect to a consolidated, combined or unitary Return
which Return includes or included Parent or any subsidiary or (B) any
Significant Tax Agreement other than any Significant Tax Agreement
described in (A).
(vii) Except for the group of which Parent and its subsidiaries are
now presently members, neither Parent nor any of its subsidiaries has
ever been a member of an affiliated group of corporations within the
meaning of Sections 1504 of the Code.
(viii) Neither Parent nor any of its subsidiaries has agreed to make
nor is it required to make any adjustment under Section 481(a) of the
Code by reason of a change in accounting method or otherwise.
(ix) Parent is not, and has not at any time been, a "United States
Real Property Holding Corporation" within the meaning of Section
897(c)(2) of the Code.
(m) EMPLOYEE BENEFITS.
(i) Except for liabilities reflected in the accruals and reserves on
the Parent Financial Statements, none of Parent or any current or former
Plan Affiliate of Parent has at any time maintained, sponsored, adopted,
made contributions to, obligated itself or had any liability with respect
to: any "employee pension benefit plan" (as such term is defined in
Section 3(2) of ERISA); any "employee welfare benefit plan" (as such term
is defined in Section 3(1) of ERISA); any personnel or payroll policy
(including vacation time, holiday pay, service awards, moving expense
reimbursement programs and sick leave) or material fringe benefit; any
severance agreement or plan or any medical, hospital, dental, life or
disability plan; any excess benefit plan, bonus or incentive plan
(including any equity or equity-based plan), tuition reimbursement,
automobile use, club membership, parental or family leave, top hat plan
or deferred compensation plan, salary reduction agreement,
change-of-control agreement, employment agreement, consulting agreement,
collective bargaining agreement, indemnification agreement, or retainer
agreement; or any other benefit plan, policy, program, arrangement,
agreement or contract, whether or not written or terminated, with respect
to any employee, former employee, director,
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independent contractor, or any beneficiary or dependent thereof (all such
plans, policies, programs, arrangements, agreements and contracts,
whether or not set forth in Section 5.1(m) of the Parent Disclosure
Schedule are referred to in this Agreement as "Parent Scheduled Plans").
(ii) Parent has delivered to the Company a complete and accurate copy
of each written Parent Scheduled Plan, together with, if applicable, a
copy of audited financial statements, actuarial reports and Form 5500
Annual Reports (including required schedules), if any, for the three (3)
most recent plan years, the most recent IRS determination letter or IRS
recognition of exemption; each other material letter, ruling or notice
issued by a governmental body with respect to each such plan, a copy of
each trust agreement, insurance contract or other funding vehicle, if
any, with respect to each such plan, the most recent PBGC Form 1 with
respect to each such plan, if any, the current summary plan description
or summary of material modifications with respect to each such plan, Form
5310 and any related filings with the PBGC and with respect to the last
six Plan years for each Plan subject to Title IV of ERISA, general
notification to employees of their rights under Code Section 4980B and
form of letter(s) distributed upon the occurrence of a qualifying event
described in Code Section 4980B, in the case of a Plan that is a "group
health plan" as defined in Code Section 162(i), and a copy or description
of each other general explanation or written or oral communication which
describes a material term of each such plan that has not previously been
disclosed to the Company pursuant to this Section. Section 5.1(m) of the
Parent Disclosure Schedule contains a description of the material terms
of any unwritten Parent Scheduled Plan as comprehended to the Closing
Date. There are no negotiations, demands or proposals which are pending
or threatened which concern matters now covered, or that would be
covered, by the foregoing types of Plans.
(iii) Except as could not reasonably give rise, whether individually
or in the aggregate, to material liability to Parent or Merger Sub:
(1) each Parent Scheduled Plan (A) has been and currently
complies in form and in operation in all material respects with all
applicable requirements of ERISA and the Code, and any other legal
requirements; (B) has been and is operated and administered in
compliance with its terms (except as otherwise required by law); (C)
has been and is operated in compliance with applicable legal
requirements in such a manner as to qualify, where appropriate, for
both Federal and state purposes, for income tax exclusions to its
participants, tax-exempt income for its funding vehicle, and the
allowance of deductions and credits with respect to contributions
thereto; and (D) where appropriate, has received a favorable
determination letter or recognition of exemption from the Internal
Revenue Service.
(2) with respect to each Parent Scheduled Plan, there are no
claims or other proceedings pending or threatened with respect to the
assets thereof (other than routine claims for benefits), and there
are no facts which could reasonably give rise to any liability, claim
or other proceeding against any Parent Scheduled Plan, any fiduciary
or plan administrator or other person dealing with any Parent
Scheduled Plan or the assets of any such plan.
(3) with respect to each Parent Scheduled Plan, no person: (A)
has entered into any "prohibited transaction," as such term is
defined in ERISA or the Code and the regulations, administrative
rulings and case law thereunder; (B) has breached a fiduciary
obligation or violated Sections 402, 403, 405, 503, 510 or 511 of
ERISA; (C) has any liability for any failure to act or comply in
connection with the administration or investment of the assets of
such plans; or (D) engaged in any transaction or otherwise acted with
respect to such plans in such a manner which could subject the
Company, or any fiduciary or plan administrator or any other person
dealing with any such plan, to liability under Sections 409 or 502 of
ERISA or Sections 4972 or 4976 through 4980B of the Code.
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(4) each Parent Scheduled Plan may be amended, terminated,
modified or otherwise revised by Parent, on and after the Closing,
without further liability to Parent, including any withdrawal
liability under ERISA for any multi-employer plan. For purposes of
this paragraph, termination of a Parent Scheduled Plan includes the
requirement of a cessation of liability for claims incurred after the
termination date regardless of any status having been obtained or
achieved.
(5) none of Parent or any current or former Parent Plan Affiliate
has at any time participated in, made contributions to or had any
other liability with respect to any Parent Scheduled Plan which is a
"multi-employer plan" as defined in Section 4001 of ERISA, a
"multi-employer plan" within the meaning of Section 3(37) of ERISA, a
"multiple employer plan" within the meaning of Section 413(c) of the
Code or a "multiple employer welfare arrangement" within the meaning
of Section 3(40) of ERISA.
(6) none of Parent or any current or former Parent Plan Affiliate
has at any time maintained, contributed to or obligated itself or
otherwise had any liability with respect to any funded or unfunded
employee welfare plan, whether or not terminated, which provides
medical, health, life insurance or other welfare-type benefits for
current or future retirees or current or future former employees,
their spouses or dependents or any other persons (except for limited
continued medical benefit coverage for former employees, their
spouses and other dependents as required to be provided under Section
4980B of the Code and Part 6 of Subtitle B of Title I of ERISA and
the accompanying proposed regulations or state continuation coverage
laws ("COBRA")).
(7) no Parent Scheduled Plan has incurred an "accumulated funding
deficiency" as such term is defined in Section 302 of ERISA or
Section 412 of the Code, whether or not waived, or has posted or is
required to provide security under Code Section 401(a)(29) or Section
307 of ERISA; no event has occurred which has or could result in the
imposition of a lien under Code Section 412 or Section 302 of ERISA,
nor has any liability to the Pension Benefit Guaranty Corporation
(the "PBGC") (except for payment of premiums) been incurred or
reportable event within the meaning of Section 4043 of ERISA occurred
with respect to any such plan; and the PBGC has not threatened or
taken steps to institute the termination of any such plan;
(8) the requirements of COBRA have been satisfied with respect to
each Parent Scheduled Plan.
(9) all contributions, payments, premiums, expenses,
reimbursements or accruals for all periods ending prior to or as of
the Closing for each Parent Scheduled Plan (including periods from
the first day of the then current plan year to the Closing) shall
have been made or accrued on Parent financial statements (in
accordance with generally applied accounting principals, including
FAS 87, 88, 106 and 112) and each such plan otherwise does not have
nor could have any unfunded liability (including benefit liabilities
as defined in Section 4001(a)(16) of ERISA) which is not reflected on
Parent financial statements. Any contribution made or accrued with
respect to any Parent Scheduled Plan is fully deductible by Parent.
(10) neither Parent nor a Plan Affiliate has any liability (A)
for the termination of any single employer plan under Section ERISA
Section 4062 of ERISA or any multiple employer plan under Section
ERISA Section 4063 of ERISA, (B) for any lien imposed under Section
302(f) of ERISA or Section 412(n) of the Code, (C) for any interest
payments required under Section 302(e) of ERISA or Section 412(m) of
the Code, (D) for any excise tax imposed by Code Sections 4971, 4972,
4977, or 4979, or (E) for any minimum funding contributions under
Section 302(c)(11) of ERISA or Code Section 412(c)(11).
▇-▇▇
▇▇
(▇▇) all Parent Scheduled Plans to the extent applicable, are in
compliance with Section 1862(b)(1)(A)(i) of the Social Security Act
and neither Parent nor any Plan Affiliate has any liability for any
excise tax imposed by Code Section 5000.
(12) with respect to any Parent Scheduled Plan which is a
welfare plan as defined in Section 3(1) of ERISA; (A) each such
welfare plan which is intended to meet the requirements for
tax-favored treatment under Subchapter B of Chapter 1 of the Code
meets such requirements; (B) there is no disqualified benefit (as
such term is defined in Code Section 4976(b)) which would subject
Parent or any Plan Affiliate to a tax under Code Section 4976(a); and
(C) each and every such welfare plan which is a group health plan (as
such term is defined in Code Section 162(i)(3)) complies and in each
and every case has complied with the applicable requirements of Code
Section 4980B, Title XXII of the Public Health Service Act and the
applicable provisions of the Social Security Act.
(iv) Other than by reason of actions taken by Parent following the
Closing, the consummation of the transactions contemplated by this
Agreement will not (A) entitle any current or former employee of Parent
to severance pay, unemployment compensation or any other payment, (B)
accelerate the time of payment or vesting of any payment, forgive any
indebtedness, or increase the amount of any compensation due to any such
employee or former employee, (C) result in any prohibited transaction
described in Section 406 of ERISA or Section 4975 of the Code for which
an exemption is not available, or (D) give rise to the payment of any
amount that would not be deductible pursuant to the terms of Section 280G
of the Code.
(v) As used in this Agreement, with respect to any person ("First
Person") the term "Plan Affiliate" shall mean each other person or entity
with whom the First Person constitutes or has constituted all or part of
a controlled group, or which would be treated or has been treated with
the First Person as under common control or whose employees would be
treated or have been treated as employed by the First Person, under
Section 414 of the Code and any regulations, administrative rulings and
case law interpreting the foregoing.
(n) PARENT INTANGIBLE PROPERTY.
(i) Section 5.1(n) of the Parent Disclosure Schedule sets forth a
true, correct and complete list of each patent, trademark, trade name,
service ▇▇▇▇, brand ▇▇▇▇, brand name, industrial design and copyright
owned or used in business by Parent and its subsidiaries, as well as all
registrations thereof and pending applications therefor, and each license
or other contract relating thereto (collectively with any other
intellectual property owned or used in the business by Parent and its
subsidiaries, and all of the goodwill associated therewith, the "Parent
Intangible Property") and indicates, with respect to each item of Parent
Intangible Property listed thereon, the owner thereof and, if applicable,
the name of the licensor and licensee thereof and the terms of such
license or other contract relating thereto. Except as set forth in
Section 5.1(n) of the Parent Disclosure Schedule, each of the foregoing
is owned free and clear of any and all liens, mortgages, pledges,
security interests, levies, charges, options or any other encumbrances of
any kind whatsoever and none of Parent or any of its subsidiaries has
received any notice to the effect that any other entity has any claim of
ownership with respect thereto. To the knowledge of Parent, the use of
the foregoing by Parent and its subsidiaries does not conflict with,
infringe upon, violate or interfere with or constitute an appropriation
of any right, title, interest or goodwill, including, without limitation,
any intellectual property right, patent, trademark, trade name, service
▇▇▇▇, brand ▇▇▇▇, brand name, computer program, industrial design,
copyright or any pending application therefor of any other person or
entity. Except as set forth in Section 5.1(n) of the Parent Disclosure
Schedule, no claims have been made, and none of Parent or any of its
subsidiaries has received any notice, nor does Parent or any of its
subsidiaries have any knowledge of any basis for any claims, that any of
the foregoing is invalid, conflicts with the
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asserted rights of other entities, or has been used or enforced (or has
failed to be used or enforced) in a manner that would result in the
abandonment, cancellation or unenforceability of any item of the Parent
Intangible Property.
(ii) Parent and each of its subsidiaries possess all Parent
Intangible Property, including, without limitation, all know-how,
formulae and other proprietary and trade rights and trade secrets,
necessary for the conduct of their businesses as now conducted. None of
Parent or any of its subsidiaries has taken or failed to take any action
that would result in the forfeiture or relinquishment of any such Parent
Intangible Property used in the conduct of their respective businesses as
now conducted.
(o) CERTAIN CONTRACTS. Section 5.1(o) of the Parent Disclosure
Schedule lists all of the following contracts, agreements and commitments,
whether oral or written, to which Parent or a subsidiary is a party or by
which any one of them or any of their properties or assets may be bound (the
"Parent Listed Agreements"): (i) all employment or other contracts with any
officer or director of Parent or any subsidiary of Parent (or any company
which is controlled by any such individual) and employment agreements with
any employee which are not terminable at will without any payment upon
termination; (ii) union, guild or collective bargaining contracts relating
to employees of Parent or any subsidiary; (iii) instruments relating to
credit or money borrowed (including, without limitation, any indentures,
guarantees, loan agreements, sale and leaseback agreements, or purchase
money obligations incurred in connection with the acquisition of property
other than in the ordinary course of business) involving individually or in
the aggregate in excess of $250,000; (iv) underwriting, purchase or similar
agreements entered into in connection with Parent's or any of its
subsidiaries' currently existing indebtedness; (v) agreements for
acquisitions or dispositions (by merger, purchase, liquidation or sale of
assets or stock or otherwise) of material assets entered into within the
last three (3) years, as to which the transactions contemplated have been
consummated or are currently pending; (vi) joint venture, strategic alliance
or similar partnership agreements; (vii) material licensing, merchandising
and distribution contracts; (viii) contracts granting any person or other
entity registration rights; (ix) guarantees, suretyships, indemnification
and contribution agreements, involving individually or in the aggregate in
excess of $250,000; (x) material agreements regarding the use, license or
other disposition of intellectual property; (xi) franchise agreements; (xii)
agreements regarding the purchase of supplies, equipment, materials or
components greater than $1,000,000 or one year in duration; (xiii)
agreements for the sale of products greater than $1,000,000 or one year in
duration; (xiv) agreements restricting competition; (xv) contracts with any
governmental or quasi-governmental entity; (xvi) existing material leases of
real or personal property and material contracts to purchase or sell real
property; and (xvii) other contracts which materially affect the business,
properties or assets of Parent and its subsidiaries taken as a whole, and
are not otherwise disclosed in this Agreement or which were entered into
other than in the ordinary course of business on a basis consistent with
past practice. Except as set forth on Section 5.1(o) of the Parent
Disclosure Schedule, a true and complete copy (including all amendments) of
each Parent Listed Agreement, or a summary of each oral contract, has been
made available to the Company. Neither Parent nor any subsidiary (i) is in
breach or default in any material respect under any of Parent Listed
Agreements or (ii) has any knowledge of any other material breach or default
under any Parent Listed Agreement by any other party thereto or by any other
person or entity bound thereby, except in the case of (i) or (ii) breaches
or defaults which would not, individually or in the aggregate, have a
Material Adverse Effect with respect to Parent. Except as provided for
herein, at the Effective Time, no person will have the right, by contract or
otherwise, to become, nor does any entity have the right to designate or
cause Parent to appoint a person as, a director of Parent or any subsidiary
of Parent.
(p) ACCOUNTING MATTERS. Neither Parent nor, to its Knowledge, any of
its affiliates, has taken or agreed to take any action that would prevent
Parent from accounting for the business combination to be effected by the
Merger as a "pooling-of-interests." Parent has not failed to bring to the
attention of
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the Company any actions, agreements or understandings, whether written or
oral, that would be reasonably likely to prevent Parent from accounting for
the Merger as a pooling-of-interests. Parent has received a letter from KPMG
Peat Marwick LLP ("KPMG") to the effect that, if consummated in accordance
with the terms of this Agreement, the Merger shall be accounted for as a
pooling of interests.
(q) UNLAWFUL PAYMENTS AND CONTRIBUTIONS. To the knowledge of Parent,
neither Parent, any subsidiary of Parent nor any of their respective
directors, officers, employees or agents has, with respect to the businesses
of Parent or its subsidiaries, (i) used any funds for any unlawful
contribution, endorsement, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee; (iii)
violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any person or
entity.
(r) LISTINGS. Parent's securities are not listed, or quoted, for
trading on any U.S. domestic or foreign securities exchange, other than the
NNM.
(s) ENVIRONMENTAL MATTERS. Except as disclosed in Parent's SEC
Reports, (i) Parent and its subsidiaries and the operations, assets and
properties thereof are in material compliance with all Environmental Laws
(as defined below); (ii) there are no judicial or administrative actions,
suits, proceedings or investigations pending or, to the knowledge of Parent,
threatened against Parent or any subsidiary of Parent alleging the violation
of any Environmental Law and neither Parent nor any subsidiary of Parent has
received notice from any governmental body or person alleging any violation
of or liability under any Environmental Laws, in either case which could
reasonably be expected to result in material Environmental Costs and
Liabilities; (iii) to the knowledge of Parent, there are no facts,
circumstances or conditions relating to, arising from, associated with or
attributable to Parent or its subsidiaries or any real property currently or
previously owned, operated or leased by Parent or its subsidiaries that
could reasonably be expected to result in material Environmental Costs and
Liabilities; and (iv) to the knowledge of Parent, Parent has not ever
generated, transported, treated, stored, handled or disposed of any
Hazardous Material (as hereinafter defined) at any site, location or
facility in a manner that could create any material Environmental Costs and
Liabilities under any Environmental Law; and no such Hazardous Material has
been or is currently present on, in, at or under any real property owned or
used by Parent in a manner that could create any Environmental Costs and
Liabilities (including without limitation, containment by means of any
underground or aboveground storage tank). For the purpose of Sections 5.1(s)
and 5.2(t), the following terms have the following definitions: (X)
"Environmental Costs and Liabilities" means any losses, liabilities,
obligations, damages, fines, penalties, judgments, actions, claims, costs
and expenses (including, without limitation, fees, disbursements and
expenses of legal counsel, experts, engineers and consultants and the costs
of investigation and feasibility studies, remedial or removal actions and
cleanup activities) arising from or under any Environmental Law; (Y)
"Environmental Laws" means any applicable federal, state, local, or foreign
law (including common law), statute, code, ordinance, rule, regulation or
other requirement relating to the environment, natural resources, or public
or employee health and safety; and (Z) "Hazardous Material" means any
substance, material or waste regulated by federal, state or local
government, including, without limitation, any substance, material or waste
which is defined as a "hazardous waste," "hazardous material," "hazardous
substance," "toxic waste" or "toxic substance" under any provision of
Environmental Law and including but not limited to petroleum and petroleum
products.
(t) TITLE TO PROPERTIES; LIENS; CONDITION OF PROPERTIES.
(i) Parent and its subsidiaries have good and marketable title to, or
a valid leasehold interest in, the real and personal property, located on
their premises or shown on their most
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recent balance sheet or acquired after the date thereof. None of the
property owned or used by Parent or any of its subsidiaries is subject to
any mortgage, pledge, deed of trust, lien (other than for taxes not yet
due and payable), conditional sale agreement, security title,
encumbrance, or other adverse claim or interest of any kind. There has
not been prior to Closing any sale, lease, or any other disposition or
distribution by Parent of any of its material assets or properties, now
owned or hereafter acquired, except transactions in the ordinary and
regular course of business.
(ii) Parent has delivered to the Company true, correct and complete
copies of all material leases, subleases, rental agreements, contracts of
sale, tenancies or licenses related to any of the real or personal
property used by Parent or any of its subsidiaries in their respective
businesses. All such leases are valid, binding and enforceable in
accordance with their terms against the parties thereto, and each such
lease is subsisting and no default exists under any thereof. Neither
Parent nor any of its subsidiaries has received notice that any party to
any such lease intends to cancel, terminate or refuse to renew the same
or to exercise or decline to exercise any option or any right thereunder.
(iii) All buildings, machinery and equipment of Parent and any of its
subsidiaries are in good condition, working order and repair, normal wear
and tear and excepted, and adequate for the uses to which they are being
put, have been well maintained, conform in all material respects with all
applicable ordinances, regulations and zoning, safety or other laws, and
to the knowledge of Parent do not encroach on property of others. As of
the date hereof, neither Parent nor any of its subsidiaries has received
written notice of or otherwise become aware of any pending or threatened
change of any such ordinance, regulation or zoning, safety or other law
and there is no pending or, to Parent's knowledge, threatened
condemnation of any such property.
(u) INVENTORIES. All inventories of finished goods and work in process
of Parent and its subsidiaries are as of the date hereof, and those existing
at the Closing will be in all material respects, good and merchantable and
of a quality and quantity salable in the ordinary course of the business of
Parent and its subsidiaries at prevailing market prices without discounts,
except for inventory reserved against in accordance with GAAP. All inventory
of raw materials are of a quality and quantity usable in the ordinary course
of business. Parent's purchase commitments for raw materials and parts are
not in excess of normal requirements, and none are at prices materially in
excess of current market prices and no inventory items have been sold or
disposed of except through sales in the ordinary course of business and
consistent with past practice at prices no less than prevailing market
prices, and in no event less than cost.
(v) ACCOUNTS RECEIVABLE AND PAYABLE. Parent's accounts receivable have
arisen in bona-fide arms length transactions in the ordinary course of
business and to Parent's knowledge represent valid and binding obligations
of the account debtors and will be collected in the ordinary course of
business. To the extent required under GAAP, Parent's accounts payable
reflect all amounts owed by Parent in respect of trade accounts due and
other payables and the actual liability of Parent in respect of such
obligations is reflected on Parent's financial statements as contained in
the Parent SEC Reports.
(w) LABOR AND EMPLOYEE RELATIONS.
(i) Parent is not a party to any employment, consulting,
non-competition, severance, golden parachute, indemnification agreement
or any other agreement providing for payments or benefits or the
acceleration of payments or benefits upon the change of control of Parent
(including, without limitation, any contract to which Parent is a party
involving employees of Parent).
(ii) (A) None of the employees of Parent or any of its subsidiaries
is represented in his or her capacity as an employee of such company by
any labor organization; (B) neither Parent nor any of its subsidiaries
has recognized any labor organization nor has any labor organization been
elected as the collective bargaining agent of any of their employees, nor
has Parent or any of its
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subsidiaries signed any collective bargaining agreement or union contract
recognizing any labor organization as the bargaining agent of any of
their employees; and (C) to the knowledge of Parent there is no active or
current union organization activity involving the employees of Parent or
any of its subsidiaries, nor has there ever been union representation
involving employees of Parent or any of its subsidiaries.
(iii) There are no complaints against Parent or any of its
subsidiaries pending or, to the knowledge of Parent, overtly threatened
before the National Labor Relations Board or any similar foreign, state
or local labor agencies, or before the Equal Employment Opportunity
Commission or any similar foreign, state or local agency, or before any
other governmental agency or entity by or on behalf of any employee or
former employee of Parent or any of its subsidiaries.
(iv) Neither Parent nor any of its subsidiaries has any material
contingent liability for severance pay or similar items. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not trigger any severance pay
obligation under any contract or at law.
(v) Parent has provided to the Company a description of all written
and other material employment policies under which Parent and each
subsidiary has operated.
(vi) Parent and each of its subsidiaries is in compliance with all
Federal, foreign (as applicable), and state laws regarding employment
practices, including laws relating to workers' safety, sexual harassment
or discrimination, except where the failure to so be in compliance,
individually or in the aggregate, would not have a Material Adverse
Effect.
(vii) To the knowledge of Parent, no executive, key employee or group
of employees has any plans to terminate his or her employment with Parent
or any of its subsidiaries.
(x) PERMITS. Parent and each of its subsidiaries hold all licenses,
permits, registrations, orders, authorizations, approvals and franchises
which are required to permit it to conduct its businesses as presently
conducted, except where the failure to hold such licenses, permits,
registrations, orders, authorizations, approvals or franchises would not,
individually or in the aggregate, have a Material Adverse Effect. All such
material licenses, permits, registrations, orders, authorizations, approvals
and franchises are listed in Section 5.1(x) of the Parent Disclosure
Schedule and are now, and will be after the Closing, valid and in full force
and effect, and Parent shall have full benefit of the same, except where the
failure to have the benefit of any such license, permit, registration,
order, authorization, approval or franchise would not, individually or in
the aggregate, have a Material Adverse Effect. Neither Parent nor any of its
subsidiaries has received any notification of any asserted present failure
(or past and unremedied failure) by it to have obtained any such license,
permit, registration, order, authorization, approval or franchise.
(y) WARRANTY OR OTHER CLAIMS. No product manufactured, sold, leased or
delivered by Parent or any of its subsidiaries is subject to any guaranty,
warranty, right of return or other indemnity beyond the applicable standard
terms and conditions of sale or lease, which have been provided in writing
to the Company. There are no existing or, to the knowledge of Parent,
threatened claims or any facts upon which a claim could be based, against
Parent or any of its subsidiaries for services or merchandise which are
defective or fail to meet any service or product warranties which would,
individually or in the aggregate, have a Material Adverse Effect. No claim
has been asserted against Parent or any of its subsidiaries for
renegotiation or price redetermination of any business transaction, and
Parent has no knowledge of any facts upon which any such claim could be
based.
(z) POWERS OF ATTORNEY. To the knowledge of Parent, neither Parent nor
any of its subsidiaries has granted any powers of attorney or similar powers
of agency.
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(aa) INSURANCE. Section 5.1(aa) of the Parent Disclosure Schedule
lists all insurance policies in force covering the businesses, properties
and assets of Parent and its subsidiaries and all outstanding claims against
such policies. All such policies are currently in effect, and neither Parent
nor any of its subsidiaries has received notice of cancellation or
termination of, or material premium increase with respect to, of any such
insurance in effect on the date hereof or within the past (2) years. All
such policies are issued by an insurer that is financial sound and reputable
and provide adequate insurance coverage for the assets and operations of
Parent and its subsidiaries for all risks customarily insured against by a
person or entity engaged in similar businesses as Parent or its
subsidiaries.
(bb) CORPORATE BOOKS AND RECORDS. The minute books and stock ledgers
of Parent, copies of which have been made available for inspection by the
Company, have been kept in due course, accurately record all material action
taken by Parent's stockholders, board of directors and committees thereof
and are complete in all material respects.
(cc) TRANSACTIONS WITH AFFILIATES. Except or as disclosed in the
Parent SEC Reports, Parent is not a party to any affiliate transactions
through the date of this Agreement and has no existing commitments to engage
in any affiliate transactions in the future.
(dd) DISCLOSURE. No representation or warranty by Parent in this
Agreement and no statement contained in the Parent Disclosure Schedule or
any certificate delivered by Parent to the Company pursuant to this
Agreement, contains any untrue statement of a material fact or omits any
material fact necessary to make the statements herein or therein not
misleading when taken together in light of the circumstances in which they
were made, it being understood that as used in this Section 5.1(dd)
"material" means material to Parent and its subsidiaries taken as a whole.
5.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Parent and Merger Sub that the statements contained
in this Section 5.2 are true and correct, except to the extent set forth on the
disclosure schedule previously delivered by the Company to Parent and Merger Sub
(the "Company Disclosure Schedule"). The Company Disclosure Schedule shall be
initialed by the Parties and shall be arranged in sections and paragraphs
corresponding to the letter and numbered paragraphs contained in this Section
5.2.
(a) CORPORATE ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and is qualified and in good
standing as a foreign corporation in each jurisdiction where the properties
owned, leased or operated, or the business conducted, by it require such
qualification, except where failure to so qualify or be in good standing as
a foreign corporation would not have a Material Adverse Effect (as defined
in Section 9.10). Each of the Company and its subsidiaries has all requisite
power and authority (corporate or otherwise) to own its properties and to
carry on its business as it is now being conducted. All of the subsidiaries
of the Company, together with an organizational chart, are set forth in
Section 5.2(a) of the Company Disclosure Schedule. The Company has
heretofore made available to Parent complete and correct copies of its
Articles of Incorporation and By-Laws, as amended.
(b) CAPITALIZATION. The authorized capital stock of the Company consists
of (i) 30,000,000 common shares of which 7,663,355 shares were issued and
outstanding on June 26, 1998, and (ii) 10,000,000 shares of preferred stock,
$.01 par value per share, none of which is issued or outstanding. All of the
outstanding shares of capital stock of the Company and its subsidiaries have
been duly authorized and validly issued and are fully paid and
nonassessable. The Company has no outstanding stock appreciation rights,
phantom stock or similar rights. All outstanding shares of capital stock or
other equity interests of the subsidiaries of the Company are wholly-owned
by the Company or a direct or indirect wholly-owned subsidiary of the
Company, free and clear of all liens, pledges, charges, encumbrances, claims
and options of any nature. Except for options outstanding on the date hereof
to purchase 779,935 Company Shares under the Company Option Plans, there are
not as of the date hereof and there will not be at the Effective Time any
outstanding or authorized
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options, warrants, calls, rights (including preemptive rights), commitments
or any other agreements of any character which the Company or any of its
subsidiaries is a party to, or may be bound by, requiring it to issue,
transfer, grant, sell, purchase, redeem or acquire any shares of capital
stock or any of its securities or rights convertible into, exchangeable for,
or evidencing the right to subscribe for, any shares of capital stock of the
Company or any of its subsidiaries. There are not as of the date hereof and
there will not be at the Effective Time any stockholder agreements, voting
trusts or other agreements or understandings to which the Company is a party
or to which it is bound relating to the voting of any shares of the capital
stock of the Company. No existing rights with respect to the registration of
Company Shares under the Securities Act, including, but not limited to,
demand rights or piggy-back registration rights, shall apply with respect to
any Parent Shares issuable in connection with the Merger.
(c) FAIRNESS OPINION. The Board of Directors of the Company has received
an opinion from BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLC, addressed to its Board
of Directors, to the effect that the consideration to be received by the
holders of Common Shares in the Merger is fair to such holders from a
financial point of view. As of the date hereof, such opinion has not been
withdrawn, revoked or modified.
(d) AUTHORITY RELATIVE TO THIS AGREEMENT. The Board of Directors of the
Company has declared the Merger advisable and the Company has the requisite
corporate power and authority to approve, authorize, execute and deliver
this Agreement and to consummate the transactions contemplated hereby. This
Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of the Company and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than the approval of the Merger by
the stockholders of the Company in accordance with the CGCL). This Agreement
has been duly and validly executed and delivered by the Company and,
assuming this Agreement constitutes the valid and binding agreement of
Parent and Merger Sub, constitutes the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors'
rights and to general principles of equity.
(e) PRESENT COMPLIANCE WITH OBLIGATIONS AND LAWS.Neither the Company nor
any of its subsidiaries is: (i) in violation of its Articles of
Incorporation or Bylaws; (ii) in default in the performance of any
obligation, agreement or condition of any debt instrument which (with or
without the passage of time or the giving of notice, or both) affords to any
person the right to accelerate any indebtedness or terminate any right;
(iii) in default, under or breach of (with or without the passage of time or
the giving of notice) any other contract to which it is a party or by which
it or its assets are bound; or (iv) in violation of any law, regulation,
administrative order or judicial order, decree or judgment (domestic or
foreign) applicable to it or its business or assets, except where any
violation, default or breach under items (ii), (iii), or (iv) would not,
individually or in the aggregate, have a Material Adverse Effect.
(f) CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement by the Company nor the consummation by the
Company of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of its Articles of Incorporation and
By-Laws; (ii) require any consent, approval, authorization or permit of, or
registration or filing with or notification to, any governmental or
regulatory authority, except (A) in connection with the applicable
requirements, if any, of the HSR Act, (B) pursuant to the applicable
requirements of the Securities Act and the Exchange Act, (C) the filing of
the Certificate of Merger pursuant to the CGCL and appropriate documents
with the relevant authorities of other states in which the Company is
authorized to do business, (D) as may be required by any applicable state
securities or takeover laws, (E) such filings and consents as may be
required under any environmental, health or safety law or
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regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or the transactions contemplated by this Agreement,
(F) such filings, consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the laws of
any foreign country, (G) filings with, and approval of, the NNM or, (H)
where the failure to obtain such consent, approval, authorization or permit,
or to make such filing or notification, would not in the aggregate have a
Material Adverse Effect or adversely affect the ability of the Company to
consummate the transactions contemplated hereby; (iii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration or lien or other charge or encumbrance) under any of the terms,
conditions or provisions of any indenture, note, license, lease, agreement
or other instrument or obligation to which the Company or any of its
subsidiaries or any of their assets may be bound, except for such
violations, breaches and defaults (or rights of termination, cancellation,
or acceleration or lien or other charge or encumbrance) as to which
requisite waivers or consents have been obtained or which, in the aggregate,
would not have a Material Adverse Effect or adversely affect the ability of
the Company to consummate the transactions contemplated hereby; (iv) cause
the suspension or revocation of any authorizations, consents, approvals or
licenses currently in effect which would have a Material Adverse Effect; or
(v) assuming the consents, approvals, authorizations or permits and filings
or notifications referred to in this Section 5.2(f) are duly and timely
obtained or made, violate any order, writ, injunction, decree, statute, rule
or regulation applicable to the Company or any of its subsidiaries or to any
of their respective assets, except for violations which would not in the
aggregate have a Material Adverse Effect or adversely affect the ability of
the Company to consummate the transactions contemplated hereby.
(g) LITIGATION. Except as disclosed in Company SEC Reports (as defined
in Section 5.2(h)), there are no actions, suits, investigations or
proceedings pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries that, alone or in the aggregate, (i)
if adversely determined, would be reasonably likely to result in any claims
against or obligations or liabilities of the Company or any of its
subsidiaries that would have a Material Adverse Effect, (ii) question the
validity of this Agreement or any action to be taken by the Company in
connection with the consummation of the transactions contemplated hereby,
(iii) would prevent the Company from performing its obligations under this
Agreement, or (iv) would delay, limit or enjoin the transactions
contemplated by this Agreement.
(h) SEC REPORTS; FINANCIAL STATEMENTS.
(i) Since January 1, 1995, the Company has filed all forms, reports
and documents with the SEC required to be filed by it pursuant to the
federal securities laws and the SEC rules and regulations thereunder, all
of which complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act (the "Company SEC
Reports"). None of the Company SEC Reports, including, without
limitation, any financial statements or schedules included therein, at
the time filed contained any untrue statement of a material fact or
omitted 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.
(ii) The consolidated balance sheets and the related statements of
income, stockholders' equity and cash flow (including the related notes
thereto) of the Company included in the Company SEC Reports
(collectively, the "Company Financial Statements") comply as to form in
all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior periods (except as otherwise
noted therein), and present fairly the consolidated financial position of
the Company and its consolidated subsidiaries as of their respective
dates, and the results of its operations and its cash flow for the
periods presented therein (subject, in the case of the unaudited interim
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financial statements, to normal year-end adjustments). Since January 1,
1995, there has not been any material change, or any application or
request for any material change, by the Company or any of its
subsidiaries in accounting principles, methods or policies for financial
accounting purposes that have affected or will affect the Company
Financial Statements or for tax purposes.
(iii) The books of account of the Company and its subsidiaries are
complete and correct in all material respects and have been maintained on
a materially consistent basis.
(i) NO LIABILITIES; ABSENCE OF CERTAIN CHANGES OR EVENTS. Neither the
Company nor any of its subsidiaries has any material indebtedness,
obligations or liabilities of any kind (whether accrued, absolute,
contingent or otherwise, and whether due or to become due or asserted or
unasserted), and, to the knowledge of the Company, there is no basis for the
assertion of any claim or liability of any nature against the Company or any
of its subsidiaries, except for liabilities (i) which are fully reflected
in, reserved against or otherwise described in the Company Financial
Statements, or (ii) which have been incurred after December 31, 1997 in the
ordinary course of business. Except as disclosed in the Company SEC Reports,
since December 31, 1997, the business of the Company and its subsidiaries
has been carried on only in the ordinary and usual course and there has not
been any material adverse change in its business, properties, operations,
financial condition or prospects and no event has occurred and no fact or
set of circumstances has arisen which has resulted in or could reasonably be
expected to result in a Material Adverse Effect with respect to the Company
and its subsidiaries. To the knowledge of the Company, no material customer
or supplier of the Company intends to or has threatened to alter materially
its relationship with the Company.
(j) BROKERS AND FINDERS. Except for the fees and expenses payable to
BancAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLC, which fees and expenses are reflected in
its agreement with the Company, a true and complete copy of which (including
all amendments) has been furnished to the Company, neither the Company nor
its subsidiaries has employed any investment banker, broker, finder,
consultant or intermediary in connection with the transactions contemplated
by this Agreement which would be entitled to any investment banking,
brokerage, finder's or similar fee or commission in connection with this
Agreement or the transactions contemplated hereby.
(k) S-4 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS. None of
the information supplied or to be supplied by the Company or its
subsidiaries for inclusion or incorporation by reference in the S-4
Registration Statement or the Joint Proxy Statement (as such terms are
defined in Section 6.4) will (i) in the case of the S-4 Registration
Statement, at the time it becomes effective or at the Effective Time,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading, or (ii) in the case of the Joint
Proxy Statement, at the time of the mailing of the Joint Proxy Statement and
at the time of the Stockholder Meeting (as such term is defined in Section
6.3), 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. If at any time prior to the Effective Time any event
with respect to the Company, its officers and directors or any of its
subsidiaries should occur which is required to be described in an amendment
of, or a supplement to, the Joint Proxy Statement or the S-4 Registration
Statement, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of the Company. The S-4 Registration
Statement will (with respect to the Company) comply as to form in all
material respects with the requirements of the Securities Act and the rules
and regulations promulgated thereunder. The Joint Proxy Statement will (with
respect to the Company) comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder.
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(l) TAXES.
(i) The Company and each of its subsidiaries has timely filed all
Returns required by applicable Tax law to be filed by the Company and
each of its subsidiaries, except for any such failures to file that could
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company. All Taxes owed by the Company or
any of its subsidiaries to a taxing authority, or for which the Company
or any of its subsidiaries is liable, whether to a taxing authority or to
other persons or entities under a Significant Tax Agreement, as of the
date hereof, have been paid and, as of the Effective Time, will have been
paid, except for any such failure to pay that could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect on the Company. The Company has made (A) accruals for Taxes on the
Company Financial Statements and (B) with respect to periods after the
date of the Company Financial Statements, provisions on a periodic basis
consistent with past practice on the Company's or one of its
subsidiaries' books and records or financial statements, in each case
which are adequate to cover any Tax liability of the Company and each of
its subsidiaries determined in accordance with generally accepted
accounting principles through the date of the Company Financial
Statements or the date of the provision, as the case may be, except where
failures to make such accruals or provisions could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect on the Company.
(ii) Except to the extent that any such failure to withhold could not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company, the Company and each of its
subsidiaries have withheld with respect to its employees all federal and
state income taxes, FICA, FUTA and other Taxes required to be withheld.
(iii) There is no Tax deficiency outstanding, proposed or assessed
against the Company or any of its subsidiaries, except any such
deficiency that, if paid, could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company. Neither the Company nor any of its subsidiaries executed or
requested any waiver of any statute of limitations on or extending the
period for the assessment or collection of any federal or material state
Tax.
(iv) No federal or state Tax audit or other examination of the
Company or any of its subsidiaries is presently in progress, nor has the
Company or any of its subsidiaries been notified in writing of any
request for such federal or material state Tax audit or other
examination, except in all cases for Tax audits and other examinations
which could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
(v) Neither the Company nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as defined in Section 341(f)(4) of the Code) owned by the
Company.
(vi) Neither the Company nor any of its subsidiaries is a party to
(A) any agreement with a party other than the Company or any of its
subsidiaries providing for the allocation or payment of Tax liabilities
or payment for Tax benefits with respect to a consolidated, combined or
unitary Return which Return includes or included the Company or any
subsidiary or (B) any Significant Tax Agreement other than any
Significant Tax Agreement described in (A).
(vii) Except for the group of which the Company and its subsidiaries
are now presently members, neither the Company nor any of its
subsidiaries has ever been a member of an affiliated group of
corporations within the meaning of Sections 1504 of the Code.
(viii) Neither the Company nor any of its subsidiaries has agreed to
make nor is it required to make any adjustment under Section 481(a) of
the Code by reason of a change in accounting method or otherwise.
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(ix) The Company is not, and has not at any time been, a "United
States Real Property Holding Corporation" within the meaning of Section
897(c)(2) of the Code.
(m) EMPLOYEE BENEFITS.
(i) Except for liabilities reflected in the accruals and reserves on
the Company Financial Statements, none of the Company or any current or
former Plan Affiliate of the Company has at any time maintained,
sponsored, adopted, made contributions to, obligated itself or had any
liability with respect to: any "employee pension benefit plan" (as such
term is defined in Section 3(2) of ERISA); any "employee welfare benefit
plan" (as such term is defined in Section 3(1) of ERISA); any personnel
or payroll policy (including vacation time, holiday pay, service awards,
moving expense reimbursement programs and sick leave) or material fringe
benefit; any severance agreement or plan or any medical, hospital,
dental, life or disability plan; any excess benefit plan, bonus or
incentive plan (including any equity or equity-based plan), tuition
reimbursement, automobile use, club membership, parental or family leave,
top hat plan or deferred compensation plan, salary reduction agreement,
change-of-control agreement, employment agreement, consulting agreement,
or collective bargaining agreement, indemnification agreement, retainer
agreement; or any other benefit plan, policy, program, arrangement,
agreement or contract, whether or not written or terminated, with respect
to any employee, former employee, director, independent contractor, or
any beneficiary or dependent thereof (all such plans, policies, programs,
arrangements, agreements and contracts, whether or not set forth in
Section 5.2(m) of the Company Disclosure Schedule are referred to in this
Agreement as "Company Scheduled Plans").
(ii) The Company has delivered to Parent a complete and accurate
copy, as of the Closing, of each written Company Scheduled Plan, together
with, if applicable, a copy of audited financial statements, actuarial
reports and Form 5500 Annual Reports (including required schedules), if
any, for the three (3) most recent plan years, the most recent IRS
determination letter or IRS recognition of exemption; each other material
letter, ruling or notice issued by a governmental body with respect to
each such plan, a copy of each trust agreement, insurance contract or
other funding vehicle, if any, with respect to each such plan, the most
recent PBGC Form 1 with respect to each such plan, if any, the current
summary plan description or summary of material modifications with
respect to each such plan, Form 5310 and any related filings with the
PBGC and with respect to the last six Plan years for each Plan subject to
Title IV of ERISA, general notification to employees of their rights
under Code Section 4980B and form of letter(s) distributed upon the
occurrence of a qualifying event described in Code Section 4980B, in the
case of a Plan that is a "group health plan" as defined in Code Section
162(i), and a copy or description of each other general explanation or
written or oral communication which describes a material term of each
such plan that has not previously been disclosed to Parent pursuant to
this Section. Section 5.2(m) of the Company Disclosure Schedule contains
a description of the material terms of any unwritten Company Scheduled
Plan as comprehended to the Closing Date. There are no negotiations,
demands or proposals which are pending or threatened which concern
matters now covered, or that would be covered, by the foregoing types of
Plans.
(iii) Except as could not reasonably give rise, whether individually
or in the aggregate, to material liability to the Company, Parent, or
Merger Sub:
(1) each Company Scheduled Plan (A) has been and currently
complies in form and in operation in all material respects with all
applicable requirements of ERISA and the Code, and any other legal
requirements; (B) has been and is operated and administered in
compliance with its terms (except as otherwise required by law); (C)
has been and is operated in compliance with applicable legal
requirements in such a manner as to qualify, where appropriate, for
both Federal and state purposes, for income tax exclusions to its
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participants, tax-exempt income for its funding vehicle, and the
allowance of deductions and credits with respect to contributions
thereto; and (D) where appropriate, has received a favorable
determination letter or recognition of exemption from the Internal
Revenue Service.
(2) with respect to each Company Scheduled Plan, there are no
claims or other proceedings pending or threatened with respect to the
assets thereof (other than routine claims for benefits), and there
are no facts which could reasonably give rise to any liability, claim
or other proceeding against any Company Scheduled Plan, any fiduciary
or plan administrator or other person dealing with any Company
Scheduled Plan or the assets of any such plan.
(3) with respect to each Company Scheduled Plan, no person: (A)
has entered into any "prohibited transaction," as such term is
defined in ERISA or the Code and the regulations, administrative
rulings and case law thereunder; (B) has breached a fiduciary
obligation or violated Sections 402, 403, 405, 503, 510 or 511 of
ERISA; (C) has any liability for any failure to act or comply in
connection with the administration or investment of the assets of
such plans; or (D) engaged in any transaction or otherwise acted with
respect to such plans in such a manner which could subject Parent, or
any fiduciary or plan administrator or any other person dealing with
any such plan, to liability under Sections 409 or 502 of ERISA or
Sections 4972 or 4976 through 4980B of the Code.
(4) each Company Scheduled Plan may be amended, terminated,
modified or otherwise revised by the Company or Parent, on and after
the Closing, without further liability to the Company or Parent,
including any withdrawal liability under ERISA for any multi-employer
plan. For purposes of this paragraph, termination of a Company
Scheduled Plan includes the requirement of a cessation of liability
for claims incurred after the termination date regardless of any
status having been obtained or achieved.
(5) none of the Company or any current or former Company Plan
Affiliate has at any time participated in, made contributions to or
had any other liability with respect to any Company Scheduled Plan
which is a "multi-employer plan" as defined in Section 4001 of ERISA,
a "multi-employer plan" within the meaning of Section 3(37) of ERISA,
a "multiple employer plan" within the meaning of Section 413(c) of
the Code or a "multiple employer welfare arrangement" within the
meaning of Section 3(40) of ERISA.
(6) none of the Company or any current or former Company Plan
Affiliate has at any time maintained, contributed to or obligated
itself or otherwise had any liability with respect to any funded or
unfunded employee welfare plan, whether or not terminated, which
provides medical, health, life insurance or other welfare-type
benefits for current or future retirees or current or future former
employees, their spouses or dependents or any other persons (except
for limited continued medical benefit coverage for former employees,
their spouses and other dependents as required to be provided under
Section 4980B of the Code and Part 6 of Subtitle B of Title I of
ERISA and the accompanying proposed regulations or state continuation
coverage laws ("COBRA")).
(7) no Company Scheduled Plan has incurred an "accumulated
funding deficiency" as such term is defined in Section 302 of ERISA
or Section 412 of the Code, whether or not waived, or has posted or
is required to provide security under Code Section 401(a)(29) or
Section 307 of ERISA; no event has occurred which has or could result
in the imposition of a lien under Code Section 412 or Section 302 of
ERISA, nor has any liability to the Pension Benefit Guaranty
Corporation (the "PBGC") (except for payment of premiums) been
incurred or reportable event within the meaning of Section 4043 of
ERISA occurred with
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respect to any such plan; and the PBGC has not threatened or taken
steps to institute the termination of any such plan;
(8) the requirements of COBRA have been satisfied with respect to
each Company Scheduled Plan.
(9) all contributions, payments, premiums, expenses,
reimbursements or accruals for all periods ending prior to or as of
the Closing for each Company Scheduled Plan (including periods from
the first day of the then current plan year to the Closing) shall
have been made or accrued on the Company financial statements (in
accordance with generally applied accounting principal, including FAS
87, 88, 106 and 112) and each such plan otherwise does not have nor
could have any unfunded liability (including benefit liabilities as
defined in Section 4001(a)(16) of ERISA) which is not reflected on
the Company financial statements. Any contribution made or accrued
with respect to any Company Scheduled Plan is fully deductible by the
Company.
(10) neither the Company nor a Plan Affiliate has any liability
(A) for the termination of any single employer plan under Section
4062 of ERISA or any multiple employer plan under Section 4063 of
ERISA, (B) for any lien imposed under Section 302(f) of ERISA or
Section 412(n) of the Code, (C) for any interest payments required
under Section 302(e) of ERISA or Section 412(m) of the Code, (D) for
any excise tax imposed by Code Sections 4971, 4972, 4977, or 4979, or
(E) for any minimum funding contributions under Section 302(c)(11) of
ERISA or Code Section 412(c)(11).
(11) all the Company Scheduled Plans to the extent applicable,
are in compliance with Section 1862(b)(1)(A)(i) of the Social
Security Act and neither the Company nor any Plan Affiliate has any
liability for any excise tax imposed by Code Section 5000.
(12) with respect to any Company Scheduled Plan which is a
welfare plan as defined in Section 3(1) of ERISA; (A) each such
welfare plan which is intended to meet the requirements for
tax-favored treatment under Subchapter B of Chapter 1 of the Code
meets such requirements; (B) there is no disqualified benefit (as
such term is defined in Code Section 4976(b)) which would subject the
Company or any Plan Affiliate to a tax under Code Section 4976(a);
and (C) each and every such welfare plan which is a group health plan
(as such term is defined in Code Section 162(i)(3)) complies and in
each and every case has complied with the applicable requirements of
Code Section 4980B, Title XXII of the Public Health Service Act and
the applicable provisions of the Social Security Act.
(13) Other than by reason of actions taken by Parent following
the Closing, the consummation of the transactions contemplated by
this Agreement will not (A) entitle any current or former employee of
the Company to severance pay, unemployment compensation or any other
payment, (B) accelerate the time of payment or vesting of any
payment, forgive any indebtedness, or increase the amount of any
compensation due to any such employee or former employee, (C) result
in any prohibited transaction described in Section 406 of ERISA or
Section 4975 of the Code for which an exemption is not available, or
(D) give rise to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G of the Code.
(14) As used in this Agreement, with respect to any person
("First Person") the term "Plan Affiliate" shall mean each other
person or entity with whom the First Person constitutes or has
constituted all or part of a controlled group, or which would be
treated or has been treated with the First Person as under common
control or whose employees would be treated or have been treated as
employed by the First Person, under Section 414 of the Code and any
regulations, administrative rulings and case law interpreting the
foregoing.
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(n) COMPANY INTANGIBLE PROPERTY.
(i) Section 5.2(n) of the Company Disclosure Schedule sets forth a
true, correct and complete list of each patent, trademark, trade name,
service ▇▇▇▇, brand ▇▇▇▇, brand name, industrial design and copyright
owned or used in business by the Company and its subsidiaries, as well as
all registrations thereof and pending applications therefor, and each
license or other contract relating thereto (collectively with any other
intellectual property owned or used in the business by the Company and
its subsidiaries, and all of the goodwill associated therewith, the
"Company Intangible Property") and indicates, with respect to each item
of Company Intangible Property listed thereon, the owner thereof and, if
applicable, the name of the licensor and licensee thereof and the terms
of such license or other contract relating thereto. Except as set forth
in Section 5.2(n) of the Company Disclosure Schedule, each of the
foregoing is owned free and clear of any and all liens, mortgages,
pledges, security interests, levies, charges, options or any other
encumbrances of any kind whatsoever and none of the Company or any of its
subsidiaries has received any notice to the effect that any other entity
has any claim of ownership with respect thereto. To the knowledge of the
Company, the use of the foregoing by the Company and its subsidiaries
does not conflict with, infringe upon, violate or interfere with or
constitute an appropriation of any right, title, interest or goodwill,
including, without limitation, any intellectual property right, patent,
trademark, trade name, service ▇▇▇▇, brand ▇▇▇▇, brand name, computer
program, industrial design, copyright or any pending application therefor
of any other person or entity. Except as set forth in Section 5.2(n) of
the Company Disclosure Schedule, no claims have been made, and none of
the Company or any of its subsidiaries has received any notice, nor does
the Company or any of its subsidiaries have any knowledge of any basis
for any claims that any of the foregoing is invalid, conflicts with the
asserted rights of other entities, or has been used or enforced (or has
failed to be used or enforced) in a manner that would result in the
abandonment, cancellation or unenforceability of any item of Company
Intangible Property.
(ii) The Company and each of its subsidiaries possesses all Company
Intangible Property, including, without limitation, all know-how,
formulae and other proprietary and trade rights and trade secrets,
necessary for the conduct of their businesses as now conducted. None of
the Company or any of its subsidiaries has taken or failed to take any
action that would result in the forfeiture or relinquishment of any such
Company Intangible Property used in the conduct of their respective
businesses as now conducted.
(o) CERTAIN CONTRACTS. Section 5.2(o) of the Company Disclosure
Schedule lists all of the following contracts, agreements and commitments,
whether oral or written, to which the Company or its subsidiaries is a party
or by which any one of them or any of their properties or assets may be
bound (the "Company Listed Agreements"): (i) all employment or other
contracts with any officer or director of the Company or any subsidiary of
the Company (or any company which is controlled by any such individual) and
any employment agreements with any employee which are not terminable at will
without any payment upon termination; (ii) union, guild or collective
bargaining contracts relating to employees of the Company or any subsidiary;
(iii) instruments for credit or money borrowed (including, without
limitation, any indentures, guarantees, loan agreements, sale and leaseback
agreements, or purchase money obligations incurred in connection with the
acquisition of property other than in the ordinary course of business)
involving individually or in the aggregate in excess of $250,000; (iv)
underwriting, purchase, liquidation or similar agreements entered into in
connection with the Company or any of its subsidiaries' currently existing
indebtedness; (v) agreements for acquisitions or dispositions (by merger,
purchase, liquidation or sale of assets or stock or otherwise) of material
assets entered into within the last three (3) years, as to which the
transactions contemplated have been consummated or are currently pending;
(vi) joint venture, strategic alliance or similar partnership agreements;
(vii) material licensing, merchandising and distribution contracts; (viii)
contracts granting any person or other entity registration rights; (ix)
guarantees, suretyships,
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indemnification and contribution agreements, involving individually or in
the aggregate in excess of $250,000; (x) material agreements regarding the
use, license or other disposition of intellectual property; (xi) franchise
agreements; (xii) agreements regarding the purchase of supplies, equipment,
materials or components greater than $1,000,000 or one year in duration;
(xiii) agreements for the sale of products greater than $1,000,000 or one
year in duration; (xiv) agreements restricting competition; (xv) contracts
with any governmental or quasi-governmental entity; (xvi) existing material
leases of real or personal property and material contracts to purchase or
sell real property; and (xvii) other contracts which materially affect the
business, properties or assets of the Company and its subsidiaries taken as
a whole, and are not otherwise disclosed in this Agreement or which were
entered into other than in the ordinary course of business on a basis
consistent with past practice. Except as set forth on Section 5.2(o) of the
Company Disclosure Schedule, a true and complete copy (including all
amendments) of each Company Listed Agreement, or a summary of each oral
contract, has been made available to the Company. Neither the Company nor
any subsidiary (i) is in breach or default in any material respect under any
of the Company Listed Agreements or (ii) has any knowledge of any other
material breach or default under any Company Listed Agreement by any other
party thereto or by any other person or entity bound thereby, except in the
case of (i) or (ii) breaches or defaults which would not, individually or in
the aggregate, have a Material Adverse Effect with respect to the Company.
Except as set forth in the Company Schedules, there is no agreement,
judgment, injunction, order or decree binding upon the Company or its
subsidiaries or their properties (including, without limitation, their
intellectual properties) which has or could reasonably be expected to have
the effect of prohibiting or materially impairing any material acquisition
of property by the Company or any of its subsidiaries or the conduct of the
business by the Company or any of its subsidiaries including any exclusive
distribution or licensing agreements which cannot be terminated on less than
30 days notice without any cost or expense to the Company or its
subsidiaries. Except as provided for herein, at the Effective Time, no
person will have the right, by contract or otherwise, to become, nor does
any entity have the right to designate or cause the Company to appoint a
person as, a director of the Company, any subsidiary of the Company or
Parent.
(p) ACCOUNTING MATTERS. Neither the Company nor, to its Knowledge, any
of its affiliates, has taken or agreed to take any action that would prevent
the Parent from accounting for the business combination to be effected by
the Merger as a "pooling-of-interests." The Company has not failed to bring
to the attention of Parent any actions, agreements or understandings,
whether written or oral, that would be reasonably likely to prevent Parent
from accounting for the Merger as a pooling-of-interests. The Company has
received a letter from Coopers & ▇▇▇▇▇▇▇ LLP ("C&L") to the effect that the
Company is a poolable entity.
(q) UNLAWFUL PAYMENTS AND CONTRIBUTIONS. To the knowledge of the
Company, neither the Company, any subsidiary of the Company nor any of their
respective directors, officers, employees or agents has, with respect to the
businesses of the Company or its subsidiaries, (i) used any funds for any
unlawful contribution, endorsement, gift, entertainment or other unlawful
expense relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee;
(iii) violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any person or
entity.
(r) LISTINGS. The Company's securities are not listed, or quoted, for
trading on any U.S. domestic or foreign securities exchange, other than the
NNM.
(s) ENVIRONMENTAL MATTERS. Except as disclosed in the Company SEC
Reports, (i) the Company and its subsidiaries and the operations, assets and
properties thereof are in material compliance with all Environmental Laws
(as defined in Section 5.1(s)); (ii) there are no judicial or administrative
actions, suits, proceedings or investigations pending or, to the knowledge
of the Company, threatened against the Company or any subsidiary of the
Company alleging the violation of any Environmental
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Law and neither the Company nor any subsidiary of the Company has received
notice from any governmental body or person alleging any violation of or
liability under any Environmental Laws, in either case which could
reasonably be expected to result in material Environmental Costs and
Liabilities (as defined in Section 5.1(s); (iii) to the knowledge of the
Company, there are no facts, circumstances or conditions relating to,
arising from, associated with or attributable to the Company or its
subsidiaries or any real property currently or previously owned, operated or
leased by the Company or its subsidiaries that could reasonably be expected
to result in material Environmental Costs and Liabilities; and (iv) to the
knowledge of the Company, the Company has not ever generated, transported,
treated, stored, handled or disposed of any Hazardous Material at any site,
location or facility in a manner that could create any material
Environmental Costs and Liabilities under any Environmental Law; and no such
Hazardous Material has been or is currently present on, in, at or under any
real property owned or used by the Company in a manner that could create any
Environmental Costs and Liabilities (including without limitation,
containment by means of any underground or aboveground storage tank).
(t) TITLE TO PROPERTIES; LIENS; CONDITION OF PROPERTIES.
(i) The Company and its subsidiaries have good and marketable title
to, or a valid leasehold interest in, the real and personal property,
located on their premises or shown on their most recent balance sheet or
acquired after the date thereof. None of the property owned or used by
the Company or any of its subsidiaries is subject to any mortgage,
pledge, deed of trust, lien (other than for taxes not yet due and
payable), conditional sale agreement, security title, encumbrance, or
other adverse claim or interest of any kind. There has not been prior to
Closing any sale, lease, or any other disposition or distribution by the
Company of any of its material assets or properties, now owned or
hereafter acquired, except transactions in the ordinary and regular
course of business.
(ii) The Company has delivered to Parent true, correct and complete
copies of all material leases, subleases, rental agreements, contracts of
sale, tenancies or licenses related to any of the real or personal
property used by the Company or any of its subsidiaries in their
respective businesses. All such leases are valid, binding and enforceable
in accordance with their terms against the parties thereto, and each such
lease is subsisting and no default exists under any thereof. Neither the
Company nor any of its subsidiaries has received notice that any party to
any such lease intends to cancel, terminate or refuse to renew the same
or to exercise or decline to exercise any option or any right thereunder.
(iii) All buildings, machinery and equipment of the Company and any
of its subsidiaries are in good condition, working order and repair,
normal wear and tear and excepted, and adequate for the uses to which
they are being put, have been well maintained, conform in all material
respects with all applicable ordinances, regulations and zoning, safety
or other laws, and to the knowledge of the Company do not encroach on
property of others. As of the date hereof, neither the Company nor any of
its subsidiaries has received written notice of or otherwise become aware
of any pending or threatened change of any such ordinance, regulation or
zoning, safety or other law and there is no pending or, to the Company's
knowledge, threatened condemnation of any such property.
(u) INVENTORIES. All inventories of finished goods and work in process
of the Company and its subsidiaries are as of the date hereof, and those
existing at the Closing will be in all material respects, good and
merchantable and of a quality and quantity salable in the ordinary course of
the business of the Company and its subsidiaries at prevailing market prices
without discounts, except for inventory reserved against in accordance with
GAAP. All inventories of raw materials are of a quality and quantity usable
in the ordinary course of business. The Company's purchase commitments for
raw materials and parts are not in excess of normal requirements, and none
are at prices materially in
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excess of current market prices and no inventory items have been sold or
disposed of except through sales in the ordinary course of business and
consistent with past practice at prices no less than prevailing market
prices, and in no event less than cost.
(v) ACCOUNTS RECEIVABLE AND PAYABLE. The Company's accounts receivable
have been arisen in bona-fide arms length transactions in the ordinary
course of business, and to the Company's knowledge, represent valid and
binding obligations of the account debtors and will be collected in the
ordinary course of business. To the extent required under GAAP, the
Company's accounts payable reflect all amounts owed by the Company in
respect of trade accounts due and other payables and the actual liability of
the Company in respect of such obligations is reflected on the Company's
financial statements as contained in the Company SEC Reports.
(w) LABOR AND EMPLOYEE RELATIONS.
(i) The Company is not a party to any employment, consulting,
non-competition, severance, golden parachute, indemnification agreement
or any other agreement providing for payments or benefits or the
acceleration of payments or benefits upon the change of control of the
Company (including, without limitation, any contract to which the Company
is a party involving employees of the Company).
(ii) (A) None of the employees of the Company or any of its
subsidiaries is represented in his or her capacity as an employee of such
company by any labor organization; (B) neither the Company nor any of its
subsidiaries has recognized any labor organization nor has any labor
organization been elected as the collective bargaining agent of any of
their employees, nor has the Company or any of its subsidiaries signed
any collective bargaining agreement or union contract recognizing any
labor organization as the bargaining agent of any of their employees; and
(C) to the knowledge of the Company, there is no active or current union
organization activity involving the employees of the Company or any of
its subsidiaries, nor has there ever been union representation involving
employees of the Company or any of its subsidiaries.
(iii) There are no complaints against the Company or any of its
subsidiaries pending or, to the knowledge of the Company, overtly
threatened before the National Labor Relations Board or any similar
foreign, state or local labor agencies, or before the Equal Employment
Opportunity Commission or any similar foreign, state or local agency, or
before any other governmental agency or entity by or on behalf of any
employee or former employee of the Company or any of its subsidiaries.
(iv) Neither the Company nor any of its subsidiaries has any
material contingent liability for severance pay or similar items. The
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not trigger any
severance pay obligation under any contract or at law.
(v) The Company has provided to Parent a description of all written
and other material employment policies under which the Company and each
subsidiary has operated.
(vi) The Company and each of its subsidiaries are in compliance with
all Federal, foreign (as applicable), and state laws regarding employment
practices, including laws relating to workers' safety, sexual harassment
or discrimination, except where the failure to so be in compliance,
individually or in the aggregate, would not have a Material Adverse
Effect.
(vii) To the knowledge of the Company, no executive, key employee or
group of employees has any plans to terminate his or her employment with
the Company or any of its subsidiaries.
(x) PERMITS. The Company and each of its subsidiaries hold all
licenses, permits, registrations, orders, authorizations, approvals and
franchises which are required to permit it to conduct its
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businesses as presently conducted, except where the failure to hold such
licenses, permits, registrations, orders, authorizations, approvals or
franchises would not, individually or in the aggregate, have a Material
Adverse Effect. All such material licenses, permits, registrations, orders,
authorizations, approvals and franchises are listed in Section 5.2(x) of the
Company Disclosure Schedule and are now, and will be after the Closing,
valid and in full force and effect, and Parent shall have full benefit of
the same, except where the failure to have the benefit of any such license,
permit, registration, order, authorization, approval or franchise would not,
individually or in the aggregate, have a Material Adverse Effect. Neither
the Company nor any of its subsidiaries has received any notification of any
asserted present failure (or past and unremedied failure) by it to have
obtained any such license, permit, registration, order, authorization,
approval or franchise.
(y) WARRANTY OR OTHER CLAIMS. No product manufactured, sold, leased or
delivered by the Company or any of its subsidiaries is subject to any
guaranty, warranty, right of return or other indemnity beyond the applicable
standard terms and conditions of sale or lease, which have been provided to
Parent. There are no existing or, to the knowledge of the Company,
threatened claims or any facts upon which a claim could be based, against
the Company or any of its subsidiaries for services or merchandise which are
defective or fail to meet any service or product warranties which would,
individually or in the aggregate, have a Material Adverse Effect. No claim
has been asserted against the Company or any of its subsidiaries for
renegotiation or price redetermination of any business transaction, and the
Company has no knowledge of any facts upon which any such claim could be
based.
(z) POWERS OF ATTORNEY. To the knowledge of the Company, neither the
Company nor any of its subsidiaries has granted any outstanding powers of
attorney or similar powers of agency.
(aa) INSURANCE. Section 5.2(aa) of the Company Disclosure Schedule
lists all insurance policies in force covering the businesses, properties
and assets of the Company and its subsidiaries and all outstanding claims
against such policies. All such policies are currently in effect, and
neither the Company nor any of its subsidiaries has received notice of
cancellation or termination of, or material premium increase with respect
to, of any such insurance in effect on the date hereof or within the past
two (2) years. All such policies are issued by an insurer that is financial
sound and reputable and provide adequate insurance coverage for the assets
and operations of the Company or its subsidiaries for all risks customarily
insured against by a person or entity engaged in a similar businesses as the
Company and its subsidiaries.
(bb) CORPORATE BOOKS AND RECORDS. The minute books and stock ledgers
of the Company, copies of which have been made available for inspection by
Parent, have been kept in due course, accurately record all material action
taken by the Company's stockholders, board of directors and committees
thereof and are complete.
(cc) TRANSACTIONS WITH AFFILIATES. The Company is not a party to any
affiliate transactions through the date of this Agreement and has no
existing commitments to engage in any affiliate transactions in the future.
(dd) DISCLOSURE. No representation or warranty by the Company in this
Agreement and no statement contained in the Company Disclosure Schedule or
any certificate delivered by the Company to Parent pursuant to this
Agreement, contains any untrue statement of a material fact or omits any
material fact necessary to make the statements herein or therein not
misleading when taken together in light of the circumstances in which they
were made, it being understood that as used in this Section 5.2(dd)
"material" means material to the Company and its subsidiaries taken as a
whole.
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ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 CONDUCT OF BUSINESS.
(a) Parent and the Company each covenant and agree that, during the
period from the date of this Agreement to the Effective Time (unless the
Parties shall otherwise agree in writing and except as otherwise
contemplated by this Agreement), Parent and the Company each will, and will
cause each of their subsidiaries to, conduct their operations according to
their ordinary and usual course of business consistent with past practice
and, to the extent consistent therewith, with no less diligence and effort
than would be applied in the absence of this Agreement, seek to preserve
intact their current business organizations, use their best efforts to keep
available the service of its current officers and employees and preserve
their relationships with customers, suppliers and others having business
dealings with them to the end that goodwill and ongoing businesses shall be
unimpaired at the Effective Time.
(b) Without limiting the generality of the foregoing, and except as
otherwise permitted in this Agreement, prior to the Effective Time, none of
Parent, the Company, or any of its subsidiaries will, without the prior
written consent of the other Parties:
(i) accelerate, amend or change the period of exercisability of any
outstanding options or restricted stock, or reprice options granted under
the Company Option Plans or authorize cash payments in exchange for any
options granted under any of such plans;
(ii) except (x) as set forth in Section 6.1(b) of the Parent
Disclosure Schedule or the Company Disclosure Schedule, as the case may
be, and (y) for shares to be issued upon exercise of the outstanding
Options or warrants, issue, deliver, sell, dispose of, pledge or
otherwise encumber, or authorize or propose the issuance, sale,
disposition or pledge or other encumbrance of (A) any additional shares
of capital stock of any class, or any securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe for any
shares of capital stock, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or
acquire any shares of capital stock or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe
for, any shares of capital stock, or (B) any other securities in respect
of, in lieu of, or in substitution for, shares outstanding on the date
hereof;
(iii) redeem, purchase or otherwise acquire, or offer to redeem,
purchase or otherwise acquire, any of its outstanding securities
(including the Parent Shares or the Company Shares, as the case may be);
(iv) split, combine, subdivide or reclassify any shares of its
capital stock or declare, set aside for payment or pay any dividend, or
make any other actual, constructive or deemed distribution in respect of
any shares of its capital stock or otherwise make any payments to
stockholders in their capacity as such;
(v) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization (other than the Merger as provided for herein);
(vi) adopt any amendments to its Certificate or Articles of
Incorporation, as the case may be, or By-Laws or alter through merger,
liquidation, reorganization, restructuring or in any other fashion the
corporate structure or ownership of any its subsidiaries;
(vii) make any acquisition, by means of merger, consolidation or
otherwise, or disposition, of assets (except in the ordinary course of
business) or securities;
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(viii) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money or guarantee any
such indebtedness or make any loans, advances or capital contributions
to, or investments in, any other person, other than the Merger and loans
or advances to employees in accordance with past practice and of less
than $20,000 individually or $300,000 in the aggregate;
(ix) make or revoke any material Tax election, settle or compromise
any material federal, state, local or foreign Tax liability or change (or
make a request to any taxing authority to change) any material aspect of
its method of accounting for Tax purposes (except for Tax elections which
are consistent with prior such elections (in past years); provided, that
this subparagraph (ix) shall not apply to any such action by Parent or
its subsidiaries;
(x) incur any liability for Taxes other than in the ordinary course
of business; or
(xi) authorize, recommend, propose or announce an intention to do any
of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
(c) Between the date hereof and the Effective Time, except as
contemplated herein, Parent, the Company and their subsidiaries shall not
(without the prior written consent of the Parties hereto) (A) grant any
increases in the compensation of any of their directors or officers and,
except in the ordinary course of business and in accordance with its
customary past practices, grant increases to any key employees; (B) pay or
agree to pay any pension, retirement allowance or other employee benefit not
required or contemplated by any of the existing benefit, severance, pension
or employment plans, agreements or arrangements as in effect on the date
hereof to any such director, officer or key employee, whether past or
present; (C) enter into any new or amend any existing employment or
severance agreement with any such director, officer or key employee, except
as contemplated by Section 6.17 hereof; or (D) except as may be required to
comply with applicable law, become obligated under any new pension plan,
welfare plan, multi-employer plan, employee benefit plan, severance plan,
benefit arrangement, or similar plan or arrangement, which was not in
existence on the date hereof, or amend any such plan or arrangement in
existence on the date hereof if such amendment would have the effect of
enhancing any benefits thereunder.
6.2 NO SOLICITATION.
(a) From and after the date of this Agreement until the Effective Time
or the earlier termination of this Agreement in accordance with its terms,
the Company and its subsidiaries will not, and will not permit their
respective directors, officers, investment bankers and affiliates to, and
will use their best efforts to cause their respective employees,
representatives and other agents not to, directly or indirectly, (i)
solicit, initiate, or encourage any inquiries or proposals that constitute,
or could reasonably be expected to lead to, any Acquisition Proposal (as
defined below), (ii) engage in negotiations or discussions concerning, or
provide any non-public information to any person or entity relating to, any
Acquisition Proposal, or (iii) agree to, approve, recommend or otherwise
endorse or support any Acquisition Proposal. As used herein, the term
"Acquisition Proposal" shall mean any proposal or actual (i) merger,
consolidation or similar transaction involving the Company or any subsidiary
of the Company, (ii) sale, lease or other disposition, directly or
indirectly, by merger, consolidation, share exchange or otherwise, of any
assets of the Company or any subsidiary of the Company representing 20% or
more of the assets of the Company on a consolidated basis, (iii) issue, sale
or other disposition of (including by way of merger, consolidation, share
exchange or any similar transaction) securities (or options, rights or
warrants to purchase or securities convertible into, such securities)
representing 20% or more of the votes attached to the outstanding securities
of the Company, (iv) transaction in which any person shall acquire
beneficial ownership (as such term is defined in Rule 13d-3 under the
Exchange Act), or the right to acquire beneficial ownership, or any "group"
(as such term is defined under the Exchange Act) shall have been formed
which beneficially
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owns or has the right to acquire beneficial ownership of, 20% or more of the
outstanding the Company Shares, (v) liquidation, dissolution, or other similar
type of transaction with respect to the Company or any subsidiary of the
Company, or (vi) transaction which is similar in form, substance or purpose to
any of the foregoing transactions, provided, however, that the term "Acquisition
Proposal" shall not include the Merger and the transactions contemplated
thereby. The Company will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
(b) Notwithstanding the provisions of paragraph (a) above, nothing
contained in this Agreement shall prevent the Company or its Board of
Directors, directly or through representatives or agents on behalf of the
Board, from (A) furnishing non-public information to, or entering into
discussions or negotiations with any person or entity in connection with an
unsolicited bona fide written Acquisition Proposal by such person or entity
or recommending such an unsolicited bona fide written Acquisition Proposal
to the stockholders of the Company, if the Board of Directors determines in
good faith that (1) after consultation with and receipt of a written opinion
from its financial advisors, such Acquisition Proposal would, if
consummated, result in a transaction more favorable to the Company's
stockholders (after due consideration to, among other matters, the financial
terms of the Acquisition Proposal, the advantages and benefits of the Merger
to the Company's stockholders, including but not limited to, the tax
treatment of the Merger, and the ability of the person or entity making such
proposal to obtain any financing necessary for the Acquisition Proposal)
than the Merger (any such more favorable Acquisition proposal being referred
to in this Agreement as a "Superior Proposal"), (2) the failure to take such
action would constitute a breach of the fiduciary duties of the Company's
Board of Directors to the Company's stockholders under California Law based
upon the advice of ▇▇▇▇ & ▇▇▇▇▇, the Company's outside corporate counsel,
and (3) prior to furnishing such non-public information to, or entering into
discussions or negotiations with, such person or entity, the Company's Board
of Directors (x) notifies Parent of such Acquisition Proposal and notifies
Parent that the Company intends to furnish such information or enter into
such negotiations, and (y) receives from such person or entity an executed
confidentiality agreement with confidentiality provisions not materially
less favorable to such party than those contained in the Confidentiality
Agreement dated May 12, 1998 between Parent and the Company; or (B)
complying with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act
or other applicable law with regard to an Acquisition Proposal.
(c) The Company will (i) notify Parent within 48 hours if any
Acquisition Proposal is made or proposed to be made or any information or
access to properties, books or records of the Company is requested in
connection with an Acquisition Proposal and (ii) within 48 hours communicate
to Parent the principal terms and conditions of any such Acquisition
Proposal or potential Acquisition Proposal or inquiry (and will disclose any
written materials received by the Company in connection with such
Acquisition Proposal, potential Acquisition Proposal or inquiry, unless the
Board of Directors determines, based on the advice of outside legal counsel
to the Company, that disclosing such materials would cause the Board of
Directors to violate its fiduciary duties to the Company's stockholders
under applicable law) and the identity of the party making such Acquisition
Proposal, potential Acquisition Proposal or inquiry.
(d) Except as set forth herein, neither the Board of Directors of the
Company nor any committee thereof shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent or Merger Sub, the
approval or recommendation by the Board of Directors of the Company or such
committee of this Agreement or the Merger, (ii) approve or recommend, or
propose to approve or recommend, any Acquisition Proposal, or (iii) enter
into any agreement with respect to any Acquisition Proposal. Notwithstanding
the foregoing, the Board of Directors of the Company may (subject to the
terms of this and the following sentence) withdraw or modify its approval or
recommendation of this Agreement or the Merger, approve or recommend a
Superior Proposal or enter into an agreement with respect to a Superior
Proposal at any time after the second
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business day following Parent's receipt of written notice advising Parent
that the Board of Directors of the Company has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal and
identifying the party making such Superior Proposal; PROVIDED, that the
Company shall not enter into an agreement with respect to a Superior
Proposal unless the Company shall have furnished Parent with written notice
not later than noon (Chicago time) two business days in advance of any date
that it intends to enter into such agreement and shall have caused its
financial and legal advisors to negotiate with Parent to make such
amendments to the terms and conditions of this Agreement as would make this
Agreement as so amended at least as favorable to the Company's stockholders
(based upon consideration of the financial terms of the Superior Proposal,
the advantages and benefits of the Merger to the Company's stockholders,
including but not limited to, the tax treatment of the Merger, and the
ability of the party making the Superior Proposal to obtain any financing
necessary for the Superior Proposal) as the Superior Proposal. In addition,
if the Company proposes to enter into an agreement with respect to any
Acquisition Proposal, it shall concurrently with entering into such
agreement pay, or cause to be paid, to Parent the Termination Fee (as
defined in Section 8.5) subject to the provisions of Section 8.5.
6.3 MEETING OF STOCKHOLDERS. Parent, on the one hand, and the Company on
the other, shall each take all action necessary in accordance with applicable
law and its Certificate of Incorporation (or Articles of Incorporation) and
By-Laws to convene a meeting of its stockholders (the "Stockholder Meetings") as
promptly as practicable to consider and vote upon the approval of the Merger and
the issuance of the Parent Shares, as the case may be. Subject to the fiduciary
duties of the each Party's Board of Directors under applicable law after
consultation with and based upon the advice of independent legal counsel (who
may be the Party's regularly engaged independent legal counsel), the Board of
Directors of Parent, on the one hand, and the Company on the other, shall each
recommend and declare advisable such approval and Parent, on the one hand, and
the Company on the other, shall take all lawful action to solicit, and use its
best efforts to obtain, such approval (the requisite approval by stockholders of
the Company as well as by stockholders of Parent is hereinafter referred to
collectively as the "Requisite Stockholder Approval").
6.4 REGISTRATION STATEMENT. Parent will, as promptly as practicable,
prepare and file with the SEC a registration statement on Form S-4 (the "S-4
Registration Statement"), containing a proxy statement/ prospectus and a form of
proxy, in connection with the registration under the Securities Act of the
Parent Shares issuable upon conversion of the Shares and the other transactions
contemplated hereby. The Company and Parent will, as promptly as practicable,
prepare and file with the SEC a proxy statement that will be the same proxy
statement/prospectus contained in the S-4 Registration Statement and a form of
proxy, in connection with the vote of the Company's and Parent's stockholders
with respect to the Merger and the issuance of the Parent Shares (such proxy
statement/prospectus, together with any amendments thereof or supplements
thereto, in each case in the form or forms mailed to the Company's and Parent's
stockholders, is herein called the "Joint Proxy Statement"). The Company and
Parent will, and will cause their accountants and lawyers to, use their best
efforts to have or cause the S-4 Registration Statement declared effective as
promptly as practicable, including, without limitation, causing their
accountants to deliver necessary or required instruments such as opinions,
consents and certificates, and will take any other action required or necessary
to be taken under federal or state securities laws or otherwise in connection
with the registration process, it being understood and agreed that ▇▇▇▇▇▇ ▇▇▇▇▇▇
& Zavis, counsel to Parent, and ▇▇▇▇ & ▇▇▇▇▇, counsel to the Company, will each
render the tax opinions referred to in Section 7.1(g) and 7.1(h), respectively,
on (i) the date the preliminary Joint Proxy Statement is filed with the SEC and
(ii) the date the S-4 Registration Statement is filed with the SEC. The Company
and Parent will each use their best efforts to cause the Joint Proxy Statement
to be mailed to their respective stockholders at the earliest practicable date
and will coordinate and cooperate with one another with respect to the timing of
the Stockholder Meetings and the Company and Parent shall each use their
commercially reasonable efforts to hold such Stockholder Meetings as soon as
practicable after the date hereof.
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6.5 BEST EFFORTS. The Parties shall: (i) promptly make their respective
filings and thereafter make any other required submissions under all applicable
laws with respect to the Merger and the other transactions contemplated hereby;
and (ii) use their best efforts to promptly take, or cause to be taken, all
other actions and do, or cause to be done, all other things necessary, proper or
appropriate to consummate and make effective the transactions contemplated by
this Agreement as soon as practicable.
6.6 ACCESS TO INFORMATION. Upon reasonable notice, Parent, on the one
hand, and the Company on the other, shall (and shall cause each of their
subsidiaries to) afford to officers, employees, counsel, accountants and other
authorized representatives of the other such party (the "Authorized
Representatives") reasonable access, during normal business hours throughout the
period prior to the Effective Time, to their properties, assets, books and
records and, during such period, shall (and shall cause each of their
subsidiaries to) furnish promptly to such Authorized Representatives all
information concerning their business, properties, assets and personnel as may
reasonably be requested for purposes of appropriate and necessary due diligence,
provided that no investigation pursuant to this Section 6.6 shall affect or be
deemed to modify any of the representations or warranties made by the Parties.
The Parties each agree to treat (and cause their Authorized Representatives to
treat) any and all information provided pursuant to this Section 6.6 in strict
compliance with the terms of that certain Confidentiality Agreement, entered by
and between the Company and Parent, dated May 12, 1998 (the "Confidentiality
Agreement").
6.7 PUBLICITY. The Parties agree that they will consult with each other
concerning any proposed press release or public announcement pertaining to the
Merger in order to agree upon the text of any such press release or the making
of such public announcement, which agreement shall not be unreasonably withheld.
6.8 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) From and after the Effective Time, Parent shall, and in addition
shall cause the Surviving Corporation to, indemnify, defend and hold
harmless the present and former officers and directors of the Company and
any of their subsidiaries against all losses, expenses, claims, damages or
liabilities arising out of actions or omissions occurring on or prior to the
Effective Time (including, without limitation, the transactions contemplated
by this Agreement) to the full extent (not otherwise covered by insurance)
permitted or required under applicable law (and shall also advance expenses
as incurred to the fullest extent permitted under applicable law, provided
that the person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such person is not
entitled to indemnification); PROVIDED, HOWEVER, the indemnification
provided hereunder by Parent shall not be greater than (x) the
indemnification permissible pursuant to the Company's Articles of
Incorporation and By-Laws, as in effect as of the date hereof or (y) the
indemnification actually provided by the Company as of the date hereof.
Parent agrees that all rights to indemnification, including provisions
relating to advances of expenses incurred in defense of any action or suit,
existing in favor of the present or former directors, officers, employees,
fiduciaries and agents of the Company, Parent or any of their subsidiaries
(collectively, the "Indemnified Parties") as provided in, as the case may
be, the Company's Articles of Incorporation or By-Laws or pursuant to other
agreements, or articles or certificates of incorporation or by-laws or
similar documents of any of the Company's or Parent's subsidiaries, as in
effect as of the date hereof, with respect to matters occurring through the
Effective Time, shall survive the Merger; PROVIDED, HOWEVER, that all rights
to indemnification in respect of any claim asserted or made within such
period shall continue until the disposition of such claim.
(b) Parent shall cause to be maintained in effect for not less than five
(5) years the current policies of directors' and officers' liability
insurance and fiduciary liability insurance maintained by the Company,
Parent and their subsidiaries with respect to matters occurring prior to the
Effective Time to the extent required to cover the types of actions and
omissions currently covered by such policies; PROVIDED, HOWEVER, that (i)
Parent may substitute therefor policies of substantially the same coverage
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containing terms and conditions which are not less advantageous, in any
material respect, to the Indemnified Parties and (ii) Parent shall not be
required to pay an annual premium for such insurance in excess of 200% of
current aggregate policies but in such case shall purchase as much coverage
as possible for such amount.
(c) In the event that any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated by this Agreement is
commenced, whether before or after the Closing, the parties hereto agree to
cooperate and use their respective commercially reasonable efforts to
vigorously defend against and respond thereto.
(d) This Section 6.8 is intended to benefit the Indemnified Parties and
shall be binding on all successors and assigns of the Parties.
6.9 AFFILIATES OF THE COMPANY AND PARENT. Parent has identified to the
Company each Parent Affiliate and the Company has identified to Parent each the
Company Affiliate (Parent Affiliates and the Company Affiliates are collectively
referred to as the "Affiliates") and each Affiliate has delivered to the Company
and Parent on or prior to the date hereof, a written agreement (i) that such
Affiliate will not sell, pledge, transfer or otherwise dispose of any Shares
issued to such Affiliate pursuant to the Merger, except in compliance with Rule
145 promulgated under the Securities Act or an exemption from the registration
requirements of the Securities Act and (ii) that on or prior to the earlier of
(x) the mailing of the Proxy Statement/Prospectus or (y) the thirtieth day prior
to the Effective Time such Affiliate will not thereafter sell or in any other
way reduce such Affiliate's risk relative to any Shares received in the Merger
(within the meaning of the SEC's Financial Reporting Release No. 1,
"Codification of Financing Reporting Policies," Section 201.01 47 F.R. 21028
(April 15, 1982)), until such time as financial results (including combined
sales and net income) covering at least 30 days of post-merger operations have
been published, except as permitted by Staff Accounting Bulletin No. 76 issued
by the SEC. Parent agrees to use commercially reasonable efforts to make
publicly available financial statements reflecting at least 30 days of combined
operations of Parent and the Company as soon as practicable.
6.10 MAINTENANCE OF INSURANCE. Between the date hereof and through the
Effective Time each of the Company and Parent will maintain in full force and
effect all of their presently existing policies of insurance or insurance
comparable to the coverage afforded by such policies.
6.11 REPRESENTATIONS AND WARRANTIES. Neither Parent, on the one hand, nor
the Company, on the other, will take any action that would cause any of their
respective representations and warranties set forth in Section 5.1 or 5.2, as
the case may be, not to be true and correct in all material respects at and as
of the Effective Time.
6.12 FILINGS; OTHER ACTION. Subject to the terms and conditions herein
provided, the Parties shall: (a) promptly make their respective filings and
thereafter make any other required submissions under the HSR Act, the Securities
Act and the Exchange Act with respect to the Merger; (b) cooperate in the
preparation of such filings or submissions under the HSR Act; and (c) use best
efforts promptly to take, or cause to be taken, all other actions and do, or
cause to be done, all other things necessary, proper or appropriate under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable.
6.13 NOTIFICATION OF CERTAIN MATTERS. Each of the Company and Parent shall
give prompt notice to the other of (a) any notice of, or other communication
relating to, a default or event which, with notice or lapse of time or both,
would become a default, received by it or any of its subsidiaries subsequent to
the date of this Agreement and prior to the Effective Time, under any contract
material to the financial condition, properties, businesses or results of
operations of it and its subsidiaries taken as a whole to which it or any of its
subsidiaries is a party or is subject, (b) any notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement, or
(c) any material adverse change in their respective financial condition,
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properties, businesses or results of operations, taken as a whole, other than
changes resulting from general economic conditions.
6.14 POOLING ACCOUNTING. None of the Parties will take any action that
could prevent the Merger from being accounted for as a pooling-of-interests and
Parent will bring to the attention of the Company, and the Company will bring to
the attention of Parent, any actions, occurrences, or agreements or
understandings, whether written or oral, which could be reasonably likely to
prevent Parent from accounting for the Merger as a pooling-of-interests.
6.15 POOLING LETTER. Prior to Closing, the Company shall cause C&L to
deliver to the Company a letter to the effect that pooling-of-interests
accounting is appropriate for the Merger if it is closed and consummated in
accordance with the terms of this Agreement. Prior to Closing, Parent shall
cause KPMG to deliver to Parent a letter to the effect that pooling-of-interests
accounting is appropriate for the Merger if it is closed and consummated in
accordance with the terms of this Agreement. Each of the Company and Parent
shall use commercially reasonable efforts to cause their respective auditors to
cooperate fully with each other in furtherance of the foregoing (including,
without limitation, sharing information, analysis and work product, engaging in
active discussions and taking other reasonable actions as the Parties or their
auditors deem necessary).
6.16 TAX-FREE REORGANIZATION TREATMENT. The Company shall execute and
deliver to ▇▇▇▇ & ▇▇▇▇▇, counsel to the Company, a representation letter
substantially in the form attached hereto as EXHIBIT D-1 at such time or times
as reasonably requested by such law firm in connection with its delivery of an
opinion with respect to the transactions contemplated hereby, and shall provide
a copy thereof to Parent. Parent shall execute and deliver to ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
Zavis, counsel to Parent, a representation letter substantially in the form
attached hereto as EXHIBIT D-2 at such time or times as reasonably requested by
such law firm in connection with its delivery of an opinion with respect to the
transactions contemplated hereby, and shall provide a copy thereof to the
Company. Prior to the Effective Time, the Parties shall use their best efforts
to cause the Merger to be treated as a reorganization within the meaning of
Section 368 of the Code and shall not knowingly take or fail to take any action
which action or failure to act would jeopardize the qualification of the Merger
as a reorganization within Section 368 of the Code.
6.17 EMPLOYMENT AGREEMENTS. As of the date hereof, each of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ Foliard shall enter into an employment
agreement with the Company in the forms attached hereto as EXHIBIT E-1, E-2 and
E-3, respectively, which agreements shall be effective as of the Effective Time
and shall replace their respective employment agreements with the Company
existing as of the date hereof. In addition, as of the date hereof, each of
▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall enter into an amendment to their
respective employment agreements with the Company in such forms as are mutually
agreed upon by the Parties, which amendments shall be effective as of the
Effective Time.
6.18 STOCKHOLDERS AGREEMENTS. Concurrently with the execution and delivery
of this Agreement, the Company and Parent shall cause each of the Voting
Stockholders to execute and deliver each Stockholders Agreement, as applicable.
6.19 BOARD SEAT. Parent agrees to take all actions necessary so as to
cause ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to be nominated and elected to the Board of Directors of
Parent and to be appointed Vice Chairman of Parent as of the Closing.
6.20 RIGHTS AGREEMENT. At or prior to the Closing, the Company shall take
all action which may be necessary under the Rights Agreement, dated as of March
28, 1998, between the Company and U.S. Stock Transfer Corporation, as Rights
Agent (the "Rights Agreement"), so that the execution of this Agreement and any
amendments thereto by the parties hereto and the consummation of the
transactions contemplated hereby shall not cause (i) Parent and/or Merger Sub or
their respective Affiliates or Associates to become an Acquiring Person (as such
terms are defined in the Rights Agreement) unless this Agreement has been
terminated in accordance with its terms or (ii) a Distribution Date, a Shares
Acquisition Date or
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a Triggering Event (as such terms are defined in the Rights Agreement) to occur,
irrespective of the number of Company Shares acquired pursuant to the Merger or
other transactions contemplated by this Agreement.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations of
each Party to consummate the Merger are subject to the satisfaction or waiver by
each of the Parties of the following conditions:
(a) this Agreement and the Merger shall have received the Requisite
Stockholder Approval;
(b) the S-4 Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the SEC and remain in effect;
(c) no writ, order, decree or injunction of a court of competent
jurisdiction or governmental entity shall have been entered against the
Company, Parent or their subsidiaries which prohibits the consummation of
the Merger;
(d) the waiting period(s), if any, under the HSR Act shall have expired;
and
(e) Parent shall have received a letter as described in Section 6.15
herein to the effect that Parent may treat the Merger as a
"pooling-of-interests" for accounting purposes;
(f) The Company shall have received a letter as described in Section
6.15 herein to the effect that the Company may treat the Merger as a
"pooling-of-interests" for accounting purposes;
(g) Parent shall have received an opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇,
dated the Closing Date, based upon certain factual representations of Parent
and the Company, to the effect that the Merger will constitute a
reorganization for federal income tax purposes within the meaning of Section
368(a) of the Code and no gain or loss will be recognized by Parent or its
stockholders as a result of the Merger, other than with respect to the
receipt of cash in lieu of fractional shares; and
(h) The Company shall have received an opinion from ▇▇▇▇ & ▇▇▇▇▇, dated
the Closing Date, based upon certain factual representations of Parent and
the Company, to the effect that the Merger will constitute a reorganization
for federal income tax purposes within the meaning of Section 368(a) of the
Code and no gain or loss will be recognized by the Company or its
stockholders as a result of the Merger, other than with respect to the
receipt of cash in lieu of fractional shares.
7.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company to consummate the Merger are subject to the fulfillment at or prior to
the Effective Time of the following conditions, any or all of which may be
waived in whole or in part by the Company to the extent permitted by applicable
law.
(a) Parent and its subsidiaries shall have obtained all of the waivers,
permits, consents, approvals or other authorizations, and effected all of
the registrations, filings and notices, referred to in Section 5.1(f) that
are reasonably deemed necessary by the Company, upon advice of counsel, to
provide for the continuation of all material agreements and to consummate
the Merger;
(b) the representations and warranties of Parent set forth in Section
5.1 shall be true and correct in all material respects (except for
representations qualified by materiality or Material Adverse Effect which
shall be correct in all respects) as of the Effective Time, with the same
force and effect as if made on and as of the Effective Time, except for
representations and warranties made as of a specific date, which shall be
true and correct in all material respects (except for representations
qualified by materiality or Material Adverse Effect which shall be correct
in all respects) as of such specific date;
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(c) Parent and its subsidiaries shall have performed or complied in all
material respects with its agreements and covenants required to be performed
or complied with under this Agreement as of or prior to the Effective Time;
(d) Parent shall have delivered to the Company a certificate of its
Chief Executive Officer and Chief Financial Officer to the effect that each
of the conditions specified in Section 7.1 (as it relates to Parent) and
clauses (a) through (c) and (e) of this Section 7.2 is satisfied in all
respects;
(e) no action, suit or proceeding shall be pending or threatened before
any governmental entity or authority wherein an unfavorable judgment, order,
decree, stipulation or injunction would (i) prevent consummation of any of
the transactions contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation or (iii) affect adversely the right of the Parent to own,
operate or control any of the assets and operations of the Surviving
Corporation and its subsidiaries following the Merger, and no such judgment,
order, decree, stipulation or injunction shall be in effect;
(f) from the date of this Agreement to the Effective Time, there shall
not have been any event or development which results in a Material Adverse
Effect upon the business of Parent, nor shall there have occurred any event
or development which could reasonably be likely to result in a Material
Adverse Effect upon the business of Parent in the future;
(g) all actions to be taken by Parent and Merger Sub in connection with
the consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required to effect
the transactions contemplated hereby shall be reasonably satisfactory in
form and substance to the Company and its counsel; and
(h) the Class A Shares into which the Parent Shares to be issued to the
stockholders of the Company are convertible shall have been approved for
listing on the NNM.
7.3 CONDITIONS TO THE OBLIGATIONS OF PARENT. The obligation of Parent to
consummate the Merger is subject to the fulfillment at or prior to the Effective
Time of the following conditions, any or all of which may be waived in whole or
in part by Parent to the extent permitted by applicable law.
(a) the Company and its subsidiaries shall have obtained all of the
waivers, permits, consents, approvals or other authorizations, and effected
all of the registrations, filings and notices, referred to in Section 5.2(f)
that are reasonably deemed necessary by Parent, upon advice of counsel, to
provide for the continuation of all material agreements and to consummate
the Merger;
(b) the representations and warranties of the Company set forth in
Section 5.2 shall be true and correct in all material respects (except for
representations qualified by materiality or Material Adverse Effect which
shall be correct in all respects) as of the Effective Time, with the same
force and effect as if made on and as of the Effective Time, except for
representations and warranties made as of a specific date, which shall be
true and correct in all material respects (except for representations
qualified by materiality or Material Adverse Effect which shall be correct
in all respects) as of such specific date;
(c) the Company and its subsidiaries shall have performed or complied
with in all material respects its agreements and covenants required to be
performed or complied with under this Agreement as of or prior to the
Effective Time;
(d) the Company shall have delivered to Parent a certificate of its
Chief Executive Officer and Chief Financial Officer to the effect that each
of the conditions specified in Section 7.1 and clauses (a) through (c) and
(e) of this Section 7.3 is satisfied in all respects;
(e) no action, suit or proceeding shall be pending or threatened before
any governmental entity or authority wherein an unfavorable judgment, order,
decree, stipulation or injunction would
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(i) prevent consummation of any of the transactions contemplated by this
Agreement, (ii) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation or (iii) affect adversely the right
of Parent to own, operate or control any of the assets and operations of the
Surviving Corporation and its subsidiaries following the Merger, and no such
judgment, order, decree, stipulation or injunction shall be in effect;
(f) from the date of this Agreement to the Effective Time, there shall
not have been any event or development which results in a Material Adverse
Effect upon the business of the Company, nor shall there have occurred any
event or development which could reasonably be likely to result in a
Material Adverse Effect upon the business of the Company in the future; and
(g) all actions to be taken by the Company in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the
transactions contemplated hereby shall be reasonably satisfactory in form
and substance to Parent and its counsel.
ARTICLE VIII
TERMINATION
8.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after gaining Requisite Stockholder Approval, by the mutual written consent of
the Company and Parent.
8.2 TERMINATION BY EITHER THE COMPANY OR PARENT. This Agreement may be
terminated and the Merger may be abandoned by action of the Board of Directors
of either the Company or Parent if:
(a) the Merger shall not have been consummated by December 31, 1998
(provided that the right to terminate this Agreement under this Section
8.2(i) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the
failure of the Merger to occur on or before such date);
(b) any court of competent jurisdiction in the United States or some
other governmental body or regulatory authority shall have issued an order,
decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling
or other action shall have become final and nonappealable; or
(c) at the duly held Stockholders Meetings (including any adjournments
thereof), the Requisite Stockholder Approval shall not have been obtained;
PROVIDED, HOWEVER, that the right to terminate this Agreement under this
Section 8.2(c) shall not be available to any Party which has not complied
with its obligations under Sections 6.3 and 6.4.
8.3 TERMINATION BY THE COMPANY. This Agreement may be terminated upon
written notice to Parent and the Merger may be abandoned at any time prior to
the Effective Time, before or after the approval by holders of the Company
Shares, by action of the Board of Directors of the Company, if:
(a) Parent shall have failed to comply in any material respect with any
of the covenants or agreements contained in this Agreement to be complied
with or performed by Parent at or prior to such date of termination, which
failure to comply has not been cured within five (5) business days following
receipt by Parent of notice of such failure to comply;
(b) any representation or warranty of Parent contained in the Agreement
shall not be true in all material respects when made or, if a representation
or warranty relates to a particular date, shall not be true in all material
respects as of such date (provided such breach is capable of being cured and
has not been cured within five (5) business days following receipt by Parent
of notice of the breach) or on and as of the Effective Time as if made on
and as of the Effective Time; or
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(c) the Company enters into a definitive agreement relating to a
transaction that constitutes a Superior Proposal, provided the Company shall
have complied with all of the provisions of Section 6.2 hereof and has made
payment of the Termination Fee required by Section 8.5 hereof.
8.4 TERMINATION BY PARENT. This Agreement may be terminated upon written
notice to the Company and the Merger may be abandoned at any time prior to the
Effective Time, before or after the approval by holders of Parent Shares, by
action of the Board of Directors of Parent, if:
(a) the Company shall have failed to comply in any material respect with
any of the covenants or agreements contained in this Agreement to be
complied with or performed by the Company at or prior to such date of
termination, which failure to comply has not been cured within five (5)
business days following receipt by the breaching party of notice of such
failure to comply;
(b) any representation or warranty of the Company contained in this
Agreement shall not be true in all material respects when made or, if a
representation or warranty relates to a particular date, shall not be true
in all material respects as of such date (provided such breach is capable of
being cured and has not been cured within five (5) business days following
receipt by the breaching party of notice of the breach) or on and as of the
Effective Time as if made on and as of the Effective Time; or
(c) (i) the Board of Directors of the Company amends, withholds or
withdraws its recommendation of the Merger in a manner adverse to Parent or
Merger Sub or shall have resolved or publicly announced or disclosed to any
third party its intention to recommend or enter into an agreement or any
agreement in principal with respect to an Acquisition Proposal (or a
proposal or offer therefor), or (ii) the Merger is not submitted to the
Company's stockholders as contemplated by this Agreement (provided that
Parent is not in material breach of the terms of this Agreement and this
Agreement has not otherwise been terminated pursuant to this Article VIII),
or (iii) a tender offer or exchange offer for twenty percent (20%) or more
of the outstanding the Company Shares shall have been commenced or a
registration statement with respect thereto shall have been filed (other
than by Parent of an affiliate thereof) and the Board of Directors of the
Company shall have (A) recommended that the stockholders of the Company
tender their shares in such tender or exchange offer or (B) publicly
announced its intention to take no position with respect to such tender
offer.
8.5 EFFECT OF TERMINATION; TERMINATION FEE.
(a) Except as set forth in this Section 8.5, in the event of termination
of this Agreement by either Parent or the Company as provided in this
Article VIII, this Agreement shall forthwith become void and there shall be
no liability or obligation on the part of the Parties or their respective
affiliates, officers, directors or stockholders except (x) with respect to
the treatment of confidential information pursuant to Section 6.6 and the
payment of expenses pursuant to Section 9.1 and (y) to the extent that such
termination results from the breach of a Party of any of its representations
or warranties, or any of its covenants or agreements, in each case, as set
forth in this Agreement.
(b) If this Agreement shall be terminated pursuant to Section 8.3(c) or
8.4(c), then, provided that Parent is not then in material breach of the
terms of this Agreement, the Company shall pay to Parent the aggregate sum
of $12,000,000 (the "Termination Fee"). If this Agreement is terminated
pursuant to Section 8.2(c) as a result of the failure to obtain the
Requisite Stockholder Approval and at the time of such termination an
Acquisition Proposal by any third party shall have been announced, and if
the Company, within twelve (12) months after such termination, enters into a
definitive agreement with such third party with respect to an Acquisition
Proposal, then the Company shall pay to Parent the Termination Fee
concurrently with entering into such agreement. In addition, if this
Agreement is terminated pursuant to Section 8.2(c) as a result of the
failure to obtain the Requisite Stockholder Approval, and within six (6)
months after such termination the Company or any of its subsidiaries enters
into a definitive agreement for the consummation of an Acquisition Proposal
with
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any person or entity, then the Company shall pay to Parent the Termination
Fee, provided that in no event shall there be more than one payment of the
Termination Fee.
(c) Any payment required to be made pursuant to Section 8.5(b) shall be
made as promptly as practicable but not later than three (3) business days
after written notice of termination of this Agreement is received by the
party obligated to make such payment and shall be made by wire transfer of
immediately available funds to an account designated by the party so owed.
(d) Each of the Parties agrees that the payment in full of the
Termination Fee shall be the exclusive remedy for any action which results
in the payment of the Termination Fee to Parent, unless the termination of
this Agreement results from the breach by a Party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement, in which event the non-breaching Party shall have all rights,
powers and remedies against the breaching Party which may be available at
law or in equity. All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall
be cumulative and not alternative, and the exercise of any such right, power
or remedy by any Party shall not preclude the simultaneous or later exercise
of any other such right, power or remedy by such Party.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 PAYMENT OF EXPENSES. Whether or not the Merger shall be consummated,
each Party shall pay its own expenses incident to preparing for, entering into
and carrying out this Agreement and the consummation of the transactions
contemplated hereby, provided that the Surviving Corporation shall pay any and
all property or transfer taxes imposed on the Surviving Corporation. The filing
fee and the cost of printing the S-4 Registration Statement and the Joint Proxy
Statement shall be borne equally by the Company and Parent. The filing fee for
the required filing under the HSR Act shall be borne by Parent.
9.2 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties made herein shall not survive beyond the Effective Time or a
termination of this Agreement, except to the extent a breach or such
representation formed the basis for such termination. This Section 9.2 shall not
limit any covenant or agreement of the Parties which by its terms contemplates
performance after the Effective Time.
9.3 MODIFICATION OR AMENDMENT. Subject to the applicable provisions of the
CGCL, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties; PROVIDED, HOWEVER, that after
approval of the Merger by the Requisite Stockholder Approval is obtained, no
amendment shall be made which changes the consideration payable in the Merger or
adversely affects the rights of the Company's or Parent's stockholders (as the
case may be) hereunder without the approval of such stockholders.
9.4 WAIVER OF CONDITIONS. The conditions to each of the Parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
9.5 COUNTERPARTS. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
9.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
9.7 NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party to the other Parties shall be deemed delivered upon
actual receipt and shall be in writing and delivered
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personally or sent by registered or certified mail, postage prepaid, reputable
overnight courier, or by facsimile transmission (with a confirming copy sent by
reputable overnight courier), as follows:
(a) if to Parent or Merger Sub, to:
Zebra Technologies Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to:
Eltron International, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ & ▇▇▇▇▇ Professional Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
9.8 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, including the Disclosure
Schedules and Confidentiality Agreement, (i) constitutes the entire agreement
among the Parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, among the
Parties or any of them with respect to the subject matter hereof, and (ii) shall
not be assigned by operation of law or otherwise.
9.9 PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective successors and
assigns. Nothing in this Agreement, express or implied, other than the right to
receive the consideration payable in the Merger pursuant to Article IV hereof,
is intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement;
PROVIDED, HOWEVER, that the provisions of Section 6.8 shall inure to the benefit
of and be enforceable by the Indemnified Parties.
9.10 CERTAIN DEFINITIONS. As used herein:
(a) "ERISA" means the Employment Retirement Income Security Act of 1974,
as amended.
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(b) "Software" means all computer software and subsequent versions
thereof, including but not limited to, source code, object code, objects,
comments, screens, user interfaces, report formats, templates, menus,
buttons and icons, and all files, data, materials manuals, design notes and
other items and documentation related thereto or associated therewith.
(c) "Malfunction" means the failure to: (i) accurately recognize dates
falling before, on or after the year 2000; (ii) accurately record, store,
retrieve and process data input and date information; (iii) function in a
manner which does not create any ambiguity as to century; and (iv)
accurately manage and manipulate single century and multi-century formulae,
including leap year calculations.
(d) "subsidiary" shall mean, when used with reference to any entity, any
entity fifty percent (50%) or more of the outstanding voting securities or
interests of which are owned directly or indirectly by such former entity.
(e) "Material Adverse Effect" shall mean any adverse change in the
properties, financial condition, business or results of operations of Parent
or any of its subsidiaries or the Company or any of its subsidiaries, as the
case may be, which is material to Parent and its subsidiaries, taken as a
whole, or the Company and its subsidiaries, taken as a whole, as the case
may be.
(f) "Tax" or "Taxes" refers to any and all federal, state, local and
foreign, taxes, assessments and other governmental charges, duties,
impositions and liabilities relating to taxes, including taxes based upon or
measured by gross receipts, income, profits, sales, use and occupation, and
value added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together with all
interest, penalties and additions imposed with respect to such amounts and
including any liability for taxes of a predecessor entity.
(g) "Significant Tax Agreement" is any agreement to which any Party or
any subsidiary of any Party is a party under which such Party or such
subsidiary could reasonably be expected to be liable to another party under
such agreement in an amount in excess of $10,000 in respect of Taxes payable
by such other party to any taxing authority.
(h) "Knowledge" with respect to a party hereto shall mean the knowledge,
after due inquiry, of any of the executive officers or directors of such
party.
9.11 OBLIGATION OF THE COMPANY. Whenever this Agreement requires Parent,
the Company or Merger Sub to take any action, such requirement shall be deemed
to include an undertaking on the part of the Company to cause such party to take
such action.
9.12 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or unenforceable, all other provisions of this Agreement shall
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party.
9.13 SPECIFIC PERFORMANCE. The parties hereto acknowledge that irreparable
damage would result if this Agreement were not specifically enforced, and they
therefore consent that the rights and obligations of the parties under this
Agreement may be enforced by a decree of specific performance issued by a court
of competent jurisdiction. Such remedy shall, however, not be exclusive and
shall be in addition to any other remedies which any party may have under this
Agreement or otherwise.
9.14 RECOVERY OF ATTORNEY'S FEES. In the event of any litigation between
the parties relating to this Agreement, the prevailing party shall be entitled
to recover its reasonable attorney's fees and costs (including court costs) from
the non-prevailing party, provided that if both parties prevail in part, the
reasonable attorney's fees and costs shall be awarded by the court in such
manner as it deems equitable to reflect the relative amounts and merits of the
parties' claims.
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9.15 CAPTIONS. The Article, Section and paragraph captions herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the Parties hereto and shall be effective as of
the date first hereinabove written.
ZEBRA TECHNOLOGIES CORPORATION
By: _________________________________
Name: _______________________________
Its: ________________________________
SPRUCE ACQUISITION CORP.
By: _________________________________
Name: _______________________________
Its: ________________________________
ELTRON INTERNATIONAL, INC.
By: _________________________________
Name: _______________________________
Its: ________________________________
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