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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MOHAWK INDUSTRIES, INC.,
MAVERICK MERGER SUB, INC.,
AND
DAL-TILE INTERNATIONAL INC.
DATED AS OF NOVEMBER 19, 2001
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER........................................................................2
1.1 Merger...................................................................................................2
1.2 Time and Place of Closing................................................................................2
1.3 Effective Time...........................................................................................2
1.4 Restructure of Transaction...............................................................................2
ARTICLE 2 TERMS OF MERGER.........................................................................................3
2.1 Charter..................................................................................................3
2.2 Bylaws...................................................................................................3
2.3 Directors and Officers...................................................................................3
ARTICLE 3 MANNER OF CONVERTING SHARES.............................................................................4
3.1 Conversion of Shares.....................................................................................4
3.2 Anti-Dilution Provisions.................................................................................4
3.3 Shares Held by Target or Buyer...........................................................................5
3.4 Dissenting Stockholders..................................................................................5
3.5 Conversion of Stock Options..............................................................................5
3.6 Fractional Shares........................................................................................7
ARTICLE 4 EXCHANGE OF SHARES......................................................................................7
4.1 Exchange Procedures......................................................................................7
4.2 Rights of Former Target Stockholders.....................................................................9
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF TARGET................................................................9
5.1 Organization, Standing, and Power........................................................................9
5.2 Authority of Target; No Breach By Agreement..............................................................9
5.3 Capital Stock...........................................................................................11
5.4 Target Subsidiaries.....................................................................................11
5.5 SEC Filings; Financial Statements.......................................................................12
5.6 Absence of Undisclosed Liabilities......................................................................12
5.7 Absence of Certain Changes or Events....................................................................13
5.8 Tax Matters.............................................................................................13
5.9 Intellectual Property...................................................................................14
5.10 Environmental Matters...................................................................................15
5.11 Compliance with Laws....................................................................................17
5.12 Labor Relations.........................................................................................18
5.13 Employee Benefit Plans..................................................................................19
5.14 Material Contracts......................................................................................22
5.15 Legal Proceedings.......................................................................................23
5.16 Information Supplied....................................................................................23
5.17 Tax and Regulatory Matters..............................................................................24
5.18 State Takeover Laws.....................................................................................24
5.19 Charter Provisions......................................................................................24
5.20 Opinion of Financial Advisor............................................................................24
5.21 Board Recommendation....................................................................................24
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER................................................................25
6.1 Organization, Standing, and Power.......................................................................25
6.2 Authority; No Breach By Agreement.......................................................................25
6.3 Capital Stock...........................................................................................26
6.4 SEC Filings; Financial Statements.......................................................................26
6.5 Compliance with Laws....................................................................................27
6.6 Legal Proceedings.......................................................................................28
6.7 Absence of Certain Changes or Events....................................................................28
6.8 Absence of Undisclosed Liabilities......................................................................28
6.9 Tax Matters.............................................................................................28
6.10 Employee Benefits Plans; ERISA..........................................................................29
6.11 Environmental Matters...................................................................................29
6.12 Information Supplied....................................................................................29
6.13 Authority of Sub........................................................................................30
6.14 Tax and Regulatory Matters..............................................................................30
6.15 Opinion of Financial Advisor............................................................................31
6.16 Board Recommendation....................................................................................31
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION...............................................................31
7.1 Affirmative Covenants of Target.........................................................................31
7.2 Negative Covenants of Target............................................................................31
7.3 Covenants of Buyer......................................................................................33
7.4 Adverse Changes in Condition............................................................................34
7.5 Reports.................................................................................................34
ARTICLE 8 ADDITIONAL AGREEMENTS..................................................................................35
8.1 Joint Proxy Statement/Prospectus; Registration Statement................................................35
8.2 Meetings of Stockholders; Board Recommendation..........................................................35
8.3 Acquisition Proposals...................................................................................36
8.4 Exchange Listing........................................................................................39
8.5 Antitrust Notification; Consents of Regulatory Authorities..............................................39
8.6 Filings with State Offices..............................................................................40
8.7 Agreement as to Efforts to Consummate...................................................................40
8.8 Investigation and Confidentiality.......................................................................40
8.9 Press Releases..........................................................................................41
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8.10 Tax Treatment...........................................................................................41
8.11 Agreement of Affiliates.................................................................................42
8.12 Employee Benefits and Contracts.........................................................................42
8.13 Indemnification.........................................................................................44
8.14 Board of Directors of Buyer.............................................................................45
8.15 Section 16(b) Board Approval............................................................................45
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE......................................................46
9.1 Conditions to Obligations of Each Party.................................................................46
9.2 Conditions to Obligations of Buyer......................................................................47
9.3 Conditions to Obligations of Target.....................................................................48
ARTICLE 10 TERMINATION...........................................................................................49
10.1 Termination.............................................................................................49
10.2 Effect of Termination...................................................................................51
10.3 Expenses................................................................................................51
ARTICLE 11 MISCELLANEOUS.........................................................................................52
11.1 Definitions.............................................................................................52
11.2 Non-Survival of Representations and Covenants...........................................................61
11.3 Brokers and Finders.....................................................................................61
11.4 Entire Agreement........................................................................................62
11.5 Amendments..............................................................................................62
11.6 Waivers.................................................................................................62
11.7 Assignment..............................................................................................63
11.8 Notices.................................................................................................63
11.9 Governing Law...........................................................................................64
11.10 Counterparts............................................................................................64
11.11 Captions, Articles and Sections.........................................................................64
11.12 Interpretations.........................................................................................64
11.13 Enforcement of Agreement................................................................................64
11.14 Severability............................................................................................65
11.15 No Affiliate Liability..................................................................................65
11.16 Schedule Definitions....................................................................................65
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EXHIBIT INDEX
Exhibit Description PAGE
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Exhibit 1 Target Voting Agreements........................................................................1
Exhibit 2 Buyer Voting Agreement..........................................................................1
Exhibit 3 Form of Affiliate Agreement....................................................................42
Exhibit 4 Tax Certificates...............................................................................47
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and entered
into as of November 19, 2001 by and among MOHAWK INDUSTRIES, INC. ("BUYER"), a
Delaware corporation; MAVERICK MERGER SUB, INC. ("SUB"), a
Delaware corporation;
and DAL-TILE INTERNATIONAL INC. ("TARGET"), a
Delaware corporation.
PREAMBLE
The respective Boards of Directors of Target, Sub and Buyer are of the
opinion that the transactions described herein are advisable and in the best
interests of the parties to this Agreement and their respective stockholders.
This Agreement provides for the acquisition of Target by Buyer pursuant to the
merger of Target with and into Sub. At the effective time of such merger, the
outstanding shares of the capital stock of Target shall be converted into the
right to receive a cash payment from Buyer or the Surviving Corporation and
shares of the common stock of Buyer (except as provided herein). As a result,
Sub shall continue to conduct the business and operations of Target as a wholly
owned subsidiary of Buyer. The transactions described in this Agreement are
subject to the approvals of the stockholders of Target, the stockholders of
Buyer, expiration of the required waiting period under the HSR Act, and the
satisfaction of certain other conditions described in this Agreement. It is the
intention of the parties to this Agreement that the Merger for federal income
tax purposes shall qualify as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code.
Concurrently with the execution and delivery of this Agreement, as a
condition and inducement to Buyer's willingness to enter into this Agreement,
certain of the holders of the outstanding shares of Target Common Stock have
executed and delivered to Buyer an agreement in substantially the form of
Exhibit 1 (the "TARGET VOTING AGREEMENTS"), pursuant to which they have agreed,
among other things, subject to the terms of such Target Voting Agreement, to
vote the shares of Target Common Stock over which such Persons have voting power
to approve and adopt this Agreement and approve the Merger.
Concurrently with the execution and delivery of this Agreement, as a
condition and inducement to Target's willingness to enter into this Agreement, a
stockholder of Buyer has executed and delivered to Target an agreement in
substantially the form of Exhibit 2 (the "BUYER VOTING AGREEMENT"), pursuant to
which such stockholder has agreed, among other things, subject to the terms of
such Buyer Voting Agreement, to vote the shares of Buyer Common Stock over which
such stockholder has voting power to approve the issuance of the shares of Buyer
Common Stock pursuant to the Merger.
Certain capitalized terms used in this Agreement are defined in Section
11.1 of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1 TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER.
Subject to the terms and conditions of this Agreement and subject to the
provisions of Section 1.4 of this Agreement, at the Effective Time, Target shall
be merged with and into Sub in accordance with the applicable provisions of the
Delaware General Corporation Law ("DGCL") and with the effect provided therein
(collectively with the Reverse Merger, the "MERGER"). Sub shall be the Surviving
Corporation resulting from the Merger and shall remain a wholly owned Subsidiary
of Buyer and shall continue to be governed by the Laws of the State of
Delaware.
The Merger shall be consummated pursuant to the terms of this Agreement, which
has been approved and adopted by the respective Boards of Directors of Target,
Sub and Buyer and by Buyer, as the sole stockholder of Sub.
1.2 TIME AND PLACE OF CLOSING.
The closing of the transactions contemplated hereby (the "CLOSING") will
take place at 9:00 A.M. on the date that the Effective Time occurs (or the
immediately preceding day if the Effective Time is earlier than 9:00 A.M.), or
at such other time as the Parties, acting through their authorized officers, may
mutually agree. The Closing shall be held at such location as may be mutually
agreed upon by the Parties.
1.3 EFFECTIVE TIME.
The Merger and other transactions contemplated by this Agreement shall
become effective on the date and at the time the Certificate of Merger
reflecting the Merger shall become effective with the Secretary of State of the
State of
Delaware in accordance with Section 251 of the DGCL (the "EFFECTIVE
TIME"). Subject to the terms and conditions hereof, unless otherwise mutually
agreed upon in writing by the authorized officers of each Party, the Parties
shall use their reasonable efforts to cause the Effective Time to occur on the
first business day following the last to occur of (i) the effective date
(including expiration of any applicable waiting period) of the last required
Consent of any Regulatory Authority having authority over and approving or
exempting the Merger, and (ii) the date or dates on which both the stockholders
of Target and the stockholders of Buyer have approved this Agreement.
1.4 RESTRUCTURE OF TRANSACTION.
Notwithstanding anything in this Agreement to the contrary, if, at the
close of trading on the NYSE on the day prior to the scheduled Closing Date,
the holders of the outstanding shares of Target Common Stock immediately prior
to the Effective Time, would not receive in the Merger, in the aggregate, an
amount of Buyer Common Stock with a value as of the Effective Time equal to at
least forty percent (40%) of the total value of all shares of Target Common
Stock outstanding immediately prior to the Effective Time taking into account
the Cash Consideration paid or to be paid to Target stockholders, then Target
may elect by written notice to Buyer prior to the Effective Time to have the
Merger effected pursuant to a merger of Sub with and into Target, with Target
being the Surviving Corporation (the "REVERSE MERGER"), the
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conditions contained in Section 9.1(f) will be deemed to have been waived by
each Party, and any inaccuracy or failure to perform the representations and
covenants contained in Sections 5.17, 6.14 and 8.10 will be deemed to have been
waived by each Party. The Reverse Merger would not be intended to qualify as a
reorganization within the meaning of Section 368(a) of the Code. The
determination of the value of Buyer Common Stock in the first sentence of this
Section 1.4 shall be based upon the Exchange Ratio and the closing sale price
of a share of Buyer Common Stock on the NYSE on the trading day prior to the
Effective Time. "CASH CONSIDERATION" shall be defined to mean cash or property
other than Buyer Common Stock in the Merger (including (i) the aggregate Cash
Payments to be paid to Target stockholders pursuant to Section 3.1(b), (ii)
cash to be paid to Target stockholders who perfect their dissenters' rights
(which for purposes of this Agreement will be assumed to be an amount equal to
the product of (A) the number of shares of Target Common Stock for which the
Target stockholders have perfected their dissenters' rights multiplied by (B)
the pro rata value of the Merger Consideration relating to such number of
shares calculated as of the date of this Agreement), (iii) redemptions or
acquisitions of Target Common Stock by Target or parties related to Target
(within the meaning of Treas. Reg. Sec. 1.368-1(e)(3) without regard to Treas.
Reg. Sec. 1.368-1(e)(3)(i)(A)) in connection with the Merger, (iv)
extraordinary distributions made by Target or parties related to Target (within
the meaning of Treas. Reg. Sec. 1.368-1(e)(3) without regard to Treas. Reg.
Sec. 1.368-1(e)(3)(i)(A)) prior to and in connection with the Merger (other
than those made pursuant to Target's historic dividend practice), and (v)
repurchases or acquisitions of Buyer Common Stock issued in connection with the
Merger by Buyer or certain parties related to Buyer (within the meaning of
Treas. Reg. Sec. 1.368-1(e)(3)). The Parties agree to take all reasonable
actions, including amending this Agreement and executing any certificates,
agreements or instruments necessary in order to effect the intended purposes of
this Section 1.4.
ARTICLE 2 TERMS OF MERGER
2.1 CHARTER.
The Certificate of Incorporation of Sub in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation until duly amended or repealed; provided that such Certificate of
Incorporation shall be amended to reflect a change of the name of the Surviving
Corporation.
2.2 BYLAWS.
The Bylaws of Sub in effect immediately prior to the Effective Time shall
be the Bylaws of the Surviving Corporation until duly amended or repealed.
2.3 DIRECTORS AND OFFICERS.
The directors of Sub in office immediately prior to the Effective Time,
together with such additional persons as may thereafter be elected, shall serve
as the directors of the Surviving Corporation from and after the Effective Time
in accordance with the Bylaws of the Surviving
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Corporation. The officers of Sub in office immediately prior to the Effective
Time, together with such additional persons as may thereafter be elected, shall
serve as the officers of the Surviving Corporation from and after the Effective
Time in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3 MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES.
Subject to the provisions of this Article 3, at the Effective Time, by
virtue of the Merger and without any action on the part of Buyer, Target, Sub or
the stockholders of any of the foregoing, the shares of the constituent
corporations shall be converted as follows:
(a) Each share of Sub Common Stock issued and outstanding immediately
prior to the Effective Time shall remain issued and outstanding from and after
the Effective Time.
(b) Each share of Target Common Stock (excluding shares held by any Target
Entity or any Buyer Entity, and excluding shares held by stockholders who
perfect their statutory dissenters' rights as provided in Section 3.4) issued
and outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for the right to receive
from Buyer (i) a cash payment in the amount of $11.00 (less any required
withholding of Taxes, the "CASH PAYMENT") and (ii) (A) .2414 of a share of Buyer
Common Stock, if the Average Closing Price (as defined below) is equal to or
greater than $41.00 per share and less than or equal to $50.12 per share, or (B)
that fraction of a share of Buyer Common Stock equal to the quotient obtained by
dividing $9.90 by the Average Closing Price, if the Average Closing Price is
less than $41.00 and greater than or equal to $36.45, or (C) that fraction of a
share of Buyer Common Stock equal to the quotient obtained by dividing $12.10 by
the Average Closing Price, if the Average Closing Price is greater than $50.12
and less than or equal to $54.67, or (D) .2716 of a share of Buyer Common Stock
if the Average Closing Price is less than $36.45 per share, or (E) .2213 of a
share of Buyer Common Stock if the Average Closing Price is greater than $54.67
(such applicable fraction of Buyer Common Stock, the "EXCHANGE RATIO"). The
Buyer Common Stock to be issued pursuant to this Agreement, together with the
Cash Payment and cash to be paid in lieu of fractional shares pursuant to
Section 3.6 are referred to collectively as the "MERGER CONSIDERATION." "AVERAGE
CLOSING PRICE" shall be defined to mean the average of the daily closing prices
for the shares of Buyer Common Stock for the twenty consecutive full trading
days on which such shares are actually traded on the NYSE (as reported by THE
WALL STREET JOURNAL or, if not reported thereby, any other authoritative source
selected by Buyer) ending at the close of the trading day three full trading
days prior to the Closing Date.
3.2 ANTI-DILUTION PROVISIONS.
(a) In the event that Buyer changes the number of shares of Buyer Common
Stock issued and outstanding prior to the Effective Time as a result of a stock
split, stock dividend, or similar recapitalization with respect to such stock
and the record date therefor (in the case of a stock dividend) or the effective
date thereof (in the case of a stock split or similar recapitalization for which
a record date is not established) shall be prior to the Effective Time, the
Exchange
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Ratios and the specified Average Closing Prices identified in Section 3.1(b)
shall all be proportionately adjusted.
(b) In the event that, prior to the Effective Time, Buyer shall consummate
a merger, consolidation, share exchange or other reorganization, or any other
transaction with another Person pursuant to which the holders of Buyer Common
Stock receive or become entitled to receive securities, cash or other assets or
any combination thereof, each holder of Target Common Stock shall be entitled to
receive at the Effective Time for each share of Target Common Stock, the Cash
Payment plus that amount of securities, cash or other assets that such holder
would have received or become entitled to receive had such holder been the
record holder of the number of shares of Buyer Common Stock issuable to such
holder of Target Common Stock pursuant to Section 3.1(b) had the Effective Time
occurred immediately prior to the consummation of such transaction.
3.3 SHARES HELD BY TARGET OR BUYER.
Each of the shares of Target Common Stock held by any Target Entity or by
any Buyer Entity shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 DISSENTING STOCKHOLDERS.
Any holder of shares of Target Common Stock who perfects such holder's
dissenters' rights in accordance with and as contemplated by Section 262 of the
DGCL shall be entitled to receive from the Surviving Corporation the value of
such shares in cash as determined pursuant to such provision of Law; provided,
that no such payment shall be made to any dissenting stockholder unless and
until such dissenting stockholder has complied with the applicable provisions of
the DGCL and surrendered to Target the Certificate or Certificates (as defined
below) representing the shares for which payment is being made. In the event
that after the Effective Time a dissenting stockholder of Target fails to
perfect, or effectively withdraws or loses, such holder's right to appraisal of
and payment for such holder's shares, Buyer or the Surviving Corporation shall
issue and deliver the consideration to which such holder of shares of Target
Common Stock is entitled under this Article 3 (without interest) upon surrender
by such holder of the Certificate or Certificates representing the shares of
Target Common Stock held by such holder.
3.5 CONVERSION OF STOCK OPTIONS.
(a) To the extent that a particular holder of Target Options consents
in writing to the conversion of all and not less than all of his or her
Target Options pursuant to this Section 3.5(a), and provided that such
written consent is delivered to Target within two business days prior to the
date on which the Effective Time occurs, such holder's Target Options shall
be converted, at the Effective Time, as follows:
(i) One-half of the Target Options held by each particular holder
which are outstanding at the Effective Time, whether or not exercisable
(each a "CASHOUT OPTION"),
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shall be canceled, and such holder shall be entitled to receive from
Buyer for each such Cashout Option (subject to any applicable withholding
tax) cash equal to the amount by which (i) the product of (x) the Cash
Payment multiplied by (y) two exceeds (ii) the per share exercise price
of such Cashout Option. From and after the Effective Time, each Cashout
Option shall only represent the right to receive the cash payment
provided in this Section 3.5(a); and
(ii) The remaining one-half of the Target Options held by each
particular holder which are outstanding at the Effective Time, whether or
not exercisable (each a "ROLLOVER OPTION"), shall be converted into and
become rights with respect to Buyer Common Stock, and Buyer shall assume
each Rollover Option, in accordance with the terms of the Target Stock
Plan and stock option agreement by which it is evidenced, except that from
and after the Effective Time, (i) Buyer and its Compensation Committee
shall be substituted for Target and the Committee of Target's Board of
Directors (including, if applicable, the entire Board of Directors of
Target) administering such Target Stock Plan, (ii) each Target Option
assumed by Buyer may be exercised solely for shares of Buyer Common Stock
as provided below, (iii) such Target Options shall be converted into Buyer
Options to purchase that number of shares of Buyer Common Stock equal to
the number of shares of Target Common Stock subject to such Target Options
immediately prior to the Effective Time multiplied by two times the
Exchange Ratio, and (iv) the per share exercise price for each such Buyer
Option shall be an amount equal to the quotient of (x) the per share
exercise price under the applicable Target Option divided by (y) two times
the Exchange Ratio and rounded up to the nearest cent; and
(iii) In determining which Target Options of a particular holder are
to be treated as Cashout Options and Rollover Options, the Cashout Options
and Rollover Options shall be allocated equally to each particular grant
of Target Options to such holder having different exercise prices and
terms and, to the extent any such grant is not divisible evenly, the odd
Target Option shall be treated as a Cashout Option.
(b) To the extent that a particular holder of Target Options does not
consent in writing to the conversion of his or her Target Options pursuant to
Section 3.5(a) hereof, or in the event that such written consent is not
delivered to Target within two business days prior to the date on which the
Effective Time occurs, such holder's Target Options which are outstanding at
the Effective Time, whether or not exercisable (the "CONVERSION OPTIONS"),
shall be converted into and become rights with respect to Buyer Common Stock
and cash, and Buyer shall assume each Conversion Option, in accordance with
the terms of the Target Stock Plan and stock option agreement by which it is
evidenced, except that from and after the Effective Time, (i) Buyer and its
Compensation Committee shall be substituted for Target and the Committee of
Target's Board of Directors (including, if applicable, the entire Board of
Directors of Target) administering such Target Stock Plan, (ii) each Target
Option assumed by Buyer may be exercised solely for shares of Buyer Common
Stock and cash as provided below, (iii) such Conversion Options shall be
converted into Buyer Options to purchase the sum of (a) that number of shares
of Buyer Common Stock equal to the number of shares of Target Common Stock
subject to such Conversion Options immediately prior to the Effective Time
multiplied by the Exchange Ratio, plus (b) the Cash Payment times the number
of shares of Target Common Stock subject to such
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Conversion Options immediately prior to the Effective Time, and (iv) the per
share exercise price under each such Conversion Option shall be adjusted by
dividing the per share exercise price under the applicable Conversion Options
by the Exchange Ratio and rounding up to the nearest cent.
(c) In the event that the exercise of any Rollover Option or Conversion
Option would result in the issuance of a fractional share of Buyer Common Stock
such fractional share shall be aggregated with all other fractional shares
attributable to all other Rollover Options then being exercised by such holder
and to the extent that such fractional shares thereafter remain, then such
holder shall be entitled to receive a cash payment for any remaining fractional
shares based upon the last sale price per share of Buyer Common Stock on the
trading day immediately preceding the date of exercise. From and after the
Effective Time, Buyer and the Surviving Corporation shall comply with the terms
of the Target Stock Plans.
At or prior to the Effective Time, Buyer shall cause to be taken all
corporate action necessary to reserve for issuance a sufficient number of
shares of Buyer Common Stock for delivery upon exercise of Rollover Options
in accordance with this Section 3.5. Promptly following the Effective Time
and in no event later than five business days following the Closing Date,
Buyer shall use its reasonable best efforts to cause the Buyer Common Stock
subject to the Rollover Options to be registered under the Securities Act
pursuant to a registration statement on Form S-8 (or any successor or other
appropriate forms) and shall use its reasonable best efforts to cause the
effectiveness of such registration statement (and current status of the
prospectus or prospectuses contained therein) and to thereafter maintain such
effectiveness for so long as any Rollover Options remain outstanding. Buyer
and its Compensation Committee shall be substituted for Target and the
Committee of Target's Board of Directors (including, if applicable, the
entire Board of Directors of Target) administering such Target Stock Plan.
3.6 FRACTIONAL SHARES.
No fraction of a share of Buyer Common Stock shall be issued by virtue of
the Merger, but in lieu thereof each holder of shares of Target Common Stock who
would otherwise be entitled to a fraction of a share of Buyer Common Stock
(after aggregating all fractional shares of Buyer Common Stock that otherwise
would be received by such holder) shall, upon surrender of such holder's
Certificate or Certificates, receive from Buyer an amount of cash, without
interest, equal to the product of (i) such fraction, multiplied by (ii) the
Average Closing Price.
ARTICLE 4 EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES.
(a) At the Effective Time, Buyer shall make available to Buyer's transfer
agent or another exchange agent selected by Buyer (the "EXCHANGE AGENT") for
exchange in accordance with this Section 4.1 the aggregate Merger Consideration.
As soon as reasonably practicable after the Effective Time, Buyer and Target
shall cause the Exchange Agent to mail to each
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holder of record of a certificate or certificates which represented shares of
Target Common Stock immediately prior to the Effective Time (the
"CERTIFICATES") appropriate transmittal materials and instructions (which shall
specify that delivery shall be effected, and risk of loss and title to such
Certificates shall pass, only upon proper delivery of such Certificates to the
Exchange Agent). The Certificate or Certificates of Target Common Stock so
delivered shall be duly endorsed as the Exchange Agent may require. In the
event of a transfer of ownership of shares of Target Common Stock represented
by Certificates that is not registered in the transfer records of Target, the
Merger Consideration may be issued to a transferee if the Certificates
representing such shares are delivered to the Exchange Agent, accompanied by
all documents required to evidence such transfer and by evidence satisfactory
to the Exchange Agent that any applicable stock transfer taxes have been paid.
If any Certificate shall have been lost, stolen, mislaid or destroyed, upon
receipt of (i) an affidavit of that fact from the holder claiming such
Certificate to be lost, mislaid, stolen or destroyed, (ii) such bond, security
or indemnity as Buyer and the Exchange Agent may reasonably require and (iii)
any other documents necessary to evidence and effect the bona fide exchange
thereof, the Exchange Agent shall issue to such holder the consideration into
which the shares represented by such lost, stolen, mislaid or destroyed
Certificate shall have been converted. The Exchange Agent may establish such
other reasonable and customary rules and procedures in connection with its
duties as it may deem appropriate.
(b) After the Effective Time, each holder of shares of Target Common Stock
(other than shares to be canceled pursuant to Section 3.3 or as to which
statutory dissenters' rights have been perfected as provided in Section 3.4)
issued and outstanding at the Effective Time shall surrender the Certificate or
Certificates representing such shares to the Exchange Agent and shall promptly
upon surrender thereof receive in exchange therefor the Merger Consideration
(without interest), together with all undelivered dividends or distributions in
respect of such shares (without interest) pursuant to Section 4.2. Buyer shall
not be obligated to deliver the Merger Consideration to which any former holder
of Target Common Stock is entitled as a result of the Merger until such holder
surrenders such holder's Certificate or Certificates for exchange as provided in
this Section 4.1.
(c) Each of Buyer, the Surviving Corporation and the Exchange Agent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Target Common Stock such
amounts, if any, as it is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code or any provision of
state, local or foreign Tax Law. To the extent that any amounts are so withheld
by Buyer, the Surviving Corporation or the Exchange Agent, as the case may be,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Target Common Stock in respect
of which such deduction and withholding was made by Buyer, the Surviving
Corporation or the Exchange Agent, as the case may be.
(d) Any other provision of this Agreement notwithstanding, none of Buyer,
the Surviving Corporation or the Exchange Agent shall be liable to a holder of
Target Common Stock for any amounts paid or property delivered in good faith to
a public official pursuant to any applicable abandoned property, escheat or
similar Law.
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4.2 RIGHTS OF FORMER TARGET STOCKHOLDERS.
At the Effective Time, the stock transfer books of Target shall be closed
as to holders of Target Common Stock immediately prior to the Effective Time and
no transfer of Target Common Stock by any such holder shall thereafter be made
or recognized. Until surrendered for exchange in accordance with the provisions
of Section 4.1, each Certificate theretofore representing shares of Target
Common Stock (other than shares to be canceled pursuant to Sections 3.3 or as to
which statutory dissenters' rights have been perfected as provided in Section
3.4) shall from and after the Effective Time represent for all purposes only the
right to receive the Merger Consideration in exchange therefor, subject,
however, to the Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective Time which
have been declared or made by Target in respect of such shares of Target Common
Stock in accordance with the terms of this Agreement and which remain unpaid at
the Effective Time. Whenever a dividend or other distribution is declared by
Buyer on the Buyer Common Stock, the record date for which is at or after the
Effective Time, the declaration shall include dividends or other distributions
on all shares of Buyer Common Stock issuable pursuant to this Agreement, but
after the Effective Time no dividend or other distribution payable to the
holders of record of Buyer Common Stock as of any time subsequent to the
Effective Time shall be delivered to the holder of any Certificate until such
holder surrenders such Certificate for exchange as provided in Section 4.1.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF TARGET
Target hereby represents and warrants to Buyer and Sub as follows:
5.1 ORGANIZATION, STANDING, AND POWER.
Target is a corporation duly organized, validly existing, and in good
standing under the Laws of the State of
Delaware, and has the corporate power
and authority to carry on its business as now conducted and to own, lease and
operate its material Assets. Target is duly qualified or licensed to transact
business as a foreign corporation in good standing in the states of the United
States and foreign jurisdictions where the character of its Assets or the nature
or conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified or licensed is
not reasonably likely to have, individually or in the aggregate, a Target
Material Adverse Effect. Target has delivered to Buyer complete and correct
copies of its Second Amended and Restated Certificate of Incorporation (the
"TARGET CERTIFICATE OF INCORPORATION") and Amended and Restated Bylaws (the
"TARGET BYLAWS"). Correct and complete copies of the minute books of the Board
of Directors (including any committees of the Board of Directors) and
stockholders of Target have been made available to Buyer for its review.
5.2 AUTHORITY OF TARGET; NO BREACH BY AGREEMENT.
(a) Target has the corporate power and authority necessary to execute,
deliver, and, other than with respect to the Merger, perform this Agreement, and
with respect to the Merger, upon the adoption and approval of this Agreement and
the Merger by Target's stockholders in accordance with this Agreement and
Delaware law, to perform its obligations under this
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Agreement and to consummate the transactions contemplated hereby. The
execution, delivery, and performance of this Agreement and the consummation of
the transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Target, subject to the adoption and approval of this Agreement by the
holders of a majority of the outstanding shares of Target Common Stock as
contemplated by Section 8.2, which is the only stockholder vote required for
approval of this Agreement and consummation of the Merger by Target. Subject to
such requisite stockholder approval, this Agreement represents a legal, valid,
and binding obligation of Target, enforceable against Target in accordance with
its terms; except as (i) such enforcement may be subject to any bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other laws, now
or hereafter in effect, relating to or limiting creditors' rights generally,
and (ii) the remedy of specific performance and injunction and other forms of
equitable relief may be subject to equitable defense, and to the discretion of
the court before which any proceeding therefor may be brought.
(b) Neither the execution and delivery of this Agreement by Target, nor
the consummation by Target of the transactions contemplated hereby, nor
compliance by Target with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of the Target Certificate of
Incorporation or Target Bylaws or the certificate or articles of incorporation
or bylaws of any Target Subsidiary or any currently effective resolution adopted
by the board of directors or the stockholders of any Target Entity, or (ii)
except as disclosed in Section 5.2(b) of the Target Disclosure Memorandum,
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any material Asset of any Target Entity
under, any material Contract or Permit of any Target Entity or, (iii) subject to
receipt of the requisite Consents referred to in Section 5.2(c) and Section
5.2(c) of the Target Disclosure Memorandum, constitute or result in a Default
under, or require any Consent pursuant to, any Law or Order applicable to any
Target Entity or any of their respective material Assets (including any Buyer
Entity or any Target Entity becoming subject to or liable for the payment of any
Tax or any of the Assets owned by any Buyer Entity or any Target Entity being
reassessed or revalued by any Regulatory Authority) or, (iv) result in any
Target stockholder having the right to require Buyer to file a registration
statement under the Securities Act with respect to shares of Buyer Common Stock
or to require Buyer to include shares of Buyer Common Stock in any registration
statement filed by Buyer with respect to any securities of Buyer, except as
provided in Section 3.5 of this Agreement.
(c) Except as set forth in Section 5.2(c) of the Target Disclosure
Memorandum or in connection or compliance with the provisions of the Securities
Laws, applicable state corporate and securities Laws, and the rules of the NYSE,
and other than Consents required from Regulatory Authorities, and other than
notices to or filings with the United States Internal Revenue Service ("IRS") or
the Pension Benefit Guaranty Corporation with respect to any employee benefit
plans, or under the HSR Act, no notice to, filing with, or Consent of, any
public body or authority or other Person is necessary for the consummation by
Target of the Merger and the other transactions contemplated in this Agreement;
other than such notices, filings, or consents that, individually or in the
aggregate, would not reasonably be expected to have a Target Material Adverse
Effect.
-10-
5.3 CAPITAL STOCK.
(a) The authorized capital stock of Target consists of (i) 200,000,000
shares of Target Common Stock, of which 55,923,201 shares are issued and
outstanding as of the date of this Agreement and not more than 67,751,099 shares
will be issued and outstanding at the Effective Time, and (ii) 11,100,000 shares
of preferred stock, par value $0.01 per share, none of which are issued and
outstanding. All of the issued and outstanding shares of capital stock of Target
are duly and validly issued and outstanding and are fully paid and nonassessable
under the DGCL. None of the outstanding shares of capital stock of Target has
been issued in violation of any preemptive rights of the current or past
stockholders of Target.
(b) Except as set forth in Section 5.3(a) or as disclosed in Section
5.3(b) of the Target Disclosure Memorandum, there are no shares of capital stock
or other equity securities of Target outstanding and no outstanding Equity
Rights relating to the capital stock of Target. Except as specifically
contemplated by this Agreement, no Person has any Contract or any right or
privilege (whether pre-emptive or contractual) capable of becoming a Contract or
Equity Right for the purchase, subscription or issuance of any securities of
Target. Upon consummation of the Merger, Buyer will not have any obligation
under any agreement granting Target stockholders the right to require Target to
file a registration statement under the Securities Act with respect to the
securities of Target or to require Target to include any securities Target
securities in any registration statement filed by Target with respect to any
securities of Target.
5.4 TARGET SUBSIDIARIES.
Target has disclosed in Section 5.4 of the Target Disclosure Memorandum
each of the Target Subsidiaries that is a corporation (identifying its
jurisdiction of incorporation, each jurisdiction in which it is qualified and/or
licensed to transact business, and the number of shares owned and percentage
ownership interest represented by such share ownership) and each of the Target
Subsidiaries that is a general or limited partnership, limited liability
company, or other non-corporate entity (identifying the Law under which such
entity is organized, each jurisdiction in which it is qualified and/or licensed
to transact business, and the amount and nature of the ownership interest
therein). Except as disclosed in Section 5.4 of the Target Disclosure
Memorandum, Target or one of its wholly owned Subsidiaries owns all of the
issued and outstanding shares of capital stock (or other equity interests) of
each Target Subsidiary. No capital stock (or other equity interest) of any
Target Subsidiary is or may become required to be issued (other than to another
Target Entity) by reason of any Equity Rights, and there are no Contracts by
which any Target Subsidiary is bound to issue (other than to another Target
Entity) additional shares of its capital stock (or other equity interests) or
Equity Rights or by which any Target Entity is or may be bound to transfer any
shares of the capital stock (or other equity interests) of any Target Subsidiary
(other than to another Target Entity). There are no Contracts relating to the
rights of any Target Entity to vote or to dispose of any shares of the capital
stock (or other equity interests) of any Target Subsidiary. Except as disclosed
in Section 5.4 of the Target Disclosure Memorandum, all of the shares of capital
stock (or other equity interests) of each Target Subsidiary held by a Target
Entity are fully paid and nonassessable under the applicable corporation Law of
the jurisdiction in which such Subsidiary is incorporated or organized and are
owned by the Target Entity free and clear of any Lien. Each Target Subsidiary
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is a corporation, limited liability company, limited partnership or limited
liability partnership, and each such Subsidiary is duly organized, validly
existing, and in good standing under the Laws of the jurisdiction in which it
is incorporated or organized, and has the power and authority necessary for it
to own, lease, and operate its Assets and to carry on its business as now
conducted. Each Target Subsidiary is duly qualified or licensed to transact
business as a foreign entity in good standing in the States of the United
States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed would not reasonably be expected to have, individually or in the
aggregate, a Target Material Adverse Effect. Target has made available to Buyer
complete and accurate copies of the minute books of the Board of Directors
(including any committee of the Board of Directors) and equityholders of each
Target Subsidiary and the organizational documents for each Target Subsidiary.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Target has timely filed and made available to Buyer all SEC Documents
required to be filed by Target since January 1, 1998 (the "TARGET SEC REPORTS").
The Target SEC Reports (i) at the time filed, complied in all material respects
with the applicable requirements of the Securities Laws and other applicable
Laws and (ii) did not, at the time they were filed (or, if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such filing
or, in the case of registration statements, at the effective date thereof)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in such Target SEC Reports or necessary in order to make
the statements in such Target SEC Reports, in light of the circumstances under
which they were made, not misleading. No Target Subsidiary files, or is required
to file, any SEC Documents.
(b) Each of the Target Financial Statements (including, in each case, any
related notes) contained in the Target SEC Reports, including any Target SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial position of Target
and its Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in amount
or effect.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES.
Neither the Target nor any of the Target Subsidiaries has any Liabilities
of a type required by GAAP to be reflected on a consolidated balance sheet,
other than (i) Liabilities incurred in the ordinary course of business since
September 28, 2001, (ii) Liabilities reflected in any of the Target SEC Reports,
and (iii) Liabilities which would not in the aggregate reasonably be expected to
have, individually or in the aggregate, a Target Material Adverse Effect.
-12-
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since September 28, 2001, except as disclosed in the Target Financial
Statements delivered prior to the date of this Agreement or as disclosed in
Section 5.7 of the Target Disclosure Memorandum, (i) there have been no events,
changes, or occurrences which have had, or would be reasonably expected to
have, individually or in the aggregate, a Target Material Adverse Effect, and
(ii) none of the Target Entities has taken any action, or failed to take any
action, prior to the date of this Agreement, which action or failure, if taken
after the date of this Agreement, would represent or result in a material
breach or violation of any of the covenants and agreements of Target provided
in Article 7.
5.8 TAX MATTERS.
(a) (i) All Target Entities have timely filed with the appropriate Taxing
authorities all material Tax Returns in all jurisdictions in which Tax Returns
are required to be filed or appropriate extensions therefor have been
appropriately obtained and have not expired, and such Tax Returns are correct
and complete in all material respects; (ii) all Taxes of the Target Entities
(whether or not shown on any Tax Return) that have become due have been fully
and timely paid, or extensions for payment have been properly obtained or such
Taxes are being timely and properly contested and, in any case, proper accruals
pursuant to GAAP have been established on the Target's consolidated financial
statements with respect thereto, except to the extent any failure to accrue or
reserve would not, individually or in the aggregate, reasonably be expected to
have a Target Material Adverse Effect; (iii) there are no Liens for any Taxes
(other than a Lien for current real property or ad valorem Taxes not yet due and
payable) on any of the Assets of any of the Target Entities; and (iv) no claim
has ever been made by an authority in a jurisdiction where any Target Entity
does not file a Tax Return that such Target Entity may be subject to Taxes by
that jurisdiction.
(b) Except as disclosed in Section 5.8(b) of the Target Disclosure
Memorandum, (i) none of the Target Entities has received any notice of
assessment or proposed assessment in connection with any Taxes, and there are
no, to the knowledge of Target, threatened or pending disputes, claims, audits
or examinations regarding any Taxes of any Target Entity or the assets of any
Target Entity; and (ii) none of the Target Entities has waived any statute of
limitations in respect of any Taxes or agreed to a Tax assessment or deficiency.
(c) Each Target Entity has complied in all material respects with all
applicable Laws, rules and regulations relating to the withholding of Taxes and
the payment thereof to appropriate authorities, including Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee
or independent contractor, and Taxes required to be withheld and paid pursuant
to Sections 1441 and 1442 of the Internal Revenue Code or similar provisions
under foreign Law.
(d) The unpaid Taxes of each Target Entity (i) did not, as of the most
recent fiscal month end, exceed the reserve for Tax Liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the most recent balance sheet
(rather than in any notes thereto) for such Target Entity and
-13-
(ii) will not exceed that reserve as adjusted for the passage of time through
the Closing Date in accordance with past custom and practice of the Target
Entities in filing their Tax Returns.
(e) None of the Target Entities is a party to any Tax allocation or
sharing agreement and none of the Target Entities has been a member of an
affiliated group filing a consolidated federal income Tax Return (other than a
group the common parent of which was Target) or has any Tax Liability of any
Person under Treasury Regulation Section 1.1502-6 or any similar provision of
state, local or foreign Law (other than the other members of the consolidated
group of which Target is parent), or as a transferee or successor, by contract
or otherwise.
(f) During the five-year period ending on the date hereof, none of the
Target Entities was a distributing corporation or a controlled corporation in a
transaction intended to be governed by Section 355 of the Internal Revenue Code.
(g) Except as set forth in Section 5.8(g) of the Target Disclosure
Memorandum, none of the Target Entities has made any payments, is obligated to
make any payments, or is a party to any contract that could obligate it to make
any payments that could be disallowed as a deduction under Section 280G or
162(m) of the Internal Revenue Code. Target has not been a United States real
property holding corporation within the meaning of Internal Revenue Code Section
897(c)(1)(A)(ii). Except as set forth in Section 5.8(g) of the Target Disclosure
Memorandum, none of the Target Entities has been or will be required to include
any adjustment in taxable income for any Tax period (or portion thereof)
pursuant to Section 481 of the Internal Revenue Code or any comparable provision
under state or foreign Tax Laws as a result of transactions or events occurring
prior to the Closing. Except as set forth in Section 5.8(g) of the Target
Disclosure Memorandum, the net operating losses of the Target Entities are not
subject to any limitation on their use under the provisions of Sections 382 or
269 of the Internal Revenue Code or any other provisions of the Internal Revenue
Code or the Treasury Regulations dealing with the utilization of net operating
losses other than any such limitations as may arise as a result of the
consummation of the transactions contemplated by this Agreement.
(h) Other than as set forth in Section 5.8(h) of the Target Disclosure
Memorandum, no Target Entity has or has had in any foreign country a permanent
establishment, as defined in any applicable tax treaty or convention between the
United States and such foreign country.
5.9 INTELLECTUAL PROPERTY.
Each Target Entity owns or has a license to use all of the material
Intellectual Property used by such Target Entity in the course of its business,
including sufficient rights in each copy possessed by each Target Entity. Each
Target Entity is the owner of or has a license, to any material Intellectual
Property sold or licensed to a third party by such Target Entity in connection
with such Target Entity's business operations, and such Target Entity has the
right to convey by sale or license any Intellectual Property so conveyed. No
Target Entity is in Default under any of its material Intellectual Property
licenses. To the Knowledge of Target, no proceedings have been instituted, or
are pending or to the Knowledge of Target threatened, which challenge the rights
of any Target Entity with respect to Intellectual Property used, sold or
licensed by such Target Entity in the course of its business, nor has any person
claimed or alleged any rights to
-14-
such Intellectual Property. To the Knowledge of Target, and with respect to
patents, trademarks, service marks and trade names only, the conduct of the
business of the Target Entities does not infringe any Intellectual Property of
any other Person. Except as disclosed in Section 5.9 of the Target Disclosure
Memorandum, no Target Entity is obligated to pay any recurring royalties to any
Person with respect to any such Intellectual Property in an amount in excess of
$100,000 a year. Every officer, director, or employee of any Target Entity is a
party to a Contract which requires such officer, director or employee to keep
confidential any trade secrets, proprietary data, customer information, or
other business information of a Target Entity, and, to the Knowledge of Target,
no such officer, director or employee is party to any Contract with any Person
other than a Target Entity which requires such officer, director or employee to
assign any interest in any Intellectual Property to any Person other than a
Target Entity or to keep confidential any trade secrets, proprietary data,
customer information, or other business information of any Person other than a
Target Entity. To the Knowledge of Target, no officer, director or employee of
any Target Entity is party to any Contract which restricts or prohibits such
officer, director or employee from engaging in activities competitive with any
Person, including any Target Entity.
5.10 ENVIRONMENTAL MATTERS.
(a) Each Target Entity, its Participation Facilities, and its Operating
Properties are, and have been, in compliance with all Environmental Laws, except
where any failure to so comply would not, individually or in the aggregate,
reasonably be expected to have a Target Material Adverse Effect.
(b) There is no Litigation pending or, to the Knowledge of Target,
threatened before any Regulatory Authority or other forum in which any Target
Entity or any of its Operating Properties or Participation Facilities (or Target
in respect of such Operating Property or Participation Facility) has been or,
with respect to threatened Litigation, may be named as a defendant (i) for
alleged noncompliance (including by any predecessor) with or Liability under any
Environmental Law or (ii) relating to the release, discharge, spillage, or
disposal into the environment of any Hazardous Material, whether or not
occurring at, on, under, adjacent to, or affecting (or potentially affecting) a
site currently or formerly owned, leased, or operated by any Target Entity or
any of its Operating Properties or Participation Facilities, nor is there any
reasonable basis for any Litigation of a type described in this sentence.
(c) Except as disclosed in Section 5.10(c) of the Target Disclosure
Memorandum, during the period of (i) any Target Entity's ownership or operation
of any of their respective current properties, (ii) any Target Entity's
participation in the management of any Participation Facility, or (iii) any
Target Entity's holding of a security interest in any Operating Property, no
Target Entity has released, discharged, spilled or disposed of Hazardous
Material in, on, under, adjacent to, or affecting such properties where such
release, discharge, spillage or disposal required remediation under
Environmental Laws and was not remediated in compliance with Environmental Laws,
except where any such releases, discharges, spillages or disposals would not,
individually or in the aggregate, reasonably be expected to have a Target
Material Adverse Effect. To the Knowledge of Target, during the period of (i)
any Target Entity's ownership or operation of any of their respective current
properties, (ii) any Target Entity's participation in the
-15-
management of any Participation Facility, or (iii) any Target Entity's holding
of a security interest in any Operating Property, no person other than a Target
Entity has released, discharged, spilled or disposed of Hazardous Material in,
on, under, adjacent to, or affecting such properties where such release,
discharge, spillage or disposal required remediation under Environmental Laws
and was not remediated in compliance with Environmental Laws, except where any
such releases, discharges, spillages or disposals would not, individually or in
the aggregate, reasonably be expected to have a Target Material Adverse Effect.
Prior to the period of (i) any Target Entity's ownership or operation of any of
their respective current properties, (ii) any Target Entity's participation in
the management of any Participation Facility, or (iii) any Target Entity's
holding of a security interest in any Operating Property, to the Knowledge of
Target, there were no releases, discharges, spillages, or disposals of
Hazardous Material in, on, under, or affecting any such property, Participation
Facility or Operating Property that required remediation under Environmental
Laws and was not remediated in compliance with Environmental Laws, except where
any such releases, discharges, spillages or disposals would not, individually
or in the aggregate, reasonably be expected to have a Target Material Adverse
Effect.
(d) Section 5.10(d) of the Target Disclosure Memorandum contains a true,
complete and accurate listing and a true and accurate description of each
facility or location at which any Target Entity has been named as or alleged to
be a responsible party or potentially responsible party under any Environmental
Law in connection with the release, disposal, transportation or arrangement for
the release, disposal or transportation of Hazardous Materials.
(e) Each Target Entity has obtained all permits, licenses, approvals,
consents, orders, and authorizations which are required under any Environmental
Law in connection with the ownership, use, or lease of the Assets
("ENVIRONMENTAL PERMITS"), except where any failure to obtain any such
Environmental Permits would not, individually or in the aggregate, reasonably be
expected to have a Target Material Adverse Effect. Each Target Entity is in
compliance with each such Environmental Permit, and no Environmental Permit
restricts such Target Entity from operating any equipment covered by such
Environmental Permit as currently conducted, except where any failure to comply
with any such Environmental Permits would not, individually or in the aggregate,
reasonably be expected to have a Target Material Adverse Effect.
(f) Target has delivered, or caused to be delivered or made available, to
Buyer true and complete copies of each written Contract and an accurate written
description of each oral Contract under which any of the Target Entities:
retained Liability for environmental matters; agreed to indemnify third parties
with respect to environmental matters; or is indemnified by a third party with
respect to environmental matters, including without limitation the May 20, 1993
Settlement Agreement with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and the
December 21, 1995 American Olean Tile Company, Inc. Acquisition Agreement.
(g) Target has delivered, or caused to be delivered or made available, to
Buyer true and complete copies of material correspondence with or notifications
to or from any federal, state or local Regulatory Authority and any material
reports prepared by or on behalf of or in the possession of any Target Entity in
connection with the ▇▇▇▇, ▇▇▇▇▇▇ County, Texas gravel pit;
-▇▇-
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ landfill; and the ▇▇▇▇▇▇ (Kleburg
Road), Dallas, Texas gravel pit.
5.11 COMPLIANCE WITH LAWS.
Each Target Entity has in effect all Permits necessary for it to own,
lease, or operate its material Assets and to carry on its business as now
conducted, and there has occurred no Default under any such Permit. None of the
Target Entities:
(a) is in Default under any of the provisions of its Certificate of
Incorporation or Bylaws (or other governing instruments);
(b) is in Default under any Laws, Orders, or Permits (other than Defaults
under Environmental Laws or Environmental Permits, which Defaults are addressed
in Section 5.10) applicable to its business or employees conducting its
business, except for Defaults which would not reasonably be anticipated to have,
individually or in the aggregate, a Target Material Adverse Effect; or
(c) since January 1, 1998, has received any notification or communication
(other than notices or communications under Environmental Laws or regarding
Environmental Permits, which are addressed in Section 5.10) from any agency or
department of federal, state, or local government or any Regulatory Authority or
the staff thereof (i) asserting that any Target Entity is not, or may not be, in
compliance with any Laws or Orders, where such noncompliance would be reasonably
expected to have, individually or in the aggregate, a Target Material Adverse
Effect, (ii) threatening to revoke any Permits, the revocation of which would
reasonably be expected to have, individually or in the aggregate, a Target
Material Adverse Effect, or (iii) requiring any Target Entity to enter into or
consent to the issuance of a cease and desist order, injunction, formal
agreement, directive, commitment, or memorandum of understanding, or to adopt
any board resolution or similar undertaking, which restricts materially the
conduct of its business or in any manner relates to its employment decisions,
its employment or safety policies or practices, its management, or the payment
of dividends; or
(d) except as set forth in Section 5.11(d) of the Target Disclosure
Memorandum, since January 1, 1997, has effectuated (i) a "plant closing" (as
defined in the Worker Adjustment and Retraining Notification Act (the "WARN
ACT")) affecting any site of employment or one or more facilities or operating
units within any site of employment or facility of any Target Entity; or (ii) a
"mass layoff" (as defined in the WARN Act) affecting any site of employment or
facility of any Target Entity; and no Target Entity has been affected by any
transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local Law. Except as set
forth in Section 5.11(d) of the Target Disclosure Memorandum, none of any Target
Entity's employees has suffered an "employment loss" (as defined in the WARN
Act) since six months prior to the Closing Date.
Copies of all material reports, correspondence, notices and other
documents relating to any material inspection, audit, monitoring or other form
of review or enforcement action
-17-
instituted or commenced by a Regulatory Authority since January 1, 1998 with
respect to any Target Entity have been made available to Buyer.
5.12 LABOR RELATIONS.
(a) Except as disclosed in Section 5.12 of the Target Disclosure
Memorandum, no Target Entity is the subject of any Litigation, and to the
Knowledge of Target, no such Litigation has been threatened, asserting that it
or any other Target Entity has committed an unfair labor practice (within the
meaning of the National Labor Relations Act or comparable state Law) or other
violation of state, federal or foreign labor Law or seeking to compel it or any
other Target Entity to bargain with any labor organization or other employee
representative as to wages or conditions of employment, nor is any Target Entity
party to any collective bargaining agreement or subject to any bargaining order,
injunction or other Order relating to Target's relationship or dealings with its
employees, any labor organization or any other employee representative. There is
no strike, slowdown, lockout or other labor dispute involving any Target Entity
pending or threatened and there have been no such actions or labor disputes
since January 1, 1998. To the Knowledge of Target, since January 1, 1998, there
has not been any attempt by any Target Entity employees or any labor
organization or other employee representative to organize or certify a
collective bargaining unit or to engage in any other union organization activity
with respect to the workforce of any Target Entity.
(b) The Target Entities are in material compliance with the Immigration
Reform and Control Act of 1986, as amended, other United States immigration Laws
and the Laws related to the employment of non-United States citizens applicable
in the state in which any Target Entity has employees and all applicable foreign
Laws in the country in which any Target Entity has employees.
(c) Except as disclosed in Section 5.12 of the Target Disclosure
Memorandum, since January 1, 1998, no Target Entity has been the subject of any
inspection or investigation relating to its compliance with or violation of any
immigration laws, nor has it been warned, fined or otherwise penalized by reason
of any failure to comply with the immigration laws, nor is any such proceeding
pending or threatened.
(d) Except as disclosed in Section 5.12 of the Target Disclosure
Memorandum, to the Knowledge of Target, (i) no Equal Employment Opportunity
Commission or state fair employment practice agency charges or other claims of
employment discrimination, harassment or wrongful discharge are pending against
any Target Entity or any of their employees, (ii) no state or federal Wage and
Hour Department investigations and no claims or charges relating to wage and
hour issues are pending or threatened, (iii) no Office of Federal Contract
Compliance Programs compliance review or investigation or other United States
Department of Labor or state department of labor compliance review or
investigation of any Target Entity is pending, and Target has received no notice
of any such compliance review or investigation, (iv) Target is not bound by any
consent decree or settlement agreement relating to employment decisions or
relations with employees, independent contractors or applicants for employment,
and (v) no Occupational Safety and Health Administration investigations are
pending against any Target Entity.
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5.13 EMPLOYEE BENEFIT PLANS
(a) Target has disclosed in Section 5.13 of the Target Disclosure
Memorandum, and has delivered or made available to Buyer prior to the execution
of this Agreement, (i) copies of each material Employee Benefit Plan currently
adopted, maintained by, sponsored in whole or in part by, or contributed to by
any Target Entity or ERISA Affiliate thereof for the benefit of employees,
former employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries or under which employees, retirees, former
employees, dependents, spouses, directors, independent contractors, or other
beneficiaries are eligible to participate (collectively, the "TARGET BENEFIT
PLANS") and (ii) a list of each material Employee Benefit Plan that is not
identified in (i) above (e.g., former Employee Benefit Plans) but for which the
Target Entity or ERISA Affiliate has or reasonably could have any obligation or
Liability. Any of the Target Benefit Plans which is an "employee pension benefit
plan," as that term is defined in ERISA Section 3(2), is referred to herein as a
"TARGET ERISA PLAN." Each Target ERISA Plan which is also a "defined benefit
plan" (as defined in Internal Revenue Code Section 414(j)) is referred to herein
as a "TARGET PENSION PLAN."
(b) Target has made available to Buyer prior to the execution of this
Agreement (i) all trust agreements or other funding arrangements for all
Employee Benefit Plans, (ii) all determination letters, rulings, opinion
letters, information letters or advisory opinions issued by the IRS, the United
States Department of Labor ("DOL") or the Pension Benefit Guaranty Corporation
during this calendar year or any of the preceding three calendar years, (iii)
any filing or documentation (whether or not filed with the IRS) where corrective
action was taken in connection with the IRS EPCRS program set forth in Revenue
Procedure 2001-17 (or its predecessor or successor rulings), (iv) annual reports
or returns, audited or unaudited financial statements, actuarial reports and
valuations prepared for any Employee Benefit Plan for the current plan year and
the three preceding plan years, and (v) the most recent summary plan
descriptions and any material modifications thereto.
(c) Except as previously disclosed to Buyer, each Target Benefit Plan is
in compliance in all material respects with the terms of such Target Benefit
Plan and the applicable requirements of the Internal Revenue Code and ERISA.
Each Target ERISA Plan which is intended to be qualified under Section 401(a) of
the Internal Revenue Code has received a favorable determination letter from the
IRS that is still in effect and applies to the Target ERISA Plan as amended and
as administered or, within the time permitted under Internal Revenue Code
Section 401(b), has timely applied for a favorable determination letter which
when issued will apply retroactively to the Target ERISA Plan as amended and as
administered. Target is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. Except as disclosed in
Section 5.13(c) of the Target Disclosure Memorandum, Target has not received any
communication (written or unwritten) from any government agency questioning or
challenging the compliance of any Target Benefit Plan with applicable Laws.
Except as disclosed in Section 5.13(c) of the Target Disclosure Memorandum, no
Target Benefit Plan is currently being audited by a governmental agency for
compliance with applicable Laws or has been audited with a determination by the
governmental agency that the Employee Benefit Plan failed to comply with
applicable Laws.
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(d) There has been no oral or written representation or communication with
respect to any aspect of the Employee Benefit Plans made to employees of any
Target Entity or ERISA Affiliate which is not in accordance with the written or
otherwise preexisting terms and provisions of such plans. No Target Entity,
ERISA Affiliate, administrator or fiduciary of any Target Benefit Plan (or any
agent of any of the foregoing) has engaged in any transaction, or acted or
failed to act in any manner, which could subject the Target or Buyer to any
direct or indirect material Liability (by indemnity or otherwise) for breach of
any fiduciary, co-fiduciary or other duty under ERISA. There are no unresolved
claims or disputes under the terms of, or in connection with, the Target Benefit
Plans other than claims for benefits which are payable in the ordinary course of
business and no action, proceeding, prosecution, inquiry, hearing or
investigation has been commenced with respect to any Target Benefit Plan.
(e) All Target Benefit Plan documents and annual reports or returns,
audited or unaudited financial statements, actuarial valuations, summary annual
reports, and summary plan descriptions issued with respect to the Target Benefit
Plans complete and correct in all material respects, have been timely filed with
the IRS, the DOL or distributed to participants of the Target Benefit Plans (as
required by Law), and there have been no material changes in the information set
forth therein.
(f) Except as previously disclosed to Buyer, no "party in interest" (as
defined in ERISA Section 3(14)) or "disqualified person" (as defined in Internal
Revenue Code Section 4975(e)(2)) of any Target Benefit Plan has engaged in any
material nonexempt "prohibited transaction" (described in Internal Revenue Code
Section 4975(c) or ERISA Section 406).
(g) For any Target Pension Plan, the fair market value of such Target
Pension Plan's assets equals or exceeds the present value of all benefits
(whether vested or not) accrued to date by all present or former participants in
such Target Pension Plan. For this purpose the assumptions prescribed by the
Pension Benefit Guaranty Corporation for valuing plan assets or liabilities upon
plan termination shall be applied and the term "benefits" shall include the
value of all benefits, rights and features protected under Internal Revenue Code
Section 411(d)(6) or its successors and any ancillary benefits (including
disability, shutdown, early retirement and welfare benefits) provided under any
such Target Pension Plan and all "benefit liabilities" as defined in ERISA
Section 4001(a)(16). Since the date of the most recent actuarial valuation,
there has been (i) no material change in the financial position of any Target
Pension Plan, (ii) no change in the actuarial assumptions with respect to any
Target Pension Plan, and (iii) no increase in benefits under any Target Pension
Plan as a result of Target Pension Plan amendments or changes in any applicable
Law which is reasonably likely to have, individually or in the aggregate, a
material adverse effect on the funding status of such Target Pension Plan. All
contributions with respect to an Employee Benefit Plan of Target, or any of its
ERISA Affiliates that is subject to Internal Revenue Code Section 412 or ERISA
Section 302 have or will be timely made and, with respect to any such Employee
Benefit Plan, there is no Lien nor is there expected to be a Lien under Internal
Revenue Code Section 412(n) or ERISA Section 302(f) or Tax under Internal
Revenue Code Section 4971. No Target Pension Plan has a "liquidity shortfall" as
defined in Internal Revenue Code Section 412(m)(5). Neither Target nor any of
its ERISA Affiliates is subject to or can reasonably be expected to become
subject to a Lien under
-▇▇-
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Code Section 401(a)(29). All premiums required to be paid
under ERISA Section 4006 have been timely paid by Target and by its ERISA
Affiliates.
(h) No Liability under Title IV of ERISA has been or is expected to be
incurred by Target or its ERISA Affiliates and no event has occurred that could
reasonably result in material Liability under Title IV of ERISA being incurred
by Target or its ERISA Affiliates with respect to any ongoing, frozen, or
terminated single-employer plan of Target or the single-employer plan of any
ERISA Affiliate. There has been no "reportable event," within the meaning of
ERISA Section 4043 for which the 30-day reporting requirement has not been
waived by any ongoing, frozen, or terminated single employer plan of Target or
of an ERISA Affiliate.
(i) Except as disclosed in Section 5.13 of the Target Disclosure
Memorandum, no Target Entity has any material Liability for retiree health and
life benefits under any of the Target Benefit Plans and there are no
restrictions on the rights of such Target Entity to amend or terminate any such
retiree health or benefit Plan without incurring any material Liability
thereunder except to the extent required under Part 6 of Title I of ERISA or
Internal Revenue Code Section 4980B. No Tax under Internal Revenue Code Sections
4980B or 5000 has been incurred with respect to any Target Benefit Plan and no
circumstance exists which is reasonably likely to give rise to such Taxes.
(j) Except as disclosed in Section 5.13 of the Target Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, termination indemnity, unemployment compensation,
golden parachute, or otherwise) becoming due to any director, any employee or
any independent contractor of any Target Entity from any Target Entity under any
Target Benefit Plan or otherwise, (ii) increase any benefits otherwise payable
under any Target Benefit Plan or otherwise, or (iii) result in any acceleration
of the time of payment or vesting of any such benefit.
(k) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of current and former
employees and current and former independent contractors of any Target Entity
and their respective beneficiaries, other than entitlements accrued pursuant to
funded retirement plans subject to the provisions of Internal Revenue Code
Section 412 or ERISA Section 302, have been fully reflected on the Target
Financial Statements to the extent required by and in accordance with GAAP.
(l) All individuals who render services to any Target Entity and who are
authorized to participate in a Target Benefit Plan pursuant to the terms of such
Target Benefit Plan are in fact eligible to and authorized to participate in
such Target Benefit Plan. All individuals participating in (or eligible to
participate in) any Target Benefit Plan are common-law employees of a Target
Entity, except where the terms of such plans allow participation by persons who
are not common law employees and as provided in Section 5.13(l) of the Target
Disclosure Memorandum.
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(m) On or after September 26, 1980, neither the Target nor any of its
ERISA Affiliates has had an "obligation to contribute" (as defined in ERISA
Section 4212) to a "multiemployer plan" (as defined in ERISA Sections 4001(a)(3)
and 3(37)(A)).
(n) Without limiting the foregoing provisions of Section 5.13, except as
disclosed in Section 5.13 of the Target Disclosure Memorandum, with respect to
each Employee Benefit Plan maintained outside the United States which is
mandated by a government other than that of the United States or subject to
foreign Law (collectively, the "TARGET FOREIGN BENEFIT PLANS"), (i) the terms of
each Target Foreign Benefit Plan and the manner in which it is and has been
administered in operation are in material compliance with all applicable Laws of
the jurisdiction in which such Target Foreign Benefit Plan is maintained, (ii)
each Target Foreign Benefit Plan which is required to be registered with or
submitted to a foreign Regulatory Authority for tax qualification or other
approval has been so registered or submitted and each such plan has received
such approval, and Target is not aware of any circumstances likely to result in
revocation of any such registration or approval, (iii) all contributions to each
Target Foreign Benefit Plan required to be made through the Effective Time or
required to be made with respect to a period prior to the Effective Time have
been or shall be made by a Target Entity or, if applicable, shall be accrued in
accordance with applicable international accounting practices, and (iv) for any
Target Foreign Benefit Plan which, under the Laws of the applicable foreign
jurisdiction, is required to be funded, the fair market value of such Target
Foreign Benefit Plan's assets equals or exceeds the present value of all
benefits (whether vested or not) accrued to date by all present and former
participants in such Target Foreign Benefit Plan or such Target Foreign Benefit
Plan is fully insured, in each case based upon generally accepted local
accounting and actuarial practice and procedure.
5.14 MATERIAL CONTRACTS.
Except as disclosed in Section 5.14 of the Target Disclosure Memorandum,
none of the Target Entities, nor any of their respective Assets, businesses, or
operations, is a party to, or is bound or affected by, or receives benefits
under, (i) any employment, severance, termination, consulting, or retirement
Contract providing for aggregate payments to any Person in any calendar year in
excess of $200,000, (ii) any Contract relating to the borrowing of money by any
Target Entity, including obligations under synthetic leases or other off-balance
sheet arrangements, or the guarantee by any Target Entity of any such obligation
(other than Contracts evidencing trade payables and Contracts relating to
borrowings or guarantees made in the ordinary course of business), (iii) any
Contract which prohibits or restricts any Target Entity from engaging in any
business activities in any geographic area, line of business or otherwise in
competition with any other Person, (iv) any Contract between or among Target
Entities, (v) any Contract involving Intellectual Property (other than Contracts
entered into in the ordinary course with customers and "shrink-wrap" software
licenses), (vi) any Contract relating to the purchase or sale of any goods or
services (other than Contracts entered into in the ordinary course of business
and involving payments under any individual Contract not in excess of $200,000
and Contracts that may be cancelled or terminated by a Target Entity without
penalty and with 60 days or less notice), and (vii) any other Contract or
amendment thereto that would be required to be filed as an exhibit to a Form
10-K filed by Target with the SEC as of the date of this Agreement (each such
Contract identified above, a "MATERIAL CONTRACT," and together with all
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Contracts referred to in Sections 5.9, 5.10 and 5.13(a), the "TARGET
CONTRACTS"). Except as disclosed in Section 5.14 of the Target Disclosure
Memorandum, with respect to each Target Contract: (A) the Contract is in full
force and effect; (B) to the Knowledge of Target, no Target Entity is in Default
thereunder; (C) no Target Entity has repudiated or waived any material provision
of any such Contract; and (D) no other party to any such Contract is, to the
Knowledge of Target, in Default in any respect or has repudiated or waived any
material provision thereunder.
5.15 LEGAL PROCEEDINGS.
There is no Litigation instituted or pending, or, to the Knowledge of
Target, threatened (or unasserted but considered probable of assertion and which
if asserted would have at least a reasonable possibility of an unfavorable
outcome) against any Target Entity, or against any director, officer or employee
in their capacities as such or Employee Benefit Plan of any Target Entity, or
against any Asset, interest, or right of any of them, that is reasonably likely,
individually or in the aggregate, to have a Target Material Adverse Effect, nor
are there any Orders outstanding against any Target Entity, that are reasonably
likely, individually or in the aggregate, to have a Target Material Adverse
Effect. Section 5.15(a) of the Target Disclosure Memorandum contains a summary
of all Litigation as of the date of this Agreement to which any Target Entity is
a party and which names a Target Entity as a defendant or cross-defendant or for
which any Target Entity has potential material Liability. Section 5.15(b) of the
Target Disclosure Memorandum contains a summary of all Orders to which any
Target Entity is subject.
5.16 INFORMATION SUPPLIED.
(a) None of the information supplied or to be supplied by any Target
Entity or any Affiliate thereof for inclusion in the Registration Statement to
be filed by Buyer with the SEC will, when the Registration Statement becomes
effective, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements therein not misleading.
(b) None of the information supplied or to be supplied by any Target
Entity or any Affiliate thereof for inclusion in the Joint Proxy
Statement/Prospectus to be mailed to each Party's stockholders in connection
with the Stockholders' Meetings, and any other documents to be filed by a Target
Entity or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Joint Proxy
Statement/Prospectus, when first mailed to the stockholders of Target and
stockholders of Buyer, be false or misleading with respect to any material fact,
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or, in
the case of the Joint Proxy Statement/Prospectus or any amendment thereof or
supplement thereto, at the time of the Stockholders' Meetings, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Stockholders' Meetings.
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(c) All documents that any Target Entity or any Affiliate thereof is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
5.17 TAX AND REGULATORY MATTERS.
No Target Entity or any Affiliate thereof has taken or agreed to take any
action or has any Knowledge of any fact or circumstance that is reasonably
likely to (i) prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) or result in the imposition of a condition or restriction of the
type referred to in the last sentence of such Section.
5.18 STATE TAKEOVER LAWS.
Each Target Entity has taken all necessary action to exempt the
transactions contemplated by this Agreement from, or if necessary to challenge
the validity or applicability of, any applicable "moratorium," "fair price,"
"business combination," "control share," or other anti-takeover Laws, including
Section 203 of the DGCL (collectively, "TAKEOVER LAWS").
5.19 CHARTER PROVISIONS.
Each Target Entity has taken all action so that the entering into of this
Agreement and the consummation of the Merger and the other transactions
contemplated by this Agreement do not and will not result in the grant of any
rights to any Person under the Certificate of Incorporation, Bylaws or other
governing instruments of any Target Entity or restrict or impair the ability of
Buyer or any of its Subsidiaries to vote, or otherwise to exercise the rights of
a stockholder with respect to, shares of any Target Entity that may be directly
or indirectly acquired or controlled by them.
5.20 OPINION OF FINANCIAL ADVISOR.
The Board of Directors of Target has received the opinion of Credit Suisse
First Boston Corporation, dated the date of this Agreement, to the effect that
the Merger Consideration is fair, from a financial point of view, to the holders
of Target Common Stock. A true, correct and complete copy of the written opinion
delivered by Credit Suisse First Boston Corporation shall be delivered to Buyer
for informational purposes only following the signing of this Agreement.
5.21 BOARD RECOMMENDATION.
The Board of Directors of Target, at a meeting duly called and held, has
by unanimous vote of the directors present (who constituted all of the directors
then in office) (i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, the Target Voting Agreements, and the
transactions contemplated thereby, taken together, are advisable and fair to and
in the best interests of the Target stockholders and (ii) resolved to recommend
that the holders of the shares of Target Common Stock approve and adopt this
Agreement and approve the Merger.
-24-
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer and Sub hereby represent and warrant to Target as follows:
6.1 ORGANIZATION, STANDING, AND POWER.
Buyer is a corporation duly organized, validly existing, and in good
standing under the Laws of the State of
Delaware, and has the corporate power
and authority to carry on its business as now conducted and to own, lease and
operate its material Assets. Buyer is duly qualified or licensed to transact
business as a foreign corporation in good standing in the states of the United
States and foreign jurisdictions where the character of its Assets or the nature
or conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified or licensed would
not reasonably be expected to have, individually or in the aggregate, a Buyer
Material Adverse Effect. Buyer has delivered to Target complete and accurate
copies of its Restated Certificate of Incorporation (the "BUYER CERTIFICATE OF
INCORPORATION") and Amended and Restated Bylaws (the "BUYER BYLAWS").
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Buyer has the corporate power and authority necessary to execute,
deliver and, other than with respect to the Merger, perform this Agreement, and
with respect to the Merger, upon the adoption and approval of this Agreement and
the Merger by Buyer's stockholders in accordance with this Agreement and
Delaware law, to perform its obligations under this Agreement and to consummate
the transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Merger, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Buyer, subject to the
approval of the issuance of the shares of Buyer Common Stock pursuant to the
Merger by a majority of the votes cast at the Buyer Stockholders' Meeting
(assuming for such purpose that the votes cast in respect of such proposal
represent a majority of the outstanding shares of Buyer Common Stock as
contemplated by Section 8.2 which is the only stockholder vote required for
approval of this Agreement and consummation of the Merger by Buyer. Subject to
such requisite stockholder approval, this Agreement represents a legal, valid,
and binding obligation of Buyer, enforceable against Buyer in accordance with
its terms; except as (i) such enforcement may be subject to any bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other laws, now
or hereafter in effect, relating to or limiting creditors' rights generally, and
(ii) the remedy of specific performance and injunction and other forms of
equitable relief may be subject to equitable defense, and to the discretion of
the court before which any proceeding therefor may be brought.
(b) Neither the execution and delivery of this Agreement by Buyer, nor the
consummation by Buyer of the transactions contemplated hereby, nor compliance by
Buyer with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of the Buyer Certificate of Incorporation or Buyer
Bylaws, or (ii) except as disclosed in Section 6.2 of the Buyer Disclosure
Memorandum, constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any material Asset of any
Buyer Entity under, any material Contract or Permit of any Buyer Entity, where
such Default or Lien,
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or any failure to obtain such Consent, would reasonably be expected to have,
individually or in the aggregate, a Buyer Material Adverse Effect, or, (iii)
constitute or result in a Default under, or require any Consent pursuant to,
any Law or Order applicable to any Buyer Entity or any of their respective
material Assets (including any Buyer Entity or any Target Entity becoming
subject to or liable for the payment of any Tax or any of the Assets owned by
any Buyer Entity or any Target Entity being reassessed or revalued by any
Regulatory Authority).
(c) Except in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and the rules
of the NYSE, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the IRS or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, or under the HSR Act, no
notice to, filing with, or Consent of, any public body or authority or other
Person is necessary for the consummation by Buyer of the Merger and the other
transactions contemplated in this Agreement; other than any such notices,
filings or consents that, individually or in the aggregate, would not reasonably
be expected to have a Buyer Material Adverse Effect.
6.3 CAPITAL STOCK.
(a) The authorized capital stock of Buyer consists of (i) 150,000,000
shares of Buyer Common Stock, of which 52,612,391 shares are issued and
outstanding as of the date of this Agreement, and (ii) 60,000 shares of Buyer
Preferred Stock, none of which are issued and outstanding. All of the issued and
outstanding shares of Buyer Capital Stock are, and all of the shares of Buyer
Common Stock to be issued in exchange for shares of Target Common Stock upon
consummation of the Merger, when issued in accordance with the terms of this
Agreement, will be, duly and validly issued and outstanding and fully paid and
nonassessable under the DGCL. None of the outstanding shares of Buyer Capital
Stock has been, and none of the shares of Buyer Common Stock to be issued in
exchange for shares of Target Common Stock upon consummation of the Merger will
be, issued in violation of any preemptive rights of the current or past
stockholders of Buyer.
(b) Except as set forth in Section 6.3(a) or as disclosed in Section 6.3
of the Buyer Disclosure Memorandum, there are no shares of capital stock or
other equity securities of Buyer outstanding and no outstanding Equity Rights
relating to the capital stock of Buyer.
6.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Buyer has timely filed and made available to Target all SEC Documents
required to be filed by Buyer since January 1, 1998 (together with all such SEC
Documents filed, whether or not required to be filed the "BUYER SEC REPORTS").
The Buyer SEC Reports (i) at the time filed, complied in all material respects
with the applicable requirements of the Securities Laws and other applicable
Laws and (ii) did not, at the time they were filed (or, if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such filing
or, in the case of registration statements, at the effective date thereof)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in such Buyer SEC Reports or necessary in order to make
the statements in such Buyer SEC Reports, in light of the
-26-
circumstances under which they were made, not misleading. No Buyer Subsidiary
files, or is required to file, any SEC Documents.
(b) Each of the Buyer Financial Statements (including, in each case, any
related notes) contained in the Buyer SEC Reports, including any Buyer SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial position of Buyer
and its Subsidiaries as at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in amount
or effect.
6.5 COMPLIANCE WITH LAWS.
Each Buyer Entity has in effect all Permits necessary for it to own, lease
or operate its material Assets and to carry on its business as now conducted,
and there has occurred no Default under any such Permit. None of the Buyer
Entities:
(a) is in Default under its Certificate of Incorporation or Bylaws (or
other governing instruments); or
(b) is in Default under any Laws, Orders or Permits (other than Defaults
under Environmental Laws or Environmental Permits, which Defaults are addressed
in Section 6.11) applicable to its business or employees conducting its
business, except for Defaults which would not reasonably be expected to have,
individually or in the aggregate, a Buyer Material Adverse Effect; or
(c) since January 1, 1998, has received any notification or communication
(other than notices or communications under Environmental Laws or regarding
Environmental Permits, which are addressed in Section 6.11) from any agency or
department of federal, state, or local government or any Regulatory Authority or
the staff thereof (i) asserting that any Buyer Entity is not, or may not be, in
compliance with any Laws or Orders, where such noncompliance would reasonably be
expected to have, individually or in the aggregate, a Buyer Material Adverse
Effect, (ii) threatening to revoke any Permits, the revocation of which would
reasonably be expected to have, individually or in the aggregate, a Buyer
Material Adverse Effect, or (iii) requiring any Buyer Entity to enter into or
consent to the issuance of a cease and desist order, injunction, formal
agreement, directive, commitment or memorandum of understanding, or to adopt any
board resolution or similar undertaking, which restricts materially the conduct
of its business, or in any manner relates to its employment decisions, its
employment or safety policies or practices, its management, or the payment of
dividends.
Copies of all material reports, correspondence, notices and other
documents relating to any material inspection, audit, monitoring or other form
of review or enforcement action
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instituted or commenced by a Regulatory Authority since January 1, 1998 with
respect to any Buyer Entity have been made available to Target.
6.6 LEGAL PROCEEDINGS.
There is no Litigation instituted or pending, or, to the Knowledge of
Buyer, threatened (or unasserted but considered probable of assertion and which
if asserted would have at least a reasonable possibility of an unfavorable
outcome) against any Buyer Entity, or against any director, officer or employee
in their capacity as such or Employee Benefit Plan of any Buyer Entity, or
against any Asset, interest, or right of any of them, that would reasonably be
expected to have, individually or in the aggregate, a Buyer Material Adverse
Effect, nor are there any Orders outstanding against any Buyer Entity, that is
reasonably likely to have, individually or in the aggregate, a Buyer Material
Adverse Effect. Section 6.6 of the Buyer Disclosure Memorandum contains a
summary of all Litigation as of the date of this Agreement to which any Buyer
Entity is a party and which names a Buyer Entity as a defendant or
cross-defendant for which any Buyer Entity has potential material Liability.
Section 6.6 the Buyer Disclosure Memorandum contains a summary of all Orders to
which any Buyer Entity is subject.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since September 30, 2001, (i) there have been no events, changes or
occurrences which have had, or would reasonably be expected to have,
individually or in the aggregate, a Buyer Material Adverse Effect, and (ii)
neither Buyer nor any Buyer Subsidiary has taken any action, or failed to take
any action, prior to the date of this Agreement, which action or failure, if
taken after the date of this Agreement, would represent or result in a material
breach or violation of any of the covenants and agreements of Buyer provided in
Article 7.
6.8 ABSENCE OF UNDISCLOSED LIABILITIES.
Neither Buyer nor any of the Buyer Subsidiaries has any material
Liabilities of a type required by GAAP to be reflected on a consolidated balance
sheet, other than (i) Liabilities incurred in the ordinary course of business
since September 30, 2001, (ii) Liabilities reflected in any of the Buyer SEC
Reports, and (iii) Liabilities which would not in the aggregate reasonably be
expected to have a Buyer Material Adverse Effect.
6.9 TAX MATTERS
All material federal, state, local and foreign Tax Returns required to be
filed by or on behalf of Buyer or any Buyer Entity, and each affiliated,
combined, consolidated or unitary group of which Buyer or any Buyer Entity is or
was a member (a "BUYER GROUP") have been timely filed or requests for extensions
to file such returns or reports have been timely filed and granted and have not
expired, and all returns filed are complete and accurate except to the extent
any failure to file or any inaccuracies in filed returns would not, individually
or in the aggregate, reasonably be expected to have a Buyer Material Adverse
Effect. All Taxes due and owing by Buyer, any Buyer Entity or any member of
Buyer Group have been paid, or adequately reserved for, except to the extent any
failure to pay or reserve would not, individually or in the aggregate,
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reasonably be expected to have a Buyer Material Adverse Effect. There is no
audit examination, deficiency, refund litigation, proposed adjustment or matter
in controversy with respect to any Taxes due and owing by Buyer, any Buyer
Subsidiary or any member of Buyer Group which would, individually or in the
aggregate, have a Buyer Material Adverse Effect. All assessments for Taxes due
and owing by Buyer, any Buyer Entity or any member of Buyer Group with respect
to completed and settled examinations or concluded litigation have been paid.
Buyer has provided or made available to Target information relating to (i) the
taxable years of Buyer for which the statutes of limitations with respect to
federal income Taxes have not expired, and (ii) with respect to federal income
Taxes, those years for which examinations have been completed, those years for
which examinations are presently being conducted, and those years for which
examinations have not yet been initiated. Buyer and each Buyer Entity has
complied in all material respects with all rules and regulations relating to the
withholding of Taxes, except to the extent any such failure to comply would not,
individually or in the aggregate, reasonably be expected to have a Buyer
Material Adverse Effect.
6.10 EMPLOYEE BENEFITS PLANS; ERISA
Except as described in any of the Buyer SEC Documents, all Employee
Benefit Plans maintained or contributed to by Buyer or Buyer Subsidiaries are in
material compliance with their terms and all applicable provisions of ERISA, the
Internal Revenue Code and any other applicable legislation, and Buyer and Buyer
Subsidiaries do not have any liabilities or obligations with respect to any such
Employee Benefit Plans, whether or not accrued, contingent or otherwise, except
(a) as described in any of the Buyer SEC Documents and (b) for instances of
noncompliance or liabilities or obligations that would not in the aggregate
reasonably be expected to have a Buyer Material Adverse Effect.
6.11 ENVIRONMENTAL MATTERS
Except as described in any of the Buyer SEC Documents, (i) Buyer and each
of its Subsidiaries is in material compliance with all applicable Environmental
Laws, except for non-compliance which would not in the aggregate reasonably be
expected to have a Buyer Material Adverse Effect, which compliance includes, but
is not limited to, the possession by Buyer and its Subsidiaries of material
Environmental Permits and other governmental authorizations required under
applicable Environmental Laws, and material compliance with the terms and
conditions thereof; (ii) neither Buyer nor any Buyer Subsidiary has received
written notice of, or, to the Knowledge of Buyer, is the subject of, any
environmental Litigation which would in the aggregate reasonably be expected to
have a Buyer Material Adverse Effect; and (iii) to the Knowledge of Buyer, there
are no circumstances that are reasonably likely to prevent or interfere with
such material compliance in the future.
6.12 INFORMATION SUPPLIED.
(a) None of the information supplied or to be supplied by any Buyer Entity
or any Affiliate thereof for inclusion in the Registration Statement to be filed
by Buyer with the SEC, will, when the Registration Statement becomes effective,
be false or misleading with respect to
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any material fact, or omit to state any material fact necessary to make the
statements therein not misleading.
(b) None of the information supplied or to be supplied by any Buyer Entity
or any Affiliate thereof for inclusion in the Joint Proxy Statement/Prospectus
to be mailed to each Party's stockholders in connection with the Stockholders'
Meetings, and any other documents to be filed by any Buyer Entity or any
Affiliate thereof with the SEC or any other Regulatory Authority in connection
with the transactions contemplated hereby, will, at the respective time such
documents are filed, and with respect to the Joint Proxy Statement/Prospectus,
when first mailed to the stockholders of Target and stockholders of Buyer, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or, in the case of the
Joint Proxy Statement/Prospectus or any amendment thereof or supplement thereto,
at the time of the Stockholders' Meetings, be false or misleading with respect
to any material fact, or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
any proxy for the Stockholders' Meetings.
(c) All documents that any Buyer Entity or any Affiliate thereof is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
6.13 AUTHORITY OF SUB.
Sub is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware as a wholly owned Subsidiary of Buyer.
The authorized capital stock of Sub shall consist of 1,000 shares of Sub Common
Stock, all of which are validly issued and outstanding, fully paid and
nonassessable and are owned by Buyer free and clear of any Lien. Sub has the
corporate power and authority necessary to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Merger, have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of Sub. This Agreement represents a legal, valid, and
binding obligation of Sub, enforceable against Sub in accordance with its terms.
Buyer, as the sole stockholder of Sub, has voted prior to the Effective Time the
shares of Sub Common Stock in favor of adoption and approval of this Agreement,
as and to the extent required by applicable Law.
6.14 TAX AND REGULATORY MATTERS.
Buyer has not taken or agreed to take any action and does not have any
Knowledge of any fact or circumstance that is reasonably likely to (i) prevent
the Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, or (ii) materially impede or delay receipt
of any Consents of Regulatory Authorities referred to in Section 9.1(b) or
result in the imposition of a condition or restriction of the type referred to
in the last sentence of such Section.
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6.15 OPINION OF FINANCIAL ADVISOR.
The Board of Directors of Buyer has received the opinion of First Union
Securities, Inc., trading under the name ("Wachovia Securities"), dated the
date of this Agreement, to the effect that the merger consideration to be
paid by Buyer pursuant to this Agreement (which consists of the Merger
Consideration and the consideration to be paid by Buyer to holders of Target
Options pursuant to Section 3.5 of this Agreement) is fair, from a financial
point of view, to Buyer. A true, correct and complete copy of the written
opinion delivered by Wachovia Securities shall be delivered to Target for
informational purposes only following the signing of this Agreement.
6.16 BOARD RECOMMENDATION.
The Board of Directors of Buyer, at a meeting duly called and held, has by
unanimous vote of the directors present resolved to recommend that the holders
of the shares of Buyer Common Stock approve the issuance of the Buyer Common
Stock in the Merger.
ARTICLE 7 CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF TARGET.
From the date of this Agreement until the earlier of (i) the Effective
Time, or (ii) the termination of this Agreement, unless the prior written
consent of Buyer shall have been obtained, and except as otherwise expressly
contemplated herein, Target shall, and shall cause each of its Subsidiaries to,
(A) operate its business only in the usual, regular, and ordinary course, (B)
use all reasonable efforts to preserve intact its business organization and
Assets and maintain its rights and franchises, and (C) take no action which
would (1) adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentence of Section
9.1(b), or (2) adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement.
7.2 NEGATIVE COVENANTS OF TARGET.
From the date of this Agreement until the earlier of the Effective Time or
the termination of this Agreement, unless the prior written consent of Buyer
shall have been obtained, and except as otherwise expressly contemplated herein,
Target covenants and agrees that it will not do or agree or commit to do, or
permit any of its Subsidiaries to do or agree or commit to do, any of the
following:
(a) amend the Certificate of Incorporation, Bylaws or other governing
instruments of any Target Entity, or
(b) incur any additional debt obligation or other obligation for borrowed
money (other than indebtedness of a Target Entity to another Target Entity) in
excess of an aggregate of $15,000,000 (for the Target Entities on a consolidated
basis) except (i) in the ordinary course of the business of the Target Entities
consistent with past practices, (ii) to pay Taxes, or (iii) to pay for budgeted
capital expenditures set forth in Section 7.2(b) of the Target Disclosure
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Memorandum, or impose, or suffer the imposition, on any material Asset of any
Target Entity of any Lien or permit any such Lien to exist (other than in
connection with Liens in effect as of the date hereof that are disclosed in the
Target Disclosure Memorandum), except in the ordinary course of business
consistent with past practice; or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of the
capital stock of any Target Entity, or declare or pay any dividend or make any
other distribution in respect of Target's capital stock; or
(d) except (i) for this Agreement, (ii) pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof in
existence on the date hereof, (iii) for shares issued under Target's 1999
Employee Stock Purchase Plan ("ESPP"), or (iv) as disclosed in Section 7.2(d) of
the Target Disclosure Memorandum, issue, sell, pledge, encumber, authorize the
issuance of, enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become outstanding, any
additional shares of Target Common Stock or any other capital stock of any
Target Entity, or any stock appreciation rights, or any option, warrant, or
other Equity Right; or
(e) adjust, split, combine or reclassify any capital stock of any Target
Entity or issue or authorize the issuance of any other securities in respect of
or in substitution for shares of Target Common Stock, or sell, lease, mortgage
or otherwise dispose of or otherwise encumber (i) any shares of capital stock of
any Target Entity (unless any such shares of stock are sold or otherwise
transferred to another Target Entity) or (ii) except as set forth in Section
7.2(e) of the Target Disclosure Memorandum, any material Asset; or
(f) except as set forth in Section 7.2(f) of the Target Disclosure
Memorandum, and except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, purchase any securities or make any material investment, either
by purchase of stock or securities, contributions to capital, Asset transfers,
or purchase of any Assets, in any Person other than a wholly owned Target
Subsidiary, or otherwise acquire direct or indirect control over any Person,
other than in connection with (i) foreclosures in the ordinary course of
business or (ii) the creation of new wholly owned Subsidiaries organized to
conduct or continue activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the employees or
officers of any Target Entity, except in accordance with past practice, as
disclosed in Sction 7.2(g) of the Target Disclosure Memorandum or as required by
Law; pay any severance or termination pay or any bonus other than pursuant to
written policies or written Contracts in effect on the date of this Agreement
and disclosed in Section 7.2(g) of the Target Disclosure Memorandum; and, except
as set forth in Section 7.2(g) of the Target Disclosure Memorandum, enter into
or amend any severance agreements with employees or officers of any Target
Entity; grant any material increase in fees or other increases in compensation
or other benefits to directors of any Target Entity except in accordance with
past practice disclosed in Section 7.2(g) of the Target Disclosure Memorandum;
or waive any stock repurchase rights, accelerate, amend or change the
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period of exercisability of any Equity Rights or restricted stock, or reprice
Equity Rights granted under the Target Stock Plans or authorize cash payments
in exchange for any Equity Rights; or
(h) except as set forth in Section 7.2(h) of the Target Disclosure
Memorandum, enter into or amend any employment Contract between any Target
Entity and any Person having a salary thereunder in excess of $150,000 per year
(unless such amendment is required by Law) that the Target Entity does not have
the unconditional right to terminate without Liability (other than Liability for
services already rendered), at any time on or after the Effective Time; or
(i) except as set forth in Section 7.2(i) of the Target Disclosure
Memorandum, adopt any new Employee Benefit Plan of any Target Entity or
terminate or withdraw from, or make any material change in or to, any existing
Employee Benefit Plans of any Target Entity other than any such change that is
required by Law or that, in the opinion of counsel, is necessary or advisable to
maintain the tax qualified status of any such plan, or make any distributions
from such Employee Benefit Plans, except as required by Law, the terms of such
plans or consistent with past practice; or
(j) commence any offering pursuant to the ESPP (as defined therein); or
(k) make any change in any Tax or accounting methods or systems of
internal accounting controls or make or revoke any Tax election, except as may
be appropriate to conform to changes in Tax Laws or regulatory accounting
requirements or GAAP; or
(l) commence any Litigation other than in accordance with past practice,
or settle any Litigation involving any Liability of any Target Entity for an
amount in excess of $250,000 or restrictions upon the operations of any Target
Entity; or
(m) except as set forth in Section 7.2(m) of the Target Disclosure
Memorandum, enter into, modify, amend or terminate any material Contract or
waive, release, compromise or assign any material rights or claims; or
(n) take any action or actions that would reasonably be expected to have a
Target Material Adverse Effect.
7.3 COVENANTS OF BUYER.
From the date of this Agreement until the earlier of the Effective Time or
the termination of this Agreement, unless the prior written consent of Target
shall have been obtained, and except as otherwise expressly contemplated herein,
Buyer covenants and agrees that it shall (a) continue to conduct its business
and the business of its Subsidiaries in a manner designed in its reasonable
judgment, to enhance the long-term value of the Buyer Common Stock and the
business prospects of the Buyer Entities and to the extent consistent therewith
use all reasonable efforts to preserve intact the Buyer Entities' core
businesses and goodwill with their respective employees and the communities they
serve, (b) make no material change in any Tax or accounting methods or systems
of internal accounting controls nor make or revoke any Tax election, except as
may be appropriate to conform to changes in Tax Laws or regulatory accounting
requirements or GAAP, (c) not enter into any agreement with respect to, or
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consummate, any acquisition by Buyer of any Person or assets the consummation of
which would require the filing of a current report on Form 8-K pursuant to Item
2 thereof with the SEC, (d) take no action or actions that would reasonably be
expected to cause a Buyer Material Adverse Effect, and (e) take no action which
would (i) materially adversely affect the ability of any Party to obtain any
Consents required for the transactions contemplated hereby without imposition of
a condition or restriction of the type referred to in the last sentence of
Section 9.1(b), or (ii) materially adversely affect the ability of any Party to
perform its covenants and agreements under this Agreement; provided, that,
subject to clauses (c) and (d) above, the foregoing shall not prevent any Buyer
Entity from acquiring any Assets or other businesses or from discontinuing or
disposing of any of its Assets or business if such action is, in the reasonable
judgment of Buyer, desirable in the conduct of the business of Buyer and its
Subsidiaries, provided that such actions shall not materially delay the
Effective Time or materially hinder consummation of the Merger. Buyer further
covenants and agrees that it will not, without the prior written consent of
Target, which consent shall not be unreasonably withheld, amend the Buyer
Certificate of Incorporation or Buyer Bylaws, in each case, in any manner
adverse to the holders of Target Common Stock as compared to rights of holders
of Buyer Common Stock generally as of the date of this Agreement.
7.4 ADVERSE CHANGES IN CONDITION.
Each Party agrees to give written notice promptly to the other Party upon
becoming aware of the occurrence or impending occurrence of any event or
circumstance relating to it or any of its Subsidiaries which (i) would
reasonably be expected to have, individually or in the aggregate, a Target
Material Adverse Effect or a Buyer Material Adverse Effect, as applicable, or
(ii) would cause or constitute a material breach of any of its representations,
warranties, or covenants contained herein, and to use its reasonable efforts to
prevent or promptly to remedy the same.
7.5 REPORTS.
Each Party and its Subsidiaries shall file all reports required to be
filed by it with Regulatory Authorities between the date of this Agreement and
the Effective Time and shall deliver to the other Party copies of all such
reports promptly after the same are filed. If financial statements are contained
in any such reports filed with the SEC, such financial statements will fairly
present the consolidated financial position of the entity filing such statements
as of the dates indicated and the consolidated results of operations, changes in
stockholders' equity, and cash flows for the periods then ended in accordance
with GAAP (subject in the case of interim financial statements to normal
recurring year-end adjustments that are not material). As of their respective
dates, such reports filed with the SEC will comply in all material respects with
the Securities Laws and will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Any financial statements contained in any other
reports to another Regulatory Authority shall be prepared in accordance with
Laws applicable to such reports.
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ARTICLE 8 ADDITIONAL AGREEMENTS
8.1 JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.
As promptly as practicable after the execution of this Agreement, Buyer
and Target shall prepare and file with the SEC the Joint Proxy
Statement/Prospectus, and Buyer shall prepare and file with the SEC the
Registration Statement in which the Joint Proxy Statement/Prospectus is to be
included as a prospectus. Buyer and Target shall provide each other with any
information which may be required in order to effectuate the preparation and
filing of the Joint Proxy Statement/Prospectus and the Registration Statement
pursuant to this Section 8.1. Each of Buyer and Target shall respond to any
comments from the SEC, shall use all reasonable efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as practicable after such filing and to keep the Registration Statement
effective as long as is necessary to consummate the Merger and the transactions
contemplated hereby. Each of Buyer and Target shall notify the other promptly
upon the receipt of any comments from the SEC or its staff in connection with
the filing of, or amendments or supplements to, the Registration Statement
and/or the Joint Proxy Statement/Prospectus. Whenever any event occurs which is
required to be set forth in an amendment or supplement to the Joint Proxy
Statement/Prospectus or the Registration Statement, Buyer or Target, as the case
may be, shall promptly inform the other of such occurrence and cooperate in
filing with the SEC or its staff, and/or mailing to stockholders of Buyer and/or
Target, such amendment or supplement. Each of Buyer and Target shall cooperate
and provide the other (and its counsel) with a reasonable opportunity to review
and comment on any amendment or supplement to the Registration Statement and
Joint Proxy Statement/Prospectus prior to filing such with the SEC, and shall
provide each other with a copy of all such filings made with the SEC. Each of
Buyer and Target shall cause the Joint Proxy Statement/Prospectus to be mailed
to its respective stockholders at the earliest practicable time after the
Registration Statement is declared effective by the SEC.
8.2 MEETINGS OF STOCKHOLDERS; BOARD RECOMMENDATION.
(a) Promptly after the Registration Statement is declared effective under
the Securities Act, each of Buyer and Target shall take all action necessary in
accordance with the DGCL and its respective Certificate of Incorporation and
Bylaws to call, hold and convene a meeting of its respective stockholders to
consider, in the case of Buyer, the issuance of shares of Buyer Common Stock
pursuant to the Merger and such other matters as it deems appropriate, and, in
the case of Target, adoption and approval of this Agreement and approval of the
Merger (each, a "STOCKHOLDERS' MEETING") to be held as promptly as practicable
(without limitation, within 20 business days, if practicable) after the mailing
of the Joint Proxy Statement/Prospectus to their respective stockholders. Each
of Buyer and Target shall use all reasonable efforts to hold their respective
Stockholders' Meetings on the same date. Subject to Section 8.3(d), each of
Buyer and Target shall use all reasonable efforts to solicit from its respective
stockholders proxies in favor of, in the case of Buyer, the issuance of shares
of Buyer Common Stock pursuant to the Merger, and, in the case of Target, the
adoption and approval of this Agreement and the approval of the Merger, and
shall take all other action necessary or advisable to secure the vote or consent
of their respective stockholders required by the rules of the NYSE or the DGCL
to obtain such approvals. Notwithstanding anything to the contrary contained in
this
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Agreement, but subject to Section 10.1(b), Buyer or Target, as the case may
be, may adjourn or postpone its Stockholders' Meeting to the extent necessary
to ensure that any necessary supplement or amendment to the Joint Proxy
Statement/Prospectus is provided to its respective stockholders in advance of
a vote on the issuance of Buyer Common Stock or the Merger and this Agreement,
as applicable, or, if as of the time for which the Stockholders' Meeting is
originally scheduled (as set forth in the Joint Proxy Statement/Prospectus)
there are insufficient shares of capital stock of Buyer or Target, as the case
may be, represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of such Stockholders' Meeting. Each of Buyer
and Target shall ensure that its respective Stockholders' Meeting is called,
noticed, convened, held and conducted, and that all proxies solicited by it in
connection with the Stockholders' Meeting are solicited in compliance with the
DGCL, its Certificate of Incorporation and Bylaws, the rules of the NYSE and
all other applicable Laws.
(b) Except to the extent expressly permitted by Section 8.3(d): (i) the
Board of Directors of each of Buyer and Target shall recommend that the
respective stockholders of Buyer and Target vote in favor of, in the case of
Buyer, the issuance of shares of Buyer Common Stock pursuant to the Merger, and,
in the case of Target, adoption and approval of this Agreement and approval of
the Merger, at their respective Stockholders' Meetings, (ii) the Joint Proxy
Statement/Prospectus shall include a statement to the effect that the Board of
Directors of Buyer has recommended that Buyer's stockholders vote in favor of
the issuance of shares of Buyer Common Stock pursuant to the Merger at Buyer's
Stockholders' Meeting and the Board of Directors of Target has recommended that
Target's stockholders vote in favor of adoption and approval of this Agreement
and approval of the Merger at Target's Stockholders' Meeting, and (iii) neither
the Board of Directors of Buyer or Target nor any committee thereof shall
withdraw, amend or modify, or propose or resolve to withdraw, amend or modify in
a manner adverse to the other party, the recommendation of its respective Board
of Directors that the respective stockholders of Buyer and Target vote in favor
of, in the case of Buyer, the issuance of shares of Buyer Common Stock pursuant
to the Merger, and, in the case of Target, adoption and approval of this
Agreement and the Merger.
8.3 ACQUISITION PROPOSALS.
(a) Target agrees that neither it nor any of its Subsidiaries nor any of
the officers and directors of it or its Subsidiaries shall, and that it shall
use all reasonable efforts to cause its and its Subsidiaries' employees, agents
and Representatives not to (and shall not authorize any of them to) directly or
indirectly: (i) solicit, initiate, encourage, knowingly facilitate or knowingly
induce any inquiry with respect to, or the making, submission or announcement
of, any Acquisition Proposal (as defined in Section 8.3(g)) with respect to
itself, (ii) participate in any discussions or negotiations regarding, or
furnish to any Person any nonpublic information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, any Acquisition Proposal
with respect to itself, (iii) engage in discussions with any Person with respect
to any Acquisition Proposal with respect to itself, except as to the existence
of these provisions, (iv) approve, endorse or recommend any Acquisition Proposal
with respect to itself (except to the extent specifically permitted pursuant to
Section 8.3(d) and Section 10.1(g)), or (v) enter into any letter of intent or
similar document or any contract agreement or commitment contemplating or
otherwise relating
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to any Acquisition Proposal or transaction contemplated thereby with respect
to itself (except as permitted pursuant to Sections 8.3(d) and 10.1(g). Target
and its Subsidiaries shall immediately cease any and all existing activities,
discussions or negotiations with any third parties conducted heretofore with
respect to any Acquisition Proposal with respect to itself.
(b) (i) As promptly as practicable after receipt of any Acquisition
Proposal or any request for nonpublic information or inquiry which it reasonably
believes could lead to an Acquisition Proposal, Target shall provide Buyer with
oral and written notice of the material terms and conditions of such Acquisition
Proposal, request or inquiry, and the identity of the Person or Group making any
such Acquisition Proposal, request or inquiry and a copy of all written
materials provided in connection with such Acquisition Proposal, request or
inquiry. Upon receipt of the Acquisition Proposal, request or inquiry, Target
shall provide Buyer as promptly as practicable oral and written notice setting
forth all such information as is reasonably necessary to keep Buyer informed in
all material respects of the status and details (including material amendments
or proposed material amendments) of any such Acquisition Proposal, request or
inquiry and shall promptly provide to Buyer a copy of all written materials
subsequently provided in connection with such Acquisition Proposal, request or
inquiry.
(ii) Target shall provide Buyer with forty-eight (48) hours prior
notice (or such lesser prior notice as is provided to the members of its Board
of Directors) of any meeting of its Board of Directors at which its Board of
Directors is reasonably expected to consider any Acquisition Proposal.
(c) Notwithstanding anything to the contrary contained in Section 8.3(a),
in the event that Target receives an unsolicited, bona fide written Acquisition
Proposal with respect to itself from a third party that its Board of Directors
has in good faith concluded (following the receipt of the advice of its outside
legal counsel and its financial advisor), is, or is reasonably likely to result
in, a Superior Offer (as defined in Section 8.3(g)), it may then take the
following actions: (i) furnish nonpublic information to the third party making
such Acquisition Proposal, provided that (A)(1) concurrently with furnishing
any such nonpublic information to such party, its gives Buyer written notice of
its intention to furnish nonpublic information and (2) it receives from the
third party an executed confidentiality agreement containing customary
limitations on the use and disclosure of all nonpublic written and oral
information furnished to such third party on its behalf, the terms of which are
at least as restrictive as the terms contained in the Confidentiality Agreement
and (B) contemporaneously with furnishing any such nonpublic information to such
third party, it furnishes such nonpublic information to Buyer (to the extent
such nonpublic information has not been previously so furnished); and (ii)
engage in negotiations with the third party with respect to the Acquisition
Proposal, provided that concurrently with entering into negotiations with such
third party, it gives Buyer written notice of the its intention to enter into
negotiations with such third party.
(d) In response to the receipt of a Superior Offer, the Board of Directors
of Target may withhold, withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify its recommendation in favor of the Merger, and, in the
case of a Superior Offer that is a tender or exchange offer made directly to its
stockholders, may recommend that its stockholders accept the tender or exchange
offer (any of the foregoing actions, whether by a Board of Directors or a
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committee thereof, a "CHANGE OF RECOMMENDATION"), if all of the following
conditions in clauses (i) through (iv) are met: (i) a Superior Offer with
respect to it has been made and has not been withdrawn; (ii) its Stockholders'
Meeting has not occurred; (iii) it shall have (A) provided to Buyer written
notice which shall state expressly (1) that it has received a Superior Offer,
(2) the material terms and conditions of the Superior Offer and the identity of
the Person or Group making the Superior Offer, and (3) that it intends to effect
a Change of Recommendation and the manner in which it intends to do so, (B)
provided to Buyer a copy of all written materials delivered to the Person or
Group making the Superior Offer in connection with such Superior Offer, and (C)
made available to Buyer all materials and information made available to the
Person or Group making the Superior Offer in connection with such Superior
Offer; and (iv) it shall not have breached in any material respect any of the
provisions set forth in Section 8.2 or this Section 8.3.
(e) Notwithstanding anything to the contrary contained in this Agreement,
the obligation of Target to call, give notice of, convene and hold its
Stockholders' Meeting shall not be limited or otherwise affected by the
commencement, disclosure, announcement or submission to it of any Acquisition
Proposal with respect to it, or by any Change of Recommendation. Target shall
not submit to the vote of its respective stockholders any Acquisition Proposal,
or propose to do so, subject to Sections 8.3(d) and 10.1(g).
(f) Nothing contained in this Agreement shall prohibit either party or its
respective Board of Directors from taking and disclosing to its stockholders a
position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange
Act; provided that the content of any such disclosure thereunder shall be
governed by the terms of this Agreement. Without limiting the foregoing proviso,
Target shall not effect a Change of Recommendation unless specifically permitted
pursuant to the terms of Section 8.3(d).
(g) For purposes of this Agreement, the following terms shall have the
following meanings: (i) "ACQUISITION PROPOSAL," with respect to Target, shall
mean any offer or proposal, relating to any transaction or series of related
transactions involving: (A) any purchase from Target or acquisition by any
Person or "GROUP" (as defined under Section 13(d) of the Exchange Act and the
rules and regulations thereunder) of more than a fifteen percent (15%) interest
in the total outstanding voting securities of any Target Entity or any tender
offer or exchange offer that if consummated would result in any Person or Group
beneficially owning fifteen percent (15%) or more of the total outstanding
voting securities of any Target Entity or any merger, consolidation, business
combination or similar transaction involving a Target Entity, (B) any sale,
lease (other than in the ordinary course of business), exchange, transfer,
license (other than in the ordinary course of business), acquisition or
disposition of more than fifteen percent (15%) of the Assets of the Target
Entities, taken as a whole, or (C) any liquidation or dissolution of a Target
Entity; and (ii) "SUPERIOR OFFER," with respect to Target, shall mean an
unsolicited, bona fide written offer made by a third party to acquire, directly
or indirectly, pursuant to a tender offer, exchange offer, merger, consolidation
or other business combination, all or substantially all of the Assets of Target
or substantially all of the total outstanding voting securities of Target on
terms that the Board of Directors of Target has in good faith concluded
(following the receipt of advice of its outside legal counsel and its financial
adviser), taking into account, among other things, all legal, financial,
regulatory and other aspects of the offer and the Person making the
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offer, to be more favorable, from a financial point of view, to Target's
stockholders (in their capacities as stockholders) than the terms of the
Merger and is reasonably capable of being consummated.
8.4 EXCHANGE LISTING.
Buyer shall use its reasonable efforts to list, prior to the Effective
Time, on the NYSE, subject to official notice of issuance, the shares of Buyer
Common Stock to be issued to the holders of Target Common Stock pursuant to the
Merger and upon the exercise of the Target Options, and Buyer shall give all
notices and make all filings with the NYSE required in connection with the
transactions contemplated herein.
8.5 ANTITRUST NOTIFICATION; CONSENTS OF REGULATORY AUTHORITIES.
(a) To the extent required by the HSR Act, each of the Parties shall,
within a reasonable period of time, file with the United States Federal Trade
Commission ("FTC") and the United States Department of Justice ("DOJ") the
notification and report form required for the transactions contemplated hereby,
shall promptly file any supplemental or additional information which may
reasonably be requested in connection therewith pursuant to the HSR Act, and
shall comply in all material respects with the requirements of the HSR Act. Each
Party shall use its reasonable efforts to resolve objections, if any, which may
be asserted with respect to the Merger under the HSR Act, the ▇▇▇▇▇▇▇ Act, as
amended, the ▇▇▇▇▇▇▇ Act, as amended, the Federal Trade Commission Act, as
amended, and any other federal, state or foreign Law or, regulation or decree
designed to prohibit, restrict or regulate actions for the purpose or effect of
monopolization or restraint of trade (collectively "ANTITRUST LAWS"). In the
event any Litigation is threatened or instituted challenging the Merger as
violative of Antitrust Laws, each Party shall use its reasonable efforts to
avoid the filing of, or resist or resolve such Litigation. Each Party shall use
its reasonable efforts to take such action as may be required by: (i) the DOJ
and/or the FTC in order to resolve such objections as either of them may have to
the Merger under the Antitrust Laws, or (ii) any federal or state court of the
United States, or similar court of competent jurisdiction in any foreign
jurisdiction, in any suit brought by any Regulatory Authority or any other
Person challenging the Merger as violative of the Antitrust Laws, in order to
avoid the entry of any Order (whether temporary, preliminary or permanent) which
has the effect of preventing the consummation of the Merger and to have vacated,
lifted, reversed or overturned any such Order. Reasonable efforts shall not
include the willingness of Buyer to accept an Order agreeing to the divestiture,
or the holding separate, of any Assets of any Buyer Entity or any Target Entity
which Buyer reasonably determines to be material to Buyer or to the benefits of
the transaction for which it has bargained for hereunder. Buyer shall be
entitled to direct any proceedings or negotiations with any Regulatory Authority
relating to any of the foregoing, provided that it shall afford Target a
reasonable opportunity to participate therein. Notwithstanding anything to the
contrary in this Section, no Buyer Entity shall be required to divest any of its
businesses, product lines or Assets, or to take or agree to take any other
action or agree to any limitation, that Buyer reasonably determines to be
material to Buyer or to the benefits of the transaction for which it has
bargained for hereunder.
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(b) The Parties hereto shall cooperate with each other and use their
reasonable efforts to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings (which shall include the
filings pursuant to subsection (a) above), and to obtain as promptly as
practicable all Consents of all Regulatory Authorities and other Persons which
are necessary or advisable to consummate the transactions contemplated by this
Agreement (including the Merger). The Parties agree that they shall consult with
each other with respect to the obtaining of all Consents of all Regulatory
Authorities and other Persons necessary or advisable to consummate the
transactions contemplated by this Agreement and each Party shall keep the other
apprised of the status of matters relating to consummation of the transactions
contemplated herein. Each Party also shall promptly advise the other upon
receiving any communication from any Regulatory Authority whose Consent is
required for consummation of the transactions contemplated by this Agreement
which causes such Party to believe that there is a reasonable likelihood that
any requisite Consent shall not be obtained or that the receipt of any such
Consent will be materially delayed.
8.6 FILINGS WITH STATE OFFICES.
Upon the terms and subject to the conditions of this Agreement, Sub shall
execute and file the Certificate of Merger with the Secretary of State of the
State of Delaware in connection with the Closing.
8.7 AGREEMENT AS TO EFFORTS TO CONSUMMATE.
Subject to the terms and conditions of this Agreement, each Party agrees
to use, and to cause its Subsidiaries to use, its reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper, or advisable under applicable Laws to consummate and make
effective, as soon as reasonably practicable after the date of this Agreement,
the transactions contemplated by this Agreement, including using its reasonable
efforts to lift or rescind any Order adversely affecting its ability to
consummate the transactions contemplated herein and to cause to be satisfied the
conditions referred to in Article 9; provided, that nothing herein shall
preclude either Party from exercising its rights under this Agreement.
8.8 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep the other Party
advised of all material developments relevant to its business and to the
consummation of the Merger and shall permit the other Party and its advisors and
agents to make or cause to be made such investigation of the business and
properties of it and its Subsidiaries and of their respective financial and
legal conditions as the other Party reasonably requests, provided that such
investigation shall be reasonably related to the transactions contemplated
hereby and shall not interfere unnecessarily with normal operations. No
investigation by a Party shall affect the ability of such Party to rely on the
representations and warranties of the other Party.
(b) In addition to the Parties' respective obligations under the
Confidentiality Agreement, which is hereby reaffirmed and adopted, and
incorporated by reference herein each Party shall, and shall cause its advisers
and agents to, maintain the confidentiality of all
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confidential information furnished to it by the other Party concerning its and
its Subsidiaries' businesses, operations, and financial positions and shall
not use such information for any purpose except in furtherance of the
transactions contemplated by this Agreement. If this Agreement is terminated
prior to the Effective Time, each Party shall promptly return or certify the
destruction of all documents and copies thereof, and all work papers
containing confidential information received from the other Party.
(c) Each of Buyer and Sub, on the one hand, and Target, on the other,
agrees that, except for the representations and warranties made by the other
party that are expressly set forth in Article 5 and Article 6 of this Agreement,
as applicable, neither the other party nor any of its representatives or
Affiliates has made and shall not be deemed to have made to such party or to any
of its representatives or Affiliates any representation or warranty of any kind.
Without limiting the generality of the foregoing, each party agrees that neither
the other party nor any of its Affiliates makes or has made any representation
or warranty to such party or to any of its representatives or Affiliates with
respect to:
(i) any projections, forecasts, estimates, plans or budgets of
future revenues, expenses or expenditures, future results of operations
(or any component thereof), future cash flows (or any component thereof)
or future financial condition (or any component thereof) of the other
party or any of its Subsidiaries or the future business, operations or
affairs of the other party or any of its Subsidiaries heretofore or
hereafter delivered to or made available to such party or its counsel,
accountants, advisors, lenders, representatives or Affiliates; and
(ii) any other information, statement or documents heretofore or
hereafter delivered to or made available to such party or its counsel,
accountants, advisors, lenders, representatives or Affiliates with respect
to the other party or any of its Subsidiaries or the business, operations
or affairs of the other party or any of its Subsidiaries, except to the
extent and as expressly covered by a representation and warranty made by
the other party and contained in Article 5 or Article 6 of this Agreement,
as applicable.
8.9 PRESS RELEASES.
Prior to the Effective Time, Target and Buyer shall consult with each
other as to the form and substance of any press release or other public
disclosure materially related to this Agreement or any other transaction
contemplated hereby; provided, that nothing in this Section 8.9 shall be deemed
to prohibit any Party from making any disclosure which its counsel deems
necessary or advisable in order to satisfy such Party's disclosure obligations
imposed by Law.
8.10 TAX TREATMENT.
(a) This Agreement is a "plan of reorganization" within the meaning of
Section 1.368-2(g) of the Treasury regulations promulgated under the Internal
Revenue Code. From and after the date of this Agreement and until the Effective
Time, except as provided in Section 1.4, each Party hereto shall use its
reasonable best efforts to cause the Merger to qualify as a reorganization under
the provisions of Section 368(a) of the Code. Following the Effective
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Time, neither Sub, Buyer nor any of their Affiliates shall knowingly take any
action that could cause the Merger to fail to qualify as a reorganization
under Section 368(a) of the Code.
(b) Target does not know of any reason why Target will not be able to
deliver to each of ▇▇▇▇▇▇ & Bird LLP and ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, at the time the
Registration Statement or any amendment thereto is filed with the SEC and on or
about the Closing Date, certificates in the form of Exhibit 4 hereto and
substantially in compliance with IRS published advance ruling guidelines, with
customary exceptions and modifications thereto, to enable such firms to deliver
the opinions contemplated by Section 9.1(f).
(c) Buyer does not know of any reason why Buyer will not be able to
deliver to each of ▇▇▇▇▇▇ & Bird LLP and ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, at the time the
Registration Statement or any amendment thereto is filed with the SEC and on or
about the Closing Date, certificates in the form of Exhibit 4 hereto and
substantially in compliance with IRS published advance ruling guidelines, with
customary exceptions and modifications thereto, to enable such firms to deliver
the opinions contemplated by Section 9.1(f).
8.11 AGREEMENT OF AFFILIATES.
Target has disclosed in Section 8.11 of the Target Disclosure Memorandum
all Persons whom it reasonably believes is an "affiliate" of Target for purposes
of Rule 145 under the 1933 Act. Target shall use its reasonable efforts to cause
each such Person to deliver to Buyer prior to the Effective Time, a written
agreement, in substantially the form of Exhibit 3, providing that such Person
shall not sell, pledge, transfer, or otherwise dispose of the shares of Buyer
Common Stock to be received by such Person upon consummation of the Merger
except in compliance with applicable provisions of the 1933 Act and the rules
and regulations thereunder. Buyer shall be entitled to place restrictive legends
upon certificates for shares of Buyer Common Stock issued to affiliates of
Target pursuant to this Agreement to enforce the provisions of this Section
8.11. Buyer shall not be required to maintain the effectiveness of the
Registration Statement under the 1933 Act for the purposes of resale of Buyer
Common Stock by such affiliates.
8.12 EMPLOYEE BENEFITS AND CONTRACTS.
(a) Following the Effective Time, Buyer shall cause the Surviving
Corporation and its Subsidiaries to continue to provide individuals who were
officers and employees of the Target Entities immediately prior to the Effective
Time (the "Continuing Employees") with benefits under the Target Benefit Plans
(except that Buyer shall have no obligation to provide benefits under stock
option or other plans involving the potential issuance of Buyer Common Stock or
Target Common Stock other than as provided in Section 3.5 of this Agreement) or
similar arrangements, on terms and conditions which when taken as a whole are
substantially similar to those which are provided to such officers and employees
by the Target Entities immediately prior to the Effective Time (with such
changes as Buyer may reasonably determine are required by law). Notwithstanding
the foregoing, Buyer may, at any time following the Effective Time and in its
sole discretion, discontinue providing benefits under any Target Benefit Plan to
Continuing Employees, provided that such Continuing Employees shall thereafter
receive benefits under Buyer's Employee Benefit Plans (except that Buyer shall
have no obligation to
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provide benefits under stock option or other plans involving the potential
issuance of Buyer Common Stock other than as provided in Section 3.5 of this
Agreement), on terms and conditions which taken as a whole are substantially
similar to those provided by the Buyer Entities to their similarly situated
officers and employees. In the event the Continuing Employees participate in
Buyer's Employee Benefit Plans at any time after the Effective Time then, (i)
for purposes of participation, vesting and (except in the case of Buyer
retirement plans) benefit accruals under Buyer's Employee Benefit Plans,
including the Termination Benefits Plan of Buyer, the service of the
Continuing Employees with the Target Entities prior to the Effective Time
shall be treated as service with a Buyer Entity participating in such Employee
Benefit Plans; and (ii) except as otherwise provided in the next succeeding
sentence, with respect to health, life, welfare and other group benefits,
Buyer's Employee Benefit Plans shall waive any eligibility periods, evidence
of insurability and pre-existing conditions limitations and shall honor any
deductible, co-payment, co-insurance or out-of-pocket expenses paid or
incurred for the current plan year by such Continuing Employees, including,
with respect to their covered dependents, under the Target Benefit Plans
during the period preceding the date of participation in Buyer's Employee
Benefit Plans, as though such amount had been paid in accordance with the
terms and conditions of the Buyer's Employee Benefit Plans. Notwithstanding
the foregoing, Buyer's undertaking set forth in clause (ii) of the immediately
preceding sentence shall only be applicable to Buyer's Employee Benefit Plans
which are fully insured to the extent permitted under the terms of the
applicable insurance policy or to the extent approved by the applicable
insurance carrier. Buyer also shall cause the Surviving Corporation and its
Subsidiaries to honor in accordance with their terms all employment,
severance, consulting and other compensation Contracts disclosed in Section
8.12 of the Target Disclosure Memorandum to Buyer between any Target Entity
and any current or former director, officer, or employee thereof, and all
provisions for vested benefits or other vested amounts earned or accrued
through the Effective Time under the Target Benefit Plans.
(b) Effective prior to the Effective Time, Target shall terminate all of
Target's severance and termination benefit plans, including without limitation,
the Target Severance Benefit Plan, as amended and restated effective October 1,
2000, and Buyer shall cause the Surviving Corporation and its Subsidiaries to
adopt the Termination Benefits Plan of Buyer and for a period of at least one
year following the Closing shall make such Buyer plan available (and not reduce
the benefits available thereunder) to the Continuing Employees. Notwithstanding
the preceding sentence, Buyer shall cause the Surviving Corporation and its
Subsidiaries to honor the terms of the Change of Control Agreements disclosed in
Section 8.12 of the Target Disclosure Memorandum.
(c) Buyer shall cause the Surviving Corporation and its Subsidiaries to
permit all Continuing Employees to retain and take any paid vacation days
accrued but not taken or lost under the Target's and the Target Entities'
vacation policies prior to the Effective Time, provided that such vacation days
are taken or paid in lieu of being taken within one year after the Effective
Time.
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(d) As soon as practicable following the date of this Agreement, Target's
Board of Directors or, if appropriate, any committee thereof administering the
ESPP, shall adopt such resolutions or take such actions as are required to (i)
terminate such ESPP prior to the Effective Time, (ii) provide that the offering
period scheduled to end on December 31, 2001 (the "FINAL OFFERING PERIOD") shall
end on the earlier of (a) December 31, 2001, or (b) the termination of the ESPP,
and (iii) provide that no new offering periods shall be commenced following the
termination of the Final Offering Period.
8.13 INDEMNIFICATION.
(a) For a period of six years after the Effective Time, Buyer shall, and
shall cause the Surviving Corporation to, indemnify, defend and hold harmless
the present and former directors, officers, employees and agents of the Target
Entities (each, an "INDEMNIFIED PARTY") against all Liabilities arising out of
actions or omissions arising out of the Indemnified Party's service or services
as directors, officers, employees or agents of Target or, at Target's request,
of another corporation, partnership, joint venture, trust or other enterprise
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement) to the fullest extent permitted under Delaware
Law and by the Target Certificate of Incorporation and Target Bylaws and their
existing Indemnification Agreements as in effect on the date hereof, including
provisions relating to advances of expenses incurred in the defense of any
Litigation and whether or not any Buyer Entity is insured against any such
matter. Without limiting the foregoing, in any case in which approval by the
Surviving Corporation is required to effectuate any indemnification, the
Surviving Corporation shall direct, at the election of the Indemnified Party,
that the determination of any such approval shall be made by independent counsel
mutually agreed upon between Buyer and the Indemnified Party.
(b) Buyer shall, or shall cause the Surviving Corporation to, use its
reasonable efforts (and Target shall cooperate prior to the Effective Time in
these efforts) to maintain in effect for a period of six years after the
Effective Time Target's existing directors' and officers' liability insurance
policy (provided that Buyer or the Surviving Corporation may substitute therefor
(i) policies of at least the same coverage and amounts containing terms and
conditions which are substantially no less advantageous or (ii) with the written
consent of Target given prior to the Effective Time, any other policy) with
respect to claims arising from facts or events which occurred prior to the
Effective Time and covering persons who are currently covered by such insurance;
provided, that neither Buyer nor the Surviving Corporation shall be obligated to
make aggregate annual premium payments for such six-year period in respect of
such policy (or coverage replacing such policy) which exceed, for the portion
related to Target's directors and officers, 150% of the annual premium payments
on Target's current policy in effect as of the date of this Agreement (the
"MAXIMUM AMOUNT"). If the amount of the premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Amount, Buyer or the
Surviving Corporation shall use its reasonable efforts to maintain the most
advantageous policies of directors' and officers' liability insurance obtainable
for a premium equal to the Maximum Amount.
(c) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 8.13, upon learning of any such Liability or Litigation,
shall promptly notify Buyer
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and the Surviving Corporation thereof. In the event of any such Litigation
(whether arising before or after the Effective Time), (i) Buyer or the
Surviving Corporation shall have the right to assume the defense thereof and
neither Buyer nor the Surviving Corporation shall be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if Buyer or the Surviving Corporation elects
not to assume such defense or counsel for the Indemnified Parties advises that
there are substantive issues which raise conflicts of interest between Buyer
or the Surviving Corporation and the Indemnified Parties, the Indemnified
Parties may retain counsel satisfactory to them, and Buyer or the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided,
that Buyer and the Surviving Corporation shall be obligated pursuant to this
paragraph (c) to pay for only one firm of counsel for all Indemnified Parties
in any jurisdiction, (ii) the Indemnified Parties shall cooperate in the
defense of any such Litigation, and (iii) neither Buyer nor the Surviving
Corporation shall be liable for any settlement effected without its prior
written consent; and provided further that neither Buyer nor the Surviving
Corporation shall have any obligation hereunder to any Indemnified Party when
and if a court of competent jurisdiction shall determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable Law.
(d) If Buyer or the Surviving Corporation or any successors or assigns
shall consolidate with or merge into any other Person and shall not be the
continuing or surviving Person of such consolidation or merger or shall transfer
all or substantially all of its assets to any Person, then and in each case,
proper provision shall be made so that the successors and assigns of Buyer or
the Surviving Corporation shall assume the obligations set forth in this Section
8.13
(e) The provisions of this Section 8.13(e) are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and their
respective heirs and representatives.
8.14 BOARD OF DIRECTORS OF BUYER.
The Board of Directors of Buyer shall take all actions necessary such that
effective as of immediately following the Effective Time, two designee(s) of
Target reasonably acceptable to Buyer, one of whom shall be "independent" under
the rules of the NYSE, shall become a member of the Board of Directors of Buyer.
8.15 SECTION 16(b) BOARD APPROVAL.
(a) Prior to Closing, the Board of Directors of Buyer shall, by resolution
duly adopted by such Board of Directors or a duly authorized committee of
"non-employee directors" thereof, approve and adopt, for purposes of exemption
from "short-swing" liability under Section 16(b) of the Exchange Act, the
acquisition of Buyer Common Stock at the Effective Time by officers and
directors of Target (including officers or directors of Target who become, prior
to, at, or following the Effective Time of the Merger, officers or directors of
Buyer) as a result of the conversion of shares of Target Common Stock in the
Merger and the assumption of the Target Options by Buyer at the Effective Time.
Such resolution shall set forth the name of the
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applicable "insiders" for purposes of Section 16 of the Exchange Act, the
number of securities to be acquired by each individual, that the approval is
being granted to exempt the transaction under Rule 16b-3 under the Exchange
Act, and, for the Target Options to be assumed by Buyer at the Effective Time,
the material terms of the options and warrants to purchase Buyer Common Stock
acquired by such insiders as a result of the assumption by Buyer of such
Target Options.
(b) Prior to Closing, the Board of Directors of Target shall, by
resolution duly adopted by such Board of Directors or a duly authorized
committee of "non-employee directors" thereof, approve and adopt, for purposes
of exemption from "short-swing" liability under Section 16(b) of the Exchange
Act, the conversion at the Effective Time of the shares of Target Common Stock
held by officers and directors of Target into shares of Buyer Common Stock and
cash as a result of the conversion of shares in the Merger, and the assumption
and cashout by Buyer at the Effective Time of the Target Options of the officers
and directors of Target. Such resolution shall set forth the name of the
applicable "insiders" for purposes of Section 16 of the Exchange Act and, for
each "insider," the number of shares of Target Common Stock to be converted into
shares of Buyer Common Stock and cash at the Effective Time, the number and
material terms of the Options to be assumed and cashed out by Buyer at the
Effective Time, and that the approval is being granted to exempt the transaction
under Rule 16b-3 under the Exchange Act.
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY.
The respective obligations of each Party to perform this Agreement and
consummate the Merger and the other transactions contemplated hereby are subject
to the satisfaction of the following conditions, unless waived by both Parties
pursuant to Section 11.6:
(a) STOCKHOLDER APPROVAL. The stockholders of Target shall have adopted
and approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by Law,
by the provisions of any governing instruments, or by the rules of the NYSE. The
stockholders of Buyer shall have approved the issuance of shares of Buyer Common
Stock pursuant to the Merger, as and to the extent required by Law, by the
provisions of any governing instruments, or by the rules of the NYSE.
(b) REGULATORY APPROVALS. All Consents of, filings and registrations with,
and notifications to, all Regulatory Authorities required for consummation of
the Merger shall have been obtained or made and shall be in full force and
effect and all waiting periods required by Law shall have expired, except for
Consents, the failure of which to obtain would not, as reasonably determined by
Buyer, be material to Buyer or to the benefits of the transaction for which it
has bargained for hereunder. No Consent obtained from any Regulatory Authority
which is necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (including requirements relating to the
disposition of Assets) which Buyer reasonably determines to be material to Buyer
or to the benefits of the transaction for which it has bargained for hereunder.
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(c) LEGAL PROCEEDINGS. No court or governmental or Regulatory Authority of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Law or Order (whether temporary, preliminary or permanent) or taken
any other action which prohibits, restricts or makes illegal consummation of the
transactions contemplated by this Agreement and no such Law, Order or action
shall be pending or overtly threatened.
(d) REGISTRATION STATEMENT. The Registration Statement shall be effective
under the 1933 Act, no stop orders suspending the effectiveness of the
Registration Statement shall have been issued, no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, and all necessary approvals under state securities
Laws or the 1933 Act or 1934 Act relating to the issuance or trading of the
shares of Buyer Common Stock issuable pursuant to the Merger shall have been
received.
(e) EXCHANGE LISTING. The shares of Buyer Common Stock issuable pursuant
to the Merger and upon the exercise of the Target Options shall have been
approved for listing on the NYSE, subject to official notice of issuance.
(f) TAX MATTERS. Target shall have received a written opinion of ▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, in form and substance reasonably satisfactory to Target, and Buyer
shall have a written opinion of ▇▇▇▇▇▇ & Bird LLP, in form and substance
reasonably satisfactory to Buyer (the "TAX OPINIONS"), to the effect that (i)
the Merger will constitute a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code, (ii) the exchange in the Merger by the
stockholders of Target Common Stock for Buyer Common Stock will not give rise to
gain or loss to the stockholders of Target with respect to such exchange (except
to the extent of any cash received), and (iii) none of Target, Sub or Buyer will
recognize gain or loss solely as a consequence of the Merger. The issuance of
such Tax Opinions shall be conditioned upon (A) receipt by each of ▇▇▇▇▇▇ & Bird
LLP and ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP of representation letters from each of Buyer and
Target substantially in the form of Exhibit 4 hereto and reasonably satisfactory
in form and substance to each of ▇▇▇▇▇▇ & Bird LLP and ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, and
each such letter shall be dated on or before the date of such Tax Opinion and
shall not have been withdrawn or modified in any material respect as of the
Effective Time, and (B) the receipt by Target stockholders in the Merger in the
aggregate, an amount of Buyer Common Stock with a value as of the Effective Time
equal to at least forty percent (40%) of the total value of all shares of Target
Common Stock outstanding immediately prior to the Effective Time taking into
account the amount of Cash Consideration paid or to be paid to Target
stockholders..
9.2 CONDITIONS TO OBLIGATIONS OF BUYER.
The obligations of Buyer to perform this Agreement and consummate the
Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by Buyer pursuant to
Section 11.6(a):
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this Section 9.2(a),
the accuracy of the representations and warranties of Target set forth in this
Agreement shall be assessed as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
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representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties set forth in
Section 5.3 shall be true and correct (except for inaccuracies that are de
minimus in amount). The representations and warranties set forth in Sections
5.17, 5.18, 5.19, 5.20 and 5.21 shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of Target set forth in this Agreement (including the representations
and warranties set forth in Sections 5.3, 5.17, 5.18, 5.19, 5.20 and 5.21) such
that the aggregate effect of such inaccuracies (without regard to any
materiality or Material Adverse Effect qualifier(s) contained in any and each
such representation and warranty) has, or is reasonably likely to have, a Target
Material Adverse Effect.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Target to be performed and complied with pursuant to
this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all material
respects.
(c) CERTIFICATES. Target shall have delivered to Buyer (i) a certificate,
dated as of the Effective Time and signed on its behalf by Target's chief
executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 9.1 as relates to Target and in Sections 9.2(a),
9.2(b) and 9.2(d) have been satisfied, and (ii) certified copies of resolutions
duly adopted by Target's Board of Directors and stockholders evidencing the
taking of all corporate action necessary to authorize the execution, delivery
and performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Buyer and its counsel
shall request.
(d) MATERIAL ADVERSE EFFECT. No Target Material Adverse Effect shall have
occurred since the date hereof and be continuing.
9.3 CONDITIONS TO OBLIGATIONS OF TARGET.
The obligations of Target to perform this Agreement and consummate the
Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by Target pursuant to
Section 11.6(b):
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this Section 9.3(a),
the accuracy of the representations and warranties of Buyer set forth in this
Agreement shall be assessed as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties of Buyer set
forth in Section 6.3 shall be true and correct (except for inaccuracies that are
de minimus in amount). The representations and warranties set forth in Sections
6.14, 6.15 and 6.16 shall be true and correct in all material respects. There
shall not exist inaccuracies in the representations and warranties of Buyer set
forth in this Agreement (including the representations and warranties set forth
in Section 6.3, 6.14, 6.15 and 6.16) such that the aggregate effect of such
inaccuracies (without regard to any materiality or Material Adverse Effect
qualifier(s) contained in any and each such representation and warranty) has, or
is reasonably likely to have, a Buyer Material Adverse Effect.
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(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Buyer to be performed and complied with pursuant to
this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all material
respects.
(c) CERTIFICATES. Buyer shall have delivered to the Target (i) a
certificate, dated as of the Effective Time and signed on its behalf by Buyer's
chief executive officer and its chief financial officer, to the effect that the
conditions set forth in Section 9.1 as relates to Buyer and in Sections 9.3(a),
9.3(b) and 9.3(d) have been satisfied, and (ii) certified copies of resolutions
duly adopted by Buyer's Board of Directors and stockholders and Sub's Board of
Directors and sole stockholder evidencing the taking of all corporate action
necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, all in
such reasonable detail as Target and its counsel shall request.
(d) MATERIAL ADVERSE EFFECT. No Buyer Material Adverse Effect shall have
occurred since the date hereof and be continuing.
ARTICLE 10 TERMINATION
10.1 TERMINATION.
Notwithstanding any other provision of this Agreement, and notwithstanding
the approval of this Agreement by the stockholders of Target and the
stockholders of Buyer or both, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) By mutual written consent duly authorized by the Boards of Directors
of Buyer and Target; or
(b) By either Buyer or Target in the event that the Merger shall not have
been consummated by May 31, 2002 (which date shall be extended to July 31, 2002,
if the Merger shall not have been consummated as a result of the failure to
satisfy the conditions set forth in Section 9.1(b) or (c), as appropriate, the
"END DATE"), if the failure to consummate the transactions contemplated hereby
on or before such date is not caused by any breach of this Agreement by the
Party electing to terminate pursuant to this Section 10.1(b); or
(c) By either Buyer or Target (provided that the terminating Party is not
then in material breach of any covenant or other agreement contained in this
Agreement and has not willfully breached any of such Party's representations and
warranties contained in this Agreement) in the event of a breach by the other
Party of any representation, warranty, covenant or agreement contained in this
Agreement which breach would permit such Party to refuse to consummate the
transactions contemplated by this Agreement pursuant to the standards set forth
in Section 9.2(a) or (b) or 9.3(a) or (b), as applicable; provided that if such
breach in the representations, warranties, covenants or agreements is curable
prior to the End Date through the exercise of reasonable efforts and the
breaching Party exercises reasonable efforts to cure such
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breach, then the non-breaching Party may not terminate this Agreement under
this Section 10.1(c) prior to 30 days following the receipt of written notice
of such breach; or
(d) By either Buyer or Target in the event (i) any Consent of any
Regulatory Authority required for consummation of the Merger and the other
transactions contemplated hereby pursuant to Section 9.1(b) shall have been
denied by final nonappealable action of such authority or if any action taken by
such authority is not appealed within the time limit for appeal, or (ii) any Law
or Order permanently restraining, enjoining or otherwise prohibiting the
consummation of the Merger shall have become final and nonappealable; or
(e) By either Buyer or Target in the event the stockholders of Target fail
to adopt and approve this Agreement and the Merger or stockholders of Buyer fail
to approve the issuance of Buyer Common Stock pursuant to this Agreement at the
Stockholders' Meetings where such matters were presented to such stockholders
for approval and voted upon; provided, however, that the right to terminate this
Agreement under this Section 10.1(e) shall not be available to a Party where the
failure to obtain stockholder approval of such Party shall have been caused by
the action or failure to act by such Party and such action or failure to act
constitutes a material breach by such Party of this Agreement; or
(f) By Buyer in the event that (i) the Board of Directors of Target, shall
have failed to reaffirm publicly its approval, as soon as reasonably
practicable, and in no event later than two business days, after Buyer's request
for such reaffirmation, of the Merger and the transactions contemplated by this
Agreement, or shall have resolved not to reaffirm the Merger, or (ii) the Board
of Directors of Target shall have failed to include in the Joint Proxy
Statement/Prospectus its recommendation, without modification or qualification,
that Target stockholders approve and adopt this Agreement and approve the Merger
or shall have withheld, withdrawn, amended or modified, or proposed publicly to
withdraw, qualify or modify, in a manner adverse to Buyer, the recommendation of
such Board of Directors to Target stockholders that they approve and adopt this
Agreement and approve the Merger, or (iii) the Board of Directors of Target
shall have made a Change of Recommendation or, within ten business days after
commencement of any tender or exchange offer for any shares of Target Common
Stock, the Board of Directors of Target shall have failed to recommend against
acceptance of such tender or exchange offer by its stockholders or takes no
position with respect to the acceptance of such tender or exchange offer by its
stockholders; or
(g) By Target, (provided that Target is not then in material breach of any
covenant or other agreement contained in this Agreement and has not willfully
breached any of its representations and warranties contained in this Agreement),
if the Board of Directors of Target has made a Change of Recommendation in order
to approve and permit Target to accept a Superior Offer; provided, however, that
(i) Buyer does not make, within three business days after receipt of Target's
written notice pursuant to Section 8.3(d), an offer that the Board of Directors
of Target shall have concluded in good faith (following consultation with its
financial advisor and outside legal counsel) is as favorable, from a financial
point of view, to the Target stockholders as such Superior Offer, and (ii)
Target shall have tendered to Buyer payment in full of the amount specified in
Section 10.3(b) concurrently with delivery of notice of termination pursuant to
this Section 10.1(g); or
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(h) By Buyer, if Target shall have had a Target Material Adverse Effect;
or
(i) By Target, if Buyer shall have had a Buyer Material Adverse Effect.
A terminating Party shall provide written notice of termination to the
other Party specifying the reason for such termination.
10.2 EFFECT OF TERMINATION.
In the event of the termination and abandonment of this Agreement pursuant
to Section 10.1, this Agreement shall become void and have no effect, except
that (i) the provisions of Sections 8.8(b), 10.2 and 10.3, and Article 11, shall
survive any such termination and abandonment, and (ii) no such termination shall
relieve the breaching Party from Liability resulting from any willful breach by
that Party of this Agreement. No termination of this Agreement shall affect the
obligations of the parties contained in the Confidentiality Agreement, all of
which obligations shall survive termination of this Agreement in accordance with
their terms.
10.3 EXPENSES.
(a) Except as otherwise provided in this Section 10.3, each of the Parties
shall bear and pay all direct costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including filing,
registration and application fees, printing fees, and fees and expenses of its
own financial or other consultants, investment bankers, accountants, and
counsel; provided, however, that Buyer and Target shall share equally (i) all
fees and expenses, other than attorneys' and accountants' fees and expenses
which fees shall be paid for by the party incurring such expense, incurred in
relation to the printing and filing (with the SEC) of the Joint Proxy
Statement/Prospectus (including any preliminary materials related thereto) and
the Registration Statement (including financial statements and exhibits) and any
amendments or supplements thereto and (ii) the filing fee for the Notification
and Report Forms filed with the FTC and DOJ under the HSR Act.
(b) Notwithstanding the foregoing, if:
(i) (x) Either Target or Buyer terminates this Agreement pursuant to
Section 10.1(e) (as it relates to the approval of Target stockholders) ,
(y) Target terminates this Agreement pursuant to Section 10.1(b), or (z)
Target has failed to perform and comply in all material respects with any
of its obligations, agreements or covenants required by this Agreement and
Buyer terminates this Agreement pursuant to Section 10.1(c); and
as to any of clauses (x), (y) or (z) above, prior to the termination of
this Agreement, there has been publicly announced an Acquisition Proposal
(other than the Merger) and within twelve months of such termination
Target shall either (1) consummate an Acquisition Transaction or (2) enter
into an agreement with respect to an Acquisition Transaction, whether or
not such Acquisition Transaction (but changing, in the case of (1) and
(2), the
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references to the 15% amounts in the definition of Acquisition Proposal to
50%) is subsequently consummated; or
(ii) Buyer shall terminate this Agreement pursuant to
10.1(f); or
(iii) Target shall terminate this Agreement pursuant to
10.1(g);
then Target shall pay to Buyer an amount equal to $45,000,000 (the "BUYER
TERMINATION FEE"). Target hereby waives any right to set-off or counterclaim
against such amounts. If the Termination Fee shall be payable pursuant to
subsection (b)(i) of this Section 10.3, the Termination Fee shall be paid in
same-day funds at or prior to the earlier of the date of consummation of such
Acquisition Transaction or the date of execution of an agreement with respect to
such Acquisition Transaction. If the Termination Fee shall be payable pursuant
to subsection (b)(ii) of this Section 10.3, the Termination Fee shall be paid in
same-day funds no later than two business days from the date of termination of
this Agreement. If the Termination Fee shall be payable pursuant to subsection
(b)(iii) of this Section 10.3, the Termination Fee shall be paid in same-day
funds concurrently with the delivery of the notice of termination of this
Agreement pursuant to Section 10.1(g).
(c) The Parties acknowledge that the agreements contained in paragraph (b)
of this Section 10.3 are an integral part of the transactions contemplated by
this Agreement, and that without these agreements, they would not enter into
this Agreement; accordingly, if Target fails to pay promptly any fee payable by
it pursuant to this Section 10.3, then Target shall pay to Buyer, its costs and
expenses (including attorneys' fees) in connection with collecting such fee,
together with interest on the amount of the fee at the prime rate of Citibank,
N.A. (in effect on the date such payment was required to be made) from the date
such payment was due under this Agreement until the date of payment.
(d) Nothing contained in this Section 10.3 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by Target of the
terms of this Agreement or otherwise limit the rights of Buyer; provided,
however, that in the event that Buyer is entitled to receive a Termination Fee
pursuant to Section 10.3(b)(i)(z) above, Buyer must elect to either (i) receive
such Termination Fee and, upon receipt of such Termination Fee, dismiss with
prejudice any pending litigation against Target, or release Target from any
Liability, relating to a breach by Target of its covenants and agreements under
this Agreement or (ii) waive its right to receive such Termination Fee.
ARTICLE 11 MISCELLANEOUS
11.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
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"ACQUISITION TRANSACTION" means any transaction or series of related
transactions (other than the transactions contemplated by this Agreement)
contemplated by an Acquisition Proposal.
"AFFILIATE" of a Person means: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by
or under common control with such Person; (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner of any 10% or
greater equity or voting interest of such Person; or (iii) any other
Person for which a Person described in clause (ii) acts in any such
capacity.
"ASSETS" of a Person means all of the assets, properties, businesses
and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or
not carried on the books and records of such Person, and whether or not
owned in the name of such Person or any Affiliate of such Person and
wherever located.
"BUYER CAPITAL STOCK" means, collectively, the Buyer Common Stock,
the Buyer Preferred Stock and any other class or series of capital stock
of Buyer.
"BUYER COMMON STOCK" means the $0.01 par value common stock of
Buyer.
"BUYER DISCLOSURE MEMORANDUM" means the written information entitled
"Buyer Inc. Disclosure Memorandum" delivered prior to the date of this
Agreement to Target describing in reasonable detail the matters contained
therein and, with respect to each disclosure made therein, specifically
referencing each Section of this Agreement under which such disclosure is
being made. Each reference to the Buyer Disclosure Memorandum contained in
this Agreement qualifies the referenced representation, warranty or
covenant to the extent specified therein and such other representations,
warranties and covenants contained herein (regardless of whether or not
such representation or warranty contains a reference to such disclosure
memorandum) to the extent a matter in such disclosure memorandum is
disclosed in a way as to make its relevance to the information called for
by such other representation or warranty readily apparent on its face.
"BUYER ENTITIES" means, collectively, Buyer and all Buyer
Subsidiaries.
"BUYER FINANCIAL STATEMENTS" means the consolidated balance sheets
(including related notes and schedules, if any) of Buyer as of most recent
quarter end, and as of December 31, 1999 and December 31, 2000, and the
related statements of operations, changes in stockholders' equity, and
cash flows (including related notes and schedules, if any) for the nine
months ended, and for each of the three fiscal years ended December 31,
2000, 1999 and 1998, as filed by Buyer in SEC Documents.
"BUYER MATERIAL ADVERSE EFFECT" means an event, change or occurrence
which, individually or together with any other event, change or
occurrence, has (i) a material
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long-term adverse impact on the financial position, business, or results
of operations of Buyer and its Subsidiaries, taken as a whole, or (ii) a
material adverse effect on the ability of Buyer to perform its
obligations under this Agreement or to consummate the Merger or the other
transactions contemplated by this Agreement, provided that "Buyer
Material Adverse Effect" shall not be deemed to include the impact of (A)
changes in the market price or trading volume of Buyer Common Stock, (B)
any failure to meet internal projections or forecasts or published
revenue or earnings predictions for any period ending on or after the
date hereof, or (C) any event, change or occurrence relating to or
resulting (y) from out-of-pocket fees and expenses, severance and other
benefit or compensation costs paid or to be paid in connection with the
Merger or (z) the performance of or compliance with any of the terms and
conditions of this Agreement, (D) changes affecting the general economic
condition in the jurisdictions where Buyer operates (which changes do not
disproportionately affect Buyer in any material respect), or (E) changes
affecting any of the industries in which Buyer operates generally (which
changes do not disproportionately affect Buyer in any material respect).
"BUYER PREFERRED STOCK" means the $0.01 par value preferred stock of
Buyer.
"BUYER SUBSIDIARIES" means the Subsidiaries of Buyer, which shall
include any corporation, limited liability company, limited partnership,
limited liability partnership or other organization acquired as a
Subsidiary of Buyer in the future and held as a Subsidiary by Buyer at the
Effective Time.
"CERTIFICATE OF MERGER" means the Certificate of Merger to be
executed by Sub and filed with the Secretary of State of the State of
Delaware relating to the Merger as contemplated by Section 1.1.
"CLOSING DATE" means the date on which the Closing occurs.
"CONFIDENTIALITY AGREEMENT" means that certain Confidentiality
Agreement, dated September 11, 2001, between Target and Buyer.
"CONSENT" means any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"CONTRACT" means any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
license, obligation, plan, practice, restriction, understanding, or
undertaking of any kind or character, or other document to which any
Person is a party or that is binding on any Person or its capital stock,
Assets or business.
"DEFAULT" means (i) any breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order, or Permit,
(ii) any occurrence of any event that with the passage of time or the
giving of notice or both would constitute a breach or violation of,
default under, contravention of, or conflict with, any Contract, Law,
Order,
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or Permit, or (iii) any occurrence of any event that with or without the
passage of time or the giving of notice would give rise to a right of any
Person to exercise any remedy or obtain any relief under, terminate or
revoke, suspend, cancel, or modify or change the current terms of, or
renegotiate, or to accelerate the maturity or performance of, or to
increase or impose any Liability under, any Contract, Law, Order, or
Permit.
"EMPLOYEE BENEFIT PLAN" means each pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock
ownership, share purchase, severance pay, bonus, retention, change in
control or other incentive plan, medical, vision, dental or other health
plan, any life insurance plan, flexible spending account, cafeteria plan,
vacation, holiday, disability or any other employee benefit plan or fringe
benefit plan, including any "employee benefit plan," as that term is
defined in Section 3(3) of ERISA and any other plan, fund, policy,
program, practice, custom understanding or arrangement providing
compensation or other benefits, whether or not such Employee Benefit Plan
is or is intended to be (i) covered or qualified under the Code, ERISA or
any other applicable Law, (ii) written or oral, (iii) funded or unfunded,
(iv) actual or contingent or (v) arrived at through collective bargaining
or otherwise.
"ENVIRONMENTAL LAWS" means all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, groundwater, land surface, or subsurface strata),
including, without limitation (i) the Comprehensive Environmental
Response Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq.
("CERCLA"); (ii) the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. Sections
6901 et seq., ("RCRA"); (iii) the Emergency Planning and Community Right
to Know Act (42 U.S.C. Sections 11001 et seq.); (iv) the Clean Air Act
(42 U.S.C. Sections 7401 et seq.); (v) the Clean Water Act (33 U.S.C.
Sections 1251 et seq.); (vi) the Toxic Substances Control Act (15 U.S.C.
Sections 2601 et seq.); (vii) the Hazardous Materials Transportation Act
(49 U.S.C. Sections 5101 et seq.); (viii) the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. Sections 136 et seq.); (ix) the
Safe Drinking Water Act (41 U.S.C. Sections 300f et seq.); (x) any
state, county, municipal, local or foreign statutes, laws or ordinances
similar or analogous to the federal statutes listed in parts (i) - (ix)
of this subparagraph; (xi) any amendments to the statutes, laws or
ordinances listed in parts (i) - (x) of this subparagraph, regardless of
whether in existence on the date hereof; (xii) any rules, regulations,
guidelines, directives, orders or the like adopted pursuant to or
implementing the statutes, laws, ordinances and amendments listed in
parts (i) - (xi) of this subparagraph; and (xiii) any other law,
statute, ordinance, amendment, rule, regulation, guideline, directive,
order or the like in effect now or in the future relating to
environmental, health or safety matters.
"EQUITY RIGHTS" means all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of a Person or by which a Person is or may be
bound to issue additional shares of its capital stock or other Equity
Rights.
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"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" means any entity which together with a Target
Entity would be treated as a single employer under Code Section 414.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXHIBITS" 1 through 4, inclusive, means the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"GAAP" means generally accepted accounting principles, consistently
applied during the periods involved.
"HAZARDOUS MATERIAL" means any chemical, substance, waste, material,
pollutant, contaminant, equipment or fixture defined as or deemed
hazardous or toxic or otherwise regulated under any Environmental Law,
including, without limitation, RCRA hazardous wastes, CERCLA hazardous
substances, pesticides and other agricultural chemicals, oil and petroleum
products or byproducts and any constituents thereof, asbestos and
asbestos-containing materials, and polychlorinated biphenyls (PCBs).
"HSR ACT" means Section 7A of the ▇▇▇▇▇▇▇ Act, as added by Title II
of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder.
"INTELLECTUAL PROPERTY" means copyrights, patents, trademarks,
service marks, service names, trade names, domain names, together with all
goodwill associated therewith, registrations and applications therefor,
technology rights and licenses, computer software (including any source or
object codes therefor or documentation relating thereto), trade secrets,
franchises, know-how, inventions, and other intellectual property rights.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"JOINT PROXY STATEMENT/PROSPECTUS" means the proxy statement used by
Target and Buyer to solicit the approval of their respective stockholders
of the transactions contemplated by this Agreement, which shall include
the prospectus of Buyer relating to the issuance of the Buyer Common Stock
to holders of Target Common Stock.
"KNOWLEDGE" as used with respect to a Person (including references
to such Person being aware of a particular matter) means those facts that
are known or should reasonably have been known after due inquiry by the
chairman, president, chief financial officer, chief accounting officer,
chief operating officer or general counsel.
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"LAW" means any code, law (including common law), ordinance,
regulation, reporting or licensing requirement, rule, or statute
applicable to a Person or its Assets, Liabilities, or business, including
those promulgated, interpreted or enforced by any Regulatory Authority.
"LIABILITY" means any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including
costs of investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than endorsements of
notes, bills, checks, and drafts presented for collection or deposit in
the ordinary course of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured, or
otherwise.
"LIEN" means any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, (ii) Liens which do not materially impair
the use of or title to the Assets subject to such Lien, (iii) the filing
of any financing statement under the Uniform Commercial Code or its
equivalent in any jurisdiction; and (iv) any agreement by such Person to
grant, give or otherwise convey any of the foregoing.
"LITIGATION" means any action, arbitration, cause of action,
lawsuit, claim, complaint, criminal prosecution, governmental or other
examination or investigation, audit (other than regular audits of
financial statements by outside auditors), compliance review, inspection,
hearing, administrative or other proceeding relating to or affecting a
Party, its business, its records, its policies, its practices, its
compliance with Law, its actions, its Assets (including Contracts related
to it), or the transactions contemplated by this Agreement.
"MATERIAL" or "MATERIAL" for purposes of this Agreement shall be
determined in light of the facts and circumstances of the matter in
question; provided that any specific monetary amount stated in this
Agreement shall determine materiality in that instance.
"NYSE" means the New York Stock Exchange, Inc.
"OPERATING PROPERTY" means any property owned, leased, or operated
by the Party in question or by any of its Subsidiaries or in which such
Party or Subsidiary holds a security interest or other interest (including
an interest in a fiduciary capacity), and, where required by the context,
includes the owner or operator of such property, but only with respect to
such property.
"ORDER" means any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local, foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
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"PARTICIPATION FACILITY" means any facility or property in which the
Party in question or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner
or operator of such facility or property, but only with respect to such
facility or property.
"PARTY" means any of Target, Sub or Buyer, and "PARTIES" means
Target, Sub and Buyer.
"PERMIT" means any federal, state, local, or foreign governmental
approval, authorization, certificate, easement, filing, franchise,
license, notice, permit, or right to which any Person is a party or that
is or may be binding upon or inure to the benefit of any Person or its
securities, Assets, or business, excluding any Environmental Permits.
"PERSON" means a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability
company, limited liability partnership, trust, business association, group
acting in concert, or any person acting in a representative capacity.
"REGISTRATION STATEMENT" means the Registration Statement on Form
S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
Buyer under the 1933 Act with respect to the shares of Buyer Common Stock
to be issued to the stockholders of Target in connection with the
transactions contemplated by this Agreement.
"REGULATORY AUTHORITIES" means, collectively, the SEC, the NYSE, the
FTC, the DOJ, and all other federal, state, county, local, foreign or
other governments or governmental or regulatory agencies, authorities
(including taxing and self-regulatory authorities), instrumentalities,
commissions, boards or bodies, having jurisdiction over the Parties and
their respective Subsidiaries.
"REPRESENTATIVE" means any investment banker, financial advisor,
attorney, accountant, consultant, or other representative or agent engaged
by a Person.
"SEC" means the United States Securities and Exchange Commission.
"SEC DOCUMENTS" means all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to
be filed, by a Party or any of its Subsidiaries with any Regulatory
Authority pursuant to the Securities Laws.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES LAWS" means the Securities Act, the Exchange Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"SUB COMMON STOCK" means the $0.01 par value common stock of Sub.
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"SUBSIDIARIES" means all those corporations, associations, or other
business entities of which the entity in question either (i) owns or
controls 50% or more of the outstanding equity securities either directly
or through an unbroken chain of entities as to each of which 50% or more
of the outstanding equity securities is owned directly or indirectly by
its parent (provided, there shall not be included any such entity the
equity securities of which are owned or controlled in a fiduciary
capacity), (ii) in the case of partnerships, serves as a general partner,
(iii) in the case of a limited liability company, serves as a managing
member, or (iv) otherwise has the ability to elect a majority of the
directors, trustees or managing members thereof.
"SURVIVING CORPORATION" means Sub as the surviving corporation
resulting from the Merger.
"TARGET COMMON STOCK" means the $0.01 par value common stock of
Target.
"TARGET DISCLOSURE MEMORANDUM" means the written information
entitled "Target Inc. Disclosure Memorandum" delivered prior to the date
of this Agreement to Buyer describing in reasonable detail the matters
contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made. Each reference to the Target Disclosure
Memorandum contained in this Agreement qualifies the referenced
representation, warranty or covenant to the extent specified therein and
such other representations, warranties and covenants contained herein
(regardless of whether or not such representation or warranty contains a
reference to such disclosure memorandum) to the extent a matter in such
disclosure memorandum is disclosed in a way as to make its relevance to
the information called for by such other representation or warranty
readily apparent on its face.
"TARGET ENTITIES" means, collectively, Target and all Target
Subsidiaries.
"TARGET FINANCIAL STATEMENTS" means (i) the consolidated balance
sheets (including related notes and schedules, if any) of Target as of
September 28, 2001, and as of December 29, 2000 and December 31, 1999, and
the related statements of income, changes in stockholders' equity, and
cash flows (including related notes and schedules, if any) for the nine
months ended September 28, 2001, and for each of the three fiscal years
ended 2000, 1999 and 1998, as filed by Target in SEC Documents.
"TARGET MATERIAL ADVERSE EFFECT" means an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has (i) a material long term adverse impact on the financial
position, business, or results of operations of Target and its
Subsidiaries, taken as a whole, or (ii) a material adverse impact on the
ability of Target to perform its obligations under this Agreement or to
consummate the Merger or the other transactions contemplated by this
Agreement, provided that "Target Material Adverse Effect" shall not be
deemed to include the impact of (A) changes in the market price or trading
volume of Target Common Stock, (B) any failure to meet internal
projections or forecasts or published revenue or earnings predictions for
any period ending on or after the date hereof, or (C) any event, change or
occurrence relating to or
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resulting from (y) out-of-pocket fees and expenses, severance and other
benefit or compensation costs paid or to be paid in connection with the
Merger or (z) the performance of or compliance with any of the terms and
conditions of this Agreement, (D) changes affecting the general economic
condition in the jurisdictions where Target operates (which changes do
not disproportionately affect Target in any material respect), or (E)
changes affecting any of the industries in which Buyer operates generally
(which changes do not disproportionately affect Target in any material
respect).
"TARGET OPTIONS" means all issued and outstanding stock options
pursuant to the Target Stock Plans.
"TARGET STOCK PLANS" means the existing stock option and other
stock-based compensation plans of Target designated as follows: the Target
2000 Amended and Restated Stock Option Plan, the Target 1998 Amended and
Restated Stock Option Plan, the Target 1997 Amended and Restated Stock
Option Plan, the Target 1996 Amended and Restated Stock Option Plan, the
Target 1990 Stock Option Plan and the ESPP.
"TARGET SUBSIDIARIES" means the Subsidiaries of Target, which shall
include the Target Subsidiaries described in Section 5.4 and any
corporation, limited liability company, limited partnership, limited
liability partnership or other organization acquired as a Subsidiary of
Target in the future and held as a Subsidiary by Target at the Effective
Time.
"TAX" or "TAXES" means any federal, state, county, local, or foreign
taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use,
transfer, recording license, payroll, franchise, severance, documentary,
stamp, occupation, windfall profits, environmental, federal highway use,
commercial rent, customs duties, capital stock, paid-up capital, profits,
withholding, Social Security, single business and unemployment,
disability, real property, personal property, registration, ad valorem,
value added, alternative or add-on minimum, estimated, or other tax or
governmental fee of any kind whatsoever, imposed or required to be
withheld by the United States or any state, county, local or foreign
government or subdivision or agency thereof, including any interest,
penalties, and additions imposed thereon or with respect thereto.
"TAX RETURN" means any report, return, information return, or other
information required to be supplied to a Regulatory Authority in
connection with Taxes, including any return of an affiliated or combined
or unitary group that includes a Party or its Subsidiaries.
(b) The terms set forth below shall have the meanings ascribed thereto on
the referenced pages of this Agreement:
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TERM PAGE
Acquisition Proposal......................38
Agreement..................................1
Antitrust Laws............................39
Average Closing Price......................4
Buyer......................................1
Buyer Bylaws..............................25
Buyer Certificate of Incorporation........25
Buyer Group...............................29
Buyer SEC Reports.........................27
Buyer Termination Fee.....................52
Buyer Voting Agreement.....................1
Cash Consideration.........................3
Cash Payment...............................4
Certificates...............................8
Change of Recommendation..................38
Closing....................................2
Continuing Employees......................43
DGCL.......................................2
DOJ.......................................39
DOL.......................................19
Effective Time.............................2
End Date..................................50
Environmental Permits.....................16
ESPP......................................32
Exchange Agent.............................7
Exchange Ratio.............................4
Final Offering Period.....................44
FTC.......................................39
Group.....................................38
Indemnified Party.........................44
IRS.......................................10
Material Contract.........................23
Maximum Amount............................45
Merger.....................................2
Merger Consideration.......................4
Reverse Merger.............................3
Stockholders' Meeting.....................36
Sub........................................1
Superior Offer............................39
Takeover Laws.............................24
Target.....................................1
Target Benefit Plans......................19
Target Bylaws..............................9
Target Certificate of Incorporation........9
Target Contracts..........................23
Target ERISA Plan.........................19
Target Foreign Benefit Plans..............22
Target Pension Plan.......................19
Target SEC Reports........................12
Target Voting Agreements...................1
Tax Opinions..............................47
WARN Act..................................17
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS.
The respective representations, warranties, obligations, covenants, and
agreements of the Parties shall not survive the Effective Time except this
Section 11.2, Sections 8.11, 8.12, 8.13 and 8.14, and Article 1, Article 2,
Article 3, Article 4 and Article 11 shall survive the Effective Time.
11.3 BROKERS AND FINDERS.
Except for Credit Suisse First Boston Corporation as to Target and except
for Wachovia Securities as to Buyer, each of the Parties represents and warrants
that neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions contemplated
hereby. In
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the event of a claim by any broker or finder based upon such broker's
representing or being retained by or allegedly representing or being retained by
Target or by Buyer, each of Target and Buyer, as the case may be, agrees to
indemnify and hold the other Party harmless of and from any Liability in respect
of any such claim.
11.4 ENTIRE AGREEMENT.
Except as otherwise expressly provided herein, this Agreement (including
the documents and instruments referred to herein) constitutes the entire
agreement between the Parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with respect
thereto, written or oral (except, as to Section 8.8(b), for the Confidentiality
Agreement). Nothing in this Agreement expressed or implied, is intended to
confer upon any Person, other than the Parties or their respective successors,
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, other than as provided in Section 8.12 and 8.13.
11.5 AMENDMENTS.
To the extent permitted by Law, this Agreement may be amended by a
subsequent writing signed by each of the Parties upon the approval of the Board
of Directors of each of the Parties, whether before or after stockholder
approval of this Agreement has been obtained; provided, that after any such
stockholder approval, there shall be made no amendment that pursuant to
applicable law requires further approval by such stockholders without the
further approval of such stockholders. This Agreement may not be amended except
in writing signed by each of Buyer, Target and Sub.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, Buyer, acting through its Board of
Directors, chief executive officer or other authorized officer, shall have the
right to waive any Default in the performance of any term of this Agreement by
Target, to waive or extend the time for the compliance or fulfillment by Target
of any and all of its obligations under this Agreement, and to waive any or all
of the conditions precedent to the obligations of Buyer under this Agreement,
except any condition which, if not satisfied, would result in the violation of
any Law. No such waiver shall be effective unless in writing signed by a duly
authorized officer of Buyer.
(b) Prior to or at the Effective Time, Target, acting through its Board of
Directors, chief executive officer or other authorized officer, shall have the
right to waive any Default in the performance of any term of this Agreement by
Buyer or Sub, to waive or extend the time for the compliance or fulfillment by
Buyer or Sub of any and all of its obligations under this Agreement, and to
waive any or all of the conditions precedent to the obligations of Target under
this Agreement, except any condition which, if not satisfied, would result in
the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of Target.
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(c) The failure of any Party at any time or times to require performance
of any provision hereof shall in no manner affect the right of such Party at a
later time to enforce the same or any other provision of this Agreement. No
waiver of any condition or of the breach of any term contained in this Agreement
in one or more instances shall be deemed to be or construed as a further or
continuing waiver of such condition or breach or a waiver of any other condition
or of the breach of any other term of this Agreement.
11.7 ASSIGNMENT.
Except as expressly contemplated hereby, neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any Party
hereto (whether by operation of Law or otherwise) without the prior written
consent of the other Party. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the Parties
and their respective successors and assigns.
11.8 NOTICES.
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, or by courier
or overnight carrier, to the persons at the addresses set forth below (or at
such other address as may be provided hereunder), and shall be deemed to have
been delivered as of the date so delivered:
Target: Dal-Tile International Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
Copy to Counsel: ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
3700 ▇▇▇▇▇▇▇▇ ▇▇▇▇ Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ Early
Buyer or Merger Sub: Mohawk Industries, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
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Copy to Counsel: ▇▇▇▇▇▇ & Bird LLP
One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
11.9 GOVERNING LAW.
Regardless of any conflict of law or choice of law principles that might
otherwise apply, the parties agree that this Agreement shall be governed by and
construed in all respects in accordance with the laws of the State of Delaware.
11.10 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument.
11.11 CAPTIONS, ARTICLES AND SECTIONS.
The captions contained in this Agreement are for reference purposes only
and are not part of this Agreement. Unless otherwise indicated, all references
to particular Articles or Sections shall mean and refer to the referenced
Articles and Sections of this Agreement.
11.12 INTERPRETATIONS.
Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against any party, whether under any rule of construction
or otherwise. No party to this Agreement shall be considered the draftsman. The
parties acknowledge and agree that this Agreement has been reviewed, negotiated,
and accepted by all parties and their attorneys and shall be construed and
interpreted according to the ordinary meaning of the words used so as fairly to
accomplish the purposes and intentions of all parties hereto.
11.13 ENFORCEMENT OF AGREEMENT.
The Parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement was not performed in accordance
with its specific terms or was otherwise breached. It is accordingly agreed that
the Parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States located in the State of Delaware or in
Delaware state court, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (c) agrees that it will not bring any
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action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a federal or state court sitting in the
State of Delaware.
11.14 SEVERABILITY.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
11.15 NO AFFILIATE LIABILITY.
Each of the following is herein referred to as a "Party Affiliate": (a)
any Affiliate of a Party or (b) any director, officer, trustee, employee,
representative or agent of (i) any Party or (ii) any Affiliate of a Party.
Unless otherwise expressly liable pursuant to a written agreement, no Party
Affiliate, acting in his or its capacity as an agent of a Party, shall have any
liability or obligation for breaches of this Agreement or the transactions
contemplated hereby, and each Party hereby waives and releases all claims of any
such liability and obligation, except as set forth below. Notwithstanding the
provisions of the preceding sentence, Buyer and Merger Sub neither waive nor
release, any claims that they may otherwise have against any Party Affiliate of
Target (i) for such Person's actual, intentional misrepresentation (a) of any
fact to Target's independent auditors, or any item reflected in Target's SEC
Reports (including any reports filed after the date of this Agreement), and (b)
to the extent that such misrepresentation has caused the Target SEC Reports
(including any reports filed after the date of this Agreement) to materially
misstate the financial position of Target and its consolidated Subsidiaries, at
such date, or the consolidated results of their operations and their
consolidated cash flow for the period then ended and (ii) for actions taken by a
Party Affiliate of Target in violation of the provisions of Section 8.3 of this
Agreement (but only to the extent that Buyer or Merger Sub seeks to enforce such
provisions against a Party Affiliate by specific performance, injunctive relief
or by any other equitable means available to Buyer).
11.16 SCHEDULE DEFINITIONS.
All capitalized terms in the Target Disclosure Memorandum or Buyer
Disclosure Memorandum shall have the meanings ascribed to them herein, unless
the context otherwise requires or as otherwise defined.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day and year
first above written.
MOHAWK INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
President
MAVERICK MERGER SUB, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
President
DAL-TILE INTERNATIONAL INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
President
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