EXHIBIT 2.03
MERGER AGREEMENT
EFFECTIVE DATE: February 19, 1998
PARTIES: ATMI, Inc.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
("Parent")
Glide Acquisition, Inc.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
("Subsidiary")
NOW Technologies, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
("NOW")
RECITALS:
A. NOW is engaged in the business of manufacturing container and
dispensing systems for advanced purity chemicals used in the manufacture of
microelectronics.
B. Parent with its subsidiaries is engaged in the business of developing,
manufacturing and selling specialty thin film materials and delivery
systems, point-of-use environmental equipment and epitaxial processing
services for the semiconductor industry.
C. All of the issued and outstanding capital stock of Subsidiary is owned
by Parent.
D. The respective Boards of Directors of NOW, Parent and Subsidiary have
determined that it is in the respective best interests of NOW, Parent and
Subsidiary and their respective shareholders to combine their businesses
under common management and control. As a result, the parties mutually
desire that NOW be merged with Subsidiary with NOW being the surviving
corporation upon the terms and subject to the conditions set forth in this
Agreement.
E. The parties desire the merger of NOW with Subsidiary to be a tax-free
reorganization under the Internal Revenue Code of 1986, as amended, and for
such transaction to be accounted for as a pooling of interests.
AGREEMENT:
The parties hereto, each intending to be legally bound, agree as follows:
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ARTICLE 1.
DEFINITIONS
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As used herein, the following words and terms shall have the meanings set forth
below:
"Agreement" shall mean this Merger Agreement (together with all Exhibits and
Schedules hereto) as from time to time assigned, supplemented, modified,
amended, or restated or as the terms hereby may be waived.
"Ceiling Lower Limit" shall mean the Initial Price plus 15%.
"Ceiling Upper Limit" shall mean the Ceiling Lower Limit plus $2.50.
"Closing" has the meaning set forth in Section 2.4 below.
"Closing Date" shall mean the date on which the Closing occurs.
"Closing Price" shall mean the average of the closing prices of Parent Common
Stock for the 20 trading day period ending the third trading day prior to the
Closing Date; provided, however, that if the Closing Price exceeds the Ceiling
Upper Limit, the Closing Price shall be deemed to be the Ceiling Upper Limit,
and if the Closing Price is less than the Floor Lower Limit, the Closing Price
shall be deemed to be the Floor Lower Limit.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Competing Transaction" shall mean any of the following (other than the Merger):
(i) any merger, consolidation, share exchange, business combination, or other
similar transaction involving NOW, (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of the assets of NOW in a single
transaction or series of transactions not in the ordinary course of business,
(iii) any tender offer or exchange offer for shares of NOW Common Stock, or (iv)
any agreement to engage in any of the foregoing.
"DGCL" shall mean the Delaware General Corporation Law.
"Effective Time" shall mean the time that the Merger becomes effective pursuant
to Section 2.2 below.
"Environmental Laws" means the Comprehensive Environmental Response Compensation
and Liability Act ("CERCLA") as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("▇▇▇▇"), 42 U.S.C. (S)(S) 9601 et seq.; the Federal
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Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. (S)(S) 6901
et seq.; the Clean Water Act, 33 U.S.C. (S)(S) 1321 et seq.; the Clean Air Act,
-- --- -- ---
42 U.S.C. (S)(S) 7401 et seq., and any other federal, state, county, local,
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foreign or other governmental statute, regulation, or ordinance, as now in
existence, that relates to or deals with employee safety and human health,
pollution, health or the environment including, but not limited to, the use,
generation, discharge, transportation, disposal, recordkeeping, notification
and reporting of Hazardous Materials (defined in Section 4.16 below).
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" shall mean State Street Bank and Trust Company or its authorized
successors and assigns pursuant to the Escrow Agreement.
"Escrow Agreement" shall mean the escrow agreement attached hereto as Exhibit
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9.5 which shall be executed and delivered by the parties thereto at the Closing.
---
"Escrow Fund" shall mean the funds being held in escrow from time to time
pursuant to the Escrow Agreement.
"Floor Lower Limit" shall mean the Floor Upper Limit less $2.50.
"Floor Upper Limit" shall mean the Initial Price less 15%.
"Governmental Entity" shall mean any federal, state, local or foreign
governmental body, agency, official or authority (including courts,
administrative agencies, commissions, self-regulatory agencies or authorities or
other governmental authority or instrumentality).
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976.
"Initial Price" shall mean the average of the closing prices of Parent Common
Stock for the 20 trading day period ending 10 trading days after the filing of
the Form S-1 with the Securities and Exchange Commission filed or to be filed by
Parent on or about the date hereof; provided, however, that notwithstanding the
foregoing, the Initial Price shall not be greater than $31.50 nor less than
$27.50.
"Knowledge" shall mean knowledge of the executive management of NOW, Parent or
Subsidiary, as the case may be, after making reasonable inquiry of the knowledge
of officers or senior management employees having responsibility for those
operations or transactions to which such representation and warranty relates.
An individual will be deemed to have "knowledge" of a particular fact or other
matter if:
(i) such individual is actually aware of such fact or other matter; or
(ii) a reasonably prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of making
reasonable inquiry of the knowledge of other officers or employees having
general responsibility for those operations or transactions to which such
representation and warranty relates.
"Material Adverse Effect" when used with respect to any entity shall mean a
material adverse effect on the business, assets, liabilities, financial
condition or results of operations of such entity and its subsidiaries,
individually or in the aggregate.
"MBCA" shall mean the Minnesota Business Corporation Act.
"Merger" shall mean the merger of NOW and Subsidiary more fully described
herein.
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"NOW" shall mean NOW Technologies, Inc., a Minnesota corporation.
"NOW Common Stock" shall mean NOW's Common Stock, par value $.01 per share.
"NOW Options" has the meaning set forth in Section 3.6 below.
"NOW Share Price" shall mean $21.9372.
"NOW Shares" shall mean the shares of NOW Common Stock outstanding as of the
effective time.
"Parent" shall mean ATMI, Inc., a Delaware corporation.
"Parent Common Stock" shall mean Parent's Common Stock, par value $.01 per
share.
"Product Liability Claims" has the meaning set forth in Section 4.12 below.
"SEC" shall mean the Securities and Exchange Commission.
"Shareholders" shall mean all of the shareholders of NOW.
"Shareholders' Meeting" shall mean the meeting of the shareholders of NOW to be
called to approve the Merger and this Agreement.
"Subsidiary" shall mean Glide Acquisition, Inc., a Delaware corporation.
"Surviving Corporation" shall mean the corporation that is the surviving
corporation in the Merger.
ARTICLE 2.
THE MERGER
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2.1) The Merger. Upon the terms and subject to the conditions set forth in
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this Agreement, at the Effective Time, Subsidiary shall be merged with and into
NOW in accordance with the MBCA and the DGCL, whereupon the separate existence
of Subsidiary shall cease, and NOW shall continue as the Surviving Corporation.
2.2) Articles of Merger; Effective Time. As soon as practicable after
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satisfaction or, to the extent permitted hereunder, waiver of all conditions to
the Merger set forth in Article 7 below, the parties hereto shall cause the
Merger to be consummated by filing Articles of Merger with the Secretary of
State of the State of Minnesota, and a Certificate of Merger with the Secretary
of State of the State of Delaware and making all other filings or recordings
required by the MBCA and the DGCL in connection with the Merger and the
transactions contemplated by this Agreement. The Merger shall become effective
(a) at the later of such time as the Articles of Merger are duly filed with
the Secretary of State of the State of Minnesota or the Certificate of Merger
is duly filed with the Secretary of State of the State of Delaware or (b) at
such later time
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as may be agreed by the parties in writing and specified in the Articles of
Merger or the Certificate of Merger.
2.3) Effect of Merger. From and after the Effective Time, the Surviving
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Corporation shall possess all the rights, privileges, powers and franchises and
be subject to all of the restrictions, disabilities and duties of NOW and
Subsidiary, all as provided under the MBCA and the DGCL.
2.4) Closing. The closing of the Merger will take place at 10:00 a.m. on a
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date to be specified by the parties, which shall be no later than the second
business day after satisfaction or waiver of the conditions set forth in Article
7 at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP in Hartford, Connecticut, unless
another date, time or place is agreed to in writing by the parties (the
"Closing").
2.5) Articles of Incorporation; By-laws.
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(a) The articles of incorporation of the Surviving Corporation shall
be the articles of incorporation of NOW, as amended in connection with
the Merger to read in their entirety (other than with respect to the name
of the corporation) as the certificate of incorporation of Subsidiary in
effect immediately prior to the Effective Time, with such changes as
Parent may determine are necessary or proper to comply with Minnesota
law, until thereafter amended as provided by law.
(b) The by-laws of the Surviving Corporation shall be the by-laws of
NOW, as amended in connection with the Merger to read in their entirety
(other than with respect to the name of the corporation) as the by-laws
of Subsidiary in effect immediately prior to the Effective Time, with
such changes as Parent may determine are necessary or proper to comply
with Minnesota law, until thereafter amended as provided by law.
2.6) Directors and Officers. The directors of Subsidiary immediately prior to
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the Effective Time and ▇▇▇▇▇ ▇▇▇▇▇ shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the articles of
incorporation and by-laws of the Surviving Corporation, and the officers of NOW
immediately prior to the Effective Time and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
ARTICLE 3.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
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3.1) Conversion of Shares. At the Effective Time, by virtue of the Merger and
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without any action on the part of the holder thereof:
(a) The shares of Subsidiary common stock which shall be outstanding
immediately prior to the Effective Time shall be converted into a number
of shares of common stock of the Surviving Corporation equal to the
number of shares of common stock of Subsidiary then outstanding.
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(b) Each NOW Share outstanding immediately prior to the Effective Time
shall, at the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive that fractional share of Parent Common Stock determined by
multiplying one share of Parent Common Stock times the Exchange Ratio.
(c) All per share prices or amounts referred to in this Agreement
shall be appropriately adjusted to reflect the effect of any stock
splits, stock dividends, stock combinations or similar transactions.
3.2) Exchange Ratio. The Exchange Ratio shall be determined as follows:
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(a) If the Closing Price is less than or equal to the Ceiling Lower
Limit and greater than or equal to the Floor Upper Limit, the Exchange
Ratio shall be equal to the NOW Share Price divided by the Initial Price.
(b) If the Closing Price is less than or equal to the Ceiling Upper
Limit and greater than the Ceiling Lower Limit, the Exchange Ratio shall
be equal to the NOW Share Price plus 15% divided by the Closing Price.
(c) If the Closing Price is less than the Floor Upper Limit and
greater than or equal to the Floor Lower Limit, the Exchange Ratio shall
be equal to the NOW Share Price less 15% divided by the Closing Price.
(d) If the Closing Price is greater than the Ceiling Upper Limit,
the Exchange Ratio shall be equal to the NOW Share Price plus 15% divided
by the Ceiling Upper Limit.
(e) If the Closing Price is less than the Floor Lower Limit, the
Exchange Ratio shall be equal to the NOW Share Price less 15% divided by
the Floor Lower Limit.
(f) Notwithstanding any other provision of this Section 3.2, in the
event that before the Effective Time an announcement is made with respect
to a business combination involving the acquisition of Parent or a
substantial portion of Parent's assets, the Closing Price shall mean the
average of the closing prices of Parent Common Stock for the 20 trading
day period ending 10 days prior to the public announcement of the
business combination.
3.3) Stock Options. At Closing, Parent shall assume all of the options to
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purchase NOW Common Stock outstanding as of the Effective Time (the "NOW
Options"). Each of the NOW Options shall be converted without any action on the
part of the holder thereof into an option to purchase shares of Parent Common
Stock as of the Effective Time under Parent's 1997 Stock Plan. The holder of a
NOW Option shall be entitled to purchase from Parent up to a number of whole
shares of Parent Common Stock equal to the product of (i) the number of shares
of NOW Common Stock subject to such NOW Option multiplied by (ii) the Exchange
Ratio, at a price per share of Parent Common Stock determined by dividing the
exercise price per share of NOW Common Stock provided for in such NOW Option
by the Exchange Ratio. The assumption and conversion of the NOW Options as
provided herein shall not give the holders of such NOW
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Options additional benefits which they did not have immediately prior to the
Effective Time or relieve the holders of any obligations or restrictions
applicable to their NOW Options or the shares obtainable upon exercise of the
NOW Options. Parent shall reserve out of its authorized but unissued shares of
Parent Common Stock sufficient shares to provide for the exercise of the NOW
Options.
3.4) Exchange of NOW Shares.
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(a) Immediately following the Effective Time, each record holder (a
"Shareholder") of any certificate or certificates which, immediately prior
to the Effective Time, represented outstanding NOW Shares (the
"Certificates") whose NOW Shares were converted into the right to receive
shares of Parent Common Stock shall be entitled to surrender his, her or
its Certificates to Parent for cancellation in exchange for the shares of
Parent Common Stock into which such NOW Shares have been converted, ninety-
five percent (95%) of which amount shall be issued to the Shareholder
thereof upon the surrender of the Certificates in accordance with this
Section 3.4, and five percent (5%) of which amount (the "Indemnification
Escrow Shares") shall be held by the Escrow Agent pursuant to the Escrow
Agreement. If any Shareholder shall fail to surrender his, her or its
Certificates promptly following the Effective Time, the Parent shall send
to such Shareholder notice of the Merger and instructions for use in
effecting the surrender of the Certificates in exchange for the shares of
Parent Common Stock into which such NOW Shares have been converted, and the
holder of such Certificates shall be entitled to receive in exchange
therefor solely the shares of Parent Common Stock into which such NOW
Shares have been converted less any applicable stock transfer taxes. No
interest shall be paid or accrued for the benefit of holders of the
Certificates on the consideration payable upon the surrender of the
Certificates. It shall be a condition of exchange that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for
transfer.
(b) From and after the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of the NOW Shares
which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving
Corporation for exchange, they shall be canceled and exchanged for the
shares of Parent Common Stock into which such NOW Shares have been
converted in accordance with the procedures set forth in this Section.
(c) At or prior to the Effective Time, Parent shall deliver to the
Escrow Agent certificates evidencing the Indemnification Escrow Shares to
be held in escrow in accordance with the terms of the Escrow Agreement,
together with appropriate stock powers executed by each Shareholder, to
be held in escrow in accordance with the terms of the Escrow Agreement.
(d) Notwithstanding the foregoing, any NOW Shares issued and
outstanding immediately prior to the Effective Time which are held by
Shareholders who have dissented from the Merger and have demanded
appraisal rights as provided by the MBCA (the "Dissenting Shareholders")
shall not be converted into shares of Parent Common
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Stock in the manner contemplated by Section 3.1(b) above, and the rights
of holders of the Dissenting Shareholders shall be governed by the
applicable provisions of the MBCA.
3.5) No Further Rights in NOW Shares. All shares of Parent Common Stock
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received by any Shareholder pursuant to this Agreement shall be deemed to have
been delivered and received in full satisfaction of all rights pertaining to
such Shareholder's NOW Shares. At the Effective Time, the holders of
Certificates representing outstanding NOW Shares shall cease to have any rights
with respect to such shares (other than such rights as they may have as
dissenting shareholders under the MBCA), and their sole right shall be to
receive the shares of Parent Common Stock into which such NOW Shares have been
converted. Dissenting Shareholders shall have the rights accorded to them by
the MBCA.
3.6) No Fractional Securities. No fractional shares of Parent Common Stock
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shall be issuable by Parent to any Shareholder in connection with the Merger.
In lieu of any such fractional shares, each Shareholder who would otherwise have
been entitled to receive a fraction of a share of Parent Common Stock shall be
entitled to receive instead an amount in cash equal to such fractional share
multiplied by the Closing Price.
3.7) Tax and Accounting Treatment. The parties intend that the Merger will be
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treated as a reorganization within the meaning of Section 368 of the Code and a
pooling of interests for accounting purposes.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF GLIDE
---------------------------------------
NOW makes the following representations and warranties to Parent and Subsidiary
with the intention that Parent and Subsidiary may rely upon the same,
notwithstanding any investigation by Parent or Subsidiary or on their behalf:
4.1) Organization; Permits. NOW is a corporation duly organized, validly
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existing and in good standing under the laws of the state of Minnesota and has
all requisite power and authority, corporate and otherwise, to own its
properties and assets and conduct its business as it is now being conducted.
NOW has all business licenses, permits and approvals necessary to conduct its
business as presently conducted, except where the failure to have such permit or
approval does not have a Material Adverse Effect. NOW conducts its business
under the trade names and other assumed names set forth on Exhibit 4.1. The
current officers and directors of NOW and each of its subsidiaries are set forth
on Exhibit 4.1.
4.2) Qualification. NOW is qualified to do business and in good standing as a
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foreign corporation in all states in which qualification is required by the
nature of its business and in which the failure to so qualify would have a
Material Adverse Effect on NOW.
4.3) Corporate Authority. NOW has all requisite power and authority to
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execute, perform and carry out the provisions of this Agreement. NOW has taken
all requisite corporate action authorizing and empowering NOW to enter into this
Agreement and to consummate the Merger.
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This Agreement constitutes the legal, valid and binding obligation of NOW
enforceable against it in accordance with the terms hereof. NOW is not subject
to any charter, mortgage, lien, lease, agreement, contract, instrument, law,
rule, regulation, order, judgment or decree, or any other restriction of any
kind or character, which would prevent or inhibit the consummation of the
Merger.
4.4) Capitalization. The authorized capital stock of NOW consists of 4,000,000
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shares of NOW Common Stock, $.01 par value, and 1,000,000 undesignated shares.
As of the date of this Agreement, there are outstanding 1,833,000 shares of NOW
Common Stock and no other shares of capital stock of NOW. As of the date
hereof, all persons having record ownership of shares of the capital stock of
NOW or having any right to purchase, acquire or obtain any of the capital stock
of NOW are as set forth on Exhibit 4.4. All outstanding shares of NOW Common
Stock have been duly authorized and validly issued and are fully paid and
nonassessable and were issued in compliance with all applicable federal and
state securities laws. As of the date of this Agreement, there are options to
acquire 264,000 shares of NOW Common Stock outstanding. Except as set forth in
this Section 4.4, there are outstanding (a) no shares of NOW Common Stock or
other voting securities of NOW, (b) no securities of NOW convertible into or
exchangeable for shares of NOW Common Stock or voting securities of NOW and (c)
no options, warrants or other rights to acquire from NOW, and no obligation of
NOW to issue, any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of NOW. There are
no outstanding obligations of NOW to repurchase, redeem or otherwise acquire any
NOW Common Stock. To NOW's Knowledge, no officer, director, or Shareholder of
NOW would be unable to give the representation that none of the events or
circumstances described in Rule 262 of Regulation A under the Securities Act of
1933, as amended (the "Securities Act") have occurred.
4.5) Subsidiaries, Joint Ventures or Partnerships. Except as set forth on
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Exhibit 4.5 hereto, NOW does not have any subsidiaries, and NOW is not a
shareholder, partner or joint venturer with any other person or legal entity.
4.6) Financial Statements.
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(a) Financial Statements. NOW has furnished Parent a true and complete
--------------------
copy of its audited balance sheets and statements of income for its fiscal
years ended March 31, 1996 and 1997 and has furnished internally-prepared
interim financial statements for the 9-month period ending December 24,
1997 (collectively the "Financial Statements"). The Financial Statements
have been prepared in conformance with generally accepted accounting
principles ("GAAP") applied on a basis consistent with prior periods, and
fairly present in all material respects the financial condition of NOW as
of the represented dates thereof and the results of NOW's operations for
the periods covered thereby. For purposes of this Agreement, the Financial
Statements shall be deemed to include any notes thereto. Except as set
forth in Exhibit 4.6(a), neither NOW nor any subsidiary has, nor at the
Effective Time will have, any liabilities or obligations, either
absolute, accrued, contingent or otherwise, which individually or in the
aggregate are material to the financial condition and business of NOW or
any subsidiary and which (i) have not been reflected in the Financial
Statements, (ii) have not been described in this Agreement or in any of
the
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Exhibits hereto, or (iii) have been incurred since December 24, 1997,
other than in the ordinary course of its business consistent with past
practice.
(b) NOW's Books and Records. NOW's books of account and records (including
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customer order files, employment records and production and manufacturing
records) are complete, true and correct in all material respects.
(c) No Adverse Changes. Since December 24, 1997 and through the date
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hereof, there has not occurred or arisen (whether or not in the ordinary
course of business) any Material Adverse Effect with respect to NOW, and
NOW has not (i) declared any dividend or made any payment or other
distribution in respect of any shares of its capital stock, (ii) acquired
or disposed of any shares of its capital stock or granted any options,
warrants or other rights to acquire or convert any obligation into any
shares of its capital stock, (iii) entered into any material transaction
with any officer, director, employee or any known relative thereof or any
entity in which such person has an interest, except (A) the payment of
rent, salaries, wages and expense reimbursement in the ordinary course of
business, and (B) termination agreements pursuant to this Agreement, (iv)
incurred any material obligation or liability (contingent or otherwise),
except for (A) this Agreement and NOW's agreement with BT Alex. ▇▇▇▇▇
Incorporated, (B) normal trade and other obligations incurred in the
ordinary course of business consistent with past practice and (C)
obligations under contracts, agreements and leases incurred in the ordinary
course of business consistent with past practice, the performance of which
has not and will not, individually or in the aggregate, have a Material
Adverse Effect on NOW, (v) discharged or satisfied any material lien or
other encumbrance or paid any material obligation or liability (fixed or
contingent), except in the ordinary course of business or as contemplated
by this Agreement, (vi) mortgaged, pledged or subjected to any lien or
other encumbrance any of its material assets (whether tangible or
intangible), (vii) sold, assigned, transferred, conveyed, leased or
otherwise disposed of or agreed to sell, lease or otherwise dispose of any
of its material assets except for sales of inventory or other assets for
fair consideration in the ordinary course of business or as contemplated by
this Agreement, (viii) canceled or compromised any material debt or claim,
except in the ordinary course of business, (ix) waived or released any
material rights, except for waivers or releases made in the ordinary course
of business consistent with past practice, (x) made any single capital
expenditure in excess of $50,000, or entered into any commitment therefor,
or (xi) suffered any material casualty loss or damage, whether or not
covered by insurance, or any adverse ruling, judgment or award, whether or
not amounts were reserved on NOW's books, which would have a Material
Adverse Effect on NOW
4.7) Tax Reports and Returns.
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(a) Except as set forth on Exhibit 4.7(a), (i) all Returns (defined in
Subsection 4.7(b) below) in respect of Taxes (defined in Subsection 4.7(b)
below) required to be filed with respect to NOW (including any
consolidated federal income tax return and any state Tax return that
includes NOW or any of its related companies on a consolidated, combined
or unitary basis) have been timely filed, none of such Returns contains,
or is required to contain, a disclosure statement under section 6661 or
6662 of the Code or any similar
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provision of state, local or foreign law, and no extension of time within
which to file any such Return has been requested, which Return has not
since been timely filed; (ii) all Taxes whether or not shown on such
Returns have been timely paid and all payments of estimated Taxes
required to be made with respect to NOW under section 6655 of the Code or
any comparable provision of state, local or foreign law have been made;
(iii) all such Returns are true, correct and complete in all material
respects; (iv) no adjustment relating to any of such Returns has been
proposed formally or informally by any Tax authority; (v) there are no
outstanding subpoenas or requests for information with respect to any
Returns of NOW or the Taxes reflected on such Returns; (vi) there are no
pending or to NOW's Knowledge threatened actions or proceedings for the
assessment or collection of Taxes against NOW or any corporation that was
included in the filing of a Return with NOW on a consolidated, combined
or unitary basis; (vii) no consent under section 341(f) of the Code has
been filed with respect to NOW; (viii) there are no Tax liens on any
assets of NOW except liens for Taxes not yet due and payable or being
contested in good faith by appropriate proceedings for which adequate
reserves have been established; (ix) no acceleration of the vesting
schedule for any property that is nonvested within the meaning of the
regulations under section 83 of the Code will occur in connection with
the transactions contemplated by this Agreement; (x) NOW is not now nor
has it at any time been subject to any accumulated earnings tax or
personal holding company tax; (xi) NOW owes no amounts pursuant to any
written or unwritten Tax sharing agreement or arrangement and will not
have any liability after the date hereof in respect of any written or
unwritten Tax sharing agreement or arrangement executed or agreed to
prior to the date hereof; (xii) all Taxes required to be withheld,
collected or deposited by NOW have been timely withheld, collected or
deposited and, to the extent required, have been paid to the relevant Tax
authority; (xiii) any adjustment of Taxes of NOW made by the Internal
Revenue Service that is required to be reported to any state, local or
foreign Tax authority has been so reported and any additional Tax due as
a result thereof has been paid in full; (xiv) there are no outstanding
waivers or agreements extending the statute of limitations for any period
with respect to any Tax to which NOW may be subject; (xv) to NOW's
Knowledge there are no requests for rulings or information currently
outstanding that could affect the Taxes of NOW, or any similar matters
pending with respect to any Tax authority; (xvi) no Tax authority has
proposed reassessments of any property owned or leased by NOW that could
increase the amount of any Tax to which NOW would be subject; (xvii) no
power of attorney that is currently in force has been granted with
respect to any matter relating to Taxes that could affect NOW; and
(xviii) with respect to each Return that has been examined by the
relevant Tax authority, such examination is closed and final without any
adjustment having been made to such Return (including adjustments not
affecting the amount of Tax due with respect to such Return).
(b) For purposes of this Agreement, "Tax" or "Taxes" shall mean any and all
taxes, charges, fees, levies, and other governmental assessments and
impositions of any kind, payable to any federal, state, local or foreign
governmental entity or taxing authority or agency, including, without
limitation, (i) income, franchise, profits, gross receipts, minimum,
alternative minimum, estimated, ad valorem, value added, sales, use,
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service,
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real or personal property, capital stock, license, payroll, withholding,
disability, employment, social security, workers' compensation,
unemployment compensation, utility, severance, production, excise, stamp,
occupation, premiums, windfall profits, transfer and gains taxes, (ii)
customs duties, imposts, charges, levies or other similar assessments of
any kind, and (iii) interest, penalties and additions to tax imposed with
respect thereto; and "Returns" shall mean any and all returns, reports,
and information statements with respect to Taxes required to be filed
with the Internal Revenue Service or any other Governmental Entity or Tax
authority or agency, whether domestic or foreign including, without
limitation. consolidated, combined and unitary tax returns. For the
purposes of this Section 4.7, references to NOW shall include former
subsidiaries of NOW identified on Exhibit 4.7(b), if any, for the periods
during which any such subsidiaries were owned, directly or indirectly, by
NOW.
4.8) Assets. NOW is the owner of or otherwise has the right to use all assets
---- ------
material to the conduct of its business as now conducted and as reflected on the
Financial Statements. NOW holds title to all assets owned by it free and clear
of all liens, charges, encumbrances or third party claims or interests of any
kind whatsoever, except as disclosed in Exhibit 4.8 hereto. The assets of NOW,
including real, personal and mixed, tangible and intangible, necessary or useful
to the operation of its business (the "Assets") are in good condition and
repair, ordinary wear and tear excepted, and suitable for the uses intended.
Except as disclosed in Exhibit 4.8 hereto, (i) the Assets comply with and are
operated in conformity with all applicable laws, ordinances, regulations,
orders, permits and other requirements relating thereto adopted or currently in
effect; (ii) the leases and other agreements or instruments under which NOW
holds, leases, subleases or is entitled to the use of any of the Assets are in
full force and effect, and all rentals, royalties or other payments payable
thereunder have been duly paid or provided for by adequate reserves; and (iii)
no default or event of default by NOW exists, and no event which, with notice or
lapse of time or both, would constitute a default by NOW, has occurred and is
continuing, under the terms or provisions of any such lease, agreement or other
instrument or under the terms or provisions of any agreement to which any of
such Assets is subject, nor has NOW received notice of any claim of such
default.
4.9) Intellectual Property.
---- ---------------------
(a) Exhibit 4.9(a) contains an accurate and complete list of: (i) all
patents, applications for patents, registrations of trademarks (including
service marks) and applications therefor, registrations of copyrights and
applications therefor that are owned by NOW and that are part of the
business of NOW as presently conducted; (ii) all other intellectual
property rights that are owned by NOW and that are material to the conduct
of business as presently conducted; (iii) all unexpired licenses relating
to such of NOW's intellectual property rights that have been granted to or
by NOW and that are material to the conduct of the business of NOW as
presently conducted; and (iv) all other agreements relating to intellectual
property rights that are material to the conduct of the business of NOW as
presently conducted (collectively, items (i)-(iv) are referred to as
"Intellectual Property Rights").
12
(b) NOW owns and has the right to use, and license others to use, all
Intellectual Property Rights that are material to the conduct of the
business of NOW as presently conducted, and such ownership and right to
use, and license of others to use, are free and clear of, and without
liability under, all liens and security interests of third parties. Such
ownership and right to use, and license of others to use, are free and
clear of, and without liability under, all claims and rights of third
parties that, if determined to be legally protectable, could have a
Material Adverse Effect.
(c) NOW has taken reasonable steps sufficient to safeguard and maintain the
secrecy and confidentiality of, and its proprietary rights in, the
unpatented know-how, technology, proprietary processes, formulae, and other
information that is material to the conduct of the business of NOW as
presently conducted (the "Proprietary Information"). Without limiting the
generality of the foregoing, NOW has obtained confidentiality and
inventions assignment agreements from all of NOW's past and present
employees and independent contractors involved in the creation or
development of Intellectual Property Rights and Proprietary Information
including, without limitation, from all employees and contractors who are
inventors, authors, creators or developers of Intellectual Property Rights
that are material to the conduct of the business as presently conducted.
To NOW's Knowledge, Exhibit 4.9(c) lists all nondisclosure agreements to
which NOW is a party or by which it is bound.
(d) Except as set forth on Exhibit 4.9(d) and except for payments made with
respect to patents and patent applications, there are no royalties,
honoraria, fees or other payments payable by NOW to any person by reason of
the ownership, use, license, sale or disposition of any Intellectual
Property Right or any Proprietary Information.
(e) Except as set forth on Exhibit 4.9(e), NOW has not received notice that
NOW is infringing in the conduct of the business upon the right or claimed
right of any other party with respect to any Intellectual Property Rights
or Proprietary Information, nor does NOW have Knowledge of any alleged or
claimed infringement by any product or process manufactured, used, sold or
under development by or for NOW in the conduct of the business of NOW as
presently conducted.
(f) To NOW's Knowledge, the Intellectual Property Rights and Proprietary
Information are free of any unresolved ownership disputes with respect to
any third party, and there is no unauthorized use, infringement or
misappropriation of any of such Intellectual Property Rights or Proprietary
Information by any third party, including any employee or former employee
of NOW.
(g) For purposes of this Section 4.9, "use" with respect to intellectual
property rights includes make, reproduce, display or perform (publicly or
otherwise), prepare derivative works based on, sell, distribute, disclose
and otherwise exploit such intellectual property rights and products
incorporating or subject to such intellectual property rights.
4.10) Agreements, Contracts and Commitments.
----- -------------------------------------
13
(a) Material Contracts. Exhibit 4.10(a) hereto contains an accurate and
------------------
complete list of all agreements, contracts, leases and commitments written
or oral to which NOW is a party or is bound and which involve more than
$50,000 singly or $100,000 in the aggregate or which is a (i) consulting
agreement not terminable on sixty (60) days or less notice involving the
payment of more than $50,000 per annum, (ii) joint venture agreement, (iii)
noncompetition or similar agreement that restricts NOW from engaging in a
line of business, (iv) agreement with any executive officer or other
employee of NOW the benefits of which are contingent, or the terms of which
are materially altered, upon the occurrence of a transaction involving NOW
of the nature contemplated by this Agreement, (v) agreement with respect to
any executive officer of NOW or any subsidiary providing any term of
employment or compensation guaranty in excess of $50,000 per annum, (vi)
agreement or plan, including any stock option plan, stock appreciation
rights plan, restricted stock plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement, (vii) (A) any agreement providing for disposition of any
line of business, material assets or securities of NOW, (B) any agreement
with respect to the acquisition of any line of business, material assets or
securities of any other business, or (C) any agreement of merger or
consolidation or letter of intent with respect to the foregoing, or (viii)
any agreement to indemnify any other party with respect to an adverse
environmental condition.
(b) Union and Employment Contracts and Other Employment Matters.
-----------------------------------------------------------
(i) Except as set forth in Exhibit 4.10(b) hereto, NOW is not a
party to any collective bargaining agreement or any other written
employment agreement, nor is NOW a party to any other contract or
understanding (oral or written) that contains any severance pay
liabilities or obligations, except for accrued, unused vacation pay
or accrued and unused sick leave pay. Exhibit 4.10(b) sets forth a
list of the names, employment status, location of employment, and
rates of compensation (including salaries, wages, commissions and
bonuses) of all employees of NOW. Except as described in Exhibit
4.10(b), NOW has no written or oral contract of employment with any
employee of NOW, and NOW is not a party to or subject to any
collective bargaining agreement nor has NOW been a party to or
subject to any collective bargaining agreement or collective
bargaining plan during the last five (5) years. Except as described
in Exhibit 4.10(b), NOW is not a party to any pending nor, to NOW's
Knowledge, threatened labor dispute affecting the business of NOW.
NOW has complied in all material respects with all applicable
foreign, federal, state and local laws, ordinances, rules and
regulations and requirements relating to the employment of labor,
including, but not limited to, the provisions thereof relative to
wages, hours, collective bargaining, drug testing, personnel
policies and practices, payment of Social Security, unemployment and
withholding taxes, and equal opportunity employment. NOW is not
liable for any arrears of wages or any taxes or penalties for
failure to comply with any of the foregoing. Except as set forth in
Exhibit 4.10(b), NOW has not received notice from any
14
employee earning a base salary in excess of $40,000 that such
employee is terminating his or her employment with NOW, nor to NOW's
Knowledge, does any such employee intend to terminate his or her
employment with NOW.
(ii) Except as set forth in Exhibit 4.10(b) hereto, NOW has no, and on
the Closing Date will not have, any obligations to NOW's directors,
officers, employees or agents other than obligations arising in the
ordinary course of business on account of wages, salaries and
commissions for prior services performed or business produced.
(c) Breach. Except as disclosed in Exhibit 4.10(c) hereto, NOW has
------
performed all material obligations required to be performed by NOW to date
under any material contract, commitment or arrangement of any kind to which
NOW is a party or by which NOW is bound, including those listed on Exhibit
4.10(a); and neither NOW nor to NOW's Knowledge, any other party is in
default under any material contract, commitment or arrangement of any kind
to which NOW is a party or by which NOW is bound, including those listed on
Exhibit 4.10(a). To NOW's Knowledge, except as disclosed in Exhibit
4.10(c), no event has occurred which after the giving of notice or the
lapse of time or otherwise would constitute a default under, or result in a
breach of by NOW or any other party, any material contract, commitment, or
arrangement to which NOW is a party or by which NOW is bound, including
those listed on Exhibit 4.10(a).
(d) Copies of Contracts; Terms and Binding Effect. True, complete and
---------------------------------------------
correct copies of all written contracts, commitments, understandings and
other documents referred to in the Exhibits have been delivered or made
available to Parent; there are no amendments to or modifications of, or
agreements of the parties relating to, any such contracts, commitments, and
understandings which have not been delivered or made available to Parent;
and each such contract, commitment, or understanding, as amended, is valid
and binding on the parties to it in accordance with its respective terms.
4.11) Contracts with Related Parties. Except as disclosed in Exhibit 4.11
----- ------------------------------
hereto, there are no material agreements or contracts between NOW and any of its
officers, directors or shareholders. Without limiting the generality of the
foregoing, as of the date hereof, none of the Shareholders or any other present
officer or director of NOW, or any person related to, controlling, controlled by
or under common control with any of the foregoing (i) has any material direct or
indirect interest in any entity which does business with NOW, (ii) has any
direct or indirect interest in any property, asset or right which is used by NOW
in the conduct of its business, or (iii) has any contractual relationship with
NOW other than such relationships which occur from being an employee, officer,
or director of NOW.
4.12) Product Liability Claims. Except as set forth on Exhibit 4.12, all
----- ------------------------
products which NOW has sold have been merchantable, free from material defects
in material or workmanship, and suitable for the purpose for which they were
sold. Except as set forth in Exhibit 4.12 hereto, NOW has not received any
claims based upon an alleged breach of product warranty, strict liability in
tort, negligent manufacture of product, or any other allegation of liability
arising from NOW's manufacture or sale of its products (hereafter collectively
referred to as "Product Liability
15
Claims"), during the sixty months immediately preceding the date hereof which
Product Liability Claim exceeds $25,000. To NOW's Knowledge there are no
existing facts or conditions which reasonably would be expected to give rise
to any claim exceeding $25,000. All liability from any actual and potential
Product Liability Claims, whether or not asserted on or before the Closing,
are fully covered, except for the deductible amounts, including all costs of
defense and investigation, by NOW's product liability insurance policies.
4.13) Insurance. All of the Assets are covered by such fire, casualty, product
----- ---------
liability, and other insurance policies issued by reputable companies as are
customarily obtained to cover comparable properties and assets by businesses in
the region in which such Assets are located, in amounts, scope and coverage
which are reasonable in light of existing conditions. Exhibit 4.13 sets forth a
list of the policies of insurance and fidelity or surety bonds carried by NOW,
including, but not limited to, fire, flood, liability, workers' compensation,
and officers' life insurance policies. NOW has not failed to give any notice or
present any material claim under any insurance policy in due and timely fashion,
and all insurance premiums due and payable by NOW in connection with the
policies set forth on Exhibit 4.13 prior to the Effective Time have been or will
be paid. There are no outstanding written requirements or written
recommendations by any insurance company that issued a policy with respect to
any of the Assets of NOW by any Board of Fire Underwriters or other body
exercising similar functions or by any governmental authority requiring or
recommending any repairs or other work to be done on or with respect to any of
the Assets of NOW or requiring or recommending any equipment or facilities to be
installed on or in connection with any of the Assets. The unemployment
insurance ratings and contributions of NOW are also set forth on Exhibit 4.13.
4.14) Litigation and Related Matters. Except as set forth on Exhibit 4.14, as
----- ------------------------------
of the date of this Agreement: (i) there is no action, suit, judicial or
administrative proceeding, arbitration or investigation pending or, to NOW's
Knowledge, threatened against or involving NOW or any of its properties or
rights, before any court, arbitrator, or administrative or governmental body;
(ii) there is no judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator
outstanding against NOW; and (iii) NOW is not in violation any term of any
judgments, decrees, injunctions or orders outstanding against it. An action
suit, proceeding, arbitration or investigation shall be considered "threatened"
for purposes of this Section 4.14 if NOW has received written notice or
otherwise has Knowledge that such event may be commenced. Except as set forth
on Exhibit 4.14, to NOW's Knowledge there are no existing facts or conditions
which reasonably would be expected to give rise to any charge, claim,
litigation, proceeding, or investigation.
4.15) Laws and Regulations. In all material respects, NOW has complied, and is
----- --------------------
in compliance, with applicable laws, statutes, orders, rules, regulations and
requirements promulgated by governmental or other authorities relating to its
business, including, without limitation, any relating to wages, hours, hiring,
promotion, retirement, working conditions, air, water, solid or liquid waste
pollution, nondiscrimination, health, safety, pensions, benefits, the
production, processing, advertising or sale of products, trade regulation,
antikickback, export licensing, antitrust, antiboycott, warranties, or control
of foreign exchange; and NOW has not received any notice of any sort of
alleged violation of any such statute, order, rule, regulation or requirement.
16
4.16) Environmental Protection. Exhibit 4.16 completely and accurately sets
----- ------------------------
forth the following: (a) a list of, to NOW's Knowledge, all above-ground
storage tanks or underground storage tanks for Hazardous Materials (as defined
below) on real property now or at any time in the past owned, leased or occupied
by NOW (such real property referred to in this Section as the "Real Property");
(b) the identity of any Hazardous Materials (as defined below) used, generated,
transported or disposed of by NOW now or at any time in the past, together with
a brief description and location of each activity using such Hazardous
Materials; (c) a summary of the identity of, to NOW's Knowledge, any Hazardous
Materials that have been disposed of or found on, above or below any Real
Property; and (d) a list of all reports, studies or tests in the possession of
NOW or initiated by NOW pertaining to the existence of Hazardous Materials on,
above or below any Real Property or any property adjoining or which could
reasonably be expected to affect Real Property, or concerning compliance with or
liability under the Environmental Laws (as defined below). NOW has heretofore
delivered to Parent complete and accurate copies of such reports, studies or
tests.
NOW has obtained, and maintained in full force and effect, all required
environmental permits and other governmental approvals and is in compliance with
all applicable Environmental Laws (as defined below), except where the failure
to so obtain and maintain or to be in compliance would not have a Material
Adverse Effect on NOW. NOW has never received a written or oral notice or Claim
(as defined below) alleging potential liability under any of the Environmental
Laws or alleging a violation of the Environmental Laws and does not have any
Knowledge that such a notice or Claim may be issued in the future. NOW does not
have any Knowledge of any notices to or Claims against any persons, or
reasonable basis therefor, alleging potential liability under any of the
Environmental Laws with respect to the Real Property or any adjoining properties
or which could reasonably be expected to affect the Real Property. There is no
proceeding or investigation pending or, to the Knowledge of NOW, threatened by
any Governmental Entity with respect to the Environmental Laws. NOW has no
Knowledge of any conditions or circumstances that could reasonably be expected
to result in the determination of liability against NOW relating to the
Environmental Laws that would have a Material Adverse Effect. No Hazardous
Materials have been or are threatened to be discharged, omitted or released into
the air, water, soil, or subsurface at or from any Real Property by NOW or, to
NOW's Knowledge, by any other person.
For purposes of this Section 4.16, the following terms shall have the
following meanings: (i) "Hazardous Materials" means asbestos, urea
formaldehyde, polychlorinated biphenyls, nuclear fuel or materials, chemical
waste, radioactive materials, explosives, known human carcinogens, petroleum
products or other substances or materials listed, identified or designated as
toxic or hazardous or as a pollutant or contaminant in, or the use, release or
disposal of which is regulated by, the Environmental Laws; (ii) "Environmental
Laws" means the Comprehensive Environmental Response Compensation and
Liability Act ("CERCLA") as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("▇▇▇▇"), 42 U.S.C. (S)(S) 9601 et seq.; the
-- ---
Federal Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C.
(S)(S) 6901 et seq.; the Clean Water Act, 33 U.S.C. (S)(S) 1321 et seq.; the
-- ---
Clean Air Act, 42 U.S.C. (S)(S) 7401 et seq., and any other federal, state,
-- ---
county, local, foreign or other governmental statute, regulation, or
ordinance, as now in existence, that relates to or deals with employee safety
and human health, pollution, health or the environment including, but not
limited to, the use, generation, discharge,
17
transportation, disposal, recordkeeping, notification and reporting of
Hazardous Materials; and (iii) "Claim" means any and all claims, demands,
causes of actions, suits, proceedings, administrative proceedings, losses,
judgments, decrees, debts, damages, liabilities, court costs, penalties,
attorneys' fees and any other expenses incurred, assessed, sustained or
alleged by or against NOW.
4.17) Breaches of Contracts; Required Consents. Neither the execution and
----- ----------------------------------------
delivery of this Agreement by NOW, nor compliance by NOW with the terms and
provisions of this Agreement will:
(a) Conflict with or result in a breach of (i) any of the terms, conditions
or provisions of the articles of incorporation, by-laws or other governing
instruments of NOW, (ii) any judgment, order, decree or ruling to which NOW
is a party, (iii) any injunction of any court or governmental authority to
which it is subject, or (iv) any agreement, contract or commitment listed
in Exhibit 4.10(a) or which is material to NOW; or
(b) Except as disclosed in Exhibit 4.17(b) hereto, require the affirmative
consent or approval of or filing with any third party or Governmental
Entity.
4.18) Brokers. Except for its financial advisor, BT Alex. ▇▇▇▇▇ & Sons
----- -------
Incorporated, no broker, finder or financial advisor is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger
based upon arrangements made by or on behalf of NOW, and a true and correct copy
of the engagement letter or agreement between NOW and BT Alex. ▇▇▇▇▇
Incorporated has been previously provided to Parent.
4.19) Employee Benefit Plans.
----- ----------------------
(a) Exhibit 4.19(a) lists each "employee benefit plan" (within the meaning
of section 3(3) of ERISA) that is maintained or otherwise contributed to by
NOW for the benefit of its employees (including, without limitation,
pension, profit sharing, stock bonus, medical reimbursement, life
insurance, disability and severance pay plans) (collectively, "Company
Plans") and all other employee benefit plans providing for deferred
compensation, bonuses, stock options, employee insurance coverage or any
similar compensation or welfare benefit plan (collectively, "Benefit
Arrangements" and, together with Company Plans, collectively referred to as
"Employee Benefit Programs").
(b) With respect to each of the Company Plans, NOW has made available to
Parent a current, accurate and complete copy (or, to the extent no such
copy exists, an accurate description) thereof (including all existing
amendments thereto that shall become effective at a later date) and, to
the extent applicable, (i) any related trust agreement, annuity contract
or other funding instrument; and (ii) any summary plan description.
(c) (i) Each of the Employee Benefit Programs has been established and
administered in compliance with any applicable provisions of ERISA, the
Code, and the terms of all documents relating to such programs; (ii) each
Company Plan that is intended to be qualified within the meaning of section
401(a) of the Code has received a favorable
18
determination letter as to its qualification; (iii) as of the date of
this Agreement, no "reportable event" (as such term is used in section
4043 of ERISA) other than an event of a type as to which the Pension
Benefit Guaranty Corporation has waived the reporting requirements,
"prohibited transaction" (as such term is used in section 4975 of the
Code or section 406 of ERISA) or "accumulated funding deficiency" (as
such term is used in section 412 or 4971 of the Code) has heretofore
occurred with respect to any Company Plan; and (iv) there are no pending
or, to NOW's Knowledge, threatened, actions, claims or lawsuits which
have been asserted or instituted against the Employee Benefit Programs,
the assets of any of the trusts under such plans or the plan sponsor or
the plan administrator, or against any fiduciary of the Employee Benefit
Programs with respect to the operation of such plans (other than routine
benefit claims).
(d) NOW does not maintain or contribute to any "multiemployer plan" (as
such term is defined in section 3(37) of ERISA) and has not incurred any
material liability that remains unsatisfied with respect to any such plans.
(e) No Employee Benefit Program (other than one which is an employee
pension benefit plan within the meaning of Section 3(2)(A) of ERISA)
provides benefits (including, without limitation, death, health or medical
benefits, whether or not insured) with respect to current or former
employees of NOW beyond their retirement or other termination of service
with NOW, other than (a) coverage mandated by applicable law, (b) deferred
compensation benefits which have been accrued as liabilities on the books
of NOW, (c) benefits the full cost of which is borne by the current or
former employees (or their beneficiaries), or (d) benefits which have
already been satisfied in full.
4.20) Indebtedness.
----- ------------
(a) Except as set forth on Exhibit 4.20(a), NOW does not have any
obligation for money borrowed or under any guarantee nor any agreement or
arrangement to borrow money or to enter into any such guarantee, and as of
the Effective Time, except as set forth on Exhibit 4.20(a), NOW will not
have any obligation for money borrowed nor any agreement or arrangement to
borrow money, and NOW will not have any guarantee outstanding nor any
agreement or commitment to enter into any such guarantee.
(b) Except as set forth on Exhibit 4.20(b), NOW has not loaned or advanced
any funds to any person. All obligations listed on Exhibit 4.20(b) are
current, and, to NOW's Knowledge, no default or event of default by any
borrower, and no event which, with notice or lapse of time or both, would
constitute a default by any borrower has occurred and is continuing,
under the terms or provisions of any agreement or other instrument
evidencing or securing such indebtedness.
4.21) Accounts Receivable. No amount included in the accounts receivable of
----- -------------------
NOW in the Financial Statements has been released for an amount less than the
value at which it was included or is or will be regarded as unrecoverable in
whole or in part except to the extent there shall have been an appropriate bad
debt reserve therefor. Such receivables are not, to NOW's Knowledge,
19
subject to any counterclaim, refusal to pay or setoff not reflected in the
reserves set forth on the NOW Financial Statements.
4.22) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. The "total assets" and the "annual net sales" of the
----- -----------------
"ultimate parent entity" of NOW (as such terms are used within the meaning of
Section 7A.(a)(2)(A) of the HSR Act) are shown on Exhibit 4.22.
4.23) Customers and Suppliers. Except as set forth in Exhibit 4.23, NOW has
----- -----------------------
not received any notice or has any Knowledge that any customer from whom NOW
received more than $50,000 in gross receipts during the 1997 or 1998 fiscal
years (i) has ceased, or will cease, to use the products, goods or services of
its business, (ii) has substantially reduced, or will substantially reduce, the
use of products, goods or services of its business or (iii) has sought, or is
seeking, to reduce the price it will pay for products, goods or services of its
business. NOW has not received any notice nor has any Knowledge that any
supplier from whom NOW purchased more than $50,000 in goods during the 1997 or
1998 fiscal years will not sell raw materials, supplies, merchandise and other
goods to NOW at any time after the Effective Time on terms and conditions
similar to those used in the current sales to NOW, subject to general and
customary price increases and unforeseeable supply or demand changes.
4.24) Stock Ownership. Other than through mutual funds or other similar
----- ---------------
investment vehicles over which no investment discretion is retained, neither NOW
nor, to NOW's Knowledge, any Shareholder owns any securities issued by Parent or
has any warrants, options or other rights to purchase or otherwise acquire or
convert any obligations into securities issued by Parent.
4.25) Powers of Attorney. Except as set forth in Exhibit 4.25, no person has
----- ------------------
any power of attorney to act on behalf of NOW in connection with any of its
properties or business affairs other than such powers to so act as normally
pertain to the officers of NOW.
4.26) Tax-Free Reorganization; Pooling. To its Knowledge, NOW has not taken,
----- --------------------------------
or failed to take, any action that would jeopardize the treatment of the Merger
as a tax-free reorganization for tax purposes or a pooling of interests for
accounting purposes.
4.27) Information in Registration Statement. None of the information supplied
----- -------------------------------------
or to be supplied by NOW or any Shareholder for inclusion or incorporation by
reference in any registration statement filed in connection with this Agreement
will, at the time such registration statement is filed with the SEC and at the
time it becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
4.28) No Misrepresentations. Neither this Agreement nor any certificate or
----- ---------------------
Exhibit or other information by or on behalf of NOW or any Shareholder pursuant
to this Agreement contains any untrue statement of a material fact or, when this
Agreement and such certificates, Exhibits and other information are taken in
their entirety, omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
20
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY
-------------------------------------------------------
Parent and Subsidiary make the following representations and warranties to NOW
with the intention that NOW may rely upon the same.
5.1) Organization. Each of Parent and Subsidiary is a corporation duly
---- ------------
organized, validly existing and in good standing under the laws of the state of
Delaware and has the corporate power to carry on its business as it is now being
conducted or presently proposed to be conducted and to own all of its properties
and assets.
5.2) Corporate Authority. Each of Parent and Subsidiary has the corporate
---- -------------------
power to enter into this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement by Parent and Subsidiary and the
consummation by each of Parent and Subsidiary of the transactions contemplated
hereby have been duly authorized by the respective Boards of Directors of Parent
and Subsidiary, and this Agreement and each of the transactions contemplated
hereby has been approved by Parent as the sole stockholder of Subsidiary. No
other corporate proceedings on the part of either Parent or Subsidiary are
necessary to approve this Agreement or the transactions contemplated hereby, and
this Agreement constitutes the valid and binding obligations of Parent and
Subsidiary, enforceable against each in accordance with its terms.
5.3) Breaches of Contracts; Required Consents. Except as set forth on Exhibit
---- ----------------------------------------
5.3 and except for applicable requirements of state or foreign laws relating to
takeovers, federal and state securities or blue sky laws, filings with the
Nasdaq Stock Market, Inc. and filing of an Agreement of Merger under the MBCA
and a Certificate of Merger under the DGCL, no filing with, and no permit,
authorization, consent or approval of, any public body or authority is necessary
for the consummation by Parent or Subsidiary of the transactions contemplated by
this Agreement. Except as set forth on Exhibit 5.3, neither the execution and
delivery of this Agreement by Parent or Subsidiary, nor the consummation by
Parent or Subsidiary of the transactions contemplated hereby, nor compliance by
Parent or Subsidiary with any of the provisions hereof, will (i) result in any
breach of the certificate of incorporation or by-laws of Parent or Subsidiary,
(ii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, contract,
agreement or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which any of them or any of their properties or
assets may be bound or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Parent, any of its subsidiaries or
any of their properties or assets, except in the case of clauses (ii) and
(iii) for violations, breaches or defaults that would not have a Material
Adverse Effect.
5.4) SEC Filings. Parent and any predecessor of Parent have filed all forms,
---- -----------
reports and documents with the SEC required to be filed by them pursuant to the
federal securities laws and the rules and regulations of the SEC (together, the
"SEC Documents"). As of their respective filing dates, the SEC Documents
complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended or the Securities Act, and none of the SEC
21
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, except to the extent corrected by a subsequently filed SEC
Document.
5.5) Capitalization. The authorized capital stock of Parent consists of
---- --------------
30,000,000 shares of Common Stock, $.01 par value, and 2,000,000 shares of
Preferred Stock, $.01 par value. As of the date of this Agreement, there are
outstanding 18,166,283 shares of Parent Common Stock and no shares of Preferred
Stock of Parent. All outstanding shares of Parent Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable and were
issued in compliance with all applicable federal and state securities laws. As
of the date of this Agreement, there are options and warrants to acquire
1,802,711 and 50,000 shares, respectively, of Parent Common Stock outstanding.
Except as set forth in this Section 5.5, there are outstanding (a) no shares of
Parent Common Stock or other voting securities of Parent, (b) no securities of
Parent convertible into or exchangeable for shares of Parent Common Stock or
voting securities of Parent and (c) no options, warrants or other rights to
acquire from Parent, and no obligation of Parent to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of Parent. There are no outstanding obligations of
Parent to repurchase, redeem or otherwise acquire any Parent Common Stock. To
Parent's Knowledge, no officer, director, or Shareholder of Parent would be
unable to give the representation that none of the events or circumstances
described in Rule 262 of Regulation A under the Securities Act have occurred.
5.6) Financial Statements. The audited supplemental consolidated balance
---- --------------------
sheets of Parent and its subsidiaries at December 31, 1995, 1996, and 1997 and
the statements of income and changes in stockholders' equity and cash flows for
the years ended December 31, 1995, 1996, and 1997 (the "Parent Financial
Statements"), fairly present the financial position and results of operations of
Parent and its subsidiaries as for the periods then ended and the financial
position of Parent and its subsidiaries at the dates thereof in accordance with
GAAP applied on a consistent basis with prior periods (a copy of the 1997 Parent
Financial Statements are to be delivered within 10 days of the date of this
Agreement). Parent has maintained its books of account in accordance with
applicable laws, rules and regulations of government authorities and with GAAP
applied on a consistent basis with prior periods, and such books of account are
and, during the period covered by Parent Financial Statements, were correct and
complete in all material respects, fairly and accurately reflect or reflected
the income, expenses, assets and liabilities of Parent, including the nature
thereof and the transactions giving rise thereto, and provide or provided a fair
and accurate basis for the preparation of the Parent Financial Statements.
5.7) No Undisclosed Liabilities. Except as set forth in Exhibit 5.7, neither
---- --------------------------
Parent nor any subsidiary has, nor at the Effective Time will have, any
liabilities or obligations, either absolute, accrued, contingent or otherwise,
which individually or in the aggregate are material to the financial condition
and business of Parent or any subsidiary and which (i) have not been reflected
in the Parent Financial Statements, (ii) have not been described in this
Agreement or in any of the Exhibits hereto, or (iii) have been incurred since
September 30, 1997, other than in the ordinary course of its business consistent
with past practice.
22
5.8) Information in Registration Statement. None of the information supplied
---- -------------------------------------
or to be supplied by Parent for inclusion or incorporation by reference in any
registration statement filed in connection with this Agreement will, at the time
such registration statement is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading. Any registration statement will comply as
to form in all material respects with the provisions of the Securities Act and
the rules and regulations thereunder, except that no representation is made by
Parent with respect to statements made therein based on information supplied by
NOW or any Shareholder or inclusion in any registration statement.
5.9) Subsidiary. Subsidiary was formed solely for the purpose of engaging in
---- ----------
the transactions contemplated by this Agreement. As of the date hereof and the
Effective Time, except for obligations or liabilities incurred in connection
with its incorporation or organization and the transactions contemplated by this
Agreement, Subsidiary does not have and will not have incurred any obligations
or liabilities or engaged in any business activities of any type or kind
whatsoever or entered into any agreements or arrangements with any person.
5.10) Tax-Free Reorganization: Pooling. To its Knowledge, Parent has not
----- --------------------------------
taken, or failed to take, any action that would jeopardize the treatment of the
Merger as tax-free reorganization for tax purposes or a pooling of interests for
accounting purposes.
5.11) No Misrepresentations. Neither this Agreement nor any certificate or
----- ---------------------
Exhibit or other information furnished by or on behalf of Parent pursuant to
this Agreement contains any untrue statement of a material fact or, when this
Agreement and such certificates, Exhibits and other information are taken in
their entirety, omits to state a material fact necessary to make the statements
contained herein not misleading.
5.12) Laws and Regulations. In all material respects, Parent has complied, and
----- --------------------
is in compliance, with applicable laws, statutes, orders, rules, regulations and
requirements promulgated by governmental or other authorities relating to its
business, including, without limitation, any relating to wages, hours, hiring,
promotion, retirement, working conditions, air, water, solid or liquid waste
pollution, nondiscrimination, health, safety, pensions, benefits, the
production, processing, advertising or sale of products, trade regulation,
antikickback, export licensing, antitrust, antiboycott, warranties, or control
of foreign exchange; and Parent has not received any notice of any sort of
alleged violation of any such statute, order, rule, regulation or requirement.
5.13) Litigation and Related Matters. Except as set forth in Exhibit 5.13, as
----- ------------------------------
of the date of this Agreement, (i) there is no action, suit, judicial or
administrative proceeding, arbitration or investigation pending or, to Parent's
Knowledge, threatened against or involving Parent or any of its properties or
rights, before any court, arbitrator, or administrative or governmental body;
(ii) there is no judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator
outstanding against Parent; and (iii) Parent is not in violation any term of any
judgments, decrees, injunctions or orders outstanding against it. An action,
suit, proceeding, arbitration or investigation shall be considered "threatened"
for purposes of this Section 5.13 if Parent has received written notice or
otherwise has Knowledge
23
that such event may be commenced. Except as set forth on Exhibit 5.13, to
Parent's Knowledge there are no existing facts or conditions which reasonably
would be expected to give rise to any charge, claim, litigation, proceeding,
or investigation.
ARTICLE 6.
ADDITIONAL AGREEMENTS
---------------------
6.1) Access to Information. During the period prior to the Closing, NOW shall
---- ---------------------
give to Parent and its attorneys, accountants or other authorized
representatives, full access to all of the property, books, contracts and
records of NOW and shall furnish to Parent during such period all such
information concerning its business as Parent reasonably may request.
6.2) Restrictions. Except as disclosed in Exhibit 6.2 hereto, NOW covenants
---- ------------
that during the period from the date of this Agreement to the Closing (except as
Parent otherwise has consented in writing):
(a) The business of NOW will be conducted only in the usual and ordinary
manner.
(b) No change will be made in NOW's authorized or issued corporate shares
or in its capital structure.
(c) No increase will be made in the compensation payable to or to become
payable to any employee of NOW, and no bonus payment will be made by NOW to
any such employee, except in each case in the ordinary course of business
consistent with past practice.
(d) NOW will not embark upon any new venture, enter into or amend any
material leases or agreements, purchase any material fixed assets or
equipment, amend any loan agreements, guarantee any obligation or increase
any existing lines of credit.
(e) NOW will not sell, dispose, transfer, assign or otherwise remove any of
its material assets except in the ordinary course of business and
consistent with past practice.
(f) NOW, in all material respects, will timely pay and discharge all bills
and monetary obligations and timely and properly perform all of its
obligations and commitments under all existing contracts and agreements
pertaining to or affecting NOW.
(g) NOW shall use its reasonable best efforts to preserve the business
organization and assets of NOW and to keep available to Parent the services
of NOW's present employees, and not to impair relationships with suppliers,
customers and others having business relations with NOW.
(h) NOW will maintain all insurance policies listed on Exhibit 4.13 hereto
in effect.
6.3) Preserve Accuracy of Representations and Warranties. NOW shall refrain
---- ---------------------------------------------------
from taking any action, other than in the ordinary course of business, except
with the prior written consent of
24
Parent, which would render any representation, warranty or agreement of NOW in
this Agreement inaccurate or breached as of the Closing. At all times prior to
the Closing, NOW will promptly inform Parent in writing with respect to any
matters that arise after the date of this Agreement which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in the Exhibits. NOW promptly will notify Parent in writing
of all lawsuits, claims, proceedings and investigations that may be
threatened, brought, asserted or commenced against NOW or NOW's officers or
directors.
6.4) No Solicitation of Transactions. NOW shall cause its officers, directors,
---- -------------------------------
employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained by it) not to initiate,
solicit or encourage, directly or indirectly (including by way of furnishing
non-public information or assistance), 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 Competing Transaction, or enter into or continue
discussions or negotiations with any person or entity in furtherance of such
inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize any of their respective officers, directors
or employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by them to take any such action, and NOW shall
notify Parent of all inquiries or proposals which it receives relating to any of
such matters.
6.5) Public Announcements. NOW understands that Parent is a public company,
---- --------------------
and that until the transactions contemplated by this Agreement are made public,
NOW and the Shareholders and those whom they advise of this transaction (which
shall only be on a "need to know basis") may be privy to material inside
information; accordingly, NOW understands, and NOW has apprised those of its
officers, directors and employees who know of the potential transaction, of the
need for confidentiality and the potential consequences of any trading in Parent
Common Stock. No public announcements shall be made concerning the negotiations
between the parties, this Agreement or the transactions contemplated herein,
without the prior mutual consent of NOW and Parent, except as may be required by
law or the rules or regulations of The Nasdaq Stock Market. The parties agree
that, to the maximum extent feasible, they will advise and confer with each
other prior to the issuance of any reports, statements or releases pertaining to
this Agreement or the transactions contemplated herein. In addition, the
parties agree to respond to all inquiries with respect to the Merger by stating
that it is their policy not to comment on such matters.
6.6) Appropriate Action; Consents; Filings.
---- -------------------------------------
(a) NOW, Parent and Subsidiary shall use their respective best efforts to
(i) take, or cause to be taken, all appropriate action, and do, or cause to
be done, all things necessary, proper or advisable under applicable law or
required to be taken by any Governmental Entity or otherwise to consummate
the Merger as promptly as practicable, (ii) obtain from any Governmental
Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by NOW, Parent or
Subsidiary in connection with the authorization, execution and delivery of
this Agreement and the consummation of the Merger, and (iii) as promptly as
practicable, make all necessary filings, and thereafter make any other
required submissions, with respect to this
25
Agreement and the Merger required under any applicable law; provided that
NOW and Parent shall cooperate with each other in connection with the
making of all such filings, including providing copies of all such
documents to the other party and its advisors prior to filing and, if
requested, to accept all reasonable additions, deletions or changes
suggested in connection therewith. NOW and Parent shall use reasonable
best efforts to furnish to the other party all information required for
any application or other filing to be made pursuant to the rules and
regulations of any applicable law in connection with the Merger and this
Agreement.
(b) (i) NOW, Parent and Subsidiary shall give any notices to third
parties, and use, their reasonable best efforts to obtain any third
party consents, (A) necessary to consummate the Merger, (B) disclosed
or required to be disclosed in the exhibits to this Agreement or (C)
required to prevent a Material Adverse Effect on NOW, Parent or
Subsidiary.
(ii) In the event that NOW, Parent or Subsidiary shall fail to obtain
any third party consent described in subsection (b)(i) above, each
party, as appropriate, shall use its reasonable best efforts, and
shall take any such actions reasonably requested by any other party,
to minimize any adverse effect on NOW, Parent or Subsidiary which
could reasonably be expected to result after the Effective Time, from
the failure to obtain such consent.
(c) From the date of this Agreement until the Effective Time, the parties
shall each promptly notify each other of any pending or threatened action,
proceeding or investigation by any Governmental Entity or any other person
(i) challenging or seeking damages in connection with the Merger or (ii)
seeking to restrain or prohibit the consummation of the Merger.
6.7) Tax-Free Reorganization: Pooling. None of NOW, Parent or Subsidiary shall
---- --------------------------------
take any action which would jeopardize the treatment of the Merger as a tax-free
reorganization or which would prevent the Merger from being accounted for as a
pooling of interests.
6.8) Preparation of S-4. Parent shall prepare and file as promptly as
---- ------------------
practicable after the execution of this Agreement with the SEC a registration
statement on Form S-4 (the "S-4"). NOW shall furnish all information concerning
NOW and the Shareholders as may be reasonably requested in connection with the
S-4. Parent shall use its best efforts to have the S-4 declared effective under
the Securities Act as promptly as practicable after such filing. Parent shall
also take any action (other than qualifying to do business in any jurisdiction
in which it is not now so qualified) required to be taken under any applicable
state securities laws in connection with the issuance of Parent Common Stock
in the Merger, and NOW shall furnish all information concerning NOW and the
Shareholders as may be reasonably requested in connection with any such
action.
6.9) Nasdaq Listing. Parent will make such filings as are necessary with The
---- --------------
Nasdaq Stock Market regarding the transactions contemplated hereby, including
filing a Notification Form for
26
Listing of Additional Shares with respect to the shares of Parent Common Stock
to be issued in the Merger.
6.10) HSR Act. In the event that the parties determine that the proposed
----- -------
transactions are subject to a waiting period under HSR Act, NOW and Parent shall
promptly file or cause to be filed on behalf of itself and any other acquired or
acquiring persons under the HSR Act, Premerger Notification and Report Forms
with respect to the transactions contemplated herein, respond to any requests
for additional information and documents and provide the necessary information
and make the necessary filings under the HSR Act. The Effective Time shall be
reasonably extended as necessary to allow the period specified in the HSR Act
and any extensions thereof to expire prior to such date.
6.11) Shareholder Matters. NOW shall call a meeting of its Shareholders for
----- -------------------
the purpose of voting upon matters relating to this Agreement and the Merger to
be held as soon as practicable after the date hereof. NOW will, through its
Board of Directors, recommend to its Shareholders approval of this Agreement,
the Merger and the other transactions contemplated hereby or thereby and will
use its reasonable best efforts to cause its Shareholders to approve the Merger.
6.12) Tax Matters. Each of the parties agrees to prepare and file any and all
----- -----------
tax returns, reports and other filings regarding the tax treatment of the Merger
in a manner which is consistent in all respects with the intent and expectation
set forth herein.
ARTICLE 7.
CONDITIONS OF CLOSING; ABANDONMENT OF TRANSACTION
-------------------------------------------------
7.1) Conditions of Each Party's Obligations to Effect the Merger. The
---- -----------------------------------------------------------
respective obligations of NOW, Parent and Subsidiary to consummate the Merger
are subject to the satisfaction upon or prior to the Closing of the following
conditions:
(a) Shareholder Approval. This Agreement and the Merger shall have been
--------------------
approved by the affirmative vote of the holders of at least 51% of shares
of outstanding NOW Common Stock in accordance with the MBCA and the
articles of incorporation and by-laws of NOW.
(b) HSR Approval. Any waiting period applicable to the consummation of the
------------
merger under the HSR Act shall have expired or been terminated.
(c) No Injunctions or Restraints. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other order issued by any
Governmental Entity of competent jurisdiction nor other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect.
(d) Statutes. No action shall have been taken, and no statute, rule,
--------
regulation or order shall have been enacted, promulgated or issued or
deemed applicable to the Merger by any Governmental Entity which would (i)
make the consummation of the Merger illegal or (ii)
27
render NOW, Parent or Subsidiary unable to consummate the Merger, except
for any waiting period provisions.
(e) Accountant's Letters. Ernst & Young LLP, independent accountants to
--------------------
Parent, shall have rendered its opinion(s), addressed to Parent, in form
and substance satisfactory to Parent as to the appropriateness of pooling
of interest accounting for the Merger under Accounting Principles Board
Opinion No. 16, and Ernst & Young LLP shall have rendered its opinion to
Parent to the effect that the Merger has been structured in a manner which
is tax-free with respect to Parent and its stockholders and NOW and the
Shareholders.
(f) Form S-4. The S-4 registering the issuance and delivery of the shares
--------
of Parent Common Stock shall have been declared effective in accordance
with the provisions of the Securities Act, and no stop order suspending the
effectiveness of the S-4 shall have been issued by the SEC. All other
filings necessary under federal and state securities laws to permit the
issuance and delivery of the shares of Parent Common Stock in compliance
therewith shall have been made, and any authorizations in connection
therewith from all applicable securities regulatory authorities shall have
been obtained.
(g) Escrow Agreement. Parent, NOW and the Shareholders shall have executed
----------------
and delivered to the Escrow Agent the Escrow Agreement.
7.2) Conditions of Obligations of Parent and Subsidiary. The respective
---- --------------------------------------------------
obligations of Parent and Subsidiary to consummate the Merger are subject to
the satisfaction prior to or upon the Closing of the following conditions,
unless waived by Parent.
(a) Representations and Warranties. The representations and warranties of
------------------------------
NOW set forth in this Agreement shall be true and correct in all material
respects as of the Closing, as though made on and as of such date (provided
that those representations or warranties made as of a particular date need
only be true and correct as of such date).
(b) Performance of Obligations of NOW. NOW shall have performed in all
---------------------------------
material respects all obligations and covenants required to be performed by
it under this Agreement prior to or as of the Closing.
(c) Consents. The consents, approvals and authorizations described (or
--------
required to be described) on Exhibit 4.17(b) hereto shall have been
obtained in form and in substance reasonably satisfactory to Parent.
(d) No Material Adverse Changes. There shall not have been a material
---------------------------
adverse change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results of
operations of NOW, whether or not arising from transactions in the ordinary
course of business, and NOW shall not have sustained any material loss or
interference with its business or properties from fire, explosion, flood or
other casualty, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order or
decree.
28
(e) Affiliate Agreements. NOW shall have delivered (or cause to be
--------------------
delivered) duly executed Affiliate Agreements substantially in the form of
Exhibit 7.2(e) from each affiliate of NOW.
(f) Employment Agreements. NOW shall have delivered (or cause to be
---------------------
delivered) duly executed Employment Agreements substantially in the form of
Exhibit 7.2(f) from ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇.
(g) Accountant's Letter. Deloitte & Touche LLP, independent accountants to
-------------------
NOW, shall have rendered its opinion, addressed to NOW, but upon which
Ernst & Young LLP may rely, in form and substance satisfactory to NOW as to
the appropriateness of pooling of interest accounting for the Merger under
Accounting Principles Board Opinion No. 16.
(h) Stock Powers. NOW shall have delivered (or caused to be delivered)
------------
duly executed stock powers from each Shareholder, with signatures
guaranteed, with respect to the Indemnification Escrow Shares substantially
in the form of Exhibit 7.2(h).
(i) Releases. NOW shall have delivered (or cause to be delivered) duly
--------
executed releases substantially in the form on Exhibit 7.2(i) hereto,
executed by each director and each officer of NOW, releasing NOW from any
and all liabilities and obligations owed by NOW to him or her, including
but not limited to those owed to him or her in his or her capacity as a
director, officer, shareholder and/or employee of NOW.
(j) ▇▇▇▇▇▇▇▇ Development Lease. NOW shall have delivered a letter
--------------------------
agreement with ▇▇▇▇▇▇▇▇ Development in which the current lease of NOW's
facilities is effectively amended to allow NOW to store, use and dispose of
hazardous materials necessary to the conduct of its business so long as
such storage, use and disposal conforms to applicable law. NOW shall use
its reasonable best efforts to: (i) obtain from ▇▇▇▇▇▇▇▇ Development a
release of any liens ▇▇▇▇▇▇▇▇ Development may have pursuant to its lease
with NOW; (ii) obtain a non-disturbance agreement from mortgagees of
▇▇▇▇▇▇▇▇ Development; (iii) obtain ▇▇▇▇▇▇▇▇ Development's acknowledgment
that the Merger is not an assignment under the terms of its lease; and (iv)
obtain ▇▇▇▇▇▇▇▇ Development's consent to NOW's sublease of lab facilities.
7.3) Conditions of Obligations of NOW. The obligation of NOW to effect the
---- --------------------------------
Merger is subject to the satisfaction prior to or upon the Closing of the
following conditions, unless waived by NOW:
(a) Representations and Warranties. The representations and warranties of
------------------------------
Parent and Subsidiary set forth in this Agreement shall be true and correct
in all material respects as of the Closing, as though made on and as of
such date (provided that those representations or warranties made as of a
particular date need only be true and correct as of such date).
(b) Performance of Obligations of Parent and Subsidiary. Parent and
---------------------------------------------------
Subsidiary shall have performed in all material respects all obligations
and covenants required to be performed by them under this Agreement prior
to or as of the Closing.
29
(c) Consents. The consents, approvals and authorizations described (or
--------
required to be described) on Exhibit 5.3 hereto shall have been obtained in
form and in substance reasonably satisfactory to NOW.
(d) Accountant's Letters. Ernst & Young LLP, independent accountants to
--------------------
Parent, shall have rendered its opinion(s), addressed to Parent, in form
and substance satisfactory to Parent as to the appropriateness of pooling
of interest accounting for the Merger under Accounting Principles Board
Opinion No. 16, and Ernst & Young LLP shall have rendered its opinion to
Parent to the effect that the Merger has been structured in a manner which
is tax-free with respect to Parent and its stockholders and NOW and the
Shareholders.
(e) No Material Adverse Changes. There shall not have been a material
---------------------------
adverse change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results of
operations of Parent, whether or not arising from transactions in the
ordinary course of business, and Parent shall not have sustained any
material loss or interference with its business or properties from fire,
explosion, flood or other casualty, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental
action, order or decree.
ARTICLE 8.
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
8.1) Termination. This Agreement may be terminated and the Merger may be
---- -----------
abandoned at any time prior to the Effective Time, notwithstanding any requisite
approval of this Agreement and the Merger by the shareholders of NOW only in
accordance with the following provisions:
(a) by mutual written consent of each of NOW, Parent and Subsidiary; or
(b) by NOW if either (i) the Effective Time shall not have occurred on or
before June 30, 1998; provided, however, that the right to terminate this
Agreement under this Section 8.1(b) shall not be available to NOW if its
failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Effective Time to occur on or before
such date, or (ii) there shall be any law that makes consummation of the
Merger illegal or otherwise prohibited or if any court of competent
jurisdiction or Governmental Entity shall have issued an order, decree,
ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action
shall have become final and unappealable; provided that NOW shall have
complied with its obligations under Section 6.6 above, or (iii) any of
the conditions provided in Section 7.3 have not been satisfied or waived;
or
(c) by Parent if either (i) the Effective Time shall not have occurred on
or before June 30, 1998; provided, however, that the right to terminate
this Agreement under this Section 8.1(c) shall not be available to Parent
if Parent's or Subsidiary's failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the
30
Effective Time to occur on or before such date, or (ii) there shall be any
law that makes consummation of the Merger illegal or otherwise prohibited
or if any court of competent jurisdiction or Governmental Entity shall have
issued an order, decree, ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree,
ruling or other action shall have become final and unappealable; provided
that Parent and Subsidiary shall have complied with their obligations under
Section 6.6 above, or (iii) any of the conditions provided in Section 7.2
have not been satisfied or waived; or
(d) by Parent, if the Board of Directors of NOW withdraws, modifies or
changes its recommendation of this Agreement or the Merger in a manner
adverse to Parent or shall have resolved to do any of the foregoing or the
Board of Directors of NOW shall have recommended to the shareholders of NOW
any Competing Transaction or resolved to do so; or
(e) by Parent if more than 10% of the Shareholders shall have dissented to
the Merger in accordance with the applicable provisions of the MBCA; or
(f) by NOW, in the event of a material breach by Parent or Subsidiary of
any representation, warranty, covenant or agreement contained herein which
has not been cured or is not curable by June 30, 1998; or
(g) by Parent, in the event of a material breach by NOW of any
representation, warranty, covenant or agreement contained herein which has
not been cured or is not curable by June 30, 1998.
8.2) Termination; Termination Payment. In the event of termination of this
---- --------------------------------
Agreement, this Agreement shall forthwith become void, and there shall be no
liability on the part of any of the parties hereto or their respective
affiliates, directors, officers, or stockholders, except as provided below and
except for those obligations intended to survive termination. In the event
that: (i) either Parent or NOW shall terminate this Agreement because of
material misrepresentation or a breach of a material covenant by the other
party; or (ii) Parent shall terminate this Agreement pursuant to Section 8.1(d);
or (iii) the Merger shall not have been approved by the affirmative vote of the
holders of at least 51% of the voting securities of NOW; or (iv) the number of
Dissenting Shareholders exceeds 10% and NOW enters into a Competing Transaction
within one year of the date hereof with any person or entity other than Parent,
(A) in the case of (i) and (ii), the nonterminating party shall be liable to
and shall pay to the terminating party by wire transfer the sum of $2,200,000
in full satisfaction of all claims within fifteen (15) business days after the
nonterminating party's receipt of written notice of termination, and (B) in
the case of (iii) and (iv), NOW shall be liable to and shall pay to the Parent
by wire transfer the sum of $2,200,000 in full satisfaction of all claims
within fifteen (15) business days after the Shareholders' Meeting, in the case
of (iii) and the entering into of such Competing Transaction, in the case of
(iv). It is agreed that the payments due hereunder are the exclusive remedy
for termination of this Agreement. Notwithstanding the foregoing, in the event
of a breach by NOW of Section 6.4, Parent may pursue any and all remedies
available to it at law or in equity. Recovery by Parent of a termination
payment under this Section 8.2 shall not bar any such action for breach of
Section
31
6.4, but the amount of any monetary damages awarded to Parent in such action
shall be reduced by the termination payment actually received by Parent.
8.3) Amendment. This Agreement may be amended by the parties hereto by action
---- ---------
taken by or on behalf of their respective Boards of Directors at any time prior
to the Effective Time; provided, however, that, after the approval of this
Agreement and the Merger by the shareholders of NOW, no amendment may be made
which would reduce the timing, certainty or number of the shares of Parent
Common Stock. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
8.4) Waiver. At any time prior to the Effective Time, any party hereto may (a)
---- ------
extend the time for the performance of any obligation or other act of any other
party hereto, (b) waive any inaccuracy in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any agreement or condition contained herein. Any such extension
or waiver shall be valid if set forth in any instrument in writing signed by the
party or parties to be bound thereby.
ARTICLE 9
GENERAL PROVISIONS
------------------
9.1) Certain Employee Benefit Matters. Parent confirms to NOW that it is
---- --------------------------------
Parent's present intent to provide after the Effective Time to continuing
employees of NOW employee benefit programs that in the aggregate are generally
not less favorable to such employees than those being provided to Parent's
employees on the date of this Agreement. To the extent Parent's employee
benefit programs provide medical or dental welfare benefits after the Closing
Date, Parent shall use reasonable efforts to cause all pre-existing condition
exclusions to be waived, and Parent shall provide that any expenses incurred on
or before the Closing Date shall be taken into account under the Parent employee
benefit programs for purposes of satisfying the applicable deductible,
coinsurance and maximum out-of-pocket provisions for such employees and their
covered dependents.
9.2) Director and Officer Indemnification. Until the date of issuance of the
---- ------------------------------------
first independent audit report with respect to the financial statements of
Parent after the Effective Time, Parent and the Surviving Corporation each
agrees that for acts occurring prior to the Effective Time, all rights to
indemnification and advancement of expenses existing in favor of the directors
and officers of NOW under the provisions existing on the date hereof of the
Articles of Incorporation, Bylaws and indemnification agreements of NOW shall
survive the Effective Time, and Parent and the Surviving Corporation each
agrees to indemnify and advance expenses to such directors and officers to the
full extent required or permitted under the provisions existing on the date
hereof of NOW's Articles of Incorporation and Bylaws and indemnification
agreements. To the extent that any matter which is properly the subject of
indemnification with respect to such continuing director and officer
indemnification obligations results from a breach of a representation,
warranty or covenant under this Agreement, Parent shall not be relieved of its
requirements to honor such continuing indemnification obligations but shall
itself be entitled to seek indemnification pursuant to the terms of this
Agreement. If such a claim by Parent is indemnified under Section 9.5, no
32
director or officer shall thereafter be entitled to seek indemnification under
the articles of incorporation or by-laws of NOW or director and officer
indemnity agreements for any amounts required to be paid pursuant to this
Agreement.
9.3) Expenses. All costs and expenses incurred in connection with this
---- --------
Agreement and the transactions contemplated hereby (whether or not the Merger is
consummated) shall be paid by the party incurring such expenses, except that if
the Merger is not consummated Parent and NOW shall share equally the expenses
incurred in connection with filings under the HSR Act.
9.4) Survival of Representations and Warranties. The representations and
---- ------------------------------------------
warranties in this Agreement and in any instrument delivered pursuant to this
Agreement shall survive the Effective Time for a period of twelve months.
9.5) Indemnification.
---- ---------------
(a) Subject to the limitations set forth in Section 9.5(b) below, Parent
and Subsidiary, jointly and severally, shall indemnify and hold NOW and the
shareholders of NOW harmless at all times from and after the date of this
Agreement against and in respect of all damages, losses, costs and expenses
(including reasonable attorney fees but not including any loss resulting
from a diminution in the value of Parent Common Stock received in the
Merger) which NOW and/or the shareholders of NOW may suffer or incur in
connection with the breach by Parent or Subsidiary of any of their
respective representations, warranties or covenants in this Agreement.
(b) NOW and the shareholders of NOW shall not assert any claim under
Section 9.5(a) above unless and until such claims exceed an aggregate of
$100,000 and any claim under Section 9.5(a) above must be asserted within
twelve months from the Effective Time or be forever barred. Notwithstanding
the foregoing or anything in this Agreement to the contrary, no claim
seeking indemnification with respect to matters set forth in Section 9.5(a)
may be brought after the date of issuance of the first independent audit
report with respect to the financial statements of Parent after the
Effective Time if such claim is of a type expected to be encountered in the
course of an audit performed in accordance with generally accepted auditing
standards.
(c) Subject to the limitations set forth in Section 9.5(d) below, NOW and
the shareholders of NOW shall indemnify and hold the Surviving Corporation,
Parent and Subsidiary harmless at all times from and after the date of
this Agreement, against and in respect of all losses, damages, costs and
expenses (including reasonable attorney fees) which the Surviving
Corporation, Parent and/or Subsidiary may suffer or incur in connection
with the breach by NOW of any of its representations, warranties or
covenants in this Agreement.
(d) The Surviving Corporation, Parent and Subsidiary shall not assert any
claim under Section 9.5(c) above unless and until such claims exceed an
aggregate of $100,000; any claim under Section 9.5(c) above must be
asserted within twelve months from the Effective Time or be forever barred;
and any claim under Section 9.5(c) above must be
33
made only against the Escrow Fund and only in accordance with the terms
of the Escrow Agreement. Notwithstanding the foregoing or anything in
this Agreement to the contrary, no claim seeking indemnification with
respect to matters set forth in Section 9.5(c) may be brought after the
date of issuance of the first independent audit report with respect to
the financial statements of Parent after the Effective Time if such claim
is of a type expected to be encountered in the course of an audit
performed in accordance with generally accepted auditing standards.
(e) If a claim by a third party is made against any of the indemnified
parties, and if any of the indemnified parties intends to seek indemnity
with respect to such claim under this Section 9.5, such indemnified party
shall promptly notify the indemnifying party of such claim. The
indemnifying party shall have thirty (30) days after receipt of the above-
mentioned notice to undertake, conduct and control, through counsel of such
party's own choosing (subject to the consent of the indemnified party, such
consent not to be unreasonably withheld) and at such party's expense, the
settlement or defense of it, and the indemnified party shall cooperate with
the indemnifying party in connection with such efforts; provided that: (i)
the indemnifying party shall not by this Agreement permit to exist any
lien, encumbrance or other adverse charge upon any asset of any indemnified
party, (ii) the indemnifying party shall permit the indemnified party to
participate in such settlement or defense through counsel chosen by the
indemnified party, provided that the fees and expenses of such counsel
shall be borne by the indemnified party, (iii) the indemnifying party shall
agree promptly to reimburse the indemnified party for the full amount of
any loss resulting from such claim and all related expense incurred by the
indemnified party pursuant to this Article, and (iv) the indemnifying party
will not compromise or settle any claim without the prior consent of the
indemnified party. So long as the indemnifying party is reasonably
contesting any such claim in good faith, the indemnified party shall not
pay or settle any such claim. If the indemnifying party does not notify
the indemnified party within thirty (30) days after receipt of the
indemnified party's notice of a claim of indemnity under this Section 9.5
that such party elects to undertake the defense of such claim, the
indemnified party shall have the right to contest, settle or compromise the
claim in the exercise of the indemnified party's exclusive discretion at
the expense of the indemnifying party.
(f) In the event that Parent and/or Subsidiary have a claim against NOW,
that claim must be asserted against the Escrow Fund only and must be made
in accordance with the provisions of the Escrow Agreement.
(g) To the extent that Parent or Subsidiary make a claim against the
Indemnification Escrow Shares pursuant to the Escrow Agreement, and such
claim is paid in shares of Parent Common Stock, then for purposes of such
payment, the shares of Parent Common Stock shall be valued at the Initial
Price, if Section 3.2(a) is applicable, or the Closing Price, if any of
Sections 3.2(b)-(e) is applicable.
9.6) Notices. All notices, requests, claims, demands and other communications
---- -------
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be deemed given if delivered personally, by facsimile, by
certified mail (postage prepaid, return receipt requested) or sent by overnight
courier (in each case, providing proof of delivery) to the parties at the
addresses
34
and/or facsimile numbers set forth at the beginning of this Agreement (or such
other address or facsimile number for a party as shall be specified in like
notice).
9.7) Entire Agreement. This Agreement (including the Exhibits and Schedules
---- ----------------
hereto) and the other documents referenced herein contain the entire agreement
between the parties with respect to the subject matter hereof and supersede all
prior arrangements and understandings, both written and oral, with respect
thereto.
9.8) Successors and Assigns. The provisions of this Agreement shall be binding
---- ----------------------
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of the other parties hereto.
9.9) Parties in Interest. This Agreement shall be binding upon and inure
---- -------------------
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, other than (a) Section 3.3 above (which is intended to be for the
benefit of the persons holding the stock options referred to therein); (b)
Section 9.1 above (which is intended to be for the benefit of the employees of
NOW); and (c) Section 9.4 and Section 9.5(a) which are intended to be for the
benefit of the shareholders of NOW.
9.10) Enforcement. The parties agree that irreparable damage would occur in
----- -----------
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement pursuant to Section 9.11 below, this
being in addition to any other remedy to which they are entitled at law or in
equity.
9.11) Governing Law; Jurisdiction. This Agreement shall be governed and
----- ---------------------------
construed in accordance with the laws of the State of Delaware without giving
effect to the provisions thereof relating to conflicts of law. Each party
hereto: (1) agrees that any proceeding arising out of this Agreement and the
Merger shall be brought in a state court or United States federal court located
in the State of New York; (2) consents to the jurisdiction of each such court in
any such proceeding; (3) waives any objection which such party may have to the
laying of venue of any such proceeding in any of such courts; and (4) agrees
that New York is the most convenient forum for litigation of any such
proceeding.
9.12) Counterparts; Effectiveness. This Agreement may be signed in any number
----- ---------------------------
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received counterparts
hereof signed by all of the other parties hereto.
9.13) Delivery by NOW. NOW shall deliver or cause to be delivered to Parent at
----- ---------------
Closing:
(i) A complete and correct copy of its articles of incorporation, as
amended to date, certified by the Secretary of State of the State of
Minnesota and its by-laws,
35
as amended to date, certified by the Secretary or an Assistant
Secretary of NOW, and the original corporate stock ledgers,
corporate seal and minute book(s) of NOW.
(ii) Long form certificates of good standing or legal existence, as
appropriate, as of a recent date issued by (i) the Secretary of State
of the State of Minnesota to the effect that NOW is in good standing
under the laws of such state, and (ii) the Secretary of State of each
state in which NOW is authorized to transact business as a foreign
corporation to the effect that NOW is duly qualified as a foreign
corporation in such state.
(iii) Such other certificates and representations as are reasonably
requested by Ernst & Young LLP in order to render its opinions.
(iv) With respect to each subsidiary of NOW, items (i) and (ii) above.
(v) Such further instruments or documents as Parent or its counsel may
reasonably request to assure the full and effective completion of the
Merger and to assure the effective completion of the transactions
contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
NOW Technologies , Inc.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer
ATMI, Inc.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
Glide Acquisition, Inc.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
36
None of the following exhibits referenced in the Merger Agreement is contained
in the attached copy:
Exhibit 4.1 Trade Names and Current Officers and
Directors
Exhibit 4.4 Record Owners of Capital Stock and
Options
Exhibit 4.5 Subsidiaries
Exhibit 4.6 (a) Undisclosed Liabilities
Exhibit 4.7 (a) Taxes
Exhibit 4.7 (b) Former Subsidiaries
Exhibit 4.8 Liens and Encumbrances
Exhibit 4.9 (a) Intellectual Property
Exhibit 4.9 (c) Nondisclosure Agreements
Exhibit 4.9 (d) Royalties
Exhibit 4.9 (e) Infringement
Exhibit 4.10 (a) Material Contracts
Exhibit 4.10 (b) Employment Contracts and Employees
Exhibit 4.10 (c) Breach of Contract
Exhibit 4.11 Contracts with Related Parties
Exhibit 4.12 Product Liability Claims
Exhibit 4.13 Insurance
Exhibit 4.14 Litigation
Exhibit 4.16 Environmental Matters
Exhibit 4.17 (b) Required Consents
Exhibit 4.19 (a) Employee Benefit Plans
Exhibit 4.20 (a) Indebtedness - Owed by NOW
Exhibit 4.20 (b) Indebtedness - Owed to NOW
Exhibit 4.22 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Exhibit 4.23 Customers and Suppliers
Exhibit 4.25 Powers of Attorney
Exhibit 5.3 Required Consents
Exhibit 5.7 Undisclosed Liabilities
Exhibit 5.13 Litigation
Exhibit 6.2 Interim Operations
Exhibit 7.2 (e) Form of Affiliate Agreement
Exhibit 7.2 (f) Form of Employment Agreement
Exhibit 7.2 (h) Form of Stock Power
Exhibit 7.2 (i) Form of Release
Exhibit 9.5 Form of Escrow Agreement
The registrant agrees to furnish supplementally a copy of any omitted exhibits
to the Securities and Exchange Commission upon request.