Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
dated as of March 17, 2003
by and among
GTECH Holdings Corporation,
Bengal Acquisition Co.
and
Interlott Technologies, Inc.
ARTICLE I THE MERGER 1
SECTION 1.1. THE MERGER 1
SECTION 1.2. CLOSING 2
SECTION 1.3. EFFECTIVE TIME OF THE MERGER 2
SECTION 1.4. EFFECTS OF THE MERGER 2
SECTION 1.5. SUBSEQUENT ACTIONS 2
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS 3
SECTION 2.1. CONVERSION OF SHARES 3
SECTION 2.2. ELECTION AND PRORATION PROCEDURES; EXCHANGE PROCEDURES 4
SECTION 2.3. DISSENTING SHARES 9
SECTION 2.4. ADJUSTMENT OF MERGER CONSIDERATION AND OPTION CONSIDERATION 10
ARTICLE III THE SURVIVING CORPORATION 10
SECTION 3.1. CERTIFICATE OF INCORPORATION 10
SECTION 3.2. BYLAWS 10
SECTION 3.3. DIRECTORS AND OFFICERS 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY 11
SECTION 4.1. CORPORATE EXISTENCE AND POWER 11
SECTION 4.2. CORPORATE AUTHORIZATION 11
SECTION 4.3. AUTHORIZATIONS 11
SECTION 4.4. NON-CONTRAVENTION 12
SECTION 4.5. CAPITALIZATION 12
SECTION 4.6. SUBSIDIARIES 13
SECTION 4.7. SEC AND RELATED FILINGS 14
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SECTION 4.8. COMPANY FINANCIAL STATEMENTS 14
SECTION 4.9. PROXY/PROSPECTUS; REGISTRATION STATEMENT 15
SECTION 4.10. ABSENCE OF CERTAIN CHANGES 15
SECTION 4.11. LITIGATION 15
SECTION 4.12. COMPLIANCE WITH LAWS 15
SECTION 4.13. SYSTEMS 16
SECTION 4.14. REAL PROPERTY 16
SECTION 4.15. PERSONAL PROPERTY 16
SECTION 4.16. CONTRACTS 17
SECTION 4.17. INSURANCE 17
SECTION 4.18. INTELLECTUAL PROPERTY 18
SECTION 4.19. TAXES 18
SECTION 4.20. EMPLOYEE BENEFITS 20
SECTION 4.21. LABOR MATTERS 22
SECTION 4.22. ENVIRONMENTAL MATTERS 22
SECTION 4.23. ABSENCE OF UNDISCLOSED LIABILITIES 24
SECTION 4.24. OPINION OF FINANCIAL ADVISOR 24
SECTION 4.25. BROKERS 24
SECTION 4.26. BOARD RECOMMENDATION; SECTION 203; REQUIRED VOTE 24
SECTION 4.27. PRIOR NEGOTIATIONS 25
SECTION 4.28. CERTAIN BUSINESS PRACTICES 25
SECTION 4.29. AFFILIATE TRANSACTIONS 26
SECTION 4.30. FULL DISCLOSURE 26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY 26
SECTION 5.1. CORPORATE EXISTENCE AND POWER 26
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SECTION 5.2. CORPORATE AUTHORIZATION 27
SECTION 5.3. AUTHORIZATIONS 27
SECTION 5.4. NON-CONTRAVENTION 27
SECTION 5.5. CAPITALIZATION 28
SECTION 5.6. SUBSIDIARIES 28
SECTION 5.7. SEC AND RELATED FILINGS 29
SECTION 5.8. PARENT FINANCIAL STATEMENTS 29
SECTION 5.9. DISCLOSURE DOCUMENTS, INFORMATION SUPPLIED 30
SECTION 5.10. ABSENCE OF CERTAIN CHANGES 30
SECTION 5.11. LITIGATION 30
SECTION 5.12. COMPLIANCE WITH LAWS 30
SECTION 5.13. REAL PROPERTY 31
SECTION 5.14. PERSONAL PROPERTY 31
SECTION 5.15. TAXES 31
SECTION 5.16. LABOR MATTERS 32
SECTION 5.17. ENVIRONMENTAL MATTERS 32
SECTION 5.18. ABSENCE OF UNDISCLOSED LIABILITIES 34
SECTION 5.19. BROKERS 34
SECTION 5.20. BOARD APPROVAL 34
SECTION 5.21. CERTAIN BUSINESS PRACTICES 34
SECTION 5.22. FULL DISCLOSURE 34
SECTION 5.23. FINANCING 35
SECTION 5.24. INTELLECTUAL PROPERTY 35
SECTION 5.25. CONTRACTS 35
ARTICLE VI CONDUCT OF BUSINESS OF COMPANY PENDING THE MERGER 35
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SECTION 6.1. CONDUCT OF COMPANY'S BUSINESS 35
SECTION 6.2. AGREEMENTS OF COMPANY'S AFFILIATES 38
SECTION 6.3. NOTICE OF CERTAIN EVENTS 38
SECTION 6.4. NO SOLICITATION 38
ARTICLE VII ADDITIONAL AGREEMENTS 41
SECTION 7.1. HSR ACT 41
SECTION 7.2. PROXY STATEMENT - PROSPECTUS 41
SECTION 7.3. STOCKHOLDERS MEETING 42
SECTION 7.4. ACCESS TO INFORMATION, CONFIDENTIALITY 42
SECTION 7.5. CONSENTS, APPROVALS 43
SECTION 7.6. INDEMNIFICATION AND INSURANCE 43
SECTION 7.7. EMPLOYEE BENEFITS 44
SECTION 7.8. NOTIFICATION OF CERTAIN MATTERS 44
SECTION 7.9. FURTHER ACTION 45
SECTION 7.10. PUBLIC ANNOUNCEMENTS 45
SECTION 7.11. TRANSFER TAXES 45
SECTION 7.12. AMEX LISTING 45
SECTION 7.13. ADDITIONAL FINANCIAL STATEMENTS 45
SECTION 7.14. AGREEMENT WITH SUPPLIER. 46
SECTION 7.15. TAX OPINIONS. 46
SECTION 7.16. SECTION 16(b) BOARD APPROVAL. 46
ARTICLE VIII CONDITIONS TO CLOSING 46
SECTION 8.1. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER 46
SECTION 8.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUBSIDIARY 47
SECTION 8.3. ADDITIONAL CONDITIONS TO OBLIGATION OF COMPANY 49
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ARTICLE IX TERMINATION 50
SECTION 9.1. TERMINATION 50
SECTION 9.2. EFFECT OF TERMINATION 51
SECTION 9.3. FEES AND EXPENSES 52
ARTICLE X GENERAL PROVISIONS 52
SECTION 10.1. EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES 52
SECTION 10.2. SURVIVAL 52
SECTION 10.3. NOTICES 53
SECTION 10.4. CERTAIN DEFINITIONS 54
SECTION 10.5. AMENDMENT 63
SECTION 10.6. WAIVER 63
SECTION 10.7. HEADINGS 63
SECTION 10.8. SPECIFIC PERFORMANCE 63
SECTION 10.9 WAIVER OF JURY TRIAL. 64
SECTION 10.10. SEVERABILITY 64
SECTION 10.11. ENTIRE AGREEMENT 64
SECTION 10.12. ASSIGNMENT, GUARANTEE OF MERGER SUBSIDIARY OBLIGATIONS 65
SECTION 10.13. PARTIES IN INTEREST 65
SECTION 10.14. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE 65
SECTION 10.15. GOVERNING LAW 65
SECTION 10.16. COUNTERPARTS 65
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EXHIBITS
A Form of Opinion of Counsel to Company
B Form of Opinion of Counsel to Parent
C Form of Company Affiliates Agreement
D Form of Stockholder Voting and Option Agreement
E Lottery Contracts
F Other Contracts
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of March 17, 2003, by and among Interlott Technologies, Inc., a Delaware
corporation (the "Company"), GTECH Holdings Corporation, a Delaware corporation
("Parent"), and Bengal Acquisition Co., a Delaware corporation and an indirect
wholly-owned subsidiary of Parent ("Merger Subsidiary").
WHEREAS, the respective Boards of Directors of Parent, Merger
Subsidiary and the Company have approved the merger of the Company into the
Merger Subsidiary (the "Merger"), upon the terms and subject to the conditions
set forth in this Agreement and in accordance with the General Corporation Law
of the State of Delaware (the "DGCL"), whereby each issued and outstanding share
of common stock, $0.01 par value per share, of the Company (the "Company Common
Stock" or the "Shares"), excluding certain Shares described herein (including
Dissenting Shares), shall be converted into the right to receive the Merger
Consideration (as defined herein); and
WHEREAS, following the recommendations of the Special Committee, the
Board of Directors of the Company has unanimously approved and determined that
this Agreement and the transactions contemplated hereby, including the Merger,
are advisable, fair to, and in the best interests of, the Company and the
stockholders of the Company, and has resolved to recommend approval and adoption
of this Agreement, the Merger and the other transactions contemplated hereby by
such stockholders; and
WHEREAS, Parent and Merger Subsidiary are unwilling to enter into this
Agreement unless, contemporaneously with the execution and delivery of this
Agreement, the beneficial and record holder of a majority of the Company Common
Stock enters into the Stockholder Voting and Option Agreement and the Noncompete
Agreement, and such stockholder has executed and delivered both such agreements;
and
WHEREAS, each of Parent, Merger Subsidiary and the Company desire to
make certain representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to the consummation
thereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements herein
contained, the parties hereto, intending to be legally bound, hereby agree as
follows (certain capitalized terms used herein are defined in Section 10.4):
ARTICLE I
THE MERGER
Section 1.1. THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, the Company shall
be merged with and into the Merger Subsidiary at the Effective Time (as defined
herein). At the Effective Time, the separate
corporate existence of the Company shall cease, and the Merger Subsidiary shall
continue its corporate existence under the laws of the State of Delaware as the
surviving corporation. (Merger Subsidiary and the Company are sometimes
hereinafter referred to as "Constituent Corporations" and the Merger Subsidiary,
after giving effect to the Merger, is sometimes hereinafter referred to as the
"Surviving Corporation.")
Section 1.2. CLOSING. Unless this Agreement shall have been terminated
and the transaction contemplated hereby shall have been abandoned pursuant to
Section 9.1, the closing of the Merger (the "Closing") shall take place at 10:00
a.m., (local time) on the first business day following satisfaction or, if
permissible, waiver of all of the conditions set forth in Article VIII hereof at
the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, Providence, Rhode Island, unless another
date, time or place is agreed to in writing by the parties hereto. At the time
of the Closing, the Company and Merger Subsidiary will file a certificate of
merger in such form as may be required by, and executed and acknowledged in
accordance with, the DGCL with the Secretary of State of the State of Delaware
and make all other filings or recordings required by the DGCL in connection with
the Merger.
Section 1.3. EFFECTIVE TIME OF THE MERGER. The Merger shall, subject to
the DGCL, become effective as of such time as the certificate of merger is duly
filed with the Secretary of State of the State of Delaware or at such time
thereafter as is provided in the certificate of merger (the "Effective Time").
Section 1.4. EFFECTS OF THE MERGER. From and after the Effective Time,
the Merger shall have the effects set forth in the applicable sections of the
DGCL. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the properties, rights, privileges, powers and franchises
of the Constituent Corporations shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Constituent Corporations shall become the
debts, liabilities and duties of the Surviving Corporation.
Section 1.5. SUBSEQUENT ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of either of the Company or Merger Subsidiary
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out the purposes and intent
of this Agreement, the officers and directors of the Surviving Corporation are
hereby authorized to execute and deliver, in the name and on behalf of the
Company and the Merger Subsidiary, all such deeds, bills of sale, assignments
and assurances and to take, in the name and on behalf of each such corporation
or otherwise, all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to or under such rights, properties or assets in the Surviving Corporation and
otherwise to carry out the transactions contemplated by this Agreement.
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ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
Section 2.1. CONVERSION OF SHARES. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time, automatically by
virtue of the Merger and without any further action on the part of any party
hereto or the holder of any shares of capital stock of the Company or Merger
Subsidiary:
(a) All Shares owned by the Company as treasury stock and all
Shares owned by the Company, Parent, Merger Subsidiary or any of their
respective Subsidiaries (other than shares of Company Common Stock held directly
or indirectly in trust accounts, managed accounts and the like or otherwise held
in a fiduciary capacity, including Shares held by a Company Benefit Plan, that
are beneficially owned by third parties (any such Shares, and shares of Parent's
common stock which are similarly held, whether held directly or indirectly by
the Company or the Parent, being referred to as "Trust Account Shares") and
other than any Shares held directly or indirectly by the Company, Parent or any
of their respective Subsidiaries in respect of a debt previously contracted (any
such Shares, and shares of Parent's common stock which are similarly held,
whether held directly or indirectly by the Company or the Parent, being referred
to herein as "DPC Shares") immediately prior to the Effective Time shall be
canceled and retired and shall cease to exist and no consideration shall be
delivered or deliverable in exchange therefor. All shares of Parent's common
stock that are owned by the Company (other than Trust Account Shares and DPC
Shares) shall become treasury stock of Parent.
(b) Each share of common stock of Merger Subsidiary issued and
outstanding immediately prior to the Effective Time shall become one fully paid
and nonassessable share of common stock of the Surviving Corporation and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation.
(c) Each Share issued and outstanding immediately prior to the
Effective Time shall, except as otherwise provided in Sections 2.1(a) and 2.1(f)
or as provided in Section 2.3 with respect to Dissenting Shares, and subject to
Section 9.1(k), be converted into, at the election of the holder as provided in
and subject to the limitations set forth in this Agreement, either (i) the right
to receive $9.00 in cash without interest (the "Cash Consideration"), less any
required withholding of Taxes or (ii) the number of shares of Parent Common
Stock equal to the Exchange Ratio (the "Stock Consideration"). The Cash
Consideration and the Stock Consideration are collectively referred to herein as
the "Merger Consideration". The "Exchange Ratio" shall be equal to the quotient
(rounded to the nearest fourth decimal place) obtained by dividing $9.00 by the
Average Closing Price on the trading day which is three business days preceding
the date on which the Company Stockholders Meeting occurs.
(d) All Shares issued and outstanding immediately prior to the
Effective Time, when converted as provided in this Section 2.1, shall cease to
be outstanding and shall automatically be canceled and retired and shall cease
to exist, and each certificate previously evidencing such Shares, excluding
Shares described in Section 2.1(a) and Dissenting Shares,
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shall thereafter represent only the right to receive the Merger Consideration.
From and after the Effective Time the holders of certificates evidencing Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to the Company Common Stock except as otherwise provided
herein or as required by Law.
(e) Each Person set forth in Section 4.5 of the Company's
Disclosure Schedule holds an option or options, in the amounts and at the prices
set forth in such section, to acquire Shares outstanding immediately prior to
the Effective Time under the Company's stock option plans or similar
arrangements (each, an "Option," and collectively, the "Options") that is or
will be vested prior to, or effective with, the Effective Time, and shall have
the right to receive from the Surviving Corporation in respect of each Share
underlying such Option, less any required withholding of Taxes, a cash payment
in an amount equal to the positive difference (if any) between the Cash
Consideration and the exercise price per Share applicable to such Option as
stated in the applicable stock option agreement or other document (the "Option
Consideration"); provided that with respect to any Person subject to Section 16
of the Exchange Act, no Option Consideration shall be paid to such Person until
payment can be made without liability to such person under Section 16(b) of the
Exchange Act. The Company shall take such other actions (including, without
limitation, giving requisite notices to holders of Options advising them of such
accelerated exercisability and right to obtain payment for their respective
Options) as are necessary to fully advise holders of Options of their rights and
to facilitate their timely exercise of such rights. From and after the Effective
Time, other than as expressly set forth in this Section 2.1(e), the holders of
Options shall cease to have any rights in respect to such Options other than to
receive payment for his or her Options as set forth herein.
(f) Notwithstanding any other provision of this Agreement, no
fraction of a share of Parent Common Stock and no certificates or scrip therefor
will be issued in the Merger; instead, Parent shall pay to each holder of
Company Common Stock who would otherwise be entitled to a fraction of a share of
Parent Common Stock an amount in cash, rounded to the nearest cent, determined
by multiplying such fraction by the Average Closing Price on the trading day
which is three business days preceding the date on which the Company
Stockholders Meeting occurs.
Section 2.2. ELECTION AND PRORATION PROCEDURES; EXCHANGE PROCEDURES.
(a) An election form (an "Election Form") and other
appropriate and customary transmittal materials, which shall specify that
delivery shall be effected and risk of loss and title to the certificates
theretofore representing Company Common Stock ("Certificates") shall pass only
upon proper delivery of such Certificates to a bank or trust company designated
by Parent and reasonably satisfactory to Company (the "Exchange Agent"), in such
form as Company and Parent shall mutually agree shall be mailed on the Mailing
Date (as defined below) to each holder of record of shares of Company Common
Stock as of a record date which shall be the same date as the record date for
eligibility to vote on the Merger. The "Mailing Date" shall be the date on which
proxy materials relating to the Merger are mailed to holders of shares of
Company Common Stock. The Parent shall pay the reasonable fees and expenses of
the Exchange Agent.
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(b) Each Election Form shall entitle the holder of shares of
Company Common Stock (or the beneficial owner through appropriate and customary
documentation and instructions) to (i) elect to receive the Cash Consideration
for all of such holder's shares (a "Cash Election"), (ii) elect to receive the
Stock Consideration for all of such holder's shares (a "Stock Election"), (iii)
elect to receive the Cash Consideration with respect to some of such holder's
shares and the Stock Consideration with respect to such holder's remaining
shares (a "Mixed Election"), or (iv) make no election or to indicate that such
holder has no preference as to the receipt of the Cash Consideration or the
Stock Consideration (a "Non-Election"). Holders of record of shares of Company
Common Stock who hold such shares as nominees, trustees or in other
representative capacities (a "Stockholder Representative") may submit multiple
Election Forms, provided that such Stockholder Representative certifies that
each such Election Form covers all the shares of Company Common Stock held by
that Representative for a particular beneficial owner. Shares of Company Common
Stock as to which a Cash Election has been made (including pursuant to a Mixed
Election) are referred to herein as "Cash Election Shares." Shares of Company
Common Stock as to which a Stock Election has been made (including pursuant to a
Mixed Election) are referred to herein as "Stock Election Shares." Shares of
Company Common Stock as to which no election has been made are referred to as
"Non-Election Shares." The aggregate number of shares of Company Common Stock
with respect to which a Stock Election has been made is referred to herein as
the "Stock Election Number."
(c) To be effective, a properly completed Election Form shall
be submitted to the Exchange Agent on or before 5:00 p.m., New York City time,
on the fifth business day immediately preceding the Company Stockholders Meeting
(or such other time and date as the Company and Parent may mutually agree) (the
"Election Deadline"). An election shall have been properly made only if the
Exchange Agent shall have actually received a properly completed Election Form
by the Election Deadline. An Election Form shall be deemed properly completed
only if accompanied by one or more Certificates (or customary affidavits and, if
required by Parent pursuant to Section 2.2(n), indemnification regarding the
loss or destruction of such Certificates or the guaranteed delivery of such
Certificates) representing all shares of Company Common Stock covered by such
Election Form, together with duly executed transmittal materials included with
the Election Form. Any Company stockholder may at any time prior to the Election
Deadline change his or her election by written notice received by the Exchange
Agent prior to the Election Deadline accompanied by a properly completed and
signed revised Election Form. Any Company stockholder may, at any time prior to
the Election Deadline, revoke his or her election by written notice received by
the Exchange Agent prior to the Election Deadline or by withdrawal prior to the
Election Deadline of his or her Certificates, or of the guarantee of delivery of
such Certificates, previously deposited with the Exchange Agent. All elections
shall be revoked automatically if the Exchange Agent is notified in writing by
Parent and the Company that this Agreement has been terminated. If a stockholder
either (i) does not submit a properly completed Election Form by the Election
Deadline, or (ii) revokes its Election Form prior to the Election Deadline and
does not submit a new properly executed Election Form prior to the Election
Deadline, the shares of Company Common Stock held by such stockholder shall be
designated Non-Election Shares. Parent shall cause the Certificates representing
Company Common Stock described in (ii) to be promptly returned without charge to
the person submitting the Election Form upon written request to that effect from
the person who submitted the Election Form. Subject to the terms of this
Agreement and of the Election
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Form, the Exchange Agent shall have reasonable discretion to determine whether
any election, revocation or change has been properly or timely made and to
disregard immaterial defects in any Election Form, and any good faith decisions
of the Exchange Agent regarding such matters shall be binding and conclusive.
(d) Notwithstanding any other provision contained in this
Agreement, 51.5% of the total number of shares of Company Common Stock
outstanding at the Effective Time (the "Stock Conversion Number") shall be
converted into the Stock Consideration and the remaining outstanding shares of
Company Common Stock shall be converted into the Cash Consideration (in each
case, excluding (i) shares of Company Common Stock to be canceled as provided in
Section 2.1(a) of this Agreement and (ii) Dissenters' Shares (together, the
"Excluded Shares," with the shares remaining outstanding after such exclusion
constituting, for purposes of this Agreement, the "Outstanding Company
Shares")); PROVIDED, HOWEVER, that for federal income tax purposes, it is
intended that the Merger will qualify as a reorganization under the provisions
of Section 368(a) of the Code and, notwithstanding anything to the contrary
contained herein, in order that the Merger will not fail to satisfy continuity
of interest requirements under applicable federal income tax principles relating
to reorganizations under Section 368(a) of the Code, Parent shall increase the
number of shares of Company Common Stock that will be converted into the Stock
Consideration and reduce the number of shares of Company Common Stock that will
be converted into the right to receive the Cash Consideration to ensure that the
Stock Consideration will represent at least 50% of the value of the aggregate
Merger Consideration, increased by the value of any Excluded Shares, each as
measured as of the Effective Time.
(e) Within three business days after the later to occur of the
Election Deadline or the Effective Time, Parent shall cause the Exchange Agent
to effect the allocation among holders of Company Common Stock of rights to
receive the Cash Consideration and the Stock Consideration as follows:
(i) If the Stock Election Number equals or exceeds
the Stock Conversion Number, then all Cash Election Shares and all Non-Election
Shares shall be converted into the right to receive the Cash Consideration, and
each holder of Stock Election Shares will be entitled to receive the Stock
Consideration in respect of that number of Stock Election Shares equal to the
product obtained by multiplying (x) the number of Stock Election Shares held by
such holder by (y) a fraction, the numerator of which is the Stock Conversion
Number and the denominator of which is the Stock Election Number, with the
remaining number of such holder's Stock Election Shares being converted into the
right to receive the Cash Consideration;
(ii) If the Stock Election Number is less than the
Stock Conversion Number (the amount by which the Stock Conversion Number exceeds
the Stock Election Number being referred to herein as the "Shortfall Number"),
then all Stock Election Shares shall be converted into the right to receive the
Stock Consideration and the Non-Election Shares and Cash Election Shares shall
be treated in the following manner:
(A) if the Shortfall Number is less than or
equal to the number of Non-Election Shares, then all Cash Election Shares shall
be converted into the right to receive the Cash Consideration and each holder of
Non-Election Shares shall receive the Stock
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Consideration in respect of that number of Non-Election Shares equal to the
product obtained by multiplying (x) the number of Non-Election Shares held by
such holder by (y) a fraction, the numerator of which is the Shortfall Number
and the denominator of which is the total number of Non-Election Shares, with
the remaining number of such holder's Non-Election Shares being converted into
the right to receive the Cash Consideration; or
(B) if the Shortfall Number exceeds the
number of Non-Election Shares, then all Non-Election Shares shall be converted
into the right to receive the Stock Consideration, and each holder of Cash
Election Shares shall receive the Stock Consideration in respect of that number
of Cash Election Shares equal to the product obtained by multiplying (x) the
number of Cash Election Shares held by such holder by (y) a fraction, the
numerator of which is the amount by which (1) the Shortfall Number exceeds (2)
the total number of Non-Election Shares and the denominator of which is the
total number of Cash Election Shares, with the remaining number of such holder's
Cash Election Shares being converted into the right to receive the Cash
Consideration.
For purposes of this Section 2.2(e), if Parent is
obligated to increase the number of shares of Company Common Stock to be
converted into shares of Parent Common Stock as a result of the application of
the proviso of Section 2.2(d) above, then the higher number shall be substituted
for the Stock Conversion Number in the calculations set forth in this Section
2.2(e).
(f) Appropriate transmittal materials (the "Letter of
Transmittal") in a form satisfactory to Parent and the Company shall be mailed
within three business days after the Effective Time to each holder of record of
Company Common Stock as of the Effective Time who did not previously submit a
completed Election Form. A Letter of Transmittal will be deemed properly
completed only if accompanied by certificates representing all shares of Company
Common Stock to be converted thereby.
(g) At and after the Effective Time, each Certificate (except
as specifically set forth in Section 2.1 and except for Dissenting Shares) shall
represent only the right to receive the Merger Consideration.
(h) Prior to the Effective Time, Parent shall deposit, or
shall cause to be deposited, with the Exchange Agent, for the benefit of the
holders of shares of Company Common Stock, for exchange in accordance with this
Section 2.2, an amount of cash sufficient to pay the aggregate Cash
Consideration and the aggregate amount of cash in lieu of fractional shares to
be paid pursuant to Section 2.1(f), and Parent shall reserve for issuance with
its transfer agent and registrar a sufficient number of shares of Parent Common
Stock to provide for payment of the aggregate Stock Consideration.
(i) The Letter of Transmittal shall (i) specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent, (ii) be in a form
and contain any other provisions as Parent may reasonably determine and (iii)
include instructions for use in effecting the surrender of the Certificates in
exchange for the Cash Consideration. Upon the proper surrender of the
Certificates to the
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Exchange Agent, together with a properly completed and duly executed Letter of
Transmittal, the holder of such Certificates shall be entitled to receive in
exchange therefor (w) a certificate representing that number of whole shares of
Parent Common Stock that such holder has the right to receive pursuant to
Section 2.1, if any, and (x) a check in the amount equal to the cash that such
holder has the right to receive pursuant to Section 2.1, if any, (including any
cash in lieu of fractional shares, if any, that such holder has the right to
receive pursuant to Section 2.1(f)) and any dividends or other distributions to
which such holder is entitled pursuant to this Section 2.2. Certificates so
surrendered shall forthwith be canceled. As soon as practicable following
receipt of the properly completed Letter of Transmittal and any necessary
accompanying documentation, the Exchange Agent shall distribute Parent Common
Stock and cash as provided herein. The Exchange Agent shall not be entitled to
vote or exercise any rights of ownership with respect to the shares of Parent
Common Stock held by it from time to time hereunder, except that it shall
receive and hold all dividends or other distributions paid or distributed with
respect to such shares for the account of the persons entitled thereto. If there
is a transfer of ownership of any shares of Company Common Stock not registered
in the transfer records of the Company, the Merger Consideration shall be issued
to the transferee thereof if the Certificates representing such Company Common
Stock are presented to the Exchange Agent, accompanied by all documents
required, in the reasonable judgment of Parent and the Exchange Agent, (y) to
evidence and effect such transfer and (z) to evidence that any applicable stock
transfer taxes have been paid.
(j) No dividends or other distributions declared or made after
the Effective Time with respect to Parent Common Stock issued pursuant to this
Agreement shall be remitted to any person entitled to receive shares of Parent
Common Stock hereunder until such person surrenders his or her Certificates in
accordance with this Section 2.2. Upon the surrender of such person's
Certificates, such person shall be entitled to receive any dividends or other
distributions, without interest thereon, which subsequent to the Effective Time
had become payable but not paid with respect to shares of Parent Common Stock
represented by such person's Certificates.
(k) The stock transfer books of the Company shall be closed
immediately upon the Effective Time and from and after the Effective Time there
shall be no transfers on the stock transfer records of the Company of any shares
of Company Common Stock. If, after the Effective Time, Certificates are
presented to Parent, they shall be canceled and exchanged for the Merger
Consideration deliverable in respect thereof pursuant to this Agreement in
accordance with the procedures set forth in this Section 2.2.
(l) Any portion of the aggregate amount of cash to be paid
pursuant to Section 2.1, any dividends or other distributions to be paid
pursuant to this Section 2.2 or any proceeds from any investments thereof that
remain unclaimed by the stockholders of the Company for twelve months after the
Effective Time shall be repaid by the Exchange Agent to Parent upon the written
request of Parent. After such request is made, any stockholders of the Company
who have not theretofore complied with this Section 2.2 shall look only to
Parent for the Merger Consideration deliverable in respect of each share of
Company Common Stock such stockholder holds, as determined pursuant to Section
2.1 of this Agreement, without any interest thereon. If outstanding Certificates
are not surrendered prior to the date on which such payments would otherwise
escheat to or become the property of any governmental unit or agency, the
unclaimed
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items shall, to the extent permitted by any abandoned property, escheat or other
applicable laws, become the property of Parent (and, to the extent not in its
possession, shall be paid over to it), free and clear of all claims or interest
of any person previously entitled to such claims. Notwithstanding the foregoing,
neither the Exchange Agent nor any party to this Agreement (or any affiliate
thereof) shall be liable to any former holder of Company Common Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(m) Parent and the Exchange Agent shall be entitled to deduct
and withhold, or cause the Exchange Agent to deduct and withhold, from the
consideration otherwise payable pursuant to this Agreement to any holder of
Shares or Options such amounts as are required to be deducted and withheld with
respect to the making of such payment under the Code, or any provision of state,
local or foreign Tax Law. To the extent that amounts are so withheld, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Shares or Options in respect of which such
deduction and withholding was made. Parent and the Exchange Agent shall be
entitled to rely upon Company's stock transfer books to establish the identity
of those persons entitled to receive the Merger Consideration, which books shall
be conclusive with respect thereto. In the event of a dispute with respect to
ownership of stock represented by any Certificate, Parent and the Exchange Agent
shall be entitled to deposit any Merger Consideration represented thereby in
escrow with an independent third party and thereafter be relieved with respect
to any claims thereto.
(n) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Exchange Agent or Parent, the posting by such Person of a bond in such amount as
the Exchange Agent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof pursuant to Section 2.1.
(o) Notwithstanding anything to the contrary herein or in any
Election Form, all shares of Company Common Stock beneficially owned by any
Person identified as a Company Affiliate under Section 6.2 hereof shall be
deemed to be Cash Election Shares until such time as such person delivers to
Parent an executed copy of the Company Affiliates Agreement described in such
Section 6.2.
Section 2.3. DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, and unless otherwise provided by applicable Law,
Shares outstanding immediately prior to the Effective Time and held by a holder
of Shares who is entitled to and has demanded and perfected his or her right of
appraisal for such Shares in accordance with Section 262 of the DGCL (the
"Dissenting Shares") shall not be converted into the right to receive the Merger
Consideration as provided in Section 2.1(c), unless and until such holder
withdraws or otherwise loses his or her right to an appraisal of the Shares and
payment under the DGCL. Such Shares instead shall, from and After the Effective
Time, represent only the right to receive payment of the appraised value of such
Shares in accordance with the provisions of such Section 262 of the DGCL, except
that if, after the Effective Time, any such holder withdraws or loses his or her
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right to an appraisal of the Shares under the DGCL, such Shares shall thereupon
be treated as if they had been converted as of the Effective Time into the right
to receive the Merger Consideration, without interest thereon, upon surrender of
the certificate or certificates formerly representing such Shares, less any
required withholding of Taxes. The Company shall give all notices required under
Section 262 of the DGCL and otherwise comply with the requirements of Section
262 of the DGCL. In addition, the Company shall give Parent (i) prompt notice of
any written demands for appraisal of any Shares, withdrawals of such demands,
and any other instruments served pursuant to the DGCL and received by the
Company, and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the DGCL. The Company shall not,
except with the prior written consent of Parent, voluntarily make any payment
with respect to any demands for appraisal of the Shares or settle or offer to
settle any such demands.
Section 2.4. ADJUSTMENT OF MERGER CONSIDERATION AND OPTION
CONSIDERATION. The Merger Consideration payable pursuant to Section 2.1(c) and
the Option Consideration payable pursuant to Section 2.1(e) have been calculated
based upon the representations and warranties made by the Company in Section
4.5. Without limiting the effect of the failure of the representations and
warranties made by the Company in Section 4.5 to be true and correct, in the
event that, at the Effective Time, the actual number of shares of capital stock
of the Company outstanding and/or the actual number of shares of capital stock
of the Company issuable upon the exercise of outstanding Options, warrants or
similar agreements or upon conversion of securities (including without
limitation, as a result of any stock split, stock dividend, including any
dividend or distribution of securities convertible into Shares, or
recapitalization) is greater than as described in Section 4.5 (including the
exercise or conversion of any currently outstanding Options, warrants or similar
agreements described in Section 4.5), the Merger Consideration and the Option
Consideration shall be appropriately adjusted downward.
ARTICLE III
THE SURVIVING CORPORATION
Section 3.1. CERTIFICATE OF INCORPORATION. At the Effective Time, the
Certificate of Incorporation of the Merger Subsidiary as in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with applicable Law.
Section 3.2. BYLAWS. At the Effective Time, the Bylaws of Merger
Subsidiary as in effect immediately prior to the Effective Time shall be the
Bylaws of the Surviving Corporation until amended in accordance with applicable
Law.
Section 3.3. DIRECTORS AND OFFICERS. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable Law, the directors of Merger Subsidiary immediately prior to the
Effective Time shall comprise all of the directors of the Surviving Corporation.
Parent and Merger Subsidiary shall cause the directors of the Surviving
Corporation to appoint the officers of the Surviving Corporation immediately
prior to the Effective Time as all the officers of the Surviving Corporation.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Subsidiary
that, except as otherwise set forth in the Company Disclosure Schedule:
Section 4.1. CORPORATE EXISTENCE AND POWER. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority and all licenses, authorizations, certificates, consents and approvals
of Governmental Authorities (collectively, "Licenses") required to own, lease
and operate its properties and assets and to carry on its business as now
conducted, other than those Licenses which the failure to so obtain would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the properties and assets owned, leased or operated by it or the
nature of its activities makes such qualification necessary, except for those
jurisdictions where the failure to be so qualified and in good standing would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. The Company has heretofore delivered to Parent
true and complete copies of the Company's Certificate of Incorporation and
Bylaws as currently in effect.
Section 4.2. CORPORATE AUTHORIZATION. The Company has all requisite
corporate power and authority to execute, deliver and perform this Agreement and
to carry out the transactions contemplated hereby and the execution, delivery
and performance by the Company of this Agreement have been duly authorized by
all necessary corporate action, except for the affirmative vote of the holders
of a majority of the outstanding Shares entitled to vote on the Merger and this
Agreement. This Agreement has been duly executed and delivered by the Company
and, subject to receipt of the approvals specified in Section 4.3 herein and
subject to the approval and adoption of the Merger and this Agreement by a
majority of the outstanding Shares entitled to vote thereon, constitutes a
valid, legal and binding agreement of the Company enforceable against the
Company in accordance with its terms, except as the enforceability of this
Agreement may be subject to or limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar Laws relating to or affecting the
rights of creditors, and (ii) general equitable principles, regardless of
whether the issue of enforceability is considered in a proceeding in equity or
at law.
Section 4.3. AUTHORIZATIONS. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby require no consent, approval, order or
authorization of, or registration, declaration or filing with or notice to any
Person by or with respect to the Company, other than (i) the filing of a
certificate of merger in accordance with the DGCL and this Agreement, (ii)
compliance with any applicable requirements of the HSR Act, (iii) compliance
with any applicable requirements of the Exchange Act and the Securities Act,
(iv) the affirmative vote of holders of a majority of the outstanding Shares
entitled to vote on the adoption of this Agreement and the Merger, (v)
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compliance with state laws relating to takeovers, if applicable, state
securities or blue sky laws, (vi) any consents, authorizations, approvals,
filings or exemptions in connection with the rules of the NYSE or AMEX, and
(vii) such other consents, waivers, approvals, orders, authorizations the
failure of which to obtain or make would not (A) reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company, (B)
materially impair the ability of the Company to perform its obligations under
this Agreement, or (C) prevent the consummation of the Merger or any of the
transactions contemplated hereby or thereby.
Section 4.4. NON-CONTRAVENTION. The execution, delivery and performance
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not contravene or conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation,
enhancement or acceleration of any obligation or the loss of a benefit under, or
give rise to the creation of any Lien or any right of first refusal with respect
to, any asset or property of the Company, pursuant to (i) any provision of the
certificate of incorporation, bylaws or other organizational documents of the
Company, (ii) assuming compliance with the matters referred to in Section 4.3,
any provision of any material Law binding upon or applicable to the Company or
its properties or assets, (iii) any Contract binding upon the Company, or (iv)
any License held by the Company, except in the case of clauses (iii) and (iv)
above, as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
Section 4.5. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
20,000,000 shares of Company Common Stock and 20,000,000 shares of Company
Preferred Stock. As of the date of this Agreement, there are outstanding (i)
6,459,718 shares of Company Common Stock, including all shares restricted under
any compensation plan or arrangement of the Company, and (ii) Options to
purchase an aggregate of 1,439,500 shares of Company Common Stock, all of which
are subject to the Company's 1994 Stock Incentive Plan (as amended and restated
effective January 15, 2003, subject to the approval of the Company's
stockholders) (the "Stock Incentive Plan"). As of the date of this Agreement,
22,444 shares of Company Common Stock are reserved for issuance pursuant to the
Company's Employee Stock Purchase Plan (the "Stock Purchase Plan") and 1,439,500
shares of Company Common Stock are reserved for issuance pursuant to the Stock
Incentive Plan, and 10,500 shares of Company Common Stock are held in treasury
by the Company. As of March 31, 2003, the Company expects that participants in
the Stock Purchase Plan will have made contributions toward the purchase of
approximately 4,000 shares of Company Common Stock under the Stock Purchase
Plan. There are no shares of Company Preferred Stock outstanding and no options,
warrants or other agreements outstanding to purchase shares of Company Preferred
Stock.
(b) All outstanding shares of capital stock of the Company (i)
have been duly authorized and validly issued and are fully paid and
nonassessable, (ii) are not subject to preemptive or other similar rights (and
were not issued in violation of any such rights), and (iii) were issued in
compliance with all applicable federal and state securities Laws. Except as set
forth in this Section 4.5 and except for changes after the date of this
Agreement resulting solely
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from the exercise of Options outstanding on such date (and identified in Section
4.5 of the Company Disclosure Schedule), there are no outstanding (i) shares of
capital stock or other voting securities of the Company, (ii) securities of the
Company convertible into or exercisable or exchangeable for shares of capital
stock or voting securities of the Company, and (iii) options or other rights to
acquire from the Company, or obligations of the Company to issue, any capital
stock, voting securities or securities convertible into or exercisable or
exchangeable for capital stock or voting securities of the Company (the items in
clauses (i), (ii) and (iii) being referred to collectively as the "Company
Securities"). There are no outstanding obligations of the Company to repurchase,
redeem or otherwise acquire any Company Securities.
(c) There are no outstanding bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into or
exercisable or exchangeable for Company Securities having the right to vote) on
any matters.
(d) Section 4.5 of the Company Disclosure Schedule sets forth,
as of the date of this Agreement, a true and correct listing of (i) each option
to purchase any Company Securities, the holder thereof, the number and type of
Company Securities purchasable thereunder, the dates upon which such options
become exercisable and expire, and the exercise prices at which such options are
exercisable (none of which options has been repriced, except as set forth in
Section 4.5(d) of the Company Disclosure Schedule), and (ii) a list of each
other right to acquire any Company Securities pursuant to any other agreement or
instrument, describing such right and indicating the holder thereof. There are
no employment, executive termination or other agreements providing for the
issuance of any Company Securities. There are no outstanding stock appreciation
rights or other outstanding contractual rights the value of which is derived
from the financial performance of the Company or the value of shares of Company
Common Stock. The amendment and restatement of the Stock Incentive Plan was
approved by the Company's Board of Directors as of January 15, 2003 and is
expected to be submitted to the Company's stockholders for approval at the
Company Stockholders Meeting. In a writing dated January 15, 2003, the Majority
Shareholder acknowledged his approval of such amendment and restatement and his
intention to vote 100% of his Company Common Stock in favor of approval thereof.
(e) Other than the Stockholder Voting and Option Agreement,
there are no stockholder agreements, voting trusts or other agreements or
understandings to which the Company is a party, by which it is bound or of which
the Company is aware relating to the voting or disposition of any Company
Securities (including any such agreements or understandings that may limit in
any way the solicitation of proxies by or on behalf of the Company from, or the
casting of votes by, the stockholders of the Company with respect to the
Merger). There are no registration rights applicable to any Company Securities.
Section 4.6. SUBSIDIARIES.
(a) The Company has no Subsidiaries. Without limiting the
effect of the failure of the representation in this Section 4.6(a) to be true
and correct, to the extent the Company does have any Subsidiaries, each of the
representations and warranties of the Company in this Agreement and any
covenants or agreements of the Company in this Agreement shall be
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read as if given as to or made by the Company and/or any of its Subsidiaries, as
applicable, in order not to limit the effect of the representation, warranty or
covenant.
(b) The Company (i) does not directly or indirectly own, (ii)
has not agreed to purchase or otherwise acquire, and (iii) does not hold any
interest convertible into or exercisable or exchangeable for, any of the capital
stock or other equity interest of any corporation, partnership, limited
liability company or other business association or entity.
Section 4.7. SEC AND RELATED FILINGS.
(a) The Company has provided to Parent true and complete
copies of (i) the Company's annual reports on Form 10-K for its fiscal years
ended December 31, 1999, 2000 and 2001 (the 2001 Form 10-K being referred to
herein as the "Company Form 10-K"), (ii) the Company's quarterly reports on Form
10-Q for its fiscal quarters ended March 31, 2002, June 30, 2002 and September
30, 2002 (the "Company Form 10-Qs"), (iii) the Company's proxy or information
statements relating to meetings of, or actions taken without a meeting by, the
stockholders of the Company since January 1, 2000 (the Company's proxy
statements for the 2001 and 2002 annual meetings of shareholders being referred
to herein as the "Company 2001 and 2002 Proxy Statements"), and (iv) all of the
Company's other forms, reports, exhibits, schedules, registration statements,
definitive proxy statements and other documents, filed with the SEC since
January 1, 2000 (the items in subsections (i) through (iv) collectively, the
"Company Securities Documents"). Each document or report that the Company has
been required to file with the SEC since January 1, 2000 has been timely filed
by the Company.
(b) As of their respective filing dates (or, in the case of
registration statements, their respective effective dates), the Company
Securities Documents complied in all material respects with the requirements of
the Securities Act, the Exchange Act or applicable state securities laws, as the
case may be, and the rules and regulations thereunder. None of the Company
Securities Documents at the time filed (or in the case of registration
statements, their respective effective dates) contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 4.8. COMPANY FINANCIAL STATEMENTS. The audited financial
statements and unaudited interim financial statements of the Company included in
the Company Securities Documents (including any pro forma financial information
contained therein) have been prepared from and are in accordance with the books
and records of the Company and complied as to form in all material respects with
the published rules and regulations of the SEC and all applicable accounting
requirements with respect thereto as in effect as of the respective dates
thereof, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be otherwise noted
therein) during the periods involved ("GAAP") and fairly present in accordance
with applicable requirements of GAAP (subject, in the case of unaudited
statements, to normal, recurring year-end audit adjustments, none of which are
or will be material, and to the absence of notes) the financial position of the
Company as of their respective dates and the results of operations, changes in
stockholders' equity and cash flows of the Company for the periods presented
therein.
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Section 4.9. PROXY/PROSPECTUS; REGISTRATION STATEMENT. None of the
information to be supplied by the Company for inclusion in (a) the proxy
statement relating to the Company Stockholders Meeting, to be filed by the
Company with the SEC, and any amendments or supplements thereto (the "Proxy
Statement-Prospectus"), or (b) the Registration Statement on Form S-4 (the
"Registration Statement"), of which the Proxy-Statement Prospectus is a part, to
be filed by Parent with the SEC in connection with the Merger, and any
amendments or supplements thereto, will, at the respective times such documents
are filed, and, in the case of the Proxy Statement-Prospectus, at the time the
Proxy Statement-Prospectus or any amendment or supplement thereto is first
mailed to the Company's stockholders, at the time of the Company Stockholders
Meeting and at the Effective Time, and, in the case of the Registration
Statement, when 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 made therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
Section 4.10. ABSENCE OF CERTAIN CHANGES. Except as contemplated by
this Agreement, since the date of the Company Balance Sheet, the Company has
conducted its business in the Ordinary Course, and (i) there has not been any
event, occurrence or development of a state of circumstances or facts which has
had or would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company, and (ii) except for reasonable and
customary fees paid or to be paid to the Company's directors for service on the
Special Committee, the Company has not taken any action which, if taken after
the date hereof, would require Parent's consent under Section 6.1.
Section 4.11. LITIGATION. There is no claim, action, suit,
investigation or proceeding pending against, or to the knowledge of the Company,
threatened in writing against, the Company, any of its properties or assets or
any of its directors and officers in their capacities as such before any court
or arbitrator or any Governmental Authority, or with respect to which the
Company has retained or assumed responsibility by contract or operation of Law.
No such claim, action, suit, investigation or proceeding if adversely
determined, would, individually or in the aggregate, have a Material Adverse
Effect on the Company. There are no judgments, decrees, orders, writs,
injunctions, determinations or awards issued by any court or arbitrator or any
Governmental Authority currently outstanding and unsatisfied against the
Company, or for which the Company has retained or assumed responsibility by
contract or operation of Law. Other than as provided by the DGCL or the
Company's certificate of incorporation or bylaws, there are no indemnification
agreements between the Company on the one hand, and any directors, officers,
employees or other agents of the Company or any of its former Subsidiaries (if
any) on the other hand. There are no indemnification or similar claims by or
against the Company that are pending or, to the knowledge of the Company,
threatened, or which could reasonably be expected to be asserted in the future.
Section 4.12. COMPLIANCE WITH LAWS.
(a) The Company is, and at all times during the last three
years (and any former Subsidiary or operations sold by the Company or any of its
Subsidiaries within the last
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three years, during such period while owned by the Company or any of its
Subsidiaries) has been, in compliance in all material respects with all
applicable material Laws, including, but not limited to, the HSR Act and all
applicable Laws respecting employment and employment practices, terms and
conditions of employment and wages. The Company has not received during the last
three years any notice, order or other communication from any Governmental
Authority of any alleged, actual or potential violation of or failure to comply
in any material respect with any Law.
(b) All Licenses required for the operation of the business of
the Company as currently conducted are in full force and effect without any
default or violation thereunder by the Company or, to the knowledge of the
Company, by any other party thereto, except where any such default or violation
or the failure of any such License to be in full force and effect has not and
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company. Since January 1, 2000, the Company has
not received any notice, order or other communication from any Governmental
Authority of any alleged, actual or potential violation of or default under any
such License in any material respect.
Section 4.13. SYSTEMS. To the Company's knowledge, all computer
databases, software, hardware and Embedded Controls (as defined below)
(collectively, the "Systems") owned, used or licensed by the Company are in good
operating order and free from defects that have had or would reasonably be
expected to have a Material Adverse Effect on the Company. "Embedded Control"
means any microprocessor, microcontroller, smart instrumentation or other
sensor, driver, monitor, robotic or other device containing a semiconductor,
memory circuit or microchip.
Section 4.14. REAL PROPERTY. Section 4.14 of the Company Disclosure
Schedule describes each interest in real property owned or leased by the
Company. The Company has good and marketable title in fee simple to all of the
real property listed or required to be listed in Section 4.14 of the Company
Disclosure Schedule owned by the Company, and owns all right, title and interest
in all leasehold estates and other rights purported to be granted to it by the
leases and other agreements listed in Section 4.14 of the Company Disclosure
Schedule, in each case free and clear of any Liens except for such Liens, if
any, as are reflected on the Company Balance Sheet or such other Liens as do not
detract in any material respect from the value of the property subject thereto
and do not materially interfere with the current use of such property.
Section 4.15. PERSONAL PROPERTY. The Company has good and marketable
title to all of its properties and assets (not including real property) free and
clear of any Liens except for Liens reflected on the Company Balance Sheet or
such other Liens, if any, as do not detract in any material respect from the
value or marketability of the property subject thereto and do not materially
interfere with the current use of such property. The material properties and
assets owned or leased by the Company are in the possession or under the control
of the Company and are in good condition and repair, ordinary wear and tear
excepted, are suitable for the purposes for which they are being used and are of
a condition, nature and quantity sufficient for the conduct of the business of
the Company as presently conducted.
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Section 4.16. CONTRACTS.
(a) Except for Contracts entered into after the date of the
Agreement which are permitted by Section 6.1 of this Agreement, the Company is
not (i) a party to or bound by any written agreement for the employment of any
officer, individual employee or other person on a full-time, part-time or
consulting basis, or relating to severance pay for any person other than those
terminable at will, (ii) a party to or bound by any Contract for the sale of any
material capital asset, (iii) a party to or bound by any Contract which is a
material contract (as defined in Item 601 of Regulation S-K) to be performed
after the date of this Agreement, (iv) a party to or bound by any Contract which
prohibits the Company or its affiliates in any material respect from freely
engaging in any business anywhere in the world, (v) a party to or bound by any
Contract relating to the borrowing of money or to mortgaging, pledging or
otherwise placing a material Lien on any of the assets of the Company, (vi) a
party to or bound by any Contract that provides for future payments to or by the
Company in excess of $200,000 and is not terminable by the Company within 180
days without the payment of a penalty or premium, or (vii) a guarantor of, or
otherwise party to any obligation for, borrowed money.
(b) The Company is not and, to the knowledge of the Company,
no other party is, in violation of or in default under (nor does there exist any
condition affecting the Company, or to the Company's knowledge, other parties to
such Contracts, which upon the passage of time or the giving of notice or both
would reasonably be expected to cause such a violation of or default under) any
Contract to which the Company is a party or by which the Company or any of its
properties or assets are bound, except for violations or defaults that have not
had and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. Each Contract set forth in
Section 4.16 of the Company Disclosure Schedule or filed as an exhibit to the
Company Form 10-K or the Company Form 10-Qs included in the Company Securities
Documents constitutes a valid and binding obligation of the Company and, to the
knowledge of the Company, each other party thereto and is enforceable against
such other party in accordance with its terms. The Company has performed all of
the Company's material obligations under each such Contract which were required
to be performed on or before the date of this Agreement or the Effective Time,
as applicable.
(c) Prior to the date of this Agreement, except for Contracts
identified in writing to Parent whose terms have not been disclosed to Parent
due to the need for confidentiality (collectively, the "Confidential
Contracts"), Parent has been provided access to a true and correct copy of each
written Contract, and a written description of each material oral Contract (if
any), set forth in the Company Securities Documents or required to be identified
in Section 4.16 of the Company Disclosure Schedule, together with all
amendments, waivers or other changes thereto.
Section 4.17. INSURANCE. Section 4.17 of the Company Disclosure
Schedule sets forth a true and correct listing of the policies and binders of
insurance maintained by the Company, together with the Company's experience
since January 1, 1996 with respect to material claims. With respect to each such
insurance policy or binder, neither the Company nor, to the Company's knowledge,
any other party to the policy is in breach or default thereunder (including with
respect to the payment of premiums or the giving of notices), and the Company
does not know of any
-17-
occurrence or any event which (with notice or the lapse of time or both) would
constitute such a breach or default or permit termination, modification or
acceleration under the policy, except for such breaches or defaults which,
individually or in the aggregate, would not result in a Material Adverse Effect
on the Company.
Section 4.18. INTELLECTUAL PROPERTY.
(a) Section 4.18(a) of the Company Disclosure Schedule sets
forth a true and correct listing of all material Registered Intellectual
Property owned by the Company (the "Owned Intellectual Property") and all
material Intellectual Property used by the Company under license or similar
agreement (the "Licensed Intellectual Property" and, together with the Owned
Intellectual Property, the "Scheduled Intellectual Property"). The Company owns
all right, title and interest in and to the Owned Intellectual Property, free
and clear of all Liens, and is the valid licensee of the Licensed Intellectual
Property. None of the Scheduled Intellectual Property is subject to any
outstanding order, ruling, decree, judgment or stipulation to which the Company
is or has been made a party, nor is it the subject of any Proceeding by or
against the Company. To the knowledge of the Company, the Owned Intellectual
Property is valid and enforceable.
(b) Reasonable measures have been taken by the Company to
maintain the secrecy of its trade secret and know-how Intellectual Property,
whether or not identified on Schedule 4.18(a).
(c) There are no agreements or arrangements pursuant to which
any of the Scheduled Intellectual Property has been licensed by the Company to
any Person, or which permits the use of any of the Scheduled Intellectual
Property (whether through non-assertion, settlement or similar agreements or
otherwise) by any Person other than the Company.
(d) To the knowledge of the Company, the conduct by the
Company of its business does not infringe upon or violate the Intellectual
Property rights of any other Person. The Company has received no claim or demand
of any Person in writing, nor is there any proceeding that is pending or to the
knowledge of the Company threatened, which (in any such case) (i) challenges the
rights of the Company in respect of any Scheduled Intellectual Property, or (ii)
asserts that the Company is infringing or otherwise in conflict with, or is
required to pay any royalty, license fee, charge or other amount with regard to,
any Intellectual Property.
(e) To the knowledge of the Company, no other Person is
infringing upon or has infringed upon any Scheduled Intellectual Property, or
the rights of the Company in any Scheduled Intellectual Property where such
infringement could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
Section 4.19. TAXES.
(a) The Company has timely filed all Tax Returns in the
jurisdictions where such returns are required to be filed through the Effective
Time, except for personal property, sales and use and other state and local
non-income Tax Returns, the nonfiling of which would not reasonably be expected
to have a Material Adverse Effect on the Company. All such Tax
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Returns are complete and correct in all material respects and have been prepared
on a proper basis. All Tax liabilities of the Company, whether or not shown to
be due on Tax Returns, have been paid or adequate reserves established on the
Company's financial statements.
(b) There are no Tax Liens upon the assets of the Company in
any amount except Liens for Taxes not yet due.
(c) No deficiency for any Taxes has been proposed, asserted or
assessed against the Company that has not been resolved or paid in full and, no
audits or other administrative proceedings or court proceedings are currently
pending or threatened in writing with regard to any Taxes or Tax Returns of the
Company where an adverse determination could reasonably be expected to have a
Material Adverse Effect on the Company.
(d) The Company has not waived any statute of limitations in
respect to Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency where an adverse determination could reasonably be
expected to have a Material Adverse Effect on the Company.
(e) No claim has been made during the last three years by a
taxing authority in a jurisdiction where the Company does not file income or
franchise Tax Returns that such entity may be subject to income or franchise
Taxes in that jurisdiction.
(f) The Company has complied in all material respects with all
applicable laws, rules and regulations relating to the payment and withholding
of Tax and has duly and timely withheld from employees salaries, wages and other
compensation, and other amounts from which withholding is required, and have
paid over to the appropriate taxing authorities, all amounts required to be
withheld and paid over for all periods under all applicable laws.
(g) The Company has not been a member of an "Affiliated Group"
as defined in the Code filing a consolidated Federal Income Tax Return.
(h) The Company has not filed a consent under Codess.341(f)
concerning collapsible corporations.
(i) The Company has not made any payments, is not obligated to
make any payments, and is not a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be deductible
under Code ss.280G.
(j) The Company has not been a United States real property
holding corporation within the meaning of Code ss.897(c)(2) during the
applicable period specified in Code ss.897(c)(1)(A)(ii).
(k) The Company has not been required to include in income any
adjustment pursuant to Section 481 of the Code by reason of a voluntary change
in accounting method initiated by the Company or any of its Subsidiaries, and
the IRS has not initiated or proposed any such adjustment or change in
accounting method.
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(l) The Company is not a foreign person within the meaning of
Section 1445 of the Code.
(m) None of the assets or properties of the Company is an
asset or property that is or will be required to be treated as being (i) owned
by any person or entity pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986, or (ii) tax-exempt use property within
the meaning of Section 168(h)(1) of the Code.
Section 4.20. EMPLOYEE BENEFITS.
(a) Section 4.20 of the Company Disclosure Schedule contains a
true and correct listing of all Company Benefit Plans. The Company has furnished
or made available to Parent, with respect to each Company Benefit Plan: all
relevant plan documents, handbooks, manuals, collective bargaining agreements
and similar documents governing employment policies, practices and procedures,
the most recent summary plan descriptions and any subsequent summaries of
material modifications and all other material employee communications discussing
any employee benefit; Forms series 5500 as filed with the IRS for the three most
recent plan years; the most recent report of the enrolled actuary for all
defined benefit plans, funded welfare plans or other plans requiring actuarial
valuation, all trust agreements with respect to employee benefit plans, plan
contracts with service providers or with insurers providing benefits for
participants or liability insurance for fiduciaries and other parties in
interest or bonding; most recent annual audit and accounting of plan assets for
all funded plans; and most recent IRS determination letter for all plans
qualified under Code section 401(a).
(b) With respect to each Company Benefit Plan: (i) each
Company Benefit Plan has been operated and administered in material compliance
with its governing documents, and is in compliance in all material respects with
the applicable provisions of ERISA, the Code and all other applicable Laws.
(c) Neither the Company nor any of the Company Benefit Plans
nor any trust created thereunder nor any trustee or administrator thereof, has
engaged in any transaction as a result of which the Company would reasonably be
expected to be subject to any material liability pursuant to Sections 406 or 409
of ERISA or to either a civil penalty assessed pursuant to Section 502(i) or
Section 502(l) of ERISA or a tax imposed pursuant to Section 4975 of the Code.
(d) Each Company Benefit Plan that is intended to be
"qualified" within the meaning of Section 401(a) of the Code has been determined
by the IRS to be so qualified by issuance and receipt of a favorable
determination letter or reliance upon an opinion letter which states that the
Company Benefit Plan meets all requirements under the Code and that any trust(s)
associated with such Company Benefit Plan is tax exempt under Section 501(a) of
the Code. Each such Company Benefit Plan has filed or will file an application
for a favorable determination letter from the IRS which covers recent tax law
changes commonly known as "GUST" within the GUST remedial amendment period (to
the extent such Plan is required to file such an application) and has been or
will be timely amended for the tax law changes commonly
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known as "EGTRRA". No event has occurred since the date of the most recent
determination (other than the effective date of certain amendments to the Code
the remedial amendment period for which has not expired) that would adversely
affect the qualified status of such Company Benefit Plan.
(e) There are no claims (other than routine claims for
benefits), actions or lawsuits pending, or to the knowledge of the Company,
threatened, with respect to any Company Benefit Plan or the Company in
connection with any Company Benefit Plan or the fiduciaries responsible for such
Company Benefit Plans, and to the knowledge of the Company, there are no
circumstances that would reasonably be expected to give rise to any action,
lawsuit or claim, on behalf of or against any of the Company Benefit Plans.
There are no audits, investigations or examinations with respect to any Company
Benefit Plan by the IRS, the Department of Labor, the PBGC or any other
governmental agency (other than a review associated with the application for a
determination letter that has or may be filed with the IRS) and to the knowledge
of the Company, no such audit, investigation or examination is threatened or
pending.
(f) All contributions (including all employer contributions
and employee salary reduction contributions) that are due with respect to any
Company Benefit Plan have been made within the time periods prescribed by ERISA
and the Code to each such plan and all contributions for any period ending on or
before the Closing Date which are not yet due have been made to each such
Company Benefit Plan or accrued in accordance with the past custom and practice
of the Company. All premiums or other payments for all periods ending before the
Closing Date have been paid with respect to each Company Benefit Plan.
(g) None of the Company Benefit Plans is a plan subject to
Title IV of ERISA, the minimum funding requirements of Section 302 of ERISA or
Section 412 of the Code. Neither the Company nor any ERISA Affiliate has
incurred any liability under Title IV of ERISA, and no events have occurred and
no circumstances exist that could reasonably be expected to result in such
liability to the Company or any ERISA Affiliate.
(h) Neither the Company nor any ERISA Affiliate maintains,
contributes to or has ever maintained or been obligated to contribute to, or has
any liability with respect to, a Multiemployer Plan. Neither the Company nor any
ERISA Affiliate has incurred any liability due to a complete or partial
withdrawal from a Multiemployer Plan or due to the termination or reorganization
of a Multiemployer Plan (except for any such liability as has been satisfied in
full), and no events have occurred and no circumstances exist that could
reasonably be expected to result in such liability to the Company or any ERISA
Affiliate.
(i) All reports and information required to be filed with the
DOL, IRS and PBGC or with plan participants and their beneficiaries with respect
to each Company Benefit Plan have been filed and all annual reports (including
Form 5500 series) of such Plans that require an audit were certified without
qualification by each Plan's accountants.
(j) All Company Benefit Plans may, without liability, be
prospectively amended, terminated or otherwise discontinued except as
specifically prohibited by federal law.
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(k) Any bonding required under ERISA with respect to any
Company Benefit Plan has been obtained and is in full force and effect.
(l) Neither the Company nor any ERISA Affiliate maintains any
retired life and/or retired health insurance plans which provide for continuing
benefits or coverage for any employee or any beneficiary of an employee after
such employee's termination of employment, except where the continuation of such
coverage is required by Law. The Company and each ERISA Affiliate has complied
in all material respects with the continuation coverage requirements of Section
4980B of the Code and Sections 601-608 of ERISA.
(m) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated by this Agreement will: (i)
result in a material payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due from the
Company under any Company Benefit Plan; (ii) materially increase any benefit
otherwise payable under any Company Benefit Plan; or (iii) accelerate the time
of payment or vesting, or increase the amount of, any compensation due to any
individual.
(n) There are no agreements to which the Company is a party
which will provide payments to any officer, employee or highly compensated
individual which will be "parachute payments" under Section 280G or Section 4999
of the Code for which the Parent or the Company would have withholding liability
or that would result in loss of tax deductions under Section 280G of the Code.
Section 4.21. LABOR MATTERS. No application or petition for
certification of a collective bargaining agent is pending or, to the knowledge
of the Company, threatened, and none of the Company's employees are, or during
the last three years have been, represented by any union or other bargaining
representative. There is no labor strike, slow down, stoppage or lock out
pending or, to the knowledge of the Company, threatened against the Company.
Section 4.22. ENVIRONMENTAL MATTERS.
(a) The Company, including all of its businesses and
operations, is, and since January 1, 2000 has been, operated in compliance with
all applicable Environmental Laws, except where the failure to so comply has
not, and would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company.
(b) There are no conditions on or beneath any real property
which is now owned, used or leased to or by the Company ("Current Real
Property") which might, under any applicable Environmental Law, (i) give rise to
a material liability or the imposition of a statutory Lien, or (ii) require any
Response, Removal or Remedial Action or any other action, including without
limitation reporting, monitoring, cleanup or contribution, which would require a
material expenditure or material commitment by the Company.
(c) There were no conditions on or beneath any real property
which was, but is no longer, owned, used or leased to or by the Company ("Former
Real Property"), during the
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period of such ownership, use or lease, which might under any applicable
Environmental Law, (i) give rise to a material liability or the imposition of a
statutory Lien, or (ii) require any Response, Removal or Remedial Action or any
other action, including without limitation reporting, monitoring, cleanup or
contribution, which would require a material expenditure or commitment by the
Company.
(d) The Company has not received any written notification of a
release or threat of a release of a Hazardous Substance with respect to any
Current Real Property or Former Real Property.
(e) No Hazardous Substances have been used, handled,
generated, processed, treated, stored, transported to or from, released,
discharged or disposed of by the Company or, to the best of the Company's
knowledge, any third party on, about or beneath any Current Real Property except
in compliance with all applicable Environmental Laws, or where the failure to so
comply has not and would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company.
(f) During the Company's ownership, use or lease of the Former
Real Property, no Hazardous Substances were used, handled, generated, processed,
treated, stored, transported to or from, released, discharged or disposed of by
the Company or, to the best of the Company's knowledge, any third party on,
about or beneath the Former Real Property except in compliance with all
applicable Environmental Laws, or where the failure to so comply has not and
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
(g) To the Company's knowledge, there are no above or
underground storage tanks, asbestos containing materials, or transformers
containing or contaminated with PCBs on or beneath the Current Real Property.
(h) The Company has received no written notice and has no
knowledge of:
(i) any claim, demand, investigation, enforcement
action, Response, Removal, Remedial Action, statutory Lien or other
governmental or regulatory action instituted or threatened against the
Company or the Current or Former Real Property pursuant to any
applicable Environmental Law;
(ii) any claim, demand notice, suit or action, made
or threatened by any Person against the Company, the Current Real
Property or the Former Real Property relating to (A) any form of
damage, loss or injury resulting from, or claimed to result from, any
Hazardous Substance on or beneath the Current or Former Real Property
or (B) any alleged material violation of any applicable Environmental
Law by the Company; or
(iii) any written communication to or from any
Governmental Authority arising out of or in connection with Hazardous
Substances on or beneath or generated at the Current Real Property or
Former Real Property,
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including, without limitation, any notice of violation, citation,
complaint, order, directive, request for information or response
thereto, notice letter, demand letter or compliance schedule.
(i) To the Company's knowledge, no wastes generated by the
Company have ever been directly or indirectly sent, transferred, transported to,
treated, stored, or disposed of at any site listed or formally proposed for
listing on the National Priority List promulgated pursuant to CERCLA or to any
site listed on any state list of sites requiring or recommended for
investigation or clean-up. None of the Current Real Property or Former Real
Property is listed on the National Priorities List or any state list of sites
requiring or recommended for investigation or clean up.
Section 4.23. ABSENCE OF UNDISCLOSED LIABILITIES. All of the material
obligations and liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise, whether due or to become due, and regardless of when asserted,
including Taxes) with respect to or based upon transactions or events
("Liabilities"), required to be reflected on the Company Balance Sheet in
accordance with GAAP, have been so reflected. The Company has no Liabilities
which are, in the aggregate, material to the condition (financial or otherwise),
business, properties, assets, results of operations, cash-flows or prospects of
the Company, except (i) as reflected on the Company Balance Sheet, (ii)
Liabilities which arose prior to the date of the Company Balance Sheet and are
not required under GAAP to be reflected on the Company Balance Sheet and which
have not had and would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company, or (iii) Liabilities
which have arisen after the date of the Company Balance Sheet in the Ordinary
Course and which have not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Section 4.24. OPINION OF FINANCIAL ADVISOR. The Board of Directors of
the Company and the Special Committee have received an opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ Financial Advisors, Inc., financial advisor to the Special
Committee, dated the date of this Agreement to the effect that, as of such date,
the Merger Consideration to be received in the Merger by a holder of Shares is
fair from a financial point of view to the public stockholders of the Company. A
signed copy of such opinion shall be delivered to Parent promptly.
Section 4.25. BROKERS. No person acting on behalf of the Company or
under its authority is or will be entitled to any brokers' or finders' fee or
any other commission or similar fee, directly or indirectly, from any of such
parties in connection with any of the transactions contemplated by this
Agreement, other than ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Financial Advisors, Inc.,
whose fees and expenses shall be paid by the Company. A true and correct copy of
all agreements with ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ Financial Advisors, Inc. have
been delivered to Parent.
Section 4.26. BOARD RECOMMENDATION; SECTION 203; REQUIRED VOTE.
(a) The Board of Directors of the Company, at a meeting duly
called and held, has by unanimous vote of those directors present (who
constituted all of the directors then in
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office) (i) approved and adopted this Agreement, (ii) determined that the
Merger, this Agreement, the Stockholder Voting and Option Agreement and the
transactions contemplated hereby and thereby are advisable and fair to and in
the best interests of the holders of Company Common Stock, and (iii) recommended
that the holders of Company Common Stock approve the Merger, this Agreement and
the transactions contemplated hereby. The Special Committee, at a meeting duly
called and held, has by unanimous vote recommended to the Board of Directors of
the Company (i) approval and adoption of this Agreement, (ii) the determination
that the Merger, this Agreement, the Stockholder Voting and Option Agreement and
the transactions contemplated hereby and thereby are advisable and fair to and
in the best interests of the public stockholders of the Company, and (iii) the
recommendation that the holders of Company Common Stock approve the Merger, this
Agreement and the transactions contemplated hereby.
(b) The Board of Directors of the Company has approved this
Agreement, the Merger and the Stockholder Voting and Option Agreement, prior to
execution, delivery and performance of this Agreement and the Stockholder Voting
and Option Agreement, in accordance with Section 203 of the DGCL, so that such
Section will not apply to Parent, Merger Subsidiary, the Merger, this Agreement,
the Stockholder Voting and Option Agreement or the transactions contemplated
hereby or thereby. No provision of the certificate of incorporation, bylaws or
other organizational documents of the Company would, directly or indirectly,
restrict or impair the ability of Parent or its affiliates to vote, or otherwise
to exercise the rights of a stockholder with respect to, securities of the
Company that may be acquired or controlled by Parent or its affiliates or permit
any stockholder to acquire securities of the Company on a basis not available to
Parent in the event that Parent were to acquire securities of the Company, and
the Company does not have any rights plan, preferred stock or similar
arrangement which has any of the aforementioned consequences.
(c) The affirmative vote of a majority of the outstanding
Shares entitled to vote to approve this Agreement is the only vote of the
holders of any class of capital or series of the Company's capital stock or
other voting securities necessary to approve the Merger.
Section 4.27. PRIOR NEGOTIATIONS. Since January 1, 2003, the Company
and its officers, directors, employees, representatives, agents and advisors
(including the Company's financial advisor) have not been involved in
substantive discussions with any group or Person or any of their respective
representatives or advisors, or furnished material confidential information to
any such group or Person or any of their respective representatives or advisors
in connection with a possible Acquisition Proposal.
Section 4.28. CERTAIN BUSINESS PRACTICES. Neither the Company nor any
of its directors, officers, agents or employees has (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to political activity, (ii) made any unlawful payment to foreign or domestic
governmental officials or employees or to foreign or domestic political parties
or campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, (iii) consummated any transaction, made any payment, entered
into any agreement or arrangement or taken any other action in violation of
Section 1128B(b) of the Social Security Act, as amended, or (iv) made any other
unlawful payment, that has had or would
-25-
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
Section 4.29. AFFILIATE TRANSACTIONS. Except as set forth in the
Company Form 10-K, Company Form 10-Qs or the Company 2001 and 2002 Proxy
Statements, since January 1, 2001, no director, officer, partner, key employee,
"affiliate" or "associate" (as such terms are defined in Rule 12b-2 under the
Exchange Act) of the Company (or any immediate family member of any of the
foregoing persons) (i) has borrowed any monies from or has outstanding any
indebtedness or other similar obligations to the Company, (ii) to the best of
the Company's knowledge, except for shares of a publicly traded company (in an
amount not in excess of 5% of the outstanding shares of such company) owns any
direct or indirect material interest of any kind in, or is a director, officer,
employee, partner, affiliate or associate of, or consultant or lender to, or
borrower from, or has the right to participate in the management, operations or
profits of, any person or entity which since January 1, 2000 has been a material
competitor, supplier, customer, distributor, lessor, tenant, creditor or debtor
of the Company, or (iii) is otherwise a party to any material Contract with the
Company. Any such Contract with the Company, whether written or oral, has been
negotiated on an arms length basis and is on terms no less favorable to the
Company than would be obtainable from unaffiliated third parties.
Section 4.30. FULL DISCLOSURE. All documents and other papers delivered
by or on behalf of the Company in connection with the transactions contemplated
by this Agreement are accurate and complete in all material respects and are
authentic. No representation or warranty of the Company contained in this
Agreement or the Company Disclosure Schedule contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUBSIDIARY
Parent and Merger Subsidiary, jointly and severally, represent and
warrant to the Company that:
Section 5.1. CORPORATE EXISTENCE AND POWER. Parent and Merger
Subsidiary are each duly incorporated, validly existing and in good standing
under the laws of the State of Delaware and each has all requisite corporate
power and authority and all material Licenses required to own, lease and operate
its properties and assets and to carry on its business as now conducted, other
than those Licenses which the failure to so obtain would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Parent. Parent and Merger Subsidiary are each duly qualified to do business
as a foreign corporation and are in good standing in each jurisdiction where the
character of the properties and assets owned, leased or operated by each or the
nature of their respective activities makes such qualification necessary, except
for those jurisdictions where the failure to be so qualified and in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on Parent. Since its date of
-26-
incorporation, Merger Subsidiary has not engaged in any material activities
other than as related or incidental to the transactions contemplated by this
Agreement. Parent has delivered to the Company true and complete copies of the
certificates of incorporation and bylaws of Parent and Merger Subsidiary as
currently in effect.
Section 5.2. CORPORATE AUTHORIZATION. Parent and Merger Subsidiary each
have all requisite corporate power and authority to execute, deliver and perform
this Agreement and the Stockholder Voting and Option Agreement and to carry out
the transactions contemplated hereby and thereby, and the execution, delivery
and performance by Parent and Merger Subsidiary of this Agreement and the
Stockholder Voting and Option Agreement have been duly authorized by all
necessary corporate action. This Agreement and the Stockholder Voting and Option
Agreement have been duly executed and delivered by Parent and Merger Subsidiary
and constitute valid, legal and binding agreements of Parent and Merger
Subsidiary enforceable against each of them in accordance with their respective
terms, except as the enforceability of such agreements may be subject to or
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar Laws relating to or affecting the rights of creditors, and (ii) general
equitable principles, regardless of whether the issue of enforceability is
considered in a proceeding in equity or at law.
Section 5.3. AUTHORIZATIONS. The execution, delivery and performance by
Parent and Merger Subsidiary of this Agreement and the Stockholder Voting and
Option Agreement and the consummation by each of them of the transactions
contemplated hereby and thereby require no consent, approval, order or
authorization of, or registration, declaration or filing with or notice to any
Person by or with respect to Parent or Merger Subsidiary, other than (i) the
filing of a certificate of merger in accordance with DGCL and this Agreement;
(ii) compliance with any applicable requirements of the HSR Act. (iii)
compliance with any applicable requirements of the Exchange Act and the
Securities Act, (iv) compliance with state laws relating to takeovers, if
applicable, state securities or blue sky laws, (v) any consents, authorizations,
approvals, filings or exemptions in connection with the rules of the NYSE or
AMEX, and (vi) such other consents, waivers, approvals, orders, authorizations
the failure of which to obtain or make would not (A) reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the Parent,
(B) materially impair the ability of the Parent or Merger Subsidiary to perform
their respective obligations under this Agreement, or (C) prevent the
consummation of the Merger or any of the transactions contemplated hereby or
thereby.
Section 5.4. NON-CONTRAVENTION. The execution, delivery and performance
by Parent and Merger Subsidiary of this Agreement and the Stockholder Voting and
Option Agreement and the consummation by them of the transactions contemplated
hereby and thereby do not and will not contravene or conflict with, or result in
any violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation, enhancement or
acceleration of any obligation or the loss of a benefit under, or give rise to
the creation of any Lien or any right of first refusal with respect to, any
asset or property of Parent or Merger Subsidiary, pursuant to (i) any provision
of the certificate of incorporation or bylaws of Parent or Merger Subsidiary,
(ii) assuming compliance with the matters referred to in Section 5.3, any
provision of any material Law binding upon or applicable to Parent or Merger
Subsidiary or their respective properties or assets, (iii) any Contract binding
upon Parent or Merger Subsidiary, or
-27-
(iv) any License held by Parent or Merger Subsidiary, except in the case of
clauses (iii) and (iv) above, as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent.
Section 5.5. CAPITALIZATION.
(a) The authorized capital stock of the Parent consists of
150,000,000 shares of Parent Common Stock and 20,000,000 shares of Parent
Preferred Stock. As of February 22, 2003, there were outstanding (i) 56,638,331
shares of Parent Common Stock, including all shares restricted under any
compensation plan or arrangement of Parent, and (ii) Options to purchase an
aggregate of 5,351,926 shares of Parent Common Stock, all of which are subject
to the Parent Stock Option Plans. As of the date of this Agreement, an adequate
number of shares of Parent Common Stock are reserved for issuance pursuant to
the Parent Stock Purchase Plan and the Parent Stock Option Plans, and 35,658,073
shares of Parent Common Stock were held in treasury by Parent. There are no
shares of Parent Preferred Stock outstanding and no options, warrants or other
agreements outstanding to purchase shares of Parent Preferred Stock.
(b) All outstanding shares of capital stock of Parent and its
Subsidiaries (i) have been duly authorized and validly issued and are fully paid
and nonassessable, (ii) are not subject to preemptive or other similar rights
(and were not issued in violation of any such rights), and (iii) were issued in
compliance with all applicable federal and state securities Laws. Except as set
forth in this Section 5.5, except for changes after February 22, 2003 resulting
solely from the exercise of options under the Parent Stock Option Plans or from
purchases of stock under the Parent Stock Purchase Plan, and except for the
Parent Convertible Debentures, there are no outstanding (i) shares of capital
stock or other voting securities of Parent or any of its Subsidiaries, (ii)
securities of Parent or any of its Subsidiaries convertible into or exercisable
or exchangeable for shares of capital stock or voting securities of Parent or
any of its Subsidiaries, and (iii) options or other rights to acquire from
Parent or any of its Subsidiaries, or obligations of Parent or any of its
Subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exercisable or exchangeable for capital stock or voting
securities of Parent or any of its Subsidiaries.
(c) The shares of Parent Common Stock to be issued to holders
of Company Common Stock as part of the Merger Consideration under Article II of
this Agreement have been duly authorized and, when issued, will be validly
issued, fully paid and non-assessable and will be issued in compliance with all
applicable federal and state securities Laws.
(d) There are no outstanding bonds, debentures, notes or other
indebtedness of Parent having the right to vote (or, other than the Parent
Convertible Debentures, convertible into or exercisable or exchangeable for
securities having the right to vote) on any matters.
Section 5.6. SUBSIDIARIES. All outstanding shares of capital stock of
the Subsidiaries of Parent are owned by Parent or a direct or indirect
Subsidiary of the Parent, free and clear of all Liens.
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Section 5.7. SEC AND RELATED FILINGS.
(a) Parent has provided to Company true and complete copies of
(i) Parent's annual reports on Form 10-K for its fiscal years ended February 26,
2000, February 24, 2001 and February 23, 2002 (the February 2002 Form 10-K being
referred to herein as the "Parent Form 10-K"), (ii) Parent's quarterly reports
on Form 10-Q for its fiscal quarters ended May 25, 2002, August 24, 2002 and
November 23, 2002 (the "Parent Form 10-Qs"), (iii) Parent's proxy or information
statements relating to meetings of, or actions taken without a meeting by, the
stockholders of Parent since January 1, 2000, and (iv) all of Parent's other
forms, reports, exhibits, schedules, registration statements, definitive proxy
statements and other documents, filed with the SEC since January 1, 2000 (the
items in subsections (i) through (iv) collectively, the "Parent Securities
Documents"). Each document or report that Parent has been required to file with
the SEC since January 1, 2000 has been timely filed by Parent.
(b) As of their respective filing dates (or, in the case of
registration statements, their respective effective dates), the Parent
Securities Documents complied in all material respects with the requirements of
the Securities Act, the Exchange Act or applicable state securities laws, as the
case may be, and the rules and regulations thereunder. None of the Parent
Securities Documents at the time filed (or in the case of registration
statements, their respective effective dates) contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 5.8. PARENT FINANCIAL STATEMENTS. The audited consolidated
financial statements and unaudited consolidated interim financial statements of
Parent included in Parent Securities Documents (including any pro forma
financial information contained therein) have been prepared from and are in
accordance with the books and records of Parent and complied as to form in all
material respects with the published rules and regulations of the SEC and all
applicable accounting requirements with respect thereto as in effect as of the
respective dates thereof, were prepared in accordance with GAAP and fairly
present in accordance with applicable requirements of GAAP (subject, in the case
of unaudited statements, to normal, recurring year-end audit adjustments, none
of which are or will be material, and to the absence of notes) the consolidated
financial position of Parent and its Subsidiaries as of their respective dates
and the consolidated results of operations, changes in stockholders' equity and
cash flows of Parent and its Subsidiaries for the periods presented therein.
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Section 5.9. DISCLOSURE DOCUMENTS, INFORMATION SUPPLIED. None of the
information to be supplied by Parent for inclusion in (a) the Proxy
Statement-Prospectus, or (b) the Registration Statement, and any amendments or
supplements thereto, will, at the respective times such documents are filed,
and, in the case of the Proxy Statement-Prospectus, at the time the Proxy
Statement-Prospectus or any amendment or supplement thereto is first mailed to
the Company stockholders, at the time of the Company Stockholders Meeting and at
the Effective Time, and, in the case of the Registration Statement, when 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 made therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
Section 5.10. ABSENCE OF CERTAIN CHANGES. Except as contemplated by
this Agreement, since the date of Parent Balance Sheet, Parent has conducted its
business in the Ordinary Course and there has not been any event, occurrence or
development of a state of circumstances or facts which has had or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent.
Section 5.11. LITIGATION. Except as set forth in the Parent Securities
Documents, there is no claim, action, suit, investigation or proceeding pending
against, or to the knowledge of Parent, threatened in writing against or
affecting, Parent or any of its Subsidiaries, any of their respective properties
or assets or any of their respective directors and officers in their capacities
as such before any court or arbitrator or any Governmental Authority, or with
respect to which Parent or any of its Subsidiaries has retained or assumed
responsibility by contract or operation of Law. No such claim, action, suit,
investigation or proceeding if adversely determined, would, individually or in
the aggregate, have a Material Adverse Effect on Parent. There are no judgments,
decrees, orders, writs, injunctions, determinations or awards issued by any
court or arbitrator or any Governmental Authority currently outstanding and
unsatisfied against Parent or any of its Subsidiaries, or for which Parent or
any of its Subsidiaries has retained or assumed responsibility by contract or
operation of Law. Except as set forth in the Parent Securities Documents, there
are no indemnification agreements between Parent or any of its Subsidiaries on
the one hand, and any directors, officers, employees or other agents of Parent
or any of its current or former Subsidiaries on the other hand. There are no
indemnification or similar claims by or against Parent or any of its
Subsidiaries that are pending or, to the knowledge of Parent, threatened, or
which could reasonably be expected to be asserted in the future.
Section 5.12. COMPLIANCE WITH LAWS.
(a) Parent and each of its Subsidiaries are, and at all times
during the last three years (and any former Subsidiary or operations sold by
Parent or any of its Subsidiaries within the last three years, during such
period while owned by Parent or any of its Subsidiaries) have been, in
compliance in all material respects with all applicable material Laws,
including, but not limited to, the HSR Act and all applicable Laws respecting
employment and employment practices, terms and conditions of employment and
wages. Neither Parent nor any of its Subsidiaries has received during the last
three years, any notice, order or other communication from any Governmental
Authority of any alleged, actual or potential violation of or failure to comply
in any material respect with any Law.
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(b) All Licenses required for the operation of the business of
Parent and each of its Subsidiaries as currently conducted are in full force and
effect without any default or violation thereunder by Parent or any of its
Subsidiaries or, to the knowledge of Parent, by any other party thereto, except
where any such default or violation or the failure of any such License to be in
full force and effect has not and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent. Since
January 1, 2000, neither Parent nor any of its Subsidiaries has received any
notice, order or other communication from any Governmental Authority of any
alleged, actual or potential violation of or default under any such License in
any material respect.
Section 5.13. REAL PROPERTY. Except as disclosed in the Parent
Securities Documents, Parent and its Subsidiaries have good and marketable title
to all real properties owned by them, free from Liens that would materially
affect the value thereof or materially interfere with the current use made
therof. Parent and its Subsidiaries hold any leased real property under valid
and enforceable leases with no exceptions that would materially interfere with
the current use thereof by them.
Section 5.14. PERSONAL PROPERTY. Parent and each of its Subsidiaries
have good and marketable title to all of their respective properties and assets
(not including real property) free and clear of any Liens except for Liens
reflected on Parent Balance Sheet or such other Liens, if any, as do not detract
in any material respect from the value or marketability of the property subject
thereto and do not materially interfere with the current use of such property.
The material properties and assets owned or leased by Parent or any of its
Subsidiaries are in the possession or under the control of Parent or such
Subsidiaries and are in good condition and repair, ordinary wear and tear
excepted, are suitable for the purposes for which they are being used and are of
a condition, nature and quantity sufficient for the conduct of the businesses of
Parent and its Subsidiaries as presently conducted.
Section 5.15. TAXES.
(a) Each of Parent and its Subsidiaries has timely filed all
Tax Returns in the jurisdictions where such returns are required to be filed,
except for personal property, sales and use and other state and local non-income
Tax Returns, the nonfiling of which would not reasonably be expected to have a
Material Adverse Effect on Parent or its Subsidiaries. All such Tax Returns are
complete and correct in all material respects. All Tax liabilities of Parent and
its Subsidiaries, whether or not shown to be due on Tax Returns, have been paid
or adequate reserves established on financial statements.
(b) There are no Tax Liens upon the assets of Parent or any of
its Subsidiaries in any amount except Liens for Taxes not yet due.
(c) No deficiency for any Taxes has been proposed, asserted or
assessed against Parent or any of its Subsidiaries that has not been resolved or
paid in full and, no audits or other administrative proceedings or court
proceedings are currently pending with regard to any
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Taxes or Tax Returns of Parent or any of its Subsidiaries where an adverse
determination could reasonably be expected to have a Material Adverse Effect on
the Parent.
(d) Neither Parent nor any of its Subsidiaries has waived any
statute of limitations in respect to Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency where an adverse determination
could reasonably be expected to have a Material Adverse Effect on the Parent.
(e) No claim has been made during the last three years by a
taxing authority in a jurisdiction where Parent or any of its Subsidiaries does
not file income or franchise Tax Returns that such entity may be subject to
income or franchise Taxes in that jurisdiction.
(f) Parent and each of its Subsidiaries have complied in all
material respects with all applicable laws, rules and regulations relating to
the payment and withholding of Tax and have duly and timely withheld from
employees salaries, wages and other compensation, and other amounts from which
withholding is required, and have paid over to the appropriate taxing
authorities, all amounts required to be withheld and paid over for all periods
under all applicable laws.
Section 5.16. LABOR MATTERS. No application or petition for
certification of a collective bargaining agent is pending or, to the knowledge
of Parent, threatened, and none of Parent's or its Subsidiaries' employees are,
or during the last three years have been, represented by any union or other
bargaining representative. There is no labor strike, slow down, stoppage or lock
out pending or, to the knowledge of Parent, threatened against Parent or any of
its Subsidiaries.
Section 5.17. ENVIRONMENTAL MATTERS.
(a) Parent and each of its Subsidiaries, including all of
their respective businesses and operations, are, and since January 1, 2000, have
been, operated in compliance with all applicable Environmental Laws, except
where the failure to so comply has not, and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on Parent.
(b) There are no conditions on or beneath any real property
which is now owned, used or leased to or by Parent or any of its Subsidiaries
("Parent Current Real Property") which might, under any applicable Environmental
Law, (i) give rise to a material liability or the imposition of a statutory
Lien, or (ii) require any Response, Removal or Remedial Action or any other
action, including without limitation reporting, monitoring, cleanup or
contribution, which would require a material expenditure or material commitment
by Parent or its Subsidiaries.
(c) There were no conditions on or beneath any real property
which was, but is no longer, owned, used or leased to or by Parent or any of its
Subsidiaries ("Parent Former Real Property"), during the period of such
ownership, use or lease, which might under any applicable Environmental Law, (i)
give rise to a material liability or the imposition of a statutory Lien, or (ii)
require any Response, Removal or Remedial Action or any other action, including
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without limitation reporting, monitoring, cleanup or contribution, which would
require a material expenditure or commitment by Parent or its Subsidiaries.
(d) Neither Parent nor any of its Subsidiaires has received
any written notification of a release or threat of a release of a Hazardous
Substance with respect to any Parent Current Real Property or Parent Former Real
Property.
(e) No Hazardous Substances have been used, handled,
generated, processed, treated, stored, transported to or from, released,
discharged or disposed of by Parent, any of its Subsidiaries or, to the best of
Parent's knowledge, any third party, on or beneath any Parent Current Real
Property except in compliance with all applicable Environmental Laws, or where
the failure to so comply has not and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent.
(f) During Parent's or its Subsidiaries' ownership, use or
lease of the Parent Former Real Property, no Hazardous Substances were used,
handled, generated, processed, treated, stored, transported to or from,
released, discharged or disposed of by Parent, its Subsidiaries or, to the best
of Parent's knowledge, any third party, on or beneath the Parent Former Real
Property except in compliance with all applicable Environmental Laws, or where
the failure to so comply has not and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent.
(g) To Parent's knowledge, there are no above or underground
storage tanks, asbestos containing materials, or transformers containing or
contaminated with PCBs on or beneath the Parent Current Real Property.
(h) Neither Parent nor any of its Subsidiaries has received
written notice or has knowledge of:
(i) any claim, demand, investigation, enforcement
action, Response, Removal, Remedial Action, statutory Lien or other
governmental or regulatory action instituted or threatened against
Parent, any of its Subsidiaries or the Parent Current or Former Real
Property pursuant to any applicable Environmental Law;
(ii) any claim, demand notice, suit or action, made
or threatened by any Person against Parent, any of its Subsidiaires,
the Parent Current Real Property or the Parent Former Real Property
relating to (A) any form of damage, loss or injury resulting from, or
claimed to result from, any Hazardous Substance on or beneath the
Parent Current or Former Real Property or (B) any alleged material
violation of any applicable Environmental Law by Parent or any of its
Subsidiaries; or
(iii) any written communication to or from any
Governmental Authority arising out of or in connection with Hazardous
Substances on or beneath or generated at the Parent Current Real
Property or Parent Former Real
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Property, including, without limitation, any notice of violation,
citation, complaint, order, directive, request for information or
response thereto, notice letter, demand letter or compliance schedule.
(i) To Parent's knowledge, no wastes generated by Parent or
any of its Subsidiaries have ever been directly or indirectly sent, transferred,
transported to, treated, stored, or disposed of at any site listed or formally
proposed for listing on the National Priority List promulgated pursuant to
CERCLA or to any site listed on any state list of sites requiring or recommended
for investigation or clean-up. None of the Parent Current Real Property or
Parent Former Real Property is listed on the National Priorities List or any
state list of sites requiring or recommended for investigation or clean up.
Section 5.18. ABSENCE OF UNDISCLOSED LIABILITIES. All Liabilities
required to be reflected on Parent Balance Sheet in accordance with GAAP, have
been so reflected. Parent and its Subsidiaries have no Liabilities which are, in
the aggregate, material to the condition (financial or otherwise), business,
properties, assets, results of operations, cash-flows or prospects of Parent,
except (i) as reflected on Parent Balance Sheet, (ii) Liabilities which arose
prior to the date of Parent Balance Sheet and are not required under GAAP to be
reflected on Parent Balance Sheet and which have not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent, or (iii) Liabilities which have arisen after the date
of Parent Balance Sheet in the Ordinary Course and which have not had and would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent.
Section 5.19. BROKERS. Except for Fleet Securities, Inc., the financial
advisor to Parent, no person acting on behalf of Parent or under its authority
is or will be entitled to any brokers' or finders' fee or any other commission
or similar fee, directly or indirectly, from any of such parties in connection
with any of the transactions contemplated by this Agreement.
Section 5.20. BOARD APPROVAL. The Board of Directors of Parent, at a
meeting duly called and held, has approved the Merger, this Agreement and the
transactions contemplated hereby.
Section 5.21. CERTAIN BUSINESS PRACTICES. None of Parent, its
Subsidiaries, or any of their respective directors, officers, agents or
employees has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic governmental officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, (iii)
consummated any transaction, made any payment, entered into any agreement or
arrangement or taken any other action in violation of Section 1128B(b) of the
Social Security Act, as amended, or (iv) made any other unlawful payment, that
has had or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent.
Section 5.22. FULL DISCLOSURE. All documents and other papers delivered
by or on behalf of Parent in connection with the transactions contemplated by
this Agreement are accurate and
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complete in all material respects and are authentic. No representation or
warranty of Parent contained in this Agreement contains any untrue statement of
a material fact or omits to state, a material fact necessary in order to make
the statements herein or therein, in light of the circumstances under which they
were made, not misleading.
Section 5.23. FINANCING. Parent has available sufficient funds to
consummate the transactions contemplated hereby including, but not limited to,
the funds necessary to pay the aggregate Cash Consideration and Option
Consideration to holders of Shares and Options in accordance with this
Agreement. Parent has a sufficient number of authorized but unissued shares of
Parent Common Stock to deliver the Stock Consideration.
Section 5.24. INTELLECTUAL PROPERTY. Parent and its Subsidiaries own or
possess the Intellectual Property necessary to conduct the business now operated
by them, or presently employed by them, and have not received any written notice
of infringement of or conflict with asserted rights of others with respect to
any Intellectual Property rights that, if determined adversely to Parent or its
Subsidiaries, would individually or in the aggregate have a Material Adverse
Effect on Parent.
Section 5.25. CONTRACTS. Parent is not and, to the knowledge of Parent
no other party is, in violation of or in default under (nor does there exist any
condition affecting Parent, or to Parent's knowledge, other parties to such
Contracts, which upon the passage of time or the giving of notice or both would
reasonably be expected to cause such a violation of or default under) any
Contract to which Parent is a party or by which Parent or any of its properties
or assets are bound, except for violations or defaults that have not had and
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent.
ARTICLE VI
CONDUCT OF BUSINESS OF COMPANY PENDING THE MERGER
Section 6.1. CONDUCT OF COMPANY'S BUSINESS. During the period from the
date of this Agreement to the Effective Time, the Company shall carry on its
business in the Ordinary Course and, to the extent consistent therewith, use all
reasonable efforts to preserve intact its current business organizations, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with it. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Effective
Time, except as disclosed in Section 6.1 of the Company Disclosure Schedule, the
Company shall not, without the prior written approval of Parent:
(a) (i) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property) in respect of, any
Company Securities, (ii) adjust, split, combine or reclassify any Company
Securities or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for any Company Securities, except as
permitted by Section 6.1(b)(iii), or (iii) purchase, redeem or otherwise acquire
any Company
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Securities or any rights, warrants or options to acquire any such Company
Securities or any other securities;
(b) (i) grant any options, warrants or rights to purchase
Company Securities, (ii) amend or reprice any outstanding option, warrant or
right to purchase Company Securities, or (iii) issue, deliver or sell, or pledge
or otherwise encumber, or authorize or propose to issue, deliver or sell, or
pledge or otherwise encumber, any Company Securities, other than the issuance of
Company Common Stock upon (A) the exercise of outstanding Options set forth in
the Company Disclosure Schedule in accordance with their present terms, and (B)
the exercise of rights pursuant to the Stock Purchase Plan in accordance with
its present terms, provided that the participants thereunder shall be entitled
to purchase Shares with accumulated payroll deductions as permitted under
Section 7.7(b) hereof;
(c) amend or propose to amend its certificate of
incorporation, bylaws or other organizational documents, create or establish any
Subsidiaries, or adopt or implement a plan of consolidation, merger or
reorganization other than in connection with the Merger;
(d) amend, modify or waive any material term of any
outstanding Company Security;
(e) (i) amend any existing agreement or instrument, or enter
into any new agreement or instrument, in each case relating to the assumption or
incurrence of indebtedness for borrowed money (except that the Company may draw
on its existing credit facilities in the Ordinary Course, so long as the
aggregate principal amount of indebtedness outstanding under such facilities
does not exceed $22 million; PROVIDED, however, that (x) such $22 million limit
may be increased if and only if the applicable draws on the Company's existing
credit facilities are made for items contemplated by the budget delivered
electronically to Parent on March 13, 2003 at 7:18 p.m., and (y) draws for
purposes not contemplated in such budget and over such limit may be made with
the consent of Parent, such consent not to be unreasonably withheld or delayed),
or to the guarantee of any indebtedness or the issuance or sale of any debt
securities or warrants or rights to acquire any debt securities of the Company
or the guarantee of any debt securities of others or enter into any lease
(whether an operating or capital lease) other than in the Ordinary Course or
create any Liens on the properties or assets of the Company, or enter into any
"keep well" or other agreement or arrangement to maintain the financial
condition of another Person, or (ii) make any loans, advances or capital
contributions to, or investments in, any other Person, other than loans or
advances to customers in the Ordinary Course and in compliance with any
applicable Law;
(f) make any capital expenditures or acquisitions of
properties or assets other than in the Ordinary Course;
(g) (i) enter into or amend in any material respect any
employment, consulting or similar agreement or arrangement with, or grant any
material increase in compensation or benefits to, any current or former director
of the Company or, other than in the Ordinary Course, any officer or employee of
the Company, (ii) pay or agree to pay any pension, retirement allowance or other
employee benefit not required or contemplated by any existing Company
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Benefit Plan as in effect on the date hereof to any such director or, other than
in the Ordinary Course, to any such officer or employee, (iii) except as may be
required to comply with applicable law, become obligated under any new Company
Benefit Plan which was not in existence on the date hereof, or amend any such
plan or arrangement in existence on the date hereof if such amendment would have
the effect of materially enhancing any benefits thereunder, or (iv) grant to any
current or former director, officer or employee any increase in severance or
termination pay (including the acceleration in the exercisability of Options or
in the vesting of Shares (or other property) except for automatic acceleration
in accordance with the terms of this Agreement or the terms of Options issued
pursuant to the Stock Incentive Plan and in effect at the date of this Agreement
and listed on Schedule 4.5 of the Company Disclosure Schedule);
(h) acquire (i) by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or (ii) except
in the Ordinary Course, any assets that are material, individually or in the
aggregate, to the Company;
(i) other than dispositions in the Ordinary Course which are
not material, individually or in the aggregate, to the Company, sell, lease,
encumber or otherwise dispose of any of its material properties or assets;
(j) voluntarily take any action that is reasonably likely to
result in any of the Company's representations or warranties hereunder being
untrue in any material respect or in any of the Company's covenants hereunder or
any of the conditions to the Merger not being satisfied;
(k) waive any material term of any confidentiality or
standstill agreement with any Person other than Parent or its affiliates;
(l) implement or adopt any change in its accounting
principles, practices or methods, other than as required by GAAP, or change any
of its methods of reporting income and deductions for Federal income tax
purposes;
(m) other than in the Ordinary Course, enter into any material
Contract, or amend or modify any material Contract, lease, agreement or
commitment;
(n) assign, waive, release or relinquish any material Contract
right or pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction of any such claims, liabilities or
obligations, in the Ordinary Course; or
(o) authorize any of, or commit or agree to take any of, the
foregoing actions.
Furthermore, during the period from the date of this Agreement to the Effective
Time, except where the Company determines upon advice of counsel that disclosure
could result in the violation by the Company or Parent of state or federal law,
the Company shall confer on a regular basis with Parent concerning operational
matters, promptly advise Parent in writing of any
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change or event that has or could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company. Each of Parent
and the Company shall promptly provide the other (or its counsel) with copies of
all filings made by it with the SEC or any other Governmental Authority (whether
or not in connection with this Agreement and the transactions contemplated
hereby).
Section 6.2. AGREEMENTS OF COMPANY'S AFFILIATES. The Company shall
identify in a letter to Parent, after consultation with counsel, all persons
who, at the time of the Company Stockholders Meeting, it believes may be deemed
to be "affiliates" of the Company, as that term is defined for the purposes of
paragraphs (c) and (d) of Rule 145 under the Securities Act (the "Company
Affiliates"). The Company shall use all reasonable efforts to cause each person
who is identified as a Company Affiliate in the letter referred to above to
deliver to Parent at least forty (40) days prior to the date of Closing an
executed copy of the Company Affiliates Agreement. Prior to the date of Closing,
the Company shall amend and supplement such letter and use all reasonable
efforts to cause each additional person who is identified as a Company Affiliate
as of the date of Closing to execute a copy of the Company Affiliates Agreement.
Section 6.3. NOTICE OF CERTAIN EVENTS. The Company and Parent shall
promptly notify each other of:
(a) any notice or other written communication from any Person
alleging that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement, which consent if not
obtained, could reasonably be expected to have a Material Adverse Effect on the
Company or which could reasonably be expected to affect materially and adversely
the transactions contemplated hereby;
(b) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement,
and
(c) any actions, suits, claims, investigations or proceedings
commenced or, to Parent's or the Company's knowledge, as the case may be,
threatened against, relating to or involving Parent or the Company which relate
to the consummation of the transactions contemplated by this Agreement or which,
with respect to the Company, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Section 4.11.
Section 6.4. NO SOLICITATION.
(a) From and after the date hereof until the Effective Time,
the Company shall not, and shall not authorize or permit any of its officers,
directors, employees, representatives, agents or affiliates (including, without
limitation, any investment banker, financial advisor, attorney, accountant or
other representative retained by the Company), to directly or indirectly
initiate, solicit or encourage (including by way of furnishing 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
Acquisition Proposal, or enter into or maintain or continue discussions or
negotiate with any Person in furtherance of such inquiries with respect to an
Acquisition Proposal or agree to or endorse any Acquisition Proposal, PROVIDED,
HOWEVER that
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prior to the Company Stockholders Meeting, if the Board of Directors of the
Company, after consultation with outside legal counsel, determines in good faith
that the failure to proceed in accordance with clause (i) and/or (ii) below of
this Section 6.4(a) is reasonably likely to violate the directors' fiduciary
duties to the Company's stockholders under applicable law, the Company may,
subject to compliance with Section 6.4(c), in response to an unsolicited written
bona fide Acquisition Proposal from any Person that the Company's Board of
Directors, after consultation with an independent nationally recognized
financial advisor and outside legal counsel, reasonably believes could result in
a Superior Proposal, (i) furnish information with respect to the Company to such
Person making such proposal after entering into a confidentiality agreement with
such Person on terms and conditions no less favorable in any material respect to
the Company than the terms and conditions of the Mutual Confidentiality
Agreement dated as of June 3, 2002 executed by Parent and the Company together
with the letter agreement dated as of January 8, 2003 between the Parent and the
Company (collectively the "Parties' Confidentiality Agreement") and (ii)
participate in negotiations regarding such Acquisition Proposal; PROVIDED THAT,
in the case of clauses (i) and (ii) above, the Company has provided not less
than one full business day prior written notice to Parent of its intention to
proceed under such clause (i) or (ii) above. Without limiting the foregoing, it
is agreed that any violation of the restrictions set forth in the preceding
sentence by any director, officer, employee, representative or agent of the
Company or any investment banker, financial advisor, attorney, accountant or
other representative of the Company shall be deemed to be a breach of this
Section 6.4(a) by the Company. For purposes of this Agreement, "Acquisition
Proposal" shall mean an inquiry, offer or proposal regarding any of the
following (other than the transactions among the Company, Parent and Merger
Subsidiary contemplated hereunder) involving the Company: (A) any merger,
consolidation, share exchange, recapitalization, business combination or other
similar transaction; (B) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 25% or more of the assets of the Company, in a single
transaction or series of transactions, (C) any tender offer or exchange offer
for outstanding shares of capital stock of the Company or purchase from the
Company of any shares of capital stock of the Company or the filing of a
registration statement under the Securities Act in connection with any of the
foregoing; or (D) any public announcement by the Company of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
(b) Except as set forth in this Section 6.4(b), neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner materially adverse to
Parent or Merger Subsidiary, the approval or recommendation by such Board of
Directors or any such committee of the Merger or this Agreement, (ii) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal or (iii)
enter into any agreement with respect to any Acquisition Proposal. Prior to the
Company Stockholders Meeting, if the Board of Directors, after consultation with
outside counsel, determines in good faith that the failure to proceed in
accordance with clause (A), (B) and/or (C) below of this Section 6.4(b) is
reasonably likely to violate its fiduciary duties to the Company's stockholders
under applicable law, the Board of Directors may (subject to the terms of this
sentence) (A) withdraw or modify its recommendation of the Merger or this
Agreement, (B) approve or recommend a Superior Proposal, or (C) cause the
Company to enter into an agreement with respect to a Superior Proposal, in each
case provided that the Company shall not take any of the actions specified in
such clauses (A), (B) or (C) unless the Parent shall have
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received from the Company written notice specifying such actions to be taken no
later than 12:00 noon New York City time the business day prior to the date such
actions are proposed to be taken (a "Superior Proposal Notice").
(c) The term "Superior Proposal" shall mean any bona fide
Acquisition Proposal that has the following characteristics: (i) it is a
proposal to acquire, directly or indirectly, for consideration consisting of
cash and/or readily marketable securities, (A) shares of Company Common Stock
representing at least 80% of the voting power of the outstanding shares of
Company Common Stock, and the shares of Company Common Stock issuable upon the
exercise of outstanding Options, warrants and rights to purchase Company Common
Stock, or (B) substantially all the assets of the Company, (ii) the terms of
such proposal in the good faith judgment of the Board of Directors of the
Company (after consultation with an independent nationally recognized financial
advisor) are more favorable to the Company's stockholders from a financial point
of view than the Merger (after taking into account, if applicable, the payment
of the Expenses and the Termination Fee and any modifications to this Agreement
proposed by Parent), (iii) the transactions envisioned by such proposal, in the
good faith judgment of the Board of Directors of the Company, after consultation
with an independent nationally recognized financial advisor and the advice of
outside legal counsel, is reasonably likely to be consummated without
unreasonable delay or unusual conditions compared to the transactions
contemplated by this Agreement, and (iv) financing for the proposed transaction,
to the extent required, has been committed in all material respects.
(d) In addition to the obligations set forth in Section
6.4(b), the Company shall promptly (and in no event later than 24 hours after
the event) advise Parent orally and in writing of any Acquisition Proposal and
of any request for information which may relate to an Acquisition Proposal, or
any inquiry with respect to or which could lead to any Acquisition Proposal, and
the material terms and conditions of such request, Acquisition Proposal or
inquiry. Such notification shall include, but shall not be limited to, the
identity of the party making such a proposal or inquiry. The Company will keep
Parent fully and timely informed of the status and details (including amendments
or proposed amendments) of any such request, Acquisition Proposal or inquiry,
and will promptly (and in no event later than 24 hours after the event) notify
Parent of any determination by the Company's Board of Directors that a Superior
Proposal has been made. Following delivery of such notice to Parent, the Company
shall engage in good faith negotiations with Parent with respect to such changes
as the Company may propose to the terms of this Agreement and the transactions
contemplated by this Agreement.
(e) Nothing contained in this Section 6.4 shall prohibit the
Company from (x) making and disclosing to its stockholders a position required
by Rule 14e-2(a) or Item 1012(a) of Regulation M-A promulgated under the
Exchange Act or (y) making any required disclosure to the stockholders of the
Company if, in the good faith judgment of the Board of Directors of the Company
(after consultation with outside legal counsel) failure to make such disclosure
is reasonably likely to constitute a violation of applicable law.
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ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1. HSR ACT. Within ten business days after the date of this
Agreement, the Company and Parent shall each file notifications under the HSR
Act in connection with the Merger and the transactions contemplated hereby (and
make any required filings with any applicable foreign antitrust authorities) and
respond as promptly as practicable to any inquiries received from the FTC and
the Antitrust Division for additional information or documentation and to
respond as promptly as practicable to all inquiries and requests received from
any state Attorney General or other Governmental Authority in connection with
antitrust matters. The Company and Parent shall promptly take or commit to take
all actions reasonably requested to obtain all consents, waivers, approvals,
authorizations or orders from the FTC, the Antitrust Division and any state
Attorney General or other Governmental Authority in connection with the
consummation of the transactions contemplated by this Agreement.
Section 7.2. PROXY STATEMENT - PROSPECTUS.
(a) Parent and the Company shall cooperate in preparing and
each shall cause to be filed with the SEC, as promptly as reasonably practicable
following the date hereof, mutually acceptable proxy materials which shall
constitute the Proxy Statement-Prospectus relating to the matters to be
submitted to the Company stockholders at the Company Stockholders Meeting and
Parent shall prepare and file with the SEC a registration statement on Form S-4
with respect to the issuance of Parent Common Stock in the Merger. The Proxy
Statement-Prospectus will be included as a prospectus in and will constitute a
part of the Registration Statement as Parent's prospectus. Each of Parent and
the Company shall use its reasonable best efforts to have the Proxy
Statement-Prospectus cleared by the SEC and the Registration Statement declared
effective by the SEC and to keep the Registration Statement effective as long as
is necessary to consummate the Merger and the transactions contemplated hereby.
Parent and the Company shall, as promptly as practicable after receipt thereof,
provide the other party copies of any written comments and advise the other
party of any oral comments, received from the SEC with respect to the Proxy
Statement-Prospectus or Registration Statement. The parties shall cooperate and
provide the other with a reasonable opportunity to review and comment on any
amendment or supplement to the Proxy Statement-Prospectus and the Registration
Statement prior to filing such with the SEC, and will provide each other with a
copy of all such filings made with the SEC. Notwithstanding any other provision
herein to the contrary, no amendment or supplement (including by incorporation
by reference) to the Proxy Statement-Prospectus or the Registration Statement
shall be made without the approval of both parties, which approval shall not be
unreasonably withheld or delayed; provided that with respect to documents filed
by a party which are incorporated by reference in the Registration Statement or
Proxy Statement-Prospectus, this right of approval shall apply only with respect
to information relating to the other party or its business, financial condition
or results of operations. The Company will use its reasonable best efforts to
cause the Proxy Statement-Prospectus to be mailed to the Company's stockholders
as promptly as practicable after the Registration Statement is declared
effective under the Securities Act. Each party will advise the other party,
promptly after it receives notice thereof, of the time when the Registration
Statement has become effective,
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the issuance of any stop order, the suspension of the qualification of the
Parent Common Stock issuable in connection with the Merger for offering or sale
in any jurisdiction, or any request by the SEC for amendment of the Proxy
Statement-Prospectus or the Registration Statement. If at any time prior to the
Effective Time any information relating to Parent or the Company, or any of
their respective affiliates, officers or directors, should be discovered by
Parent or the Company which should be set forth in an amendment or supplement to
any of the Registration Statement or the Proxy Statement-Prospectus so that any
of such documents would not include any misstatement 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 were
made, not misleading, the party which discovers such information shall promptly
notify the other party hereto and, to the extent required by law, rules or
regulations, an appropriate amendment or supplement describing such information
shall be promptly filed with the SEC and disseminated to the stockholders of the
Company.
(b) Parent shall also take any action required to be taken
under any applicable state securities laws in connection with the Merger, and
each of the Company and Parent shall furnish all information concerning it and
the holders of Company Common Stock as may be reasonably requested in connection
with any such action.
(c) Parent shall use its reasonable best efforts to cause the
shares of Parent Common Stock to be issued in the Merger to be approved for
listing on the NYSE, subject to official notice of issuance, prior to the
Closing Date.
Section 7.3. STOCKHOLDERS MEETING. The Company shall call, give notice
of, convene and hold a special stockholders meeting for the purpose of voting
upon the approval and adoption of the Merger and this Agreement as soon as
practicable after the date on which the Proxy Statement-Prospectus shall have
been cleared by the SEC. Subject to the provisions of Section 6.4, the Company
shall solicit from its stockholders proxies in favor of, necessary or advisable
to obtain, approval and adoption of the Merger and this Agreement, and, subject
to the provisions of Section 6.4, the Board of Directors shall recommend that
holders of Shares vote in favor of and approve and adopt the Merger and this
Agreement at the Company Stockholders Meeting.
Section 7.4. ACCESS TO INFORMATION, CONFIDENTIALITY. The Company shall
afford to the officers, employees, accountants, counsel, potential lenders and
other representatives of Parent full access, at all reasonable times during the
period prior to the Effective Time, to all properties, books, Contracts and
records of the Company and, during such period, the Company shall furnish
promptly to Parent all information concerning the Company's business, properties
and personnel as Parent may reasonably request, and the Company shall make
available to Parent the appropriate individuals (including attorneys,
accountants and other professionals) for discussions of the Company's business,
properties and personnel as Parent may reasonably request. Without limiting the
foregoing, the Company shall provide Parent and Merger Subsidiary with access to
its books and records so as to enable Parent and Merger Subsidiary to ascertain
whether the Company has complied with all covenants herein. Parent acknowledges
that certain of the information which may be made available to it is proprietary
and includes confidential information. Prior to the Effective Time and/or seven
years after any termination of this Agreement, Parent will hold and will use its
commercially reasonable efforts to cause its officers,
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directors, employees, accountants, counsel, consultants, advisors and agents
(collectively, "Representatives") to hold, in confidence, unless compelled to
disclose by judicial or administrative process or by other requirements of Law,
all confidential documents and information concerning the Company ("Evaluation
Material") furnished in connection with the transactions contemplated by this
Agreement. In the event that Parent or any of its Representatives becomes
legally compelled (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar process) to disclose any of the
Evaluation Material, Parent shall provide the Company with prompt prior written
notice of such requirement so that the Company may seek a protective order or
other appropriate remedy and/or waive compliance with the terms of this
Agreement. In the event that such protective order or other remedy is not
obtained, or that the Company waives compliance with the provisions hereof,
Parent shall furnish only that portion of the Evaluation Material which Parent
is advised by written opinion of counsel is legally required and exercise best
efforts to obtain assurance that confidential treatment will be accorded such
Evaluation Material. The term "Evaluation Material" does not include any
information that (i) at the time of disclosure or thereafter is generally
available to the public (other than as a result of its disclosure directly or
indirectly by Parent or its Representatives), (ii) was available to Parent on a
non-confidential basis from a source other than the Company or its advisors,
provided that such source is not and was not bound by a confidentiality
agreement regarding the Company, or (iii) has been independently acquired or
developed by Parent without violating any of its obligations under this Section
7.4. At any time upon written request by the Company, Parent shall promptly
return to the Company all copies of the Evaluation Material in its possession or
in the possession of its Representatives, and Parent will promptly destroy all
copies of any analyses, compilations, studies or other documents prepared by or
for Parent or its Representatives or for Parent's or their use which reflect or
contain any Evaluation Material. Notwithstanding the foregoing, the Company may
deny access or disclosure where it determines upon advice of counsel that
disclosure could result in the violation by the Company of state or federal law,
provided that the Company informs Parent at the time that such a determination
has been made.
Section 7.5. CONSENTS, APPROVALS. The Company and Parent shall each use
all reasonable efforts to obtain promptly all consents, waivers, approvals,
authorizations or orders (including, without limitation, from all Governmental
Authorities), and the Company and Parent shall promptly make all filings
(including, without limitation, with all Governmental Authorities) required in
connection with the authorization, execution and delivery of this Agreement by
the parties hereto and the consummation by them of the transactions contemplated
hereby. The Company and Parent shall furnish each other with all information
required to be included in the Proxy Statement-Prospectus or any application or
other filing to be made pursuant to the rules and regulations of any
Governmental Authority in connection with the transactions contemplated by this
Agreement.
Section 7.6. INDEMNIFICATION AND INSURANCE.
(a) The certificate of incorporation and bylaws of the
Surviving Corporation shall contain provisions with respect to indemnification
similar in all material respects to those set forth in the certificate of
incorporation and bylaws of the Company on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period
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of six years after the Effective Time in any manner that would adversely affect
in any material respect the rights thereunder of individuals who at any time
prior to the Effective Time were directors or officers of the Company in respect
of actions or omissions occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement), unless
such modification is required by Law; PROVIDED, HOWEVER, that nothing in this
Section 7.6 shall prevent the Surviving Corporation from effecting any merger,
reorganization or consolidation, provided that the surviving corporation in
respect of any such merger, reorganization or consolidation is obligated to
comply with this Section 7.6.
(b) For a period of six years from and after the Effective
Time, the Surviving Corporation shall maintain in effect the liability insurance
policies (if any) for directors and officers currently maintained by the
Company; PROVIDED THAT the Surviving Corporation may substitute therefor
policies, including policies maintained by an affiliate of the Surviving
Corporation, providing substantially the same combined coverage and containing
terms and conditions substantially the same as the coverage currently maintained
by the Company; and PROVIDED FURTHER that in no event shall the Surviving
Corporation be required to expend more than an amount per year equal to 250% of
the current annual premiums paid by the Company to maintain or procure insurance
coverage required by this Section 7.6.
Section 7.7. EMPLOYEE BENEFITS.
(a) For a period of at least one year after the Effective
Time, Parent shall maintain employee benefits and programs, including a 401(k)
plan, for employees of the Company that are in the aggregate not materially less
favorable than those being provided to such employees on the date hereof. To the
extent any employee benefit plan, program or policy of Parent is made available
to the employees of the Surviving Corporation or its Subsidiaries, service with
the Company by any employee prior to the Effective Time shall be credited in
determining such employee's eligibility and vesting levels (but not for accrual
of benefits) under such plans, programs and policies of Parent. For the
remainder of the calendar year which includes the Effective Time, Parent shall
maintain each of the Company's cafeteria plans within the meaning of Section 125
of the Code so as to prevent the forfeiture of unused participant account
balances under each such plan. This Section 7.7 shall not apply to salaries, and
bonuses, the amounts of which Parent shall have the right to establish in its
sole discretion, subject to any existing employment agreements.
(b) The Company shall take such actions as are necessary to
terminate the Stock Purchase Plan effective five business days before the
Effective Time. After such termination, employee participants in such Stock
Purchase Plan shall not be permitted to continue to have the Company withhold
any monies for investment in such Stock Purchase Plan, and each such employee
shall be permitted to elect to receive invested cash or purchase Shares in
accordance with the terms of such plan.
Section 7.8. NOTIFICATION OF CERTAIN MATTERS. In the event that any
representations and warranties of the Company shall be or become materially
untrue such that the condition set forth in Section 8.2(a) would not be
satisfied, the Company shall promptly provide Parent and Merger Subsidiary with
a revised Company Disclosure Schedule, if necessary. In the event that the
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representations and warranties of Parent and Merger Subsidiary shall be or
become materially untrue such that the condition set forth in Section 8.3(a)
would not be satisfied, Parent and Merger Subsidiary shall promptly notify the
Company. No such notification shall affect in any way the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
Section 7.9. FURTHER ACTION. Upon the terms and subject to the
conditions hereof, each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, to
obtain in a timely manner all necessary waivers, consents, approvals, orders and
authorizations and to effect all necessary registrations and filings, and
otherwise to satisfy or cause to be satisfied all conditions precedent to its
obligations under this Agreement.
Section 7.10. PUBLIC ANNOUNCEMENTS. Parent and the Company shall
consult with each other before issuing any press release, with respect to the
Merger or this Agreement, and shall not issue any such press release or make any
such public statement without the prior consent of the other party, which shall
not be unreasonably withheld or delayed; PROVIDED, HOWEVER, that any party may,
without the prior consent of the other party, issue such press release or make
such public statement as may upon the advice of counsel be required by Law or
the rules and regulations of the NYSE or AMEX, if it has used all reasonable
effort to consult with the other party.
Section 7.11. TRANSFER TAXES. Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding all Taxes which become payable by the
Company in connection with the transactions contemplated hereby that are
required or permitted to be filed on or before the Effective Time. Parent,
Merger Subsidiary and the Company agree that the Company (prior to the Merger)
and the Surviving Corporation (following the Merger) will pay any real property
transfer or gains tax, stamp tax, stock transfer tax or other similar tax
imposed on the Merger or the surrender of the Company Common Stock pursuant to
the Merger (collectively, "Transfer Taxes"), excluding any Transfer Taxes as may
result from the transfer of beneficial interests in the Shares or Options other
than as a result of the Merger, and any penalties or interest with respect to
the Transfer Taxes. The Company shall cooperate with Merger Subsidiary and
Parent in the filing of any returns with respect to the Transfer Taxes.
Section 7.12. AMEX LISTING. The Company shall use its reasonable best
efforts to continue the quotation of the Company Common Stock on the AMEX
during the term of this Agreement.
Section 7.13. ADDITIONAL FINANCIAL STATEMENTS. The Company and Parent
shall furnish to each other such additional financial data concerning itself as
the other party may reasonably request, including any audited financial
statements or financial statements for the fiscal year ended December 31, 2002
(in the case of the Company) or February 23, 2003 (in the case of Parent),
prepared in conformity with the requirements of the SEC applicable to annual
financial statements to be included in Form 10-K under the Exchange Act (such
financial statements of the
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Company, the "Company 2002 Audited Financial Statements"). The Company shall
furnish to Parent all interim quarterly financial statements or consolidated
financial statements of the Company prepared after the date of this Agreement,
accompanied by a statement of the Chief Financial Officer of the Company that,
in the opinion of such officer, such quarterly financial statements were
prepared in conformity with the requirements of the SEC applicable to financial
statements to be included in Form 10-Q under the Exchange Act applied on a
consistent basis (except as otherwise stated in such quarterly financial
statements) and present fairly the financial position, results of operations and
cash flows of the Company as of the date and for the period indicated, subject
to normal, recurring year-end audit adjustments and the absence of notes.
Section 7.14. AGREEMENT WITH SUPPLIER. The Company shall use its
reasonable efforts to renew its Pull-Tab Manufacturing and License Agreement
with Algonquin Industries, Inc. ("Algonquin"), for a minimum of ten years and
shall use its reasonable efforts to enter into a written non-disclosure and
proprietary developments agreement with Algonquin, in each case on terms and
conditions satisfactory to Parent; provided that the Company's inability to
renew or enter into such agreements shall not be deemed to be a condition to the
obligations of the Parent to effect the Merger.
Section 7.15. TAX OPINIONS. Each of the Company and Parent shall use
its respective reasonable best efforts to obtain the tax opinions referred to in
Section 8.3(d) and 8.2(i), respectively.
Section 7.16. SECTION 16(b) BOARD APPROVAL. Prior to the Effective
Time, Parent and the Company shall take all such steps as may be required to
cause any dispositions of Company Common Stock (including derivative securities
with respect to Company Stock) or acquisitions of Parent Common Stock (including
derivative securities with respect to Parent Common Stock) resulting from the
transactions contemplated by Article 1 or Article 2 of this Agreement by each
individual who is subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to the Company, to be exempt under Rule 16b-3
promulgated under the Exchange Act, such steps to be taken in accordance with
the No-Action Letter dated January 12, 1999, issued by the SEC to Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP.
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction or, to the extent permitted by applicable Law,
waiver at or prior to the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the stockholders of the
Company.
(b) HSR ACT. The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated and any
investigations relating to the Merger that may have been opened by the FTC or
the Antitrust Division or any foreign
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antitrust authority (by means of a written request for additional information or
otherwise) shall have been terminated.
(c) NO INJUNCTIONS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing or
delaying the consummation of the Merger shall be in effect.
(d) REGISTRATION STATEMENT. The Registration Statement shall
have been declared effective by the SEC and shall be effective and no
proceedings shall be pending or threatened by the SEC to suspend the
effectiveness of the Registration Statement, and Parent shall have received all
required approvals by state securities or "blue sky" authorities with respect to
the transactions contemplated by this Agreement.
(e) NYSE LISTING. The shares of Parent Common Stock issuable
as part of the Merger Consideration shall have been approved for listing on the
NYSE, subject to official notice of issuance.
Section 8.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER
SUBSIDIARY. The obligations of Parent and Merger Subsidiary to effect the Merger
are also subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations
and warranties of the Company contained in this Agreement shall have been true
and correct as of the date of this Agreement, and (ii) the representations and
warranties of the Company contained in this Agreement shall be true and correct
as of the Effective Time, as though made on and as of the Effective Time, except
those representations and warranties which address matters only as of a
particular date (which shall have been true and correct as of such date). Parent
and Merger Subsidiary shall have received a certificate to the effect that the
foregoing condition has been satisfied signed by the President and the Chief
Financial Officer of the Company, in their capacities as such and not
personally, which certificate shall specifically indicate the manner in which
any representation or warranty of the Company contained in this Agreement, if
any, is not true and correct in all respects as of the Effective Time, as though
made on and as of the Effective Time.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed
and complied in all material respects with all material agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to
the Effective Time, and Parent and Merger Subsidiary shall have received a
certificate to such effect signed by the President and Chief Financial Officer
of the Company in their capacities as such and not personally.
(c) CONSENTS OBTAINED. The Company shall have obtained (i)
consents required under the Lottery Contracts identified on EXHIBIT E
representing (together with revenue from Lottery Contracts executed after the
date hereof for which consents have similarly been obtained) at least 85% of the
projected revenue for fiscal year 2003 represented by all of the Lottery
Contracts identified on EXHIBIT E determined in accordance with the Company 2003
Budget and (ii) consents required under at least five of the Contracts
identified on EXHIBIT F.
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(d) NO LITIGATION. There shall not be pending by any
Governmental Authority any claim, suit, action or proceeding (or by any other
Person, any claim, suit, action or proceeding which the Board of Directors of
Parent, based upon advice from counsel, believes has a reasonable likelihood of
success) (i) challenging or seeking to restrain or prohibit the consummation of
the Merger or any of the other transactions contemplated by this Agreement or
seeking material damages in connection therewith, or (ii) seeking to prohibit or
limit the ownership or operation by Parent, the Company or any of their
respective Subsidiaries of any material portion of the business or assets of the
Company, Parent or any of their respective Subsidiaries, as a result of the
Merger or any of the other transactions contemplated by this Agreement.
(e) AUDITED FINANCIAL STATEMENTS. The Company 2002 Audited
Financial Statements shall have been delivered to Parent and Merger Subsidiary
and shall be consistent in all material respects with the financial information
included in the preliminary financial statements delivered to Parent on March 6,
2003.
(f) DELIVERIES. The Parent shall have received a payoff letter
in customary form with respect to the Company Credit Facility.
(g) LEGAL OPINION. Parent shall have received a legal opinion,
dated the Closing Date, of ▇▇▇▇, Stettinius & Hollister LLP in substantially the
form attached as EXHIBIT A.
(h) DISSENTING SHARES. The number of Dissenting Shares shall
not exceed 10% of the outstanding Shares.
(i) TAX OPINION. Parent shall have received an opinion dated
as of the date of Closing from its counsel, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, substantially
to the effect that (i) the Merger should be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code,
(ii) each of Parent, Merger Subsidiary and the Company should be a party to a
reorganization within the meaning of Section 368(a) of the Code, and (iii) no
gain or loss should be recognized by Parent, Merger Subsidiary or the Company as
a result of the Merger. In rendering such opinion, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP shall
be entitled to require delivery of, and to refer to and rely upon, such facts
and representations set forth in certificates received from Parent, Merger
Subsidiary and the Company, their respective officers, directors and affiliates,
and from the stockholders of the Company, as it shall deem necessary or
appropriate to enable it to render such opinion, and the parties hereto agree to
use their respective best efforts to obtain such representations and
certificates.
(j) NO MATERIAL ADVERSE EFFECT. A Material Adverse Effect
shall not have occurred with respect to the Company.
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Section 8.3. ADDITIONAL CONDITIONS TO OBLIGATION OF COMPANY. The
obligations of the Company to effect the Merger is also subject to the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations
and warranties of Parent and Merger Subsidiary contained in this Agreement shall
have been true and correct as of the date of this Agreement, and (ii) the
representations and warranties of Parent and Merger Subsidiary contained in this
Agreement shall be true and correct as of the Effective Time, as though made on
and as of the Effective Time, except those representations and warranties which
address matters only as of a particular date (which shall have been true and
correct as of such date). The Company shall have received a certificate to the
effect that the foregoing condition has been satisfied signed by the President
and the Chief Financial Officer of Parent, which certificate shall specifically
indicate the manner in which any representation or warranty of Parent and Merger
Subsidiary contained in this Agreement, if any, is not true and correct in all
respects as of the Effective Time, as though made on and as of the Effective
Time.
(b) AGREEMENTS AND COVENANTS. Parent and Merger Subsidiary
shall have performed or complied in all material respects with all material
agreements and covenants required by this Agreement to be performed or complied
with by them on or prior to the Effective Time, and the Company shall have
received a certificate to such effect signed by the President and the Chief
Financial Officer of Parent.
(c) NO MATERIAL ADVERSE EFFECT. A Material Adverse Effect
shall not have occurred with respect to the Parent.
(d) TAX OPINION. The Company shall have received an opinion
dated as of the date of Closing from its counsel, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
LLP, substantially to the effect that (i) the Merger should be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code, (ii) a Company stockholder will recognize no gain or loss
upon receipt of Parent Common Stock in exchange for Company Common Stock, (iii)
a Company stockholder's receipt of Cash Consideration will be treated as capital
gain or loss if the Company Common Stock was a capital asset in the hands of
such stockholder, and (iv) a Company stockholder's basis in Parent Common Stock
received pursuant to the Merger will be equal to such stockholder's basis in its
Company Common Stock surrendered in the exchange, increased by the gain, if any,
recognized by such stockholder's receipt of Cash Consideration. In rendering
such opinion, ▇▇▇▇, Stettinius & Hollister LLP shall be entitled to require
deliver of, and to refer to and rely upon, such facts and representations set
forth in certificates received from Parent, Merger Subsidiary and the Company,
their respective officers, directors and affiliates, and from the stockholders
of the Company, as it shall deem necessary or appropriate to enable it to render
such opinion, and the parties hereto agree to use their respective best efforts
to obtain such representations and certificates.
(e) LEGAL OPINION. The Company shall have received a legal
opinion, dated the Closing Date, of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, in substantially the
form attached as EXHIBIT B.
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ARTICLE IX
TERMINATION
Section 9.1. TERMINATION. This Agreement may be terminated and the
Merger contemplated herein abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not
have been consummated by September 17, 2003; PROVIDED, HOWEVER, that the right
to terminate this Agreement under this Section 9.1(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Merger to occur on or before such
date; or
(c) by either Parent or the Company if a court of competent
jurisdiction shall have issued a nonappealable final order, decree or ruling
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger (provided that the right to terminate this Agreement under this
Section 9.1(c) shall not be available to any party who has not complied with
Section 7.9 and such noncompliance materially contributed to the issuance of any
such order, decree or ruling or the taking of such action); or
(d) by either Parent or the Company if the requisite vote of
the holders of the Company Common Stock shall not have been obtained at the
Company Stockholders Meeting; or
(e) by Parent, if the Board of Directors of the Company shall
withdraw, modify or change its approval or recommendation of this Agreement or
the Merger in a manner adverse to Parent or approves or recommends an
Acquisition Proposal or the Company shall have entered into an agreement with
respect to an Acquisition Proposal; or
(f) by the Company if (i) the Board of Directors pursuant to
Section 6.4(b) withdraws or modifies its approval or recommendation of this
Agreement or the Merger, and (ii) the Company simultaneously with terminating
this Agreement pays Parent all Expenses and the Termination Fee in cash and
otherwise complies with the provisions of Section 6.4(b); or
(g) by the Company if (i) the Company enters into a definitive
agreement in accordance with Section 6.4(b), and (ii) the Company simultaneously
with terminating this Agreement pays Parent all Expenses and the Termination Fee
in cash and otherwise complies with the provisions of Section 6.4(b); or
(h) by either Parent or the Company if the Special Committee
shall have requested but not have received an opinion from the Special
Committee's financial advisor dated as of the date of the Proxy
Statement-Prospectus to the effect that the Merger Consideration to be received
by the stockholders of the Company is fair from a financial point of view to the
public stockholders of the Company; or
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(i) by Parent or the Company, upon a material breach of any
covenant or agreement on the part of the Company or Parent, respectively, set
forth in this Agreement, which breach has not been cured within ten business
days following receipt by the breaching party of notice of such breach from the
other party, such that the conditions set forth in Section 8.2(b) or Section
8.3(b), as the case may be, would not be satisfied;
(j) by Parent, if any representation or warranty of the
Company shall be untrue such that the condition set forth in Section 8.2(a)
would not be satisfied, or by the Company, if any representation or warranty of
Parent shall be untrue such that the condition set forth in Section 8.3(a) would
not be satisfied; or
(k) by Parent, if the Average Closing Price on the trading day
which is three business days preceding the date on which the Company
Stockholders Meeting occurs is less than the Minimum Market Price; PROVIDED,
HOWEVER, that Parent shall not be permitted to terminate this Agreement under
this Section 9.1(k) if the Company notifies Parent, by 12:00 noon on the
business day following the date Parent gives notice to the Company of its
determination to terminate this Agreement under this Section 9.1(k), that the
Company wishes to proceed with an all-cash merger transaction, in which case the
terms and conditions of this Agreement shall continue in full force and effect,
except that the Merger Consideration shall be payable in cash only, such that
all holders of shares of Company Common Stock (other than Excluded Shares) shall
be entitled to receive the Cash Consideration in respect of such shares, less
any required withholding of Taxes, and in which case the parties hereto hereby
agree to negotiate an amendment and restatement of this Agreement to reflect the
requirements of an all-cash transaction.
Any party desiring to terminate this Agreement shall give written notice thereof
and the reasons therefor to the other parties hereto.
Section 9.2. EFFECT OF TERMINATION.
(a) In the event of the termination of this Agreement in
accordance with Section 9.1, this Agreement shall forthwith become void and
there shall be no liability on the part of any party hereto or any of its
directors, officers, stockholders or affiliates except as set forth in Sections
6.4, 7.4, 9.2 or 9.3 and Article X hereof, PROVIDED THAT nothing herein shall
relieve any party from liability for any material breach of any covenant,
agreement, representation or warranty contained in this Agreement. The right of
any party hereto to terminate this Agreement pursuant to Section 9.1 shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any party hereto, any Person controlling any such party
or any of their respective officers, directors, employees, accountants,
consultants, legal counsel, agents or other representatives, whether prior to or
after the execution of this Agreement.
(b) The Company shall immediately pay, or cause to be paid, by
wire transfer to Parent the sum of (i) all of Parent's out-of-pocket expenses,
up to a maximum of $750,000, reasonably incurred in connection with the
transactions contemplated by this Agreement (the "Expenses"), and (ii) $2.75
million (the "Termination Fee") upon demand if (A) Parent or the
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Company terminates this Agreement in accordance with Section 9.1(d); (B) Parent
terminates this Agreement in accordance with Section 9.1(e) or (C) the Company
terminates this Agreement in accordance with Section 9.1(f), (g) or (h). The
amount of Expenses so payable shall be the amount set forth in an estimate
delivered by Parent upon termination subject to upward or downward adjustment as
provided in the next sentence. In the event that Parent's actual out-of-pocket
expenses, as documented in reasonable detail, exceed such estimate, the amount
of any such excess (subject to the maximum limitation in the preceding sentence)
shall be payable upon demand, and in the event that Parent's actual expenses are
less than the amount of such estimate, Parent shall promptly refund to the
Company by wire transfer such lesser amount.
(c) If (i) this Agreement is terminated in accordance with
Section 9.1, and (ii) Merger Subsidiary has exercised the option granted to it
pursuant to Section 2.01 of the Stockholder Voting and Option Agreement, then
Parent and Merger Subsidiary shall, to the extent permitted by applicable state
and federal law, including rules and regulations of the SEC, (x) initiate a
tender offer for all of the then-outstanding shares of Company Common Stock and
Options on the same terms and conditions, including, without limitation, the
same price to be paid pursuant to such Section 2.01, as set forth in Article II
of the Stockholder Voting and Option Agreement and (y) cause the Company to
execute and deliver employment agreements with senior management of the Company,
on substantially the same terms as those employment agreements being executed
and delivered by such senior managers and Parent on the date hereof (which are
to become effective at the Effective Time, if it occurs).
Section 9.3. FEES AND EXPENSES. Except as set forth in Section 9.2, all
fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses whether or not the Merger is consummated; provided that (i) if this
Agreement is terminated for any reason other than a breach by Parent, and (ii)
Parent has not been paid its Expenses pursuant to Section 9.2(b), and (iii)
within 12 months of this Agreement being so terminated the Company consummates a
transaction concerning a Superior Proposal, the Company shall immediately pay or
cause to be paid, by wire transfer funds to Parent, all of Parent's Expenses.
Without limiting the generality of the foregoing, the Company shall be
responsible for and pay the reasonable fees and expenses for its legal,
financial and accounting advisors, including, without limitation, all printing,
mailing and other fees and expenses relating to the Proxy Statement-Prospectus
and the Company Stockholders Meeting.
ARTICLE X
GENERAL PROVISIONS
Section 10.1. EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties in this Agreement shall terminate at the
Effective Time. In the event of any inconsistency between the statements made in
the body of this Agreement and those contained in the Company Disclosure
Schedule (other than an express exception to a specifically identified
statement), those in this Agreement shall control.
Section 10.2. SURVIVAL. The provisions of this Agreement shall
terminate at the Effective Time or upon termination of this Agreement pursuant
to Section 9.1, as the case may be, except that (i) if the Merger is
consummated, the agreements in Articles I and II and Sections
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7.6, 7.7, 7.10 and 7.11 shall survive the Effective Time indefinitely unless
otherwise limited to specific periods in accordance with their respective terms,
and (ii) the agreements in Sections 9.2 and 9.3 and this Article X shall survive
termination of this Agreement indefinitely.
Section 10.3. NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally or by overnight courier to the
parties at the following addresses or sent by electronic transmission, with
confirmation received, to the telecopy numbers specified below (or at such other
address or telecopy number for a party as shall be specified by like notice):
(a) If to Parent or Merger Subsidiary:
GTECH Holdings Corporation
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇, Esq.
(b) If to the Company:
Interlott Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, President and CEO
With copies to:
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
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Section 10.4. CERTAIN DEFINITIONS. The following terms, as used herein,
have the following meanings:
"Acquisition Proposal" shall have the meaning as set forth in Section
6.4(a) of the Agreement.
"Agreement" shall have the meaning as set forth in the Preamble.
"AMEX" shall mean the American Stock Exchange LLC.
"Antitrust Division" shall mean the Antitrust Division of the
Department of Justice.
"Average Closing Price" as of any date shall mean the average of the
daily last sales prices of Parent Common Stock on the NYSE (as reported in the
Wall Street Journal) for the 20 consecutive trading days in which such shares
are trading ending at the close of trading on the last day of trading before the
date of determination.
"Cash Consideration" shall have the meaning as set forth in Section
2.1(c) of the Agreement.
"Cash Election" shall have the meaning set forth in Section 2.2(b) of
the Agreement.
"Cash Election Shares" shall have the meaning set forth in Section
2.2(b) of the Agreement.
"CERCLA" shall mean the Comprehensive Environmental Response,-
Compensation and Liability Act, as amended.
"Certificates" shall have the meaning set forth in Section 2.2(a) of
the Agreement.
"Closing" shall have the meaning as set forth in Section 1.2 of the
Agreement.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Art
of 1985, as amended.
"Code" shall mean The Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning as set forth in the Preamble.
"Company 2001 and 2002 Proxy Statements" shall have the meaning set
forth in Section 4.7 of the Agreement.
"Company 2002 Audited Financial Statements" shall have the meaning set
forth in Section 7.14 of the Agreement.
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"Company 2003 Budget" shall mean the budget for the Company's fiscal
year ending December 31, 2003, delivered to Parent on March 14, 2003.
"Company Affiliates" shall have the meaning set forth in Section 6.2
of the Agreement.
"Company Affiliates Agreement" shall mean the agreements to be
executed by each of the Company Affiliates, substantially in the form of EXHIBIT
C to this Agreement, providing that such person will comply with Rule 145 under
the Securities Act.
"Company Balance Sheet" shall mean the balance sheet of the Company as
of September 30, 2002, as filed with the SEC in the Company Form 10-Q for the
fiscal period ended on such date.
"Company Benefit Plan" shall mean (i) each "employee pension benefit
plan" as defined in Section 3(2) of ERISA, (ii) each "employee welfare benefit
plan" as defined in Section 3(1) of ERISA and (iii) each other retirement,
profit sharing, deferred compensation, incentive compensation, bonus, stock
option, stock purchase, severance pay and change in control agreement,
unemployment benefit, vacation pay, health, life or other insurance, Section 125
cafeteria plan or flexible benefit arrangement, fringe benefit or other employee
benefit plan, program, agreement or arrangement maintained or contributed to by
the Company or any ERISA Affiliate in respect of or for the benefit of any
employee, former employee or director of the Company and their eligible
dependents and beneficiaries or with respect to which the Company has any
liability.
"Company Common Stock" shall have the meaning as set forth in the
Preamble.
"Company Credit Facility" shall mean that certain Credit Agreement
($30,000,000), dated as of January 25, 2001 between the Company and Fifth Third
Bank, an Ohio banking corporation, as amended.
"Company Disclosure Schedule" shall mean the written disclosure
schedule delivered on or prior to the date hereof by the Company to Parent and
Merger Subsidiary that is arranged in paragraphs corresponding, and is intended
to relate solely to, to the numbered and lettered paragraphs corresponding to
the numbered and lettered paragraphs contained in this Agreement.
"Company Form 10-K" shall have the meaning as set forth in Section 4.7
of the Agreement.
"Company Form 10-Qs" shall have the meaning as set forth in Section 4.7
of the Agreement.
"Company Preferred Stock" shall mean the shares of preferred stock
authorized by the Company's Certificate of Incorporation in effect on the date
of this Agreement.
"Company Securities" shall have the meaning as set forth in Section
4.5(b) of the Agreement.
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"Company Securities Documents" shall have the meaning as set forth in
Section 4.7.
"Company Stockholders Meeting" shall mean the meeting of the holders of
the Company Common Stock described in Section 7.3 of the Agreement, held for the
purposes of approving the Agreement and the Merger and any adjournment thereof.
"Confidential Contracts" shall have the meaning as set forth in Section
4.16(c) of the Agreement.
"Constituent Corporations" shall have the meaning as set forth in
Section 1.1 of the Agreement.
"Contract" shall mean any legally binding contract, agreement,
indenture, arrangement, instrument, commitment or understanding, whether written
or oral.
"Current Real Property" shall have the meaning as is set forth in
Section 4.22(b) of the Agreement.
"DGCL" shall have the meaning as set forth in the Preamble.
"Dissenting Shares" shall have the meaning as set forth in Section 2.3
of the Agreement.
"DOL" shall mean the Department of Labor.
"DPC Shares" shall have the meaning as set forth in Section 2.1(a) of
the Agreement.
"Effective Time" shall have the meaning as set forth in Section 1.3 of
the Agreement.
"Election Deadline" shall have the meaning set forth in Section 2.2(c)
of the Agreement.
"Election Form" shall have the meaning set forth in Section 2.2(a) of
the Agreement.
"Embedded Control" shall have the meaning as set forth in Section 4.13
of the Agreement.
"Environmental Laws" means all Laws concerning or relating to
industrial hygiene or protection of human health or the environment or to
emissions, discharges or releases of pollutants, contaminants or other Hazardous
Substances or wastes into the environment, including without limitation ambient
air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or other Hazardous Substances
or wastes or the clean-up or other remediation thereof
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
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"ERISA Affiliate" shall mean each entity which is treated as a single
employer with the Company for the purposes of Section 414 of the Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Agent" shall have the meaning as set forth in Section 2.2(a)
of the Agreement.
"Exchange Ratio" shall have the meaning as set forth in Section 2.1(c)
of the Agreement.
"Excluded Shares" shall have the meaning as set forth in Section 2.2(d)
of the Agreement.
"Expenses" shall have the meaning as set forth in Section 9.2(b) of the
Agreement.
"Evaluation Material" shall have the meaning as set forth in Section
7.4 of the Agreement.
"Former Real Property" shall have the meaning as is set forth in
Section 4.22(c) of the Agreement.
"FTC" shall mean the Federal Trade Commission.
"GAAP" shall have the meaning as set forth in Section 4.8 of the
Agreement.
"Governmental Authority" shall mean any Federal, state, local or
foreign government of any nature whatsoever, or any court, tribunal,
administrative agency or commission or other governmental or regulatory
official, authority or agency or body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.
"Hazardous Substances" shall mean any substance regulated under any
Environmental Laws including, without limitation, any substance which is (A)
petroleum, asbestos or asbestos-containing material, or polychlorinated
biphenyls; (B) defined, designated or listed as a "Hazardous Substance" pursuant
to Sections 307 and 311 of the Clean Water Act, 33 U.S.C. ss.ss.1317, 1321,
Section 101(14) of CERCLA, 42 U.S.C. ss.9601; (C) listed in the United States
Department of Transportation Hazardous Material Tables, 49 C.F.R. ss.172-101; or
(D) defined, designated or listed as a "Hazardous Waste" under Section 1004(5)
of the Resource and Conservation and Recovery Act, 42 U.S.C. ss.6903(5).
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"Intellectual Property" shall mean any and all United States and
foreign: (a) issued patents (including, without limitation, design patents,
industrial designs and utility models),
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pending patent applications (including docketed patent disclosures awaiting
filing, reissues, divisions, continuations-in-part and extensions), and pending
patent disclosures awaiting filing determination; (b) registered trademarks,
service marks, trade names, domain names, trade dress, logos, business and
product names and slogans; (c) registered copyrights (the Intellectual Property
described in clauses (a), (b) and (c) being collectively "Registered
Intellectual Property"); (d) unregistered trademarks, service marks, trade
names, trade dress, logos, business and product names, slogans, and copyrights;
(e) inventions, processes, designs, formulae, trade secrets and know-how; and
(f) computer software (including, without limitation, data and related
documentation), other than off-the-shelf software.
"IRS" shall mean the Internal Revenue Service.
"Law" shall mean any law (including, without limitation, principles of
common law), statute, regulation, treaty, License, judgment, order, award or
other decision or requirement enacted, promulgated, issued, enforced or entered
by any arbitrator, court or Governmental Authority (domestic or foreign).
"Letter of Transmittal" shall have the meaning set forth in Section
2.2(f) of the Agreement.
"Liabilities" shall have the meaning as set forth in Section 4.23 of
the Agreement.
"Licensed Intellectual Property" shall have the meaning set forth in
Section 4.18(a) of the Agreement.
"Licenses" shall have the meaning as set forth in Section 4.1 of the
Agreement.
"Lien" shall mean any mortgage, lien, pledge, charge, security
interest, encumbrance, hypothecation, adverse right or interest, charge or claim
of any nature whatsoever in respect to any asset, property or property interest.
"Lottery Contracts" shall mean Contracts to which the Company is a
party or by which the Company is bound relating to the provision of lottery
goods or services, directly or indirectly (and including through independent
contractors), to any Governmental Authority, and including without limitation
the Contracts listed on EXHIBIT E to this Agreement, but excluding any
agreements with Parent or its Subsidiaries.
"Mailing Date" shall have the meaning set forth in Section 2.2(a) of
the Agreement.
"Majority Shareholder" shall mean ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, Jr.
"Material Adverse Effect" shall mean with respect to any Person, any
change, effect or event that (i) is or is reasonably likely to be material and
adverse to the condition (financial or otherwise), business, properties, assets,
liabilities, results of operations, cash flows or prospects of such Person and
its Subsidiaries taken as a whole, or (ii) does or is reasonably likely to
materially impair the ability of such Person to perform its obligations under
this Agreement or
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otherwise materially threatens or impedes the consummation of the Merger and the
other transactions contemplated by this Agreement or the conduct of the business
of the Surviving Corporation.
"Merger" shall have the meaning as set forth in the Preamble.
"Merger Consideration" shall have the meaning as set forth in Section
2.1(c) of the Agreement.
"Merger Subsidiary" shall have the meaning set forth in the Preamble.
"Minimum Market Price" shall mean a per share price for Parent Common
Stock which is eighteen percent (18%) below the per share price for Parent
Common Stock at the close of trading on the NYSE on the date of execution of
this Agreement.
"Mixed Election" shall have the meaning set forth in Section 2.2(b) of
the Agreement.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 3(37) and 4001(a)(3) of ERISA.
"Noncompete Agreement" shall mean the Noncompete Agreement by and
between the Parent and the Majority Shareholder of even date herewith.
"Non-Election" shall have the meaning set forth in Section 2.2(b) of
the Agreement.
"Non-Election Shares" shall have the meaning set forth in Section
2.2(b) of the Agreement.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Option" shall have the meaning as set forth in Section 2.1(e) of the
Agreement.
"Option Consideration" shall have the meaning set forth in Section
2.1(e) of the Agreement.
"Ordinary Course" shall mean substantially in the same manner, nature
and amounts as previously conducted and on an arms length basis and, with
respect to the Company, shall include, without limitation, the implementation of
Contracts to sell or lease instant ticket vending machines and/or related
services.
"Outstanding Company Shares" shall have the meaning set forth in
Section 2.2(d) of the Agreement.
"Owned Intellectual Property" shall have the meaning set forth in
Section 4.18(a) of the Agreement.
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"Parent" shall have the meaning as set forth in the Preamble.
"Parent Balance Sheet" shall mean the consolidated balance sheet of the
Parent and its Subsidiaries as of November 23, 2002, as filed with the SEC in
the Parent Form 10-Q for the fiscal period ended on such date.
"Parent Common Stock" shall mean the shares of common stock, par value
$0.01 per share, of Parent.
"Parent Convertible Debentures" shall mean the 1 3/4% Convertible
Debentures due December 15, 2021, of Parent, fully and unconditionally
guaranteed by certain of Parent's Subsidiaries.
"Parent Current Real Property" shall have the meaning set forth in
Section 5.17(b) of the Agreement.
"Parent Form 10-K" shall have the meaning set forth in Section 5.7(a)
of the Agreement.
"Parent Form 10-Qs" shall have the meaning set forth in Section 5.7(a)
of the Agreement.
"Parent Former Real Property" shall have the meaning set forth in
Section 5.17(c) of the Agreement.
"Parent Preferred Stock" shall mean the shares of preferred stock, par
value $0.01 per share, of Parent.
"Parent Securities" shall have the meaning set forth in Section 5.5(b)
of the Agreement.
"Parent Securities Documents" shall have the meaning set forth in
Section 5.7(a) of the Agreement.
"Parent Stock Option Plans" shall mean, collectively, (i) the 1994
Stock Option Plan of Parent, as amended and restated; (ii) the 1996 Non-Employee
Directors' Stock Option Plan of Parent, as amended; (iii) the 1997 Stock Option
Plan of Parent, as amended April 2, 2002; (iv) the 1998 Non-Employee Directors'
Stock Election Plan of Parent; and (v) the 1999 Non-Employee Directors' Stock
Option Plan of Parent, as amended.
"Parent Stock Purchase Plan" shall mean the 1998 Employee Stock
Purchase Plan, as amended and restated as of November 1, 2001, of Parent.
"Parties' Confidentiality Agreement" shall have the meaning set forth
in Section 6.4 of the Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
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"Permitted Investments" shall have the meaning as set forth in Section
2.2(g) of the Agreement.
"Person" means an individual, a corporation, a partnership, an
association, a trust, a limited liability company or any other entity or
organization, including a Governmental Authority.
"Proxy Statement-Prospectus" shall have the meaning as set forth in
Section 4.9 of the Agreement.
"Registered Intellectual Property" has the meaning set forth in the
definition of Intellectual Property, above.
"Registration Statement" shall have the meaning set forth in Section
4.9 of the Agreement.
"Representatives" shall have the meaning as set forth in Section 7.4 of
the Agreement.
"Response," "Removal" and "Remedial Action" shall have the meanings
ascribed to them in Sections 101(23)-101(25) of CERCLA, as amended by the
Superfund Amendments and Reauthorization Act, 42 U.S.C. ▇▇.▇▇.
9601(23)-9601(25).
"Scheduled Intellectual Property" shall have the meaning set forth in
Section 4.18(a) of the Agreement.
"SEC" shall refer to the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Shares" shall have the meaning set forth in the Preamble.
"Shortfall Number" shall have the meaning set forth in Section 2.2(e)
of the Agreement.
"Special Committee" shall mean a special committee of the Board of
Directors of the Company established to consider approval of this Agreement and
the transactions contemplated hereby including the Merger and to determine
whether such transactions are advisable, fair to and in the best interests of
the public stockholders of the Company.
"Stock Consideration" shall have the meaning set forth in Section
2.2(d) of the Agreement.
"Stock Conversion Number" shall have the meaning set forth in Section
2.1(c) of the Agreement.
"Stock Election" shall have the meaning set forth in Section 2.2(b) of
the Agreement.
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"Stock Election Number" shall have the meaning set forth in Section
2.2(b) of the Agreement.
"Stock Election Shares" shall have the meaning set forth in Section
2.2(b) of the Agreement.
"Stock Incentive Plan" shall have the meaning set forth in Section
4.5(a) of the Agreement.
"Stock Purchase Plan" shall have the meaning set forth in Section
4.5(a) of the Agreement.
"Stockholder Representative" shall have the meaning set forth in
Section 2.2(b) of the Agreement.
"Stockholder Voting and Option Agreement" shall mean the Stockholder
Voting and Option Agreement dated the date hereof between and among the Parent,
the Merger Subsidiary and the Majority Shareholder, providing for the Majority
Stockholder to support the transactions contemplated by this Agreement and
providing the Parent or Merger Subsidiary with the option, under certain
circumstances, to acquire the Shares owned by such stockholder, which agreement
shall be substantially in the form attached hereto as EXHIBIT D.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof), (ii) any partnership (a) the sole general partner or managing general
partner of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or of one or more Subsidiaries of such
Person (or any combination thereof), and (iii) with respect to the Company, any
corporation, association or other business entity which is included or
consolidated in the Company's financial statements.
"Superior Proposal" shall have the meaning as is set forth in Section
6.4(c) of the Agreement.
"Superior Proposal Notice" shall have the meaning as is set forth in
Section 6.4(b) of the Agreement.
"Systems" shall have the meaning set forth in Section 4.13 of the
Agreement.
"Surviving Corporation" shall have the meaning as set forth in Section
1.1 of the Agreement.
"Tax or Taxes" shall mean any federal, foreign, state, county or local
taxes, charges, fees, levies, duties or other assessments, including, but not
limited to, all net income, gross
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income, sales and use, transfer, gains, profits, excise, franchise, real and
personal property, gross receipts, capital stock, production, business and
occupation, customs, disability, employment, payroll, license, estimated,
severance or withholding taxes or charges imposed by any Governmental Authority,
and includes any interest and penalties (civil or criminal) on or additions to
any such taxes.
"Tax Return" means a return or report, including accompanying
schedules, required to be supplied to a Governmental Authority with respect to
Taxes including, where permitted or required, combined or consolidated returns
for a group of entities and information returns.
"Termination Fee" shall have the meaning as set forth in Section 9.2(b)
of the Agreement.
"Transfer Taxes" shall have the meaning as set forth in Section 7.11 of
the Agreement.
"Trust Account Shares" shall have the meaning as set forth in Section
2.1(a) of the Agreement.
Section 10.5. 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 approval
and adoption of the Merger and this Agreement by the stockholders of the
Company, no amendment may be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
Section 10.6. WAIVER. At any time prior to the Effective Time, any
party hereto may with respect to any other party hereto (a) extend the time for
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (c) to the extent permitted by applicable Law,
waive compliance with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
Section 10.7. HEADINGS. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 10.8. SPECIFIC PERFORMANCE. The parties hereto agree that if
for any reason any party hereto shall have failed to perform its obligations
under this Agreement, then any other party hereto seeking to enforce this
Agreement against such nonperforming party in addition to any damages and other
remedies available to it, shall be entitled to specific performance and
injunctive and other equitable relief and the parties hereto further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such injunctive or other equitable relief. In addition,
each of the parties hereto (a) irrevocably and unconditionally submits itself to
the exclusive jurisdiction of any Federal court located in the State of Delaware
or any Delaware state court in the event of any dispute arising out of or
relating to this Agreement, (b) agrees not to commence any such action or
proceeding except in such courts, (c) agrees that any claim in respect of any
such action or proceeding may be heard and determined in
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such Delaware State court or, to the extent permitted by law, in such Federal
court, (d) waives, to the fullest extent it may legally and effectively do so,
any objection which it may now or hereafter have to the laying of venue of any
such action or proceeding in any such Delaware State or Federal court, and (e)
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such Delaware State
or Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 10.3. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
Section 10.9 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS
VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.9.
Section 10.10. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible, in an acceptable manner, to the
end that transactions contemplated hereby are fulfilled to the extent possible.
Section 10.11. ENTIRE AGREEMENT.
(a) This Agreement (inclusive of the Company Disclosure
Schedule) constitutes the entire agreement and supersedes all prior agreements
and undertakings (excluding, however, the confidentiality obligations contained
in the Parties' Confidentiality Agreement) both oral and written, among the
parties, or any of them, with respect to the subject matter hereof.
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(b) The parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.
Section 10.12. ASSIGNMENT, GUARANTEE OF MERGER SUBSIDIARY OBLIGATIONS.
Parent and Merger Subsidiary may assign their rights, but not their obligations,
under this Agreement in whole or in part to any direct or indirect wholly-owned
Subsidiary of Parent; otherwise, they shall not assign this Agreement or any
rights hereunder, or delegate any obligations hereunder, without the prior
written consent of the Company. The Company shall not assign this Agreement or
any rights hereunder, or delegate any obligations hereunder, without prior
written consent of Parent. Subject to the foregoing, this Agreement and the
rights, and obligations set forth herein shall inure to the benefit of, and be
binding upon, the parties hereto, and each of their respective successor and
assigns. Parent guarantees the full and punctual performance by Merger
Subsidiary and any assignee of Parent or Merger Subsidiary of all the
obligations hereunder of Merger Subsidiary or such assignee.
Section 10.13. PARTIES IN INTEREST. Except as expressly provided
herein, 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, including,
without limitation, by way of subrogation.
Section 10.14. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
Section 10.15. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware
applicable to contracts executed and fully performed within the State of
Delaware, without regard to laws that may be applicable under conflict of laws
principles.
Section 10.16. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
[signature page follows]
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IN WITNESS WHEREOF, Parent, Merger Subsidiary and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
GTECH HOLDINGS CORPORATION
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
Name: W. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive Officer
BENGAL ACQUISITION CO.
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
Name: W. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive Officer
INTERLOTT TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
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