AGREEMENT AND PLAN OF MERGER by and among XEROX CORPORATION RG ACQUISITION I CORP. and GLOBAL IMAGING SYSTEMS, INC. Dated as of April 1, 2007
AGREEMENT
AND PLAN OF MERGER
by
and
among
XEROX
CORPORATION
RG
ACQUISITION I CORP.
and
GLOBAL
IMAGING SYSTEMS, INC.
Dated
as
of April 1, 2007
Page
ii
AGREEMENT
AND PLAN OF MERGER
AGREEMENT
AND PLAN OF MERGER
(the
“Agreement”),
dated
as of April 1, 2007, by and among Xerox Corporation, a New York corporation
(the
“Parent”),
RG
Acquisition I Corp., a Delaware corporation and a wholly owned subsidiary of
the
Parent (the “Purchaser”),
and
Global Imaging Systems, Inc., a Delaware corporation (the “Seller”).
Recitals
A. The
boards of directors of each of the Purchaser, the Seller and the Parent have
approved the acquisition of the Seller by the Parent on the terms and conditions
set forth in this Agreement.
B. Pursuant
to this Agreement, and subject to the terms and conditions set forth herein,
the
Purchaser has agreed to commence a tender offer (the “Offer”)
to
purchase all the Seller’s common stock, par value $0.01 per share (“Seller
Common Stock”)
at a
price per share of $29.00 net to the selling stockholders in cash, without
interest (such amount or any greater amount per share paid pursuant to the
Offer
being hereafter referred to as the “Offer
Price”).
C. The
board
of directors of the Seller has (A) by unanimous vote of the directors (i)
determined that this Agreement, the Offer and the Merger (as defined below)
are
advisable, and in the best interest of the Seller and its stockholders, (ii)
approved the Offer and the merger of the Purchaser with and into the Seller,
with the Seller as the surviving corporation (the “Merger”
and,
with the Offer and the other transactions contemplated hereby, the “Transaction”)
in
accordance with the General Corporation Law of the State of Delaware (the
“DGCL”)
and
(iii) approved this Agreement and (B) is recommending that the Seller’s
stockholders accept the Offer, tender their shares of Seller Common Stock into
the Offer, approve the Merger and adopt this Agreement.
D. The
parties desire to make certain representations, warranties and agreements in
connection with the Transaction and to prescribe certain conditions to the
Transaction.
Agreement
In
consideration of the foregoing and the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
(a) Provided
that this Agreement shall not have been terminated in accordance with
Article
IX
hereof
and none of the events set forth in Annex
I
hereto
(the “Tender
Offer Conditions”)
shall
have occurred and be continuing, on April 4, 2007 (or such other day as the
parties shall agree in writing), the Parent shall cause the Purchaser (and
the
Seller shall cooperate with the Parent and the Purchaser) to commence (within
the meaning of Rule 14d-2 of the Exchange Act) an offer to purchase all
outstanding shares of Seller Common Stock at the Offer Price and shall use
its
reasonable best efforts to consummate the Offer, subject to the terms and
conditions hereof and thereof. Subject to the terms and conditions of this
Agreement and to the satisfaction or waiver of the Tender Offer Conditions,
the
Purchaser shall, and the Parent shall cause it to, promptly after the expiration
of the Offer, accept for payment, and pay for (after giving effect to any
required withholding Tax), all shares of Seller Common Stock validly tendered
pursuant to the Offer and not withdrawn (the time and date of acceptance for
payment, the “Acceptance
Date”).
(b) The
Purchaser expressly reserves the right, in its sole discretion, to waive, in
whole or in part, any Tender Offer Condition or modify the terms of the Offer;
provided, however, that without the prior written consent of the
Seller, the Purchaser shall not decrease the Offer Price or change the form
of
consideration payable in the Offer, waive or amend the Minimum Condition (as
defined in Annex I hereto), decrease the number of shares of Seller
Common Stock sought to be purchased in the Offer, impose additional conditions
to the Offer or amend any other term of the Offer in any manner adverse to
the
holders of shares of Seller Common Stock. The Offer shall remain open until
12:00 midnight, New York time, on the date that is twenty-five (25) Business
Days after the commencement (determined pursuant to Rule 14d-1(g)(3) under
the
Exchange Act) of the Offer (the “Expiration Date”), unless the Purchaser
shall have extended the period of time for which the Offer is open pursuant
to,
and in accordance with, the succeeding sentence or as may be required by
applicable Laws or interpretations or positions of the Securities and Exchange
Commission or its staff (the “SEC”), in which event the term
“Expiration Date” shall mean the latest time and date as the Offer, as so
extended, may expire; provided, however, that the Purchaser may,
in its sole discretion, provide a subsequent offering period after the
Expiration Date, in accordance with Rule 14d-11 under the Exchange Act. If
on
any then scheduled Expiration Date, any of the Tender Offer Conditions is not
satisfied or waived by the Purchaser, the Purchaser may extend the Offer from
time to time; provided, however, that, on such Expiration Date,
(i) if the waiting period under the HSR Act or under any applicable foreign
statutes or regulations applicable to the Offer or the Merger shall have not
expired or been terminated, the Purchaser shall extend the Offer from time
to
time until the expiration or termination under the HSR Act or any other material
applicable foreign statutes or regulations or (ii) if any of the Tender Offer
Conditions set forth in paragraphs (a) or (b) of Annex I hereto
shall have occurred and be continuing, the Purchaser shall extend the Offer
from
time to time in consecutive increments of up to five (5) Business Days each
until the time such condition or conditions shall no longer exist or any of
the
matters described in such paragraphs (a) or (b) shall have become final and
non-appealable; provided, further, however that the
Purchaser shall not be required to extend the Offer beyond the Outside Date
(defined in Section 9.1(b) below). Nothing contained in this
paragraph shall affect any termination rights in Article IX.
Subject to the terms of the Offer and this Agreement and the satisfaction of
all
the Tender Offer Conditions as of the Expiration Date, the Purchaser will accept
for payment and pay for all shares of Seller Common Stock validly tendered
and
not validly withdrawn pursuant to the Offer promptly after the Expiration Date
of the Offer.
(c) On
the
date of commencement of the Offer, the Parent and the Purchaser shall (i)
file
or cause to be filed with the SEC a Tender Offer Statement on Schedule
TO (together with all
amendments and supplements thereto, the “Schedule
TO”)
with
respect to the Offer which shall contain the offer to purchase and related
letter of transmittal and summary advertisement and other ancillary documents
and instruments required thereby pursuant to which the Offer will be made
(collectively with any supplements or amendments thereto, the “Offer
Documents”)
and
(ii) cause the Offer Documents to be disseminated to holders of Seller
Common
Stock. The Seller and its counsel shall be given a reasonable opportunity
to
review and comment on the Offer Documents prior to their filing with the
SEC,
and the Parent and the Purchaser shall give reasonable and good faith
consideration to any comments made by Seller and their counsel. The Parent
and
the Purchaser agree to provide the Seller with (i) any comments or other
communications, whether written or oral, that may be received from the
SEC or
its staff with respect to the Offer Documents promptly after receipt thereof
and
prior to responding thereto and (ii) a reasonable opportunity to provide
comments on that response (to which reasonable and good faith consideration
shall be given). If at any time prior to the Effective Time, any information
relating to the Offer, the Merger, the Seller, the Parent, the Purchaser
or any
of their respective Affiliates, directors or officers, should be discovered
by
the Seller or the Purchaser which should be set forth in an amendment or
supplement to the Offer Documents, so that the Offer Documents shall not
contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, the party which discovers such information shall promptly notify
the
other party, and an appropriate amendment or supplement describing such
information shall be filed with the SEC and disseminated to the stockholders
of
the Seller, as and to the extent required by applicable Law or any applicable
rule or regulation of any stock exchange. The Seller shall furnish to the
Parent
and the Purchaser all information concerning the Seller required by the
Exchange
Act to be set forth in the Offer Documents.
(d) The
Parent shall provide or cause to be provided to the Purchaser on a timely basis
the funds necessary to pay for any shares of Seller Common Stock that the
Purchaser becomes obligated to purchase pursuant to the Offer and shall cause
the Purchaser to fulfill its obligations under this Agreement.
(e) The
Purchaser shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to the Offer to any holder of shares of Seller Common
Stock such amounts as the Purchaser is required to deduct and withhold 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 and paid
over to the appropriate Taxing authority by the Purchaser, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to
the
holder of the shares of Seller Common Stock in respect of which such deduction
and withholding was made by the Purchaser.
(a) The
Seller shall, after affording the Parent a reasonable opportunity to review
and
comment thereon, file with the SEC and mail to the holders of shares of
Seller
Common Stock, as promptly as practicable on the date of the filing by the
Parent
and the Purchaser of the Offer Documents, a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with any amendments
or supplements thereto, the “Schedule
14D-9”)
reflecting the
recommendation
of the Seller board of directors that holders of shares of Seller Common Stock
tender their shares of Seller Common Stock pursuant to the Offer and shall
disseminate the Schedule 14D-9 as required by Rule 14d-9 promulgated under
the
Exchange Act. The Schedule 14D-9 will set
forth, and the Seller hereby represents, that the Seller board of directors,
at
a meeting duly called and held at which a quorum was present throughout, has
unanimously (i) determined and declared that this Agreement, the
Transaction, and each of the Offer and the Merger, is advisable and in the
best
interests of the Seller and its stockholders, (ii) approved the Offer and
this Agreement in accordance with the DGCL, (iii) recommended acceptance of
the Offer, tender of the shares of Seller Common Stock into the Offer and
adoption of this Agreement by the Seller Stockholders if such adoption is
required by applicable Laws (together with the declarations in clause (i),
the “Seller
Recommendations”),
and
(iv) taken all other action necessary to render Section 203 of the DGCL
inapplicable to each of the Offer and the Merger; provided,
however,
that
the Seller Recommendations may be withdrawn, modified or amended only prior
to
the acceptance for payment of shares of Seller Common Stock pursuant to the
Offer and in any case only to the extent permitted by Section 7.2.
The
Seller hereby consents to the inclusion in the Offer Documents of the Seller
Recommendations.
If at
any time prior to the Effective Time, any information relating to the Offer,
the
Merger, the Seller, the Parent, the Purchaser or any of their respective
Affiliates, directors or officers, should be discovered by the Seller or the
Purchaser which should be set forth in an amendment or supplement to the
Schedule 14D-9, so that the Schedule 14D-9 shall not contain any untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they are made, not misleading, the party which
discovers such information shall promptly notify the other party, and an
appropriate amendment or supplement describing such information shall be filed
with the SEC and disseminated to the stockholders of the Seller, as and to
the
extent required by applicable Law or any applicable rule or regulation of any
stock exchange. The Parent, the Purchaser and their counsel shall be given
a
reasonable opportunity to review and comment on the Schedule 14D-9 prior to
their filing with the SEC, and the Seller shall give reasonable and good faith
consideration to any comments made by the Parent, the Purchaser or their
counsel. The Seller agrees to provide the Parent and the Purchaser with (i)
any
comments or other communications, whether written or oral, that may be received
from the SEC or its staff with respect to the Schedule 14D-9 promptly after
receipt thereof and prior to responding thereto and (ii) a reasonable
opportunity to provide comments on that response (to which reasonable and good
faith consideration shall be given).
(b) In
connection with the Offer, the Seller will promptly furnish the Purchaser
with
mailing labels, security position listings, non-objecting beneficial owner
lists
and any available listing or computer list containing the names and addresses
of
the record holders of the shares of Seller Common Stock as of the most recent
practicable date and shall furnish the Purchaser with such additional available
information (including updated lists of holders of shares of Seller Common
Stock
and their addresses, mailing labels and lists of security positions and
non-objecting beneficial owner lists) and such other assistance as the Purchaser
or its agents may reasonably request in communicating the Offer to the Seller’s
record and beneficial stockholders. Subject to the requirements of applicable
Laws, and except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Merger, the
Parent, the Purchaser and their Affiliates, associates, agents and advisors,
shall keep such information confidential
and use the information contained in any such labels, listings and files
only in
connection with the Offer and the Merger and, should the Offer terminate
or if
this Agreement shall be terminated, will deliver to the Seller all copies
of
such information then in their possession.
(a) Subject
to compliance with applicable Laws and this Section
1.3,
promptly upon the payment by the Purchaser of such number of shares of Seller
Common Stock as represents at least a majority of the then-outstanding shares
of
Seller Common Stock pursuant to the Offer and from time to time thereafter,
the
Parent shall be entitled to designate such number of directors, rounded up
to
the next whole number, on the Seller board of directors as is equal to the
product of (x) the total number of directors on the Seller board of directors
(determined after giving effect to the election of any additional directors
pursuant to this sentence) multiplied by (y) the percentage that the aggregate
number of shares of Seller Common Stock beneficially owned by the Purchaser
or
any of its Affiliates bears to the total number of shares of Seller Common
Stock
then outstanding, and the Seller shall, upon request of the Parent, promptly
take all actions necessary to cause the Parent’s designees to be so elected or
appointed (including, if necessary, seeking the resignations of one or more
existing directors or increasing the size of the Seller board of directors)
in
compliance with applicable Law; provided,
however,
that
the Parent shall be entitled to designate at least a majority of the directors
on the Seller board of directors (as long as the Parent and its Affiliates
beneficially own a majority of the outstanding shares of Seller Common Stock
of
the Seller);
provided,
further,
that
prior to the Effective Time, the Seller board of directors shall always have
at
least two members who are not officers, directors, employees or designees of
the
Purchaser or any of its Affiliates (“Purchaser
Insiders”).
If
the number of directors who are not Purchaser Insiders is reduced below two
prior to the Effective Time, the remaining director who is not a Purchaser
Insider shall be entitled to designate a Person to fill such vacancy who is
not
a Purchaser Insider and who shall be a director not deemed to be a Purchaser
Insider for all purposes of this Agreement.
(b) The
Seller’s obligations to appoint the Parent’s designees to the Seller board of
directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder. The Seller shall promptly take all actions required pursuant to
such
Section and Rule in order to fulfill its obligations under this Section 1.3,
including the mailing to the stockholders of an information statement (the
“Information
Statement”)
containing the information required by such Section and Rule, as promptly as
practicable following the mailing of the Schedule 14D-9 and shall include in
the
Information Statement such information with respect to the Seller and its
officers and directors as is required under such Section and Rule in order
to
fulfill its obligations under this Section 1.3.
The
Parent will supply to the Seller any information with respect to itself and
its
officers, directors and Affiliates required by such Section and
Rule.
(c) Following
the election or appointment of the Parent’s designees pursuant to this
Section 1.3
and
prior to the Effective Time, (i) any amendment or termination of this Agreement
by the Seller, any extension by the Seller of the time for the performance
of
any of the obligations or other acts of the Parent or the Purchaser or
waiver of
any of the Seller’s rights or any of the obligations of the Parent or the
Purchaser hereunder which in each case would be reasonably likely to have
an
adverse effect on the minority stockholders of the Seller and (ii) any
amendment, waiver or modification of this Section
1.3
or
Section
7.5,
will
require the consent of a majority of the directors of the Seller
then in office who are not Purchaser Insiders (or the approval of the sole
director if there shall only be one director then in office who is not
a
Purchaser Insider). Following the election or appointment of the Parent’s
designees pursuant to this Section
1.3
and
prior to the Effective Time, any actions with respect to the enforcement
of this
Agreement by the Seller shall be effected only be the action of a majority
of
the directors of the Seller then in office who are not Purchaser Insiders
(or
the approval of the sole director if there shall only be one director then
in
office who is not a Purchaser Insider) and such authorization shall constitute
the authorization of the Seller board of directors and no other action
on the
part of the Seller, including any action by any other director of the Seller,
shall be required to authorize.
(a) The
Seller hereby grants to the Purchaser an irrevocable option (the “Top-Up
Option”),
exercisable only on the terms and conditions set forth in this Section 1.4,
to
purchase at a price per share equal to the Offer Price paid in the Offer up
to
that number of newly issued shares of Seller Common Stock (the “Top-Up
Shares”)
equal
to the lowest number of shares of Seller Common Stock that, when added to the
number of shares of Seller Common Stock directly or indirectly owned by the
Parent or the Purchaser at the time of exercise of the Top-Up Option, shall
constitute one share more than 90% of the shares of Seller Common Stock
outstanding immediately after the issuance of the Top-Up Shares (determined
on a
“fully diluted basis” (which assumes conversion or exercise of all derivative
securities regardless of the conversion or exercise price, the vesting schedule
or other terms and conditions thereof)); provided,
however,
that
(i) the Top-Up Option shall not be exercisable for a number of shares of
Seller Common Stock in excess of the shares of Seller Common Stock authorized
and unissued at the time of exercise of the Top-Up Option and (ii) the
Top-Up Option may not be exercised unless, following the time of acceptance
by
the Purchaser of shares of Seller Common Stock tendered in the Offer or after
a
subsequent offering period, eighty-five percent (85%) or more of the shares
of
Seller Common Stock shall be directly or indirectly owned by the Parent or
the
Purchaser. The Top-Up Option shall be exercisable once at any time following
the
Acceptance Date and prior to the earlier to occur of (a) the Effective Time
and
(b) the termination of this Agreement in accordance with its terms.
(b) The
parties shall cooperate to ensure that the issuance and delivery of the Top-Up
Shares comply with all applicable Law, including compliance with an applicable
exemption from registration of the Top-Up Shares under the Securities Act.
If
the Purchaser wishes to exercise the Top-Up Option, the Purchaser shall give
the
Seller one Business Day prior written notice, specifying (i) the number of
shares of Seller Common Stock directly or indirectly owned by the Parent at
the
time of such notice and (ii) a place and a time for the closing of such
purchase. The Seller shall, as soon as practicable following receipt of such
notice, deliver written notice to the Purchaser specifying, based on the
information provided by the Purchaser in its notice, the number of Top-Up
Shares. At the closing of the purchase of Top-Up Shares, the purchase price
owed
by the Purchaser to the Seller therefor shall be paid to the Seller (i) in
cash, by wire transfer or cashier’s check or (ii) by issuance by the
Purchaser to the Seller of a promissory note on terms reasonably satisfactory
to
the Seller.
2.1
The
Merger. Subject
to the terms and conditions of this Agreement, in accordance with the DGCL,
at
the Effective Time, the Purchaser shall merge with and into the Seller. The
Seller shall be the surviving corporation (the “Surviving
Corporation”)
in the
Merger, and shall continue its corporate existence under the laws of the State
of Delaware. Upon consummation of the Merger, the separate corporate existence
of the Purchaser shall terminate.
2.2
Closing;
Effective Time.
The
closing of the Merger (the “Closing”)
will
take place at 10:00 a.m., New York time, on a date to be specified by the
parties, which shall be not later than the second Business Day after
satisfaction or waiver of the conditions set forth in Article
VIII,
at the
offices of Cravath, Swaine & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, unless another time, date or place is agreed to in writing by the
Parent and the Seller; provided,
however,
that if
all the conditions set forth in Article VIII
shall
not be satisfied or waived on such second Business Day, then the Closing shall
take place on the first Business Day on which all such conditions shall be
satisfied or waived. The date on which the Closing occurs is referred to in
this
Agreement as the “Closing
Date”.
As
soon as practicable on or after the Closing Date, the parties shall duly execute
a certificate of merger (the “Certificate
of Merger”)
that
shall be filed with the Secretary of State of the State of Delaware. The Merger
shall become effective at the Effective Time. The term “Effective
Time”
shall
be the date and time when the Merger becomes effective as set forth in the
Certificate of Merger.
2.3
Effects
of the Merger.
At
and
after the Effective Time, the Merger shall have the effects set forth in
Section 259 of the DGCL.
2.4
Certificate
of Incorporation and Bylaws. The
certificate of incorporation of the Seller shall be amended at the Effective
Time to read in the form of Annex II hereto
(which shall contain such provisions as are necessary to give full effect to
the
exculpation and indemnification provided for in Section 7.5)
and, as
so amended, shall be the certificate of incorporation of the Surviving
Corporation, until thereafter amended as provided therein and in accordance
with
applicable Law. The bylaws of the Purchaser, as in effect immediately prior
to
the Effective Time (which shall contain such provisions as are necessary to
give
full effect to the exculpation and indemnification provided for in
Section 7.5),
shall
be the bylaws of the Surviving Corporation, until thereafter amended as provided
therein and in accordance with applicable Law.
2.5
Directors
and Officers. The
directors of the Purchaser immediately prior to the Effective Time shall become
the directors of the Surviving Corporation, each to hold office in accordance
with the certificate of incorporation and bylaws of the Surviving Corporation.
The officers of the Seller immediately prior to the Effective Time shall become
the officers of the Surviving Corporation, each to hold office in accordance
with the certificate of incorporation and bylaws of the Surviving
Corporation.
(a) If
the
adoption of this Agreement by the holders of Seller Common Stock is required
by
applicable Law in order to consummate the Merger, the Seller, acting through
the
Seller board of directors, shall, as promptly as reasonably practicable
following the Acceptance Date, in accordance with applicable Law:
(i) establish
a record date (which shall be as promptly as reasonably practicable following
the Acceptance Date) for, duly call, give notice of, convene and hold a special
meeting of its stockholders (the “Special
Meeting”)
for
the purpose of considering and taking action upon this
Agreement;
(ii) state
in
the notice of the Special Meeting that a resolution to adopt this Agreement
will
be considered at the Special Meeting;
(iii) prepare
and file with the SEC a preliminary proxy statement relating to this Agreement
and shall (A) use its reasonable best efforts to respond to any comments of
the
SEC with respect to the proxy statement and to cause the SEC to confirm that
it
has no comments or no further comments, as the case may be, on the proxy
statement, (B) promptly notify the Parent upon the receipt of any comments
from
the SEC, or any request from the SEC for amendments or supplements to the proxy
statement, and shall provide the Parent with copies of all correspondence
relating to the proxy statement between it and its representatives, on the
one
hand, and the SEC, on the other hand, (C) prior to the filing of the proxy
statement (or any amendment or supplement thereto) with the SEC or the
dissemination thereof to the stockholders of the Seller, or responding to any
comments of the SEC with respect thereto, provide the Parent a reasonable
opportunity to review and comment on such document or response (including the
proposed final version of such document or response) and give good faith
consideration to the Parent’s comments on such document or response, (D) cause a
definitive proxy statement (the “Proxy
Statement”)
to be
mailed to its stockholders, (E) if at any time prior to the Special Meeting
any
information relating to the Transaction, the Seller, the Parent, the Purchaser
or any of their respective Affiliates, directors or officers should be
discovered by the Seller, the Parent or the Purchaser which should be set forth
in an amendment or supplement to the Proxy Statement, so that the Proxy
Statement shall not contain any untrue statement of a material fact or omit
to
state any material fact required to be stated therein or necessary in order
to
make the statements therein, in light of the circumstances under which they
are
made, not misleading, file with the SEC and disseminate to the holders of Seller
Common Stock an appropriate amendment or supplement describing such information,
as and to the extent required by applicable Law or any applicable rule or
regulation of any stock exchange and (F) use its reasonable best efforts to
obtain the necessary approvals of the Merger and this Agreement by its
stockholders;
(iv) subject
to the fiduciary duties of the Seller board of directors, include in the Proxy
Statement the Seller Recommendations that stockholders of the Seller vote in
favor of the approval of this Agreement; and
(v) include
in the Proxy Statement the opinions of the Seller’s Financial Advisors referred
to in Section 5.21.
(b) The
Parent agrees that it will vote, or cause to be voted, all of the shares of
Seller Common Stock then owned by it, the Purchaser or any of its subsidiaries
in favor of the approval of the Merger and of this Agreement.
2.7
Merger
Without Meeting of Stockholders. Notwithstanding
Section 2.6,
in the
event that the Parent, the Purchaser or any other Subsidiary of the Parent
shall
acquire at least 90% of the outstanding shares of Seller Common Stock pursuant
to the Offer or otherwise, the parties hereto agree to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after the acceptance for payment of and payment for shares of Seller
Common Stock by the Purchaser pursuant to the Offer without a meeting of
stockholders of the Seller, in accordance with Section 253 of the
DGCL.
3.1
Conversion
of Capital Stock. As
of the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any shares of the capital stock
of the Seller or capital stock of the Purchaser:
(a) Capital
Stock of the Purchaser.
Each
share of the common stock of the Purchaser issued and outstanding immediately
prior to the Effective Time shall continue as one fully paid and nonassessable
share of common stock, $1.00 par value per share, of the Surviving
Corporation.
(b) Cancellation
of Certain Stock.
All shares of Seller Common Stock that are owned by the Seller, and any
shares of Seller Common Stock owned by the Parent or the Purchaser immediately
prior to the Effective Time, shall be cancelled and shall cease to exist and
no
consideration shall be delivered in exchange therefor.
(c) Conversion
of Seller Common Stock.
(i) Subject
to Section 3.3,
each
share of Seller Common Stock (other than (x) shares to be cancelled in
accordance with Section 3.1(b)
and (y)
Dissenting Shares of Seller Common Stock (as defined in Section 3.4(a))
issued
and outstanding immediately prior to the Effective Time shall be automatically
converted into the right to receive an amount in cash, without interest, equal
to the Offer Price per share (the “Merger
Consideration”).
As of
the Effective Time, all such shares of Seller Common Stock shall no longer
be
outstanding and shall automatically be cancelled and shall cease to exist,
and
each holder of a certificate or evidence of shares held in book-entry form
representing any such shares of Seller Common Stock shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration upon surrender of such certificate in accordance with
Section 3.3,
without
interest.
(ii) The
Parent and the Purchaser acknowledge that all shares of Seller Common Stock
that
are outstanding as of immediately prior to the Effective Time but are subject
to
vesting or other forfeiture restrictions or are subject to a right of repurchase
by the Seller at a fixed purchase price (shares so subject, “Seller
Restricted Shares”)
granted under the Seller Stock Plans shall immediately vest and the restrictions
associated therewith shall automatically be deemed waived as provided by the
Seller Stock Plans at the Effective Time.
3.2
Seller
Stock-Based Awards.
(a)
As soon as practicable following the date of this Agreement, the Seller board
of
directors (or, if appropriate, any committee thereof administering the Seller
Stock Plans) shall adopt such resolutions or take such other actions as may
be
required to effect the following:
(i) adjust
the terms of each outstanding Seller Stock Option, whether vested or unvested,
as necessary to provide that such Seller Stock Option will become fully
exercisable and may be exercised before the Effective Time at such applicable
time or times as specified in the relevant Seller Stock Plan, and, at the
Effective Time, each Seller Stock Option outstanding immediately prior to the
Effective Time shall be canceled and the holder thereof shall then become
entitled to receive, in full satisfaction of the rights of such holder with
respect thereto, as soon as practicable following the Effective Time, a single
lump-sum cash payment equal to the product of (A) the number of shares of Seller
Common Stock for which such Seller Stock Option shall not theretofore have
been
exercised and (B) the excess, if any, of the Merger Consideration over the
exercise price per share of such Seller Stock Option;
(ii) adjust
the terms of all outstanding Seller Restricted Shares as necessary to provide
that, as of the Effective Time, each Seller Restricted Share outstanding
immediately prior to the Effective Time will be treated in accordance with
Section 3.1(c)(ii);
and
(iii) make
such
other changes to the Seller Stock Plans as the Seller and the Parent may agree
are appropriate to give effect to the Merger.
(b) All
amounts payable pursuant to Section 3.2(a)
shall be
subject to any required withholding of taxes and shall be paid without interest
as soon as practicable following the Effective Time.
(c) Prior
to
the Closing Date, the Seller shall ensure that following the Effective Time
no
holder of a Seller Stock Option or Seller Restricted Share (or former holder
of
a Seller Stock Option or Seller Restricted Share) or any current or former
participant in any Seller Stock Plan, Seller Benefit Plan or Seller Benefit
Agreement shall have any right thereunder to acquire any capital stock of the
Seller, the Surviving Corporation or their Subsidiaries or any other equity
interest therein (including “phantom” stock or stock appreciation
rights).
3.3
Exchange
of Certificates. The
procedures for exchanging outstanding shares of Seller Common Stock for the
Merger Consideration are as follows:
(a) Paying
Agent.
Prior to the Effective Time, the Parent shall (i) designate, or cause to
be
designated, a bank or trust company that is reasonably acceptable to the
Seller (the
“Paying
Agent”)
and
(ii) enter into a paying agent agreement, in form and substance reasonably
acceptable to the Seller, with such Paying Agent to act as agent for the
payment
or exchange in accordance with this Article III
of the
Merger Consideration (such cash being referred to as the “Exchange
Fund”).
On or
before the Effective Time, the Parent shall deposit with the Paying Agent
the
Exchange Fund for the benefit of the holders of Seller Common Stock. The
Paying
Agent shall make payments of the Merger Consideration out of the Exchange
Fund
in accordance with this Agreement. The Exchange Fund shall not be used for
any
unrelated other purpose.
(b) Exchange
Procedures.
As soon as reasonably practicable after the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail to each holder of record of
a
certificate or certificates or evidence of shares held in book-entry form which
immediately prior to the Effective Time represented outstanding shares of Seller
Common Stock (the “Certificates”)
whose
shares were converted pursuant to Section 3.1(c)
into the
right to receive the Merger Consideration (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to
the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions as the Parent
may
reasonably specify) and (ii) instructions for effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of
a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by the Parent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor cash equal to the Merger Consideration payable
in respect of the shares of Seller Common Stock previously represented by such
Certificate, and the Certificate so surrendered shall immediately be cancelled.
In the event of a transfer of ownership of Seller Common Stock which is not
registered in the transfer records of the Seller, payment may be made to a
Person other than the Person in whose name the Certificate so surrendered is
registered, if such Certificate is presented to the Paying Agent, accompanied
by
all documents reasonably required to evidence and effect such transfer and
by
evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 3.3,
each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration. No
interest shall be paid or accrue on any cash payable upon surrender of any
Certificate.
(c) No
Further Ownership Rights in Seller Stock.
The
Merger Consideration delivered upon the surrender for exchange of Certificates
in accordance with the terms hereof shall be deemed to have been delivered
(and
paid) in full satisfaction of all rights pertaining to such shares of Seller
Common Stock, and from and after the Effective Time there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Seller Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Paying Agent
for
any reason, they shall be cancelled and exchanged as provided in this
Article III.
(d) Termination
of Exchange Fund.
Any portion of the Exchange Fund which remains undistributed to the
holders of Seller Common Stock nine months after the Effective Time shall be
delivered to the Parent, upon demand, and any holder of Seller Common Stock
who
has not previously complied with this Section 3.3
shall,
subject to Section 3.3(e),
thereafter look
only
to the Parent for payment of its claim for the Merger Consideration.
(e) No
Liability.
To the extent permitted by applicable Law, none of the Parent, the
Purchaser, the Seller, the Surviving Corporation or the Paying Agent shall
be
liable to any holder of shares of Seller Common Stock delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
If any Certificates shall not have been surrendered prior to two years after
the
Effective Time (or immediately prior to such earlier date on which any Merger
Consideration would otherwise escheat to or become the property of any
Governmental Authority), any such Merger Consideration in respect thereof shall,
to the extent permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any Person previously
entitled thereto.
(f) Investment
of Exchange Fund.
The Paying Agent shall invest any cash included in the Exchange Fund, as
directed by the Surviving Corporation. Any net profit resulting from, or
interest or income produced by, such investments, shall be payable to the
Surviving Corporation.
(g) Withholding
Rights.
Each of the Parent, the Surviving Corporation and the Paying Agent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement (including any payments made in respect of the
Dissenting Shares) to any holder of shares of Seller Common Stock, such amounts
as it reasonably determines that it is required to deduct and withhold with
respect to the making of such payment under the Code, or any other applicable
provision of Law. To the extent that amounts are so withheld by the Surviving
Corporation, the Parent or the Paying Agent, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid
to the holder of the shares of Seller Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation, the Parent
or
the Paying Agent, as the case may be.
(h) Lost
Certificates.
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 Surviving Corporation,
the
posting by such Person of a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that may be made against
it with respect to such Certificate, the Paying Agent shall issue in exchange
for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof pursuant to this Agreement.
(a) Notwithstanding
anything in this Agreement to the contrary, any shares of Seller Common Stock
that are issued and outstanding immediately prior to the Effective Time and
that
are held by Seller Stockholders who, in accordance with Section 262 of the
DGCL (the “Appraisal
Rights Provisions”)
(i)
have not voted in favor of adopting and approving this Agreement, (ii) shall
have demanded properly in writing appraisal for such shares, and (iii) have
not
effectively withdrawn, lost or failed to perfect their rights to appraisal
(collectively, the “Dissenting
Shares”),
will
not be converted as described in Section 3.1,
but at
the Effective Time, by virtue of the Merger and without any action on the
part
of the holder thereof, shall be cancelled and shall cease to exist and shall
represent the right to receive only those rights provided
under the Appraisal Rights Provisions; provided,
however,
that
all shares of Seller Common Stock held by Seller Stockholders who shall have
failed to perfect or who effectively shall have withdrawn or lost their rights
to appraisal of such shares of Seller Common Stock under the Appraisal Rights
Provisions shall thereupon be deemed to have been canceled and to have been
converted, as of the Effective Time, into the right to receive the Merger
Consideration relating thereto, without interest, in the manner provided
in
Section 3.1.
Persons
who have perfected statutory rights with respect to Dissenting Shares (the
“Dissenting
Stockholders”)
as
described above will not be paid as provided in this Agreement and will have
only such rights as are provided by the Appraisal Rights Provisions with
respect
to such Dissenting Shares.
(b) The
Seller shall give the
Parent and the Purchaser prompt (and in any event within 10 days of receipt)
notice of any demands received by the Seller for the exercise of appraisal
rights with respect to shares of Seller Common Stock and the Parent shall have
the right to direct all negotiations and proceedings with respect to such
demands, subject, prior to the Effective Time, to consultation with the Seller.
The Seller shall not, except with the prior written consent of the Parent,
make
any payment with respect to, or settle or offer to settle, any such
demands.
(c) Each
Dissenting Stockholder who becomes entitled under the Appraisal Rights
Provisions to payment for Dissenting Shares shall receive payment therefor
after
the Effective Time from the Surviving Corporation (but only after the amount
thereof shall have been agreed upon or finally determined pursuant to the
Appraisal Rights Provisions), and such shares of Seller Common Stock shall
be
canceled.
Parent
and the Purchaser hereby
jointly and severally represent and warrant to the Seller as
follows:
(a) The
Parent is a corporation duly incorporated, validly existing and in good
standing under
the
laws of the State of New York. The Purchaser is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware.
(b) The
Parent has all requisite corporate power and authority to own, lease or operate
all of its properties and assets and to carry on its business as it is now
being
conducted. The Parent is duly licensed or qualified to do business and is
in
corporate good standing in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets
owned,
leased or operated by it makes such licensing or qualification necessary,
except
where the failure to be so licensed or qualified and in good standing would
not,
either individually or in the aggregate, reasonably be expected to have a
the
Parent Material Adverse Effect. The certificate of incorporation and bylaws
of
the Parent, copies of which have previously been made available to the Seller,
are true, complete and correct copies of such documents as currently in
effect.
(c) The
Purchaser was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement. All of the issued and outstanding capital stock
of the Purchaser is validly issued, fully paid and non-assessable and is owned,
beneficially and of record, by the Parent, free and clear of any claim, lien,
encumbrance or agreement with respect thereto. Except for obligations and
liabilities incurred in connection with its incorporation and the transactions
contemplated by this Agreement, the Purchaser has not and will not have
incurred, directly or indirectly, any material obligations or liabilities or
engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any Person.
(a) Each
of
the Parent and the Purchaser has all requisite corporate power and authority
to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The adoption, execution and delivery of this Agreement
to
which the Parent or the Purchaser is a party and the approval of the
consummation of the transactions contemplated hereby have been recommended
by,
and have been duly and validly adopted and approved by vote of the board
of
directors of each of the Parent and the Purchaser. No other corporate
proceedings on the part of the Parent are necessary to authorize this Agreement
or to consummate each of the Offer and the Merger. This Agreement has been
duly
and validly executed and delivered by the Parent and the Purchaser, and
(assuming due authorization, execution and delivery by the Seller), constitutes
the valid and binding obligations of the Parent and the Purchaser, enforceable
against the Parent and the Purchaser in accordance with its terms.
(b) Assuming
that all consents, authorizations, permits, waivers and approvals referred
to in
Section 5.4
of the
Seller Letter have been obtained and all registrations, declarations, filings
and notifications described in Section 5.4
of the
Seller Letter have been made and any waiting periods thereunder have terminated
or expired, neither the execution and delivery of this Agreement by the Parent,
the consummation by the Parent of the transactions contemplated hereby nor
the
compliance by the Parent with the provisions of this Agreement will,
(i)
conflict with or violate any provision of the certificate of incorporation
or
other organizational document of like nature or bylaws of the Parent or the
Purchaser or (ii) conflict with or violate any statute, law, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable
to the
Parent or the Purchaser or by which any property or asset of the Parent or
the
Purchaser is bound or affected, except, with respect to (ii) above, for any
such
conflicts, violations, breaches or defaults which would not, either individually
or in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect.
4.3
Consents
and Approvals.
No
consents, authorizations, orders, waivers or approvals of, or filings,
declarations or registrations with, or notifications to any Governmental
Authority are necessary in connection with (a) the execution and delivery
by the
Parent and the Purchaser of this Agreement, or (b) the consummation by
the
Parent and the Purchaser of each of the Offer, the Merger and the other
transactions contemplated hereby or the compliance by the Parent and the
Purchaser with the provisions of this Agreement, except (i) such consents,
authorizations, orders, waivers, approvals, filings, declarations, notices
and
registrations the failure of which to obtain or make would not, either
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect and (ii) such consents, authorizations,
waivers,
approvals, filings, notices and registrations as are listed in Section 5.4
of the
Seller Letter.
4.4
Broker’s Fees. Neither
the Parent nor the Purchaser nor any of their respective officers, directors,
employees or agents has employed any broker, finder or financial advisor
or
incurred any liability for any fees or commissions in connection with any
of the
transactions contemplated by this Agreement for which the Seller would be
liable
(including ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., which was engaged by the Parent in
connection with the transactions contemplated by this
Agreement). 4.5 Legal
Proceedings.
There
is
no claim, suit, action, proceeding or investigation of any nature pending
or, to
the knowledge of the Parent, threatened, against the Parent or any subsidiary
of
the Parent or challenging the validity or propriety of the transactions
contemplated by this Agreement, which, if adversely determined, would, either
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect.
4.6
Available
Funds. The
Parent will have at each of the Acceptance Date and the date of the Effective
Time, sufficient cash, available lines of credit or other sources of immediately
available funds to enable it to pay the aggregate Offer Price and the aggregate
Merger Consideration in full as well as to make all other required payments
payable in connection with the transactions contemplated hereby.
4.7
Certain
Compensation Arrangements.
The
parties acknowledge that certain payments have been made or are to be made
and
certain benefits have been granted or are to be granted according to certain
employment compensation, severance and other employee benefit plan(s) to
which
the Parent is a party (the “Parent
Arrangement(s)”)
to
certain holders of Seller Common Stock and other securities of the Seller
(the
“Covered
Securityholders”).
The
Parent hereby represents and warrants that all such amounts payable under
the
Parent Arrangement(s) (i) are being paid or granted as compensation for past
services performed, future services to be performed, or future services to
be
refrained from performing, by the Covered Securityholders (and matters
incidental thereto) and (ii) are not calculated based on the number of shares
tendered or to be tendered into the Offer by the applicable Covered
Securityholder.
4.8
Offer
Documents; Proxy Statement; the Parent
Information. The
Parent and the Purchaser represent that the Offer Documents will comply in
all
material respects with the provisions of applicable federal securities laws
and,
on the date filed with the SEC and on the date first published, sent or given
to
the Seller Stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Parent or the Purchaser with respect to
information supplied by the Seller in writing for inclusion in the Offer
Documents.
(a) The
information supplied by the Parent in writing for inclusion in the Proxy
Statement (where and to the extent required by applicable Laws to consummate
the
Merger), will not, on the date the Proxy Statement is first mailed to
stockholders of the Seller or at the time of the Special Meeting, contain
any
untrue statement of any material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not false or misleading at the time and in light of the circumstances
under which such statement is made.
4.9
No
Other Representations or Warranties.
Except
for the representations and warranties of the Parent or the Purchaser contained
in this Article IV,
none of
the Parent, the Purchaser or any other Person on behalf of the Parent or the
Purchaser makes any express or implied representation or warranty with respect
to the Parent or the Purchaser or with respect to any other information provided
to the Seller in connection with the transactions contemplated hereby. None
of
the Parent or the Purchaser or any other Person on behalf of the Parent or
the
Purchaser shall be held liable for any actual or alleged damage, liability
or
loss resulting from the distribution to the Seller, or the Seller’s use of, any
such information, including any information, documents, projections, forecasts
or other material made available to the Seller in expectation of the
transactions contemplated by this Agreement, unless any such information is
expressly included in a representation or warranty contained in this
Article IV.
Except
as set forth in the letter
delivered by the Seller to the Parent and the Purchaser concurrently with
the
execution of this Agreement (the “Seller
Letter”),
which
letter shall identify any exceptions to the representations, warranties and
covenants contained in this Agreement (with specific reference to the particular
Section or subsection to which such information relates; provided
that an
item disclosed in any Section or subsection shall be deemed to have been
disclosed for each other Section or subsection of this Agreement to the extent
the relevance is reasonably apparent on the face of such disclosure), the
Seller
hereby represents and warrants to the Parent and the Purchaser as
follows:
(a) The
Seller is a corporation duly incorporated, validly existing and in good
corporate standing under the laws of the State of Delaware. The Seller has
all
requisite corporate power and authority to own, lease or operate all of its
properties and assets and to carry on its business as it is now being conducted.
The Seller is duly licensed or qualified to do business and is in corporate
good
standing in each jurisdiction in which the nature of the business conducted
by
it or the character or location of the properties and assets owned, leased
or
operated by it makes such licensing or qualification necessary, except where
the
failure to be so licensed or qualified and in corporate good standing would
not,
either individually or in the aggregate, reasonably be expected to have a
Seller
Material Adverse Effect. The certificate of incorporation and bylaws of the
Seller, copies of which have previously been made available to the Parent,
are
true, complete and correct copies of such documents as currently in effect.
The
Seller has made available to the Parent complete and correct copies of the
minutes (or, in the case of draft minutes, the most recent drafts thereof)
of
all meetings of the stockholders, the board of directors and each committee
of
the board of directors of the Seller and each of its subsidiaries held since
January 1, 2004 through the date of this Agreement. The Seller has made
available to the Parent complete and correct copies of all resolutions of
the
board of directors of the Seller, and each committee thereof, in respect
of this
Agreement, the Merger and the other transactions
contemplated
hereby.
16
(b) Each
of the Seller’s
subsidiaries is duly organized, validly existing and in good standing under
the
laws of the jurisdiction of its organization. Each of the subsidiaries has
all
requisite power and authority to own, lease or operate all of its properties
and
assets and to carry on its business as it is now being conducted. Each of
the
subsidiaries is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned, leased, or operated by it makes such
licensing or qualification necessary, except where the failure to be so licensed
or qualified and in good standing would not, either individually or in the
aggregate, reasonably be expected to have a Seller Material Adverse
Effect.
(c) The
certificate of incorporation and bylaws or equivalent organizational documents
of each of the Seller’s subsidiaries that currently has operations, copies of
which have previously been made available to the Parent, are true, correct
and
complete copies of such documents as currently in effect.
(a) The
authorized capital stock of the Seller consists of 80,000,000 shares of
Seller Common Stock and 20,000,000 shares of preferred stock, $0.01 par
value per share (the “Seller
Preferred Stock”).
As of
March 30, 2007, there were 50,243,460 shares of Seller Common Stock
(of which 559,500 were Seller Restricted Shares) and no shares of Seller
Preferred Stock issued and outstanding. As of March 30, 2007, there were
3,806,892 shares of Seller Common Stock and no shares of Seller Preferred
Stock
held in the treasury of the Seller. In addition, as of March 30, 2007,
there were 1,019,860 shares of Seller Common Stock reserved and available
for issuance under the Seller Stock Plans, of which 3,896,974 were subject
to
Seller Stock Options outstanding as of March 30, 2007, and 20,000 shares
of
Seller Common Stock were subject to Seller Stock Options outstanding as
of the
date hereof that were not granted under a Seller Stock Plan. The Seller
has no
shares of Seller Common Stock or Seller Preferred Stock reserved for issuance
other than as described above. All issued and outstanding shares of Seller
Common Stock have been duly authorized and validly issued and are fully
paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof except as required by law. Other than
as set
forth above, as of March 30, 2007, there were no outstanding shares of
Seller
Common Stock or Seller Preferred Stock or any other share of capital stock
of,
or equity or voting interests in, the Seller or any subsidiary of the Seller,
any securities convertible into, exchangeable or exercisable for or representing
the right to subscribe for, purchase or otherwise receive any shares of
Seller
Common Stock or Seller Preferred Stock or any other share of capital stock
of,
or equity or voting interests in, the Seller or any subsidiary of the Seller
or
any stock appreciation rights, “phantom” stock rights, performance units, rights
to receive shares of Seller Common Stock on a deferred basis or other rights
that are linked to the value of the Seller Common Stock or the value of
the
Seller or any part thereof granted by the Seller or any of its subsidiaries.
Since March 30, 2007 through the date of this Agreement, there have been
no
issuances of shares of Seller Common Stock or Seller Preferred Stock or
any
other share of capital stock of, or equity or voting interests in, the
Seller or
any subsidiary of the Seller, any securities convertible into, exchangeable
or
exercisable for or representing the right to subscribe for, purchase
or
otherwise receive any shares of Seller Common Stock or Seller Preferred
Stock or
any other share of capital stock of, or equity or
voting
interests in, the Seller or any subsidiary of the Seller or any stock
appreciation rights, “phantom” stock rights, performance units, rights to
receive shares of Seller Common Stock on a deferred basis or other rights
that
are linked to the value of the Seller Common Stock or the value of the
Seller or
any part thereof granted by the Seller or any of its subsidiaries. Except
for
Seller Stock Options, neither the Seller nor any of its subsidiaries has
or is
bound by any outstanding subscriptions, options, warrants, calls, commitments,
rights agreements or Contracts of any character calling for the Seller
or any of
its subsidiaries to issue, deliver or sell, or cause to be issued, granted,
delivered or sold any shares of Seller Common Stock or Seller Preferred
Stock or
any other share of capital stock of, or equity or voting interests in,
the
Seller or any subsidiary of the Seller, any securities convertible into,
exchangeable or exercisable for or representing the right to subscribe
for,
purchase or otherwise receive any shares of Seller Common Stock or Seller
Preferred Stock or any other share of capital stock of, or equity or voting
interests in, the Seller or any subsidiary of the Seller or any stock
appreciation rights, “phantom” stock rights, performance units, rights to
receive shares of Seller Common Stock on a deferred basis or other rights
that
are linked to the value of the Seller or any part thereof granted by the
Seller
or any of its subsidiaries or any shares of deferred stock, restricted
stock
awards, stock appreciation rights, “phantom” stock awards or other similar
rights that are linked to the value of the Seller Common Stock or the value
of
the Seller or any part thereof, or obligating the Seller or any such Subsidiary
to grant, extend or enter into any such subscriptions, options, warrants,
calls,
commitments, rights agreements or any other similar agreements. There are
no
outstanding contractual obligations of the Seller or any of its subsidiaries
to
repurchase, redeem or otherwise acquire any shares of capital stock of,
or other
equity or voting interests in, the Seller or any of its subsidiaries or
to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any subsidiary of the
Seller. Section 5.2(a)
of the
Seller Letter sets forth, with respect to each outstanding Seller Stock
Option,
(i) the name of each holder of such Seller Stock Option and an indication
of whether such holder is a current employee of the Seller or its Subsidiaries,
(ii) the date each such Seller Stock Option was granted, (iii) the
number of shares of Seller Common Stock subject to each such Stock Option,
(iv) the expiration date of each such Seller Stock Option, (v) the
price at which each such Seller Stock Option may be exercised, (vi) whether
or
not each such Seller Stock Option was granted under a Seller Stock Plan
and
(vii) whether or not each such Seller Stock Option is intended to qualify
as an
“incentive stock option” under Code Section 422. Section 5.2(a)
of the
Seller Letter also sets forth, with respect to each outstanding Seller
Restricted Share, (i) the name of each holder of such Seller Restricted
Share and whether such holder is a current employee of the Seller or its
Subsidiaries and (ii) the date each such Seller Restricted Share was
granted. The form of award agreement pursuant to which each outstanding
Seller
Stock Option and Seller Restricted Share was granted is set forth in
Section 5.2(a)
of the
Seller Letter. Except for the Seller Stock Options and Seller Restricted
Shares
set forth in Section 5.2(a)
of the
Seller Letter, there are no (A) shares of Seller Common Stock outstanding
which
are subject to vesting over time or upon the satisfaction of any condition
precedent, or which are otherwise subject to any right or obligation of
repurchase or redemption on the part of the Seller, (B) stock appreciation
rights, “phantom” stock awards or other similar rights that are linked to the
value of the Seller Common Stock or the value of the Seller or any part
thereof,
(C) outstanding rights of any person to receive Seller Common Stock under
the
Seller Stock Plans or otherwise, on a deferred basis or otherwise, and
(D)
outstanding rights of any person to receive Seller Preferred Stock, on
a
deferred basis or otherwise. All
Seller Stock Options and Seller Restricted Shares may, by their terms,
be
treated in accordance with Section 3.2(a).
Each of
the directors and the officers of the Seller listed on Section
5.2(a)
of the
Seller Letter have waived all rights to receive (by contract or otherwise)
Seller Stock Options or Seller Restricted Shares during any period commencing
March 30, 2007.
(b) Section 5.2(b)
of the
Seller Letter lists each of the Seller’s subsidiaries on the date of this
Agreement and indicates for each such subsidiary as of such date: (i) the
percentage and equity securities owned or controlled, directly or indirectly,
by
the Seller; and (ii) the jurisdiction and form of organization. All of the
(x)
issued and outstanding shares of capital stock of each of the subsidiaries
of
the Seller that are corporations are held, directly or indirectly, by the Seller
and are validly issued, fully paid and nonassessable; (y) issued and outstanding
partnership or membership interests of each of the subsidiaries of the Seller
that are either limited liability companies or limited partnerships are held,
directly or indirectly, by the Seller; and (z) shares or other ownership
interests of each of the subsidiaries of the Seller are owned by the Seller,
directly or indirectly free and clear of any claim, lien, Encumbrance or
agreement with respect thereto. No subsidiary of the Seller owns any capital
stock of the Seller.
(c) With
respect to the Seller Stock Options, (i) each Seller Stock Option intended
to qualify as an “incentive stock option” under Code Section 422 of the
Code so qualifies,
(ii) each grant of a Seller Stock Option was duly authorized no later than
the date on which the grant of such Seller Stock Option was by its terms to
be
effective (the “Grant
Date”)
by all
necessary corporate action, including, as applicable, approval by the Seller
board of directors (or a duly constituted and authorized committee thereof)
and
any required stockholder approval by the necessary number of votes or written
consents, and the award agreement governing such grant (if any) was duly
executed and delivered by each party thereto, (iii) each such grant was
made in accordance with the terms of the applicable Seller Stock Plan, the
Exchange Act and all other applicable Laws and regulatory rules or requirements,
including the rules of The NASDAQ Stock Market LLC and any other exchange on
which Seller securities are traded, (iv) the per share exercise price of
each Seller Stock Option was not less than the fair market value of a share
of
Seller Common Stock on the applicable Grant Date and (v) each such grant
was properly accounted for in accordance with GAAP in the financial statements
(including the related notes) of the Seller and disclosed in all of the Seller
SEC Reports in accordance with the Exchange Act and all other applicable
Laws.
The
Seller has not knowingly granted, and there is no and has been no policy or
practice of the Seller of granting, Seller Stock Options prior to, or otherwise
coordinating the grant of Seller Stock Options with, the release or other public
announcement of material information regarding the Seller or its Subsidiaries
or
their results of operations or prospects.
(d) As
of the
date of this Agreement, except (x) as set forth on the balance sheet of the
Seller as of December 31, 2006 included in the Seller SEC Reports, (y) for
indebtedness owed by the Seller or one of its subsidiaries to the Seller or
another of its subsidiaries and (z) guarantees by the Seller of indebtedness
of
any subsidiary of the Seller, neither the Seller nor any of its subsidiaries
has
any (A) indebtedness for borrowed money, (B) indebtedness evidenced by any
bond,
debenture, note, mortgage, indenture or other debt instrument or debt security,
(C) accounts payable to trade creditors and accrued expenses not arising in
the
ordinary course of business, (D) amounts owing as deferred purchase price for
the purchase of any property (other than ordinary course payment arrangement
with suppliers) or (E)
guarantees with respect to any indebtedness or obligation of a type described
in
clauses (A) through (D) above of any other Person (collectively, “indebtedness”).
As of
the date of this Agreement, except as set forth on the balance sheet of the
Seller as of December 31, 2006 included in the Seller SEC Reports, there is
no
Encumbrance on any asset of the Seller or any of its subsidiaries that secures
indebtedness.
(a) The
Seller has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby, including the Offer
and
the Merger, and to comply with the provisions of this Agreement, subject, in
the
case of the Merger, to the Seller Stockholder Approval. The approval, adoption,
execution and delivery of this Agreement, the consummation by the Seller of
the
transactions contemplated hereby and the compliance by the Seller with the
provisions of this Agreement have been duly authorized by all necessary
corporate action on the part of the Seller, and no other corporate proceedings
on the part of the Seller are necessary to authorize this Agreement, to comply
with the terms of this Agreement or to consummate the transactions contemplated
hereby, subject, in the case of the Merger, to the Seller Stockholder Approval.
The board of directors of the Seller, at a meeting duly called and held at
which
all directors of the Seller were present, duly and unanimously adopted
resolutions (i) determining and declaring that this Agreement, the Offer and
the
Merger and the other transactions contemplated hereby are advisable, and in
the
best interest of the Seller and its stockholders, (ii) approving the Offer
and
the Merger in accordance with the DGCL, (iii) approving this Agreement, (iv)
recommending that the Seller Stockholders accept the Offer, tender their shares
of Seller Common Stock into the Offer, approve the Merger and adopt this
Agreement and (v) determining that each member of the Seller Compensation
Committee approving any plan, program, agreement, arrangement, payment or
benefit as an Employment Compensation Arrangement in order to satisfy the
non-exclusive safe harbor under Rule 14d-10(d)(2) is an “independent director”
within the meaning of Rule 4200(a)(15) of The NASDAQ Stock Market LLC (an
“Independent
Director”),
which
resolutions have not been rescinded, modified or withdrawn in any way. This
Agreement has been duly and validly executed and delivered by the Seller and
(assuming due authorization, execution and delivery by the Parent and the
Purchaser) constitutes the valid and binding obligations of the Seller,
enforceable against the Seller in accordance with its terms.
(b) Assuming
that all consents, authorizations, permits, waivers and approvals referred
to in
Section 5.4
of the
Seller Letter have been obtained and all registrations, declarations, filings
and notifications described in Section 5.4
of the
Seller Letter have been made and any waiting periods thereunder have terminated
or expired, neither the execution and delivery of this Agreement by the Seller
nor the consummation by the Seller of the transactions contemplated hereby,
including the Offer and the Merger, nor the compliance by the Seller with the
provisions of this Agreement, do or will (i) conflict with or violate any
provision of the certificate of incorporation or other organizational document
of like nature or the bylaws of the Seller or any of its subsidiaries,
(ii) conflict with or violate any statute, law, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to the Seller
or any of its subsidiaries or by which any property or asset of the Seller
or
any of its subsidiaries is bound or affected or (iii) result in any violation
or
breach of or any loss of any benefit under, or constitute a change of control
or
default (or an event which, with notice or lapse of time, or both, would constitute
a default) under, or give to others any right of termination, vesting,
amendment, acceleration or cancellation of, result in the creation of a lien,
security interest, charge or other Encumbrance upon any of the properties or
assets of the Seller or any of its subsidiaries pursuant to, or give rise to
any
increased, additional, accelerated or guaranteed rights or entitlements under,
any Contract to which the Seller or any of its subsidiaries is a party as
issuer, guarantor or obligor, or by which they or any of their respective
properties or assets may be bound or affected, except, with respect to (iii)
above, for any such conflicts, violations, breaches, defaults, rights, liens,
security interests, charges, other Encumbrances or entitlements which would
not,
either individually or in the aggregate, reasonably be expected to have a Seller
Material Adverse Effect.
5.4
Consents
and Approvals. No
consents, authorizations, orders, waivers or approvals of, or filings,
declarations or registrations with, or notifications to any Governmental
Authority are necessary in connection with (a) the execution and delivery
by the
Seller of this Agreement, or (b) the consummation by the Seller of the
transactions contemplated hereby, including the Offer and the Merger, or
the
compliance by the Seller with the provisions of this Agreement, except
(i) such consents, authorizations, orders, waivers, approvals, filings,
declarations, notices and registrations the failure of which to obtain
or make
would not, either individually or in the aggregate, reasonably be expected
to
have a Seller Material Adverse Effect and (ii) such consents,
authorizations, waivers, approvals, filings, notices and registrations
as are
listed in Section 5.4
of the
Seller Letter.
5.5
Financial
Statements.
The
Seller has made available to the Parent copies of the (i) audited consolidated
balance sheets of the Seller and its subsidiaries as of March 31, 2006,
March 31, 2005 and March 31, 2004, and the related consolidated statements
of
income, changes in stockholders’ equity and cash flows for the fiscal years 2004
through 2006, inclusive, accompanied by the audit report of Ernst & Young
LLP, independent public accountants for the Seller, and (ii) the unaudited
consolidated balance sheet of the Seller as of December 31, 2006 and the
related unaudited consolidated statement of income, statement of changes
in
stockholders’ equity and statement of cash flows for the nine-month period ended
December 31, 2006 (the “Unaudited
Balance Sheet”).
The
March 31, 2006 audited consolidated balance sheet of the Seller and its
subsidiaries and the Unaudited Balance Sheet (collectively, the “Seller
Balance Sheet”)
(including the related notes, where applicable) and the other financial
statements of the Seller referred to in this Section 5.5
(including the related notes, where applicable) present fairly, in all
material
respects, and the 2006 Financial Statements (including the related notes)
and
the financial statements to be included in any reports or statements (including
reports on Forms 10-Q and 10-K) to be filed by the Seller with the SEC
after the
date hereof will present fairly, in all material respects, the consolidated
financial position and results of the consolidated operations and cash
flows and
changes in stockholders’ equity of the Seller and its subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth;
and
each of such statements (including the related notes, where applicable)
has been
and will be prepared in accordance with GAAP, except as otherwise set forth
in
the notes thereto (subject, in the case of unaudited interim statements,
to
normal year-end adjustments). Each of the consolidated financial statements
of
the Seller and its subsidiaries, including, in each case, the notes thereto,
made available to the Parent comply, and the financial statements to be
filed
with the SEC by the Seller after the date hereof and the 2006 Financial
Statements will comply, with applicable accounting requirements and with
the
published rules and regulations of the SEC with respect thereto.
5.6
Broker’s
Fees.
Neither
the Seller nor any of its officers, directors, employees, or agents has employed
any broker, finder or financial advisor or incurred any liability for any fees
or commissions in connection with any of the transactions contemplated by this
Agreement, except for fees and commissions incurred in connection with the
engagement of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and Wachovia Capital
Markets, LLC (the “Seller’s
Financial Advisors”)
and
for legal, accounting and other professional fees payable in connection with
the
transactions contemplated hereby, including the Transaction. True and complete
copies of the engagement letters with Seller’s Financial Advisors have been
provided to the Parent.
5.7 Absence
of Certain Changes or Events.
Since
March 31, 2006, (a) the Seller and each of its subsidiaries have conducted
its
respective business in the ordinary course consistent with their past practices,
(b) except as expressly set forth in the Seller SEC Reports filed prior to
the
date of this Agreement, none of the Seller or any of its subsidiaries has
taken
any actions that if taken between the date hereof and the Effective Time
would
constitute a breach of any of clauses (a), (b)(B), (e), (j), (l), (n) or
(p) of
Section 6.1
and (c)
there has not been any change, circumstance or event (including any event
involving a prospective change) which has had, or would reasonably be expected
to have, a Seller Material Adverse Effect. Since December 31, 2006, except
as
expressly set forth in the Seller SEC Reports filed prior to the date of
this
Agreement, none of the Seller or any of its subsidiaries has taken any actions
that if taken between the date hereof and the Effective Date would constitute
a
breach of any of clauses (d)(i) through (v) of Section 6.1.
5.8
Legal
Proceedings.
There
is
no claim, suit, action, proceeding or investigation of any nature (each,
a
“Proceeding”)
pending or, to the knowledge of the Seller, threatened, against the Seller
or
any of its subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement, which if adversely determined
would, either individually or in the aggregate, reasonably be expected to
have a
Seller Material Adverse Effect. As of the date of this Agreement (a) there
is no
Proceeding pending or, to the knowledge of the Seller, threatened against
the
Seller or any of its subsidiaries seeking, or that is reasonably expected
to
involve, money damages in excess of $1,000,000, (b) the aggregate money damages
that are sought, or are reasonably expected to be involved, in all Proceedings
that are pending or, to the knowledge of the Seller, threatened against the
Seller or any of its subsidiaries does not exceed $5,000,000 and (c) there
is no
material Proceeding pending or, to the knowledge of the Seller, threatened
against the Seller or any of its subsidiaries that seeks injunction relief
or
specific performance. Neither the Seller nor any subsidiary nor any property
or
asset of the Seller or any subsidiary is subject to any continuing order
of or
consent decree, settlement agreement or similar agreement with any Governmental
Authority or any order, writ, judgment, injunction, decree, determination
or
award of any Governmental Authority or arbitrator that is material.
(a) Since
January 1, 2004, the Seller and its subsidiaries have timely filed, and
subsequent to the date hereof, will timely file, all reports, registrations
and
statements, together with any amendments required to be made with respect
thereto, that were and are required to be filed with (i) the SEC,
including
Forms 10-K, Forms 10-Q and Forms 8-K (collectively, the “Seller SEC
Reports”) (and copies of all such Seller SEC Reports have been or will be
delivered or otherwise made available by the Seller to the Parent) and
(ii) any
applicable state securities authorities (except, in the case of state
securities
authorities, no such representation is made as to filings which are not
material) (all such reports, registrations and statements, together with
any
amendments thereto, are collectively referred to herein as the “Seller
Reports”) and have paid all fees and assessments due and payable in
connection with any of the foregoing. As of their respective dates, the
Seller
Reports complied and, with respect to filings made after the date of
this
Agreement, will at the date of filing comply, in all material respects,
with all
of the statutes, rules and regulations enforced or promulgated by the
regulatory
authority with which they were filed and did not contain and, with respect
to
filings made after the date of this Agreement, will not at the date of
filing
contain, any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements
therein, in light of the circumstances under which they were made, not
misleading. None of the Seller’s subsidiaries is required to file any form,
report or other document with the SEC. The Seller is in compliance in
all
material respects with the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002
and the
rules and regulations promulgated thereunder applicable to it.
(b) The
Seller has (i)
designed and maintained disclosure controls and procedures (as defined
in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) to ensure that
material information relating to the Seller, including its consolidated
subsidiaries, that is required to be disclosed by the Seller in the reports
it
files under the Exchange Act is made known to its principal executive
officer
and principal financial officer or other appropriate members of management
as
appropriate to allow timely decisions regarding required disclosure;
(ii)
designed and maintained a system of internal control over financial reporting
(as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient
to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in
accordance
with GAAP, including reasonable assurance (A) that transactions are executed
in
accordance with management’s general or specific authorizations and recorded as
necessary to permit preparation of financial statements in conformity
with GAAP
and to maintain asset accountability and (B) regarding prevention or
timely
detection of any unauthorized acquisition, use or disposition of assets
that
could have a material effect on the Seller’s financial statements; (iii) with
the participation of the Seller’s principal executive and financial officers,
completed an assessment of the effectiveness of the Seller’s internal controls
over financial reporting in compliance with the requirements of Section
404 of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act for the year ended March 31, 2006, and such
assessment concluded that such internal controls were effective using
the
framework specified in the Seller’s Annual Report on Form 10-K for
such year ended; and (iv) to the extent required by applicable Laws,
disclosed
in such report or in any amendment thereto any change in the Seller’s internal
control over financial reporting that occurred during the period covered
by such
report or amendment that has materially affected, or is reasonably likely
to
materially affect, the Seller’s internal control over financial
reporting.
(c) The
Seller has disclosed, based on the most recent quarterly evaluation of internal
control over financial reporting, to the Seller’s auditors and audit committee
of the Seller board of directors (i) any significant deficiency or material
weakness in the design or operation of internal control over financial reporting
that is reasonably likely to adversely affect the Seller’s ability to record,
process, summarize and report financial information, and (ii) any fraud,
whether
or not material, that involves management or other employees who have a
significant role in the Seller’s internal control over financial reporting. To
the knowledge of the Seller, there are no material weaknesses in the design
or
operation of internal control over financial reporting that is reasonably
likely
to adversely affect the Seller’s ability to record, process, summarize and
report financial information.
(d) There
are
no pending (i) formal or, to the knowledge of the Seller, informal
investigations of the Seller by the SEC, (ii) to the knowledge of the Seller,
inspections of an audit of the Seller’s financial statements by the Public
Company Accounting Oversight Board or (iii) investigations by the audit
committee of the Seller board of directors regarding any complaint, allegation,
assertion or claim that the Seller or any of its subsidiaries has engaged in
improper or illegal accounting or auditing practices or maintains improper
or
inadequate internal accounting controls.
(e) Neither
the Seller nor any of its subsidiaries is a party to, or has any commitment
to
become a party to, any joint venture, off-balance sheet partnership or any
similar Contract (including any Contract relating to any transaction or
relationship between or among the Seller and any of its subsidiaries, on the
one
hand, and any unconsolidated Affiliate, including any structured finance,
special purpose or limited purpose entity or Person, on the other hand, or
any
“off-balance sheet arrangements” (as defined in Item 303(a) of
Regulation S-K under the Exchange Act)), where the result, purpose or
effect of such Contract is to avoid disclosure of any material transaction
involving, or material liabilities of, the Seller or any of its subsidiaries
in
the Seller’s or any of its subsidiaries published financial statements or other
Seller SEC Reports.
5.10
Absence
of Undisclosed Liabilities. Since
March 31, 2006, except for those liabilities that are fully reflected or
reserved against on the Seller Balance Sheet in accordance with GAAP and for
liabilities incurred in the ordinary course of business consistent with past
practice since March 31, 2006, neither the Seller nor any of its
subsidiaries has incurred any obligation or liability (whether or not accrued
and contingent or otherwise) that, either alone or when combined with all such
liabilities, either individually or in the aggregate, is or would reasonably
be
expected to be material in relation to the Seller and its subsidiaries, taken
as
a whole.
5.11
Compliance
with Applicable Laws and Reporting
Requirements.
The
Seller and its subsidiaries hold all permits, licenses, variances,
authorizations, exemptions, orders, registrations and approvals of all
Governmental Authorities which are required for the operation of their
respective businesses (the “Seller
Permits”)
and
the Seller and each of the Subsidiaries is in compliance with the terms of
the
Seller Permits and all applicable Laws and regulations, except where the
failure
to so hold or comply, either individually or in the aggregate, is or would
reasonably be expected to be material in relation to the Seller and its
subsidiaries, taken as a whole. Except as expressly disclosed in the Seller
SEC
Reports filed prior to the date of this Agreement, the businesses of the
Seller
and its Subsidiaries are not being conducted in violation of any Law (including
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the USA PATRIOT Act of 2001), except for
possible violations which, either individually or in the aggregate, are not
or
would not reasonably be expected to be material in relation to the Seller
and
its subsidiaries, taken as a whole. No investigation by any Governmental
Authority with respect to the Seller or any of the Subsidiaries is pending
or
threatened, other than, in each case, those the outcome of which, individually
or in the aggregate, would not reasonably be expected to be material in relation
to the Seller and its subsidiaries, taken as a whole.
(a) Each
of
the Seller and each of its Subsidiaries (referred to for purposes of this
Section 5.12,
collectively, as the “Seller
Companies”)
has
(i) timely filed (or had timely filed on its behalf) with the appropriate
Governmental Authorities all material Tax Returns required to be filed
by it
(giving effect to all extensions), and all such Tax Returns are true, correct
and complete in all material respects and (ii) timely paid (or had timely
paid
on its behalf) all material Taxes, whether or not reflected on a Tax Return,
required to have been paid by it. The most recent financial statements
contained
in the Sellers’ filed SEC reports reflect an adequate reserve (excluding any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income), in accordance with GAAP, for all Taxes, whether or
not yet
due and payable, of the Seller Companies for all taxable periods and portions
thereof through the date of such financial statements.
(b) There
are
no material liens for Taxes upon any property or assets of the Seller Companies,
except for liens for Taxes not yet due or for Taxes which are being contested
in
good faith by appropriate proceedings and for which adequate reserves,
in
accordance with GAAP, have been established.
(c) The
Seller Companies have complied in all material respects with all applicable
Laws, rules and regulations relating to the payment and withholding of
Taxes
(including withholding of Taxes in connection with amounts paid or owing
to any
employee, former employee or independent contractor) and have duly and
timely
withheld and have paid over to the appropriate Governmental Authorities
all
material amounts required to be so withheld and paid over on or prior to
the due
date thereof under all applicable Laws.
(d) As
of the
date of this Agreement, no federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of the Seller Companies, and none of
the
Seller Companies has received a written notice of any material pending
or
proposed claims, audits or proceedings with respect to Taxes. The relevant
statute of limitations is closed with respect to the federal income Tax
Returns
of the Seller Companies for all years through March 31, 2003.
(e) None
of
the Seller Companies has granted in writing any power of attorney which
is
currently in force with respect to any Taxes or Tax Returns.
(f) None
of
the Seller Companies has requested an extension of time within which to
file any
Tax Return which has not since been filed, and no currently effective waivers,
extensions, or comparable consents regarding the application of the statute
of
limitations with respect to Taxes or Tax Returns have been given by or
on behalf
of the Seller Companies.
(g) None
of
the Seller Companies is party to or bound by or currently has any material
liability under any agreement providing for the allocation, sharing or
indemnification of Taxes.
(h) None
of
the Seller Companies has been included in any “consolidated,” “unitary” or
“combined” Tax Return (other than Tax Returns which include only the Seller and
any Seller Company) provided for under the laws of the United States, any
foreign jurisdiction or any state or locality with respect to Taxes for any
taxable year.
(i)
No
claim
has been made in writing by any Governmental Authorities in a jurisdiction
where
the Seller Companies do not file Tax Returns that any such entity is, or may
be,
subject to taxation by that jurisdiction.
(j)
The
Seller Companies have made available to the Parent copies of (i) all of their
material income Tax Returns filed within the past three (3) years, (ii) all
audit reports, letter rulings, technical advice memoranda and similar documents
issued by a Governmental Authority within the past five (5) years relating
to
the federal, state, local or foreign Taxes due from or with respect to the
Seller Companies, and (iii) any closing letters or agreements entered into
by
the Seller or any Seller Company with any Governmental Authorities within the
past five (5) years with respect to Taxes.
(k) None
of
the Seller Companies has received any written notice of deficiency or assessment
from any Governmental Authority for any material amount of Tax that has not
been
fully settled or satisfied.
(l)
None
of
the Seller Companies has constituted either a “distributing corporation” or a
“controlled corporation” within the meaning of Section 355(a)(1)(A) of the Code
in a distribution of stock intended to qualify for tax-free treatment under
Section 355 of the Code in the two years prior to the date of this Agreement
(or
will constitute such a corporation in the two years prior to the Effective
Time)
or which otherwise constitutes part of a “plan” or “series of related
transactions” within the meaning of Section 355(e) of the Code in conjunction
with the Offer and the Merger.
(m) None
of
the Seller Companies will be required to include in a Taxable period ending
after the Effective Time Taxable income attributable to income that arose in
a
prior Taxable period but was not recognized for Tax purposes in any prior
Taxable period as a result of the installment method of accounting, the
completed contract method of accounting, the long-term contract method of
accounting, the cash method of accounting or Section 481 of the Code or
comparable provisions of any Tax Law or for any other reason (including as
a
result of prepaid amounts or deferred revenue received on or prior to the
Effective Time).
(n) None
of
the Seller Companies has participated in any “listed transaction”, as defined in
Treasury Regulation Section 1.6011-4.
(o) To
the
knowledge of the Seller, Section 5.12(o)
of the
Seller Letter sets forth a list of all Seller Companies that have made elections
under Section 1362 of the Code to be treated as S corporations for
federal income Tax purposes or made similar elections under any comparable
provisions of any applicable Tax Laws.
(p) There
has
been no change in ownership (within the meaning of Section 382(g) of the
Code) of the Seller or any predecessor.
(q) Other
than the Specified Parachute Payments (as defined below), no amount or other
entitlement that could be received as a result of the transactions contemplated
hereby (alone or in conjunction with any other event) by any “disqualified
individual” (as defined in Code Section 280G(c) of the Code) with respect to the
Seller will constitute an “excess parachute payment” (as defined in Code Section
280G(b)(1)). Section 5.12(q)
of the
Seller Letter sets forth, with respect to each disqualified individual with
respect to the Seller who could receive any excess parachute payment (i) such
person’s name, title and base amount (as defined in Code Section 280G(b)(3)) and
(ii) a calculation of the aggregate present value of the “parachute payments”
(as defined in Code Section 280G(b)(2)) such person could receive (collectively,
the “Specified
Parachute Payments”).
No
current or former director, officer, employee, independent contractor or
consultant of the Seller or any of its subsidiaries (collectively, “Seller
Personnel”)
is
entitled to any gross-up, make-whole or other additional payment from the Seller
or any of its subsidiaries in respect of any tax (including federal, state,
local and foreign income, excise and other taxes (including taxes imposed under
Code Sections 280G or 409A)) or interest or penalty related
thereto.
(r)
To
the
knowledge of the Seller, Section
5.12(r)
of the
Seller Letter sets forth as of the most recent practicable date a list, by
type
of Tax, of each state in which the Seller Companies are (i) required to file
a
Tax Return relating to state income, franchise or sales or use Taxes or
(ii) required
to register for sales or use Tax purposes.
(a) Section 5.13(a)(i)
of the
Seller Letter sets forth a complete and current list, as of the date of this
Agreement, of each “employee pension benefit plan” (the “Seller
Pension Plans”),
as
such term is defined in Section 3(2) of ERISA, “employee welfare benefit
plan”, as such term is defined in Section 3(1) of ERISA, stock option plan,
restricted stock plan, stock purchase plan, deferred compensation plan, bonus
or
incentive plan, severance, change in control, retention or termination plan,
program, policy or arrangement, and each other employee benefit plan, program,
policy or arrangement, in each case, sponsored, maintained, contributed to,
or
required to be maintained or contributed to, by the Seller, any of its
subsidiaries or any of Seller’s ERISA Affiliates for the benefit of any Seller
Personnel, but not including any Seller Benefit Agreement (each such plan,
program, policy or arrangement, together with any such plan, program, policy
or
arrangement that is entered into after the date of this Agreement, a
“Seller
Benefit Plan”).
Each
employment, consulting, bonus, incentive or deferred compensation, equity
or
equity-based compensation, severance, change in control, retention, termination
or other agreement or arrangement between the Seller or any of its subsidiaries,
on the one hand, and any Seller Personnel, but not including any Seller Benefit
Plan, is referred to herein as a “Seller
Benefit Agreement”.
Section
5.13(a)(ii) of the Seller Letter sets forth a complete and correct list,
as of
the date of this Agreement, of each material Seller Benefit
Agreement.
(b) The
Seller has made available to the Parent complete and accurate copies of each
of
the following with respect to each of the Seller Benefit Plans and the Seller
Benefit Agreements: (i) a complete and current copy thereof, including any
amendments thereto; (ii) trust agreement or insurance contract (including
any fiduciary liability policy or fidelity bond), if any; (iii) most recent
IRS
determination or opinion letter, if any; (iv) the two most recent annual
reports
on Form 5500; (v) the two most recent financial and/or actuarial reports,
if
any, and (vi) summary plan description, any summary of material modifications
thereto, and any material employee communications.
(c) Each
of the Seller
Pension Plans, each of the Seller Benefit Plans and each of the Seller Benefit
Agreements, has been and is administered in compliance with its terms in all
material respects and is in compliance in all material respects with the
applicable provisions of ERISA (including the funding and prohibited
transactions provisions thereof), the Code and all other applicable
Laws.
(d) Each
of
the Seller Pension Plans which is intended to be a qualified plan within the
meaning of Code Section 401(a) has received a favorable determination or
opinion letter from the IRS that such plan meets the requirements of Code
Section 401(a) and the Seller is not aware of any reason why any such
opinion letter would reasonably be expected to be revoked or not be
reissued.
(e) The
Seller has made or provided for all contributions to the Seller Pension Plans
required thereunder.
(f)
Neither
the Seller nor any of its subsidiaries is a party to or maintains any contract
or other arrangement with any employee or group of employees that provides
for
any kind of severance payments.
(g) Neither
the Seller nor any of its subsidiaries or ERISA Affiliates sponsors, maintains
or contributes to, or in the six (6) years prior to the date hereof has
sponsored, maintained or contributed to (i) any “multiemployer plan” within
the meaning of Section 4001(a)(3) of ERISA, or (ii) any plan subject
to Section 302 or Title IV of ERISA or Code Section 412 or which is
otherwise a defined benefit pension plan. No circumstances exist which could
reasonably be expected to result in any liability to the Seller or any of its
subsidiaries under Section 302 or Title IV of ERISA or Code
Section 412.
(h) Neither
the Seller nor any of its subsidiaries provides or has agreed to provide
healthcare, welfare or any other non-pension benefits to any employees after
their employment is terminated (other than as required by Part 6 of Subtitle
B
of Title I of ERISA or state health continuation laws), and no circumstances
exist that could result in the Seller or any of its subsidiaries becoming
obligated to provide any such benefits.
(i)
No
lawsuits, governmental administrative proceedings, claims (other than routine
claims for benefits) or complaints to, or by, any Person or Governmental
Authority have been filed, are pending, or to the knowledge of the Seller,
threatened with respect to any Seller Benefit Plan or Seller Benefit Agreement.
There is no material correspondence between the Seller or any of its
subsidiaries and any Governmental Authority related to any Seller Benefit Plan
or Seller Benefit Agreement concerning any matter that would result in any
material liability to the Parent, the Seller or any Seller Benefit Plan or
Seller Benefit Agreement. Neither the
Seller
nor any of its subsidiaries has received notice of any, and, to the knowledge
of
the Seller, there are no, material investigations by any Governmental Authority
with respect to any Seller Benefit Plan or Seller Benefit Agreement. None of
the
Seller and its Subsidiaries nor any other Person, including any fiduciary,
has
engaged in any “prohibited transaction” (as defined in Code Section 4975 or
Section 406 of ERISA) which could subject any Seller Benefit Plan or Seller
Benefit Agreement or their related trusts, the Seller, any of its subsidiaries
or any Person that the Seller or any of its subsidiaries has an obligation
to
indemnify, to any material tax or penalty imposed under Code Section 4975 or
Section 502 of ERISA.
(j)
Each
Seller Benefit Plan and Seller Benefit Agreement that is a “nonqualified
deferred compensation plan” within the meaning of Code Section 409A has been
operated in material compliance with Code Section 409A since January
1, 2005, based upon a good faith, reasonable interpretation of Code Section
409A, the proposed regulations issued thereunder and Internal Revenue Services
Notices 2005-1 and 2006-79.
(k) The
parties acknowledge that certain payments have been made or are to be made
and
certain benefits have been granted or are to be granted according to employment
compensation, severance and other employee benefit plans of the Seller,
including the Seller Benefit Plans, the Seller Pension Plans and the Seller
Benefit Agreements (collectively, the “Arrangements”),
to
the Covered Securityholders. The Seller hereby represents and warrants that
all
such amounts payable under the Arrangements (i) are being paid or granted as
compensation for past services performed, future services to be performed,
or
future services to be refrained from performing, by the Covered Securityholders
(and matters incidental thereto) and (ii) are not calculated based on the number
of shares tendered or to be tendered into the Offer by the applicable Covered
Securityholder. The Seller also hereby represents and warrants that the
Compensation Committee of the Seller board of directors (the “Seller
Compensation Committee”)
(A) at
a meeting duly called and held at which all members of the Seller Compensation
Committee were present, duly and unanimously adopted resolutions approving
as an
“employment compensation, severance or other employee benefit arrangement”
within the meaning of Rule 14d-10(d)(1) under the Exchange Act (an “Employment
Compensation Arrangement”)
(1)
each Retention Letter Agreement presented to the Seller Compensation Committee
on or prior to the date hereof, (2) the treatment of the Seller Stock Options
and Seller Restricted Shares in accordance with the terms set forth in this
Agreement, (3) the terms of Sections 7.4 and 7.5 of this Agreement and (4)
each
Change in Control Arrangement that is set forth in Section
5.14(c)(i)
of the
Seller Letter, which resolutions have not been rescinded, modified or withdrawn
in any way and (B) has taken all other actions necessary to satisfy the
requirements of the non-exclusive safe harbor under Rule 14d-10(d)(2) under
the
Exchange Act with respect to the foregoing arrangements. Immediately prior
to
the Acceptance Date, there will be no Change in Control Arrangements between
the
Seller or any of its subsidiaries, on the one hand, and any stockholder of
the
Seller that has tendered shares of Seller Common Stock into the Offer, on the
other hand, other than those Change in Control Arrangements that have been
approved by the Seller Compensation Committee as Employment Compensation
Arrangements prior to the Acceptance Date and with respect to which the Seller
Compensation Committee has taken all other actions, prior to the Acceptance
Date, necessary to satisfy the requirements of the non-exclusive safe harbor
under Rule 14d-10(d)(2) under the Exchange Act.
(l)
All
Seller Benefit Plans and Seller Benefit Agreements subject to the
laws of any jurisdiction outside of the United States (i) have been
maintained in accordance with all applicable requirements in all material
respects, (ii) if they are intended to qualify for special tax treatment
meet
all material requirements for such treatment, and (iii) if they are intended
to
be funded and/or book-reserved are fully funded and/or book-reserved, as
appropriate, based upon reasonable actuarial assumptions.
(m) With
respect to each of the Key Personnel who has entered into a Retention Letter
Agreement with the Parent on or prior to the date of this Agreement, the Seller
has made available to the Parent in the electronic data room complete and
accurate information relating to all material terms and conditions of such
Key
Personnel's employment with the Seller or its subsidiaries (including (i) all
cash and non-cash compensation that each such Key Personnel is entitled to
or
eligible to receive from the Seller, (ii) any employment, change in control,
retention or severance agreements between each such Key Personnel and the Seller
of any of its subsidiaries and (iii) all Seller Stock Options and Seller
Restricted Shares held by each such Key Personnel).
(a) The
Seller and its Subsidiaries are in compliance with all federal, state,
and
foreign laws respecting employment and employment practices, terms and
conditions of employment, and wages and hours, including Title VII of
the Civil
Rights Act of 1964, as amended, the Equal Pay Act of 1967, as amended,
the Age
Discrimination in Employment Act of 1967, as amended, the Americans with
Disabilities Act, as amended, and the related rules and regulations adopted
by
those Governmental Authorities responsible for the administration of
such Laws,
except where the failure to so comply, either individually or in the
aggregate,
is or would not reasonably be expected to be material in relation to
the Seller
and its subsidiaries, taken as a whole. Other than normal accruals of
wages
during regular payroll cycles, there are no material arrearages in the
payment
of wages. The Seller has not received notice of any audits or investigations
pending or scheduled by any Governmental Authority pertaining to the
employment
practices of the Seller or of any material complaints relating to employment
practices of the Seller that have been made to any Governmental Authority,
and
no such complaints have been submitted in writing to the
Seller.
(b) Neither
the Seller nor any of its subsidiaries has recognized or is a party to or
otherwise bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization. Neither
the
Seller nor any of its subsidiaries is subject to any charge, demand, petition
or
representation proceeding seeking to compel, require or demand it to bargain
with any labor union or labor organization nor
has
there been nor is there pending or, to the Seller’s knowledge, threatened, any
labor
strike, work stoppage, slowdown or lockout involving the Seller or any of
its
subsidiaries.
(c) Neither
the Seller nor any of its subsidiaries is a party to any employment, severance
or consulting agreements with any Seller Personnel requiring payment of cash
compensation or benefits after termination of such agreement that has a value
in
excess of $50,000, or with a severance term in excess of six months, and
no
Seller Personnel who is not a party to an employment, severance or consulting
agreement with the Seller or any of its subsidiaries would be entitled to
cash
compensation or benefits in connection with termination of employment
that has a value in excess of $50,000 or a severance term in excess of six
months. Section 5.14(c)(i) of the Seller Letter sets forth, as of the
date of this Agreement, a complete and correct list of (i) each material
Change
in Control Arrangement and (ii) the names of all Seller Personnel entitled
to
any compensation or benefits pursuant to any such Change in Control Arrangement
and the category or type of each such form of compensation or benefit to
which
such Seller Personnel is entitled. Other than as set forth in the immediately
prior sentence, neither the execution and delivery of this Agreement nor
the
consummation of the Offer, the Merger or any other transaction contemplated
hereby will (either alone or in conjunction with any other event, including
any
termination of employment on or following the Effective Time) (A) entitle
any
Seller Personnel to any compensation or benefit, (B) result in, cause the
accelerated vesting, funding or delivery of, or increase the amount or value
of,
any payment or benefit to any Seller Personnel, or (C) result in any breach
or
violation or, default under or limitation on the right of the Seller or any
of
its subsidiaries to amend, merge or terminate a Seller Benefit Plan or Seller
Benefit Agreement.
5.15
Material
Contracts.
Except for this Agreement, neither the Seller nor any of
its
subsidiaries is a party to or is bound by any Contract, (i) with respect to
the employment of any directors or executive officers, (ii) with any
consultant that is a natural Person, that involves the payment of $100,000
or
more per annum, other than those that are terminable at the Seller’s option on
30 days notice or less, (iii) which is a “material contract” (as such terms is
defined in Item 601(b)(10) of Regulation S-K of the SEC), (iv) which grants
a
right of first refusal or first offer or similar right or which limits
the
ability of the Seller or any of its subsidiaries to compete or engage in
any
line of business or to solicit clients, in any geographic area or with
any
Person, or pursuant to which any material benefit or right is required
to be
given or lost, or any material penalty or detriment is incurred, as a result
of
so competing, engaging or soliciting, (v) which provides for exclusivity
by the
Seller or any of its subsidiaries with respect to any material products
or
services sold or purchased by the Seller or any of its subsidiaries, (vi)
which
following the Acceptance Date or the Effective Time would apply to the
Parent or
its Affiliates (other than the Seller and/or its subsidiaries), other than
those
which would be immaterial to the business of the Parent or its Affiliates
(other
than the Seller and/or its subsidiaries), (vii) which contains “most favored
nation” pricing or terms that applies to the Seller or any of its subsidiaries
that relates to any Contract that involves more than $250,000 in annual
revenue
or cost to the Seller or its subsidiaries, (viii) between the Seller or any
of its subsidiaries, on the one hand, and any Major Supplier, on the other
hand
(such Contracts, “Major
Supplier Contracts”),
(ix)
which is a joint venture, partnership or similar agreement pursuant to
which the
Seller owns an equity or other interest in another Person other than any
of
Seller’s subsidiaries, (x) with or to a labor union or guild (including any
collective bargaining agreement), (xi) in the case of a Seller Benefit
Plan, any of the benefits of which will be increased, or the vesting of
the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement, or the value of any of the
benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement, (xii) in the case of any Contract that is not a Seller
Benefit Plan, any of the benefits, rights or obligations under which would
be
accelerated or triggered by or are conditioned on a change of control caused
by
transactions contemplated hereby, (xiii) which would prohibit or delay the
consummation of any of the transactions contemplated by this Agreement,
(xiv)
with any customer of the Seller or its subsidiaries under which services
remain
to be performed, and which relates to more than $2,000,000 in annual fee
revenue per contract], (xv) consisting of indentures, mortgages, promissory
notes, loan agreements, bonds, guarantees of borrowed money, letters of
credit or other agreements or instruments representing indebtedness for
borrowed
money in excess of $10,000,000 or providing for the creation of any Encumbrance
upon any of the material assets of the Seller or its subsidiaries, (xvi)
with
any officer, director or Affiliate of the Seller or its subsidiaries other
than
employment, severance or consulting agreements covered elsewhere in this
Article
V,
and
(xvii) that is a stock purchase, asset purchase or other acquisition agreement
for any entity or any business or line of business (collectively, the
“Acquisition
Agreements”).
The
Seller has previously made available to the Parent complete and accurate
copies
of each Contract of the type described in this Section 5.15
(collectively referred to herein as the “Seller
Contracts”).
All
of the Seller Contracts are valid and in full force and effect, except
to the
extent they have previously expired in accordance with their terms or if
the
failure to be in full force and effect, individually or in the aggregate,
would
not reasonably be expected to have a Seller Material Adverse Effect. Neither
the
Seller nor any of its subsidiaries has, and to the knowledge of the Seller,
none
of the other parties thereto have, violated any provision of, or committed
or
failed to perform any act, and no event or condition exists, which with
or
without notice, lapse of time or both would constitute a default under
the
provisions of, any Seller Contract, except in each case for those violations
and
defaults which, individually or in the aggregate, would not reasonably
be
expected to result in a Seller Material Adverse Effect. Neither the Seller
nor
any of its subsidiaries and, to the knowledge of the Seller, no other party
thereto, is in material default under any Acquisition Agreement or any
Major
Supplier Contract. The Seller has made available all agreements or instruments
related or ancillary to each Acquisition Agreement. During each of the
three
most recently completed fiscal years of the Seller, no Person (taken together
with its Affiliates) accounted for more than 3% of the consolidated revenues
of
the Seller. As of the date of this Agreement, neither the Seller nor any
of its
subsidiaries has received notice from any Major Supplier of an intent to
terminate or modify its relationship with the Seller and its subsidiaries
in a
way which, individually or in the aggregate, is or would reasonably be
expected
to be material in relation of the Seller and its subsidiaries, taken as
a
whole.
(a) Neither
the Seller nor any of its subsidiaries owns any real property.
Section 5.16(a) of the Seller Letter lists all
real property previously owned by Seller or any of its subsidiaries during
the
period such subsidiary was owned directly or indirectly by the Seller,
and to
Seller’s knowledge, neither Seller nor any of its subsidiaries owned any other
real property prior to such period. Section 5.16(a) of the Seller
Letter also lists all real property leased, subleased, licensed or otherwise
occupied to or by the Seller or any of its subsidiaries, including any
leases or
subleases otherwise guaranteed by the Seller or its subsidiaries in which
either
(x) the Seller or any of its subsidiaries maintains inventory or other
material
records of the Seller or its subsidiaries or (y) the Seller or its subsidiaries
pays rent or other expenses in excess of $ 30,000 per annum (all of the
foregoing being collectively referred to as “leases and subleases”). The
Seller has made available to the Parent true, complete and accurate copies
of
the leases and subleases (each as amended to date) relating to the leased
property in Section 5.16(a) of the Seller Letter. With respect to
each such lease and sublease:
(i) the
lease
or sublease is a valid, binding and enforceable obligation of the Seller
or its
subsidiary, as the case may be, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors’ rights and
general principles of equity;
(ii) neither
the Seller nor any of its subsidiaries, or to the knowledge of the Seller,
any
other party (including any landlord or sublandlord under the leases and
subleases), is in breach or violation of, or default under, any such lease
or
sublease, and no event has occurred, is pending or, to the knowledge of the
Seller, is threatened, which, after the giving of notice or the lapse of time
or
both, would constitute a breach or default by the Seller or any of its
subsidiaries, or to the knowledge of the Seller, any other party (including
any
landlord or sublandlord under the leases and subleases) under such lease or
sublease;
(iii) neither
the Seller nor any of its subsidiaries has assigned, transferred, conveyed,
mortgaged, deeded in trust or Encumbered any interest in the leasehold or
subleasehold, or further leased, subleased or licensed or permitted any other
Person to use or occupy the property subject thereto; and
(iv) the
Seller or its subsidiaries have good, valid leasehold or subleasehold title
to
the premises leased pursuant to the leases and subleases, except as would not,
individually or in the aggregate, reasonably be expected to have a Seller
Material Adverse Effect, and there are no Encumbrances applicable to the real
property subject to any such lease or sublease, except for recorded easements,
covenants and other restrictions which do not, individually or in the aggregate,
materially impair the current uses or the occupancy by the Parent or its
subsidiary, as the case may be, of the property subject thereto;
(v) there
are
no consents, permissions or approvals by any third party pursuant to any lease
or sublease which may be required with respect to the making, assigning or
subleasing of any lease or sublease by the Seller or its subsidiaries, which
have not been obtained, except for those, the failure of which would not
reasonably be expected, individually or in the aggregate, to have a Seller
Material Adverse Effect;
(vi) neither
Seller nor any of its subsidiaries has received notice from any Governmental
Authority or any other third party which alleges or asserts that any real
property leased, subleases, licensed or otherwise occupied by Seller or its
subsidiaries does not comply with applicable zoning, building codes or other
applicable laws, regulations or ordinances; and
(vii) to
the
knowledge of the Seller, all real property and improvements occupied or used
by
the Seller and its subsidiaries are in compliance with all applicable
Environmental, Health and Safety Laws.
(b) the
Parent and its subsidiaries own good title, free and clear of all Encumbrances,
to all property and assets necessary to conduct the business of the Seller
as
currently conducted, except for (i) Encumbrances reflected in the Seller
Balance Sheet included in the Seller SEC Reports, (ii) Encumbrances or
imperfections of title which do not detract from the value or interfere with
the
present or presently contemplated use of the assets subject thereto or affected
thereby, (iii) Encumbrances for current Taxes not yet due and payable and
(iv) Encumbrances on the landlord’s interest in the premises (subject to
Section 5.16(a)(iv)
above).
The Seller and its subsidiaries, as lessees, have the right under valid
and subsisting leases to use, possess and control all personal property leased
by the Seller or its subsidiaries as now used, possessed and controlled by
the
Seller or its subsidiaries, as applicable. All of the machinery, equipment
and
other tangible personal property and assets owned or used by the Seller and
its
subsidiaries are in good condition, maintenance and repair, except for ordinary
wear and tear, are useable in the ordinary course of business, and are
reasonably adequate and suitable for the uses to which they are being
put.
5.17
Environmental,
Health and Safety Liability.
(a)
Except
for such matters which, either individually or in the aggregate, are not
and
would not reasonably be expected to be material to the Seller and its
subsidiaries, taken as a whole:
(i) there
are, and have been, no Environmental, Health and Safety Claims pending or,
to
the Seller’s knowledge, threatened, seeking to impose, or that are reasonably
likely to result in the imposition of, any liability or obligation on the
Seller
or any of its subsidiaries;
(ii) there
has
been no release, disposal or presence of any Hazardous Material that could
reasonably be expected to result in, and to the knowledge of the Seller,
there
is no other reasonable basis for, any Environmental, Health and Safety Claim
against the Seller or any of its subsidiaries or against any Person whose
liabilities for such Environmental, Health and Safety Claim the Seller or
any of
its subsidiaries has or may have retained or assumed, either by contract
or by
operation of Law;
(iii) neither
the Seller nor any of its subsidiaries has retained or assumed, either
contractually or by operation of Law, any liabilities that could reasonably
be
expected to form the basis of any such Environmental, Health and Safety
Claim;
(iv) neither
the Seller nor any of its subsidiaries is or has been, subject to any agreement,
order, judgment, decree, letter or memorandum by or with any Governmental
Authority or third party imposing any liability or obligation with respect
to
the foregoing, and has received any communication alleging that Seller or
any of
its subsidiaries is in violation of, or may have any liability under, any
Environmental, Health and Safety Law;
(v) compliance
with applicable Environmental, Health and Safety Laws will not require the
Seller or its subsidiaries to incur costs or liabilities, except for those
costs
and liabilities that are fully reflected, or reserved for, on the Seller
Balance
Sheet in accordance with GAAP; and
(vi) to
the
knowledge of the Seller, there are no waste transporters, treatment, recycling
and/or disposal facilities, locations or operations utilized by the Seller
or
its subsidiaries for the transport, treatment, recycling or disposal of Hazardous
Materials or electronic equipment, including copiers, printers, multifunction
devices, computers, or monitors, (A) that are or have been operating in
non-compliance with any Environmental, Health and Safety Law or (B) the use
of which would reasonably be expected to result in any Environmental, Heath
and
Safety Claim against the Seller or its subsidiaries;
(b) The
Seller has provided the Parent with true and complete copies of all Phase I
and Phase II environmental site assessments or similar environmental
reports, asbestos surveys, or other assessments or questionnaires conducted
by
or on behalf of, or otherwise in possession of, the Seller with respect to
the
current or former owned or leased properties or operations of the Seller or
its
subsidiaries.
(a) The
board
of directors of the Seller has approved this Agreement and taken all other
requisite action such that the provisions of any anti-takeover laws and
regulations of any Governmental Authority, including Section 203 of the DGCL,
will not apply to this Agreement and the transactions contemplated
hereby.
(b) The
only
vote of holders of any class of capital stock of the Seller that may be
necessary to adopt this Agreement is adoption of this Agreement by the
affirmative vote of a majority of the outstanding shares of Seller Common
Stock,
voting as a single class, in the event that a vote of Stockholders is required
by applicable Law to consummate the Merger (any such vote, “Seller
Stockholder Approval”).
(a) The
Seller does not own any Patents. Section
5.19
of the
Seller Letter contains a complete and accurate list of all registered and
unregistered Marks owned by the Seller (“Seller
Marks”),
Seller Software and Copyrights owned by the Seller (“Seller
Copyrights”).
The
Seller and its subsidiaries own, or are validly licensed to use, in each
case
free and clear of any Encumbrances, all material Intellectual Property Assets
used in or necessary to carry on its business as currently
conducted.
(b) Except
as
would not, individually or in the aggregate, have a Seller Material Adverse
Effect:
(i) all
Seller Marks and Seller Copyrights which are issued by, or registered or
the
subject of an application filed with, as applicable, the U.S. Patent and
Trademark Office, the U.S. Copyright Office or in any similar office or
agency
anywhere in the world have been duly maintained (including the payment
of
maintenance fees) and are not expired, cancelled or abandoned, except for
such
issuances, registrations or applications that the Seller has permitted
to expire
or has cancelled or abandoned in its reasonable business judgment;
(ii) there
are
no pending, or, to the knowledge of the Seller, threatened claims against
any of
the Seller alleging that any of the Seller Intellectual Property
Assets
or
the Seller’s Business infringes or conflicts with any right of any Person under
any Intellectual Property Assets;
(iii) neither
the operation of the Seller’s Business nor any Seller Intellectual Property
Asset owned by the Seller infringes or conflicts with any right of any Person
under any Intellectual Property Assets.
(iv) the
Seller has not received any written communications alleging that the Seller
has
violated or, by conducting the Seller’s Business, would violate any third party
intellectual property rights or that any of the Seller Intellectual Property
Assets is invalid or unenforceable;
(v) no
current or former employee or consultant of the Seller owns any rights in or
to
any of the Seller Intellectual Property Assets; and
(vi) to
the
knowledge of the Seller, there is no violation or infringement by a third party
of any of the Seller Intellectual Property Assets;
(c) For
purposes of this Agreement,
(i) “Intellectual
Property Assets”
means:
|
(A)
|
patents
and patent applications (collectively, “Patents”);
|
|
(B)
|
trade
names, trademarks, trade name rights, trade dress, service marks,
brand
names, domain names, logos, slogans, Internet domain names, registered
and
unregistered trademarks and service marks and related registrations
and
applications for registration (collectively, “Marks”);
|
|
(C)
|
copyrights,
both registered and unregistered, in both published and unpublished
works,
including all compilations, databases and computer programs, manuals
and
other documentation and all copyright registrations and applications
(collectively, “Copyrights”);
|
|
(D)
|
rights
under
applicable US state trade secret laws as are applicable to know-how
and confidential information (collectively, “Trade
Secrets”);
|
|
(D)
|
computer
programs in both object code and source code form (“Software”);
and
|
|
(E)
|
know-how
and other proprietary intellectual property
rights.
|
(ii) “Seller’s
Business”
means
the business of the Seller as currently conducted.
(iii) “Seller
Intellectual Property Assets”
means
all Intellectual Property Assets owned by the Seller or used by the Seller
in
the Seller’s Business. “Seller Intellectual Property Assets” includes the Seller
Marks, Seller Software, Seller Copyrights and Seller Trade Secrets.
(iv) “Seller
Trade Secrets”
means
all material Trade Secrets owned by the Seller or used by the Seller in the
operation of the Seller’s Business.
(v) “Seller
Software”
means
all material Software owned or licensed by the Seller or used by the Seller
in
the operation of the Seller’s Business.
5.20
Insurance.
The
Seller and each of its Subsidiaries maintains insurance with financially
responsible insurers in such amounts with such deductibles and covering such
risks and losses as are in accordance with normal industry practice for
companies engaged in businesses similar to those of the Seller and its
Subsidiaries. Copies of (a) all material insurance policies maintained by Seller
and its subsidiaries and (b) all financial agreements between insurance
companies, on the one hand, and the Seller and any of its subsidiaries, on
the
other hand, have been made available to Parent. All such insurance policies
are
in full force and effect, all premiums due and payable thereunder have been
paid, and none of the Seller or any of its subsidiaries is in material default
thereunder. Neither the Seller nor any of its subsidiaries has received any
written or, to the knowledge of Seller, oral notice of cancellation or
termination with respect to any such insurance policy of the Seller or any
of
its subsidiaries. To the knowledge of the Seller, there is no material claim
pending under any such policy as to which coverage has been denied or
disputed.
5.21
Opinion
of Seller’s Financial Advisors.
The
board
of directors of the Seller has received the written opinions of each of Seller’s
Financial Advisors, to the effect that, subject to the procedures followed,
assumptions made, limitations and qualifications on the review undertaken and
other matters considered in connection with the preparation of their opinions
as
of March 31, 2007, the consideration to be received by the holders of Seller
Common Stock other than the Parent and its Affiliates in the Offer and the
Merger is fair to such holders from a financial point of view.
5.22
Schedule
14D-9; Proxy Statement; Seller Information. The
Seller represents that the Schedule 14D-9, the Information Statement and the
Proxy Statement will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and
on
the date first published, sent or given to the Seller Stockholders and, in
the
case of the Proxy Statement, on the date of the Special Meeting, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Seller with respect
to
information supplied by the Parent or the Purchaser in writing for inclusion
in
the Schedule 14D-9, the Information Statement or the Proxy
Statement.
5.23
Transactions
with Certain Persons.
No
director or officer of the Seller or any of its subsidiaries, nor, to the
knowledge of the Seller, any Affiliate or Associate of such
directors or officers, has any material interest in any material property (real
or personal, tangible or intangible) used in or pertaining to the business
of
the Seller or any of its subsidiaries.
37
5.24
No
Other Representations or Warranties. Except for the representations and
warranties of Seller contained in this Article V or otherwise in this
Agreement, neither the Seller nor any other Person on behalf of the
Seller makes
any express or implied representation or warranty with respect to the
Seller or
with respect to any other information provided to the Parent in connection
with
the transactions contemplated hereby. Neither the Seller nor any other
Person
nor any other Person on behalf of the Seller shall be held liable for
any actual
or alleged damage, liability or loss resulting from the distribution
to the
Parent, or the Parent’s use of, any such information, including any information,
documents, projections, forecasts or other material made available
to the Parent
in certain “data rooms” or management presentation in expectation of the
transaction contemplated by this Agreement, unless any such information
is
expressly included in a representation or warranty contained in this
Article
V.
6.1
Conduct
of Business Pending the Effective Time.
At
all
times from the execution of this Agreement until the Effective Time, except
as
set forth in Section
6.1
of the
Seller Letter or as expressly permitted elsewhere in this Agreement, the
Seller
shall, and shall cause each of its subsidiaries to, conduct its business
in the
ordinary course consistent with past practice and in compliance in all
material
respects with all applicable Laws and regulations and to use reasonable
best
efforts to preserve substantially intact its business organizations and
goodwill
and keep available the services of its officers and employees and preserve
the
relationships with those Persons having business dealings with the Seller.
Furthermore, the Seller agrees not to take any of the following actions
(and to
cause its subsidiaries not to take such actions) without the prior written
consent of the Parent (which will not be unreasonably delayed):
(a) amend
its
certificate of incorporation or bylaws, joint venture documents, partnership
agreements or equivalent organizational documents except as necessary to
permit
a Permitted Acquisition to occur;
(b) (A)
except (x) upon the exercise of the Seller Stock Options outstanding as
of the
date of this Agreement, (y) as approved by the Parent in writing in connection
with a Permitted Acquisition or (z) as set forth in Section
6.1(b)
of the
Seller Letter, issue, deliver, sell, pledge or otherwise encumber any shares
of
its capital stock or other equity or voting interests, or any securities
convertible into, exchangeable or exercisable for or representing the right
to
subscribe for, purchase or otherwise receive any such shares or interests
or any
stock appreciation rights, “phantom” stock rights, performance units, rights to
receive shares of its capital stock or other rights that are linked to
the value
of the Seller Common Stock or the value of the Seller or any part thereof
or (B)
effect any share split, share combination, share reclassification, reverse
share
split, share dividend, recapitalization or other similar
transaction;
(c) except
as
set forth in Section
6.1(b)
of the
Seller Letter, grant, confer or award
any
option, right, warrant, deferred stock unit, conversion right or other right
not
existing on the date hereof to acquire any of its shares of capital stock or
shares of deferred stock, restricted stock awards, stock appreciation rights,
“phantom” stock awards or other similar rights that are linked to the value of
the Seller Common Stock or the value of the Seller or any part thereof (whether
or not pursuant to existing Seller Stock Plans);
(d) (i)
except to the extent required under existing plans or arrangements set forth
in
Section 5.13(a)(i)
or
(ii)
of the
Seller Letter that were in effect on December 31, 2006, increase any
compensation or benefit (other than in the ordinary course of business
consistent with past practice to non-Key Personnel) of, or enter into or
amend
in any material respect any employment or severance agreement with (or pay
any
amounts (other than in the ordinary course of business consistent with past
practice to non-Key Personnel) under any Seller Benefit Plan or Seller Benefit
Agreement not otherwise due to) any Seller Personnel, (ii) except as set
forth in Section
6.1(d)
of the
Seller Letter, grant any bonuses, other than prior to the date of this Agreement
in the ordinary course of business consistent with past practice (including
grants of bonuses to new hires), to any Seller Personnel, (iii) adopt any
new
Seller Benefit Plan or Seller Benefit Agreement (including any stock option,
stock benefit or stock purchase plan) or amend or modify any existing Seller
Benefit Plan or Seller Benefit Agreement in any material respect, or accelerate
the vesting of any compensation (including equity-based awards) for the benefit
of any Seller Personnel or grant or amend in any material respect any award
under any Seller Benefit Plan (including the grant of any equity or equity-based
or related compensation), (iv) except as set forth in Section
6.1d)
of the
Seller Letter, provide any funding for any rabbi trust or similar arrangement,
or take any other action to fund or secure the payment of any compensation
or
benefit, (v) grant to any Seller Personnel any right to receive any
severance, change in control, retention, termination or similar compensation
or
benefits or increases therein (other than, in the case of any non-Key Personnel,
the payment of cash severance or the provision of continued welfare benefits
in
the ordinary course of business consistent with past practice), (vi) hire
or otherwise employ any individual other than non-Key Personnel who are hired
in
the ordinary course of business consistent with past practice or
(vii) terminate any Key Personnel other than for cause (including
misconduct or breach of company policy);
(e) (A)
declare, set aside or pay any dividend or make any other distribution or
payment
(whether in cash, stock or other property) with respect to any shares of
its
capital stock or other equity or voting interests (other than dividends or
distributions from a wholly owned subsidiary of the Seller to another subsidiary
of the Seller or to the Seller) or (B) directly or indirectly redeem,
purchase or otherwise acquire any of its shares of capital stock of, or other
equity or voting interest in, any of the Seller or any of its subsidiaries,
or
any options, warrants, calls or rights to acquire any such shares or other
securities, other than in connection with tax withholdings and exercise price
settlement upon (I) the exercise of the Seller Stock Options or (II) the
lapse
of restrictions on any Seller Restricted Shares, in each case, outstanding
on
the date of this Agreement;
(f) except
as
set forth in Section
6.1(f)
of the
Seller Letter, (A) sell, lease, sublease or license (including through a lease,
sublease or license) or otherwise dispose of any material assets or properties
or any of the capital stock of or other equity interests in any of its
subsidiaries or (B) mortgage or pledge any of its property or assets or subject
any such property or assets to any security interest or Encumbrance, other
than,
in the case of both (A) and (B), in the ordinary course of business consistent
with past practice;
(g) except
with respect to ordinary course contracts with clients, customers, vendors
or
suppliers of the Seller, enter into, or amend or terminate any Seller Contract
or any lease or sublease (excluding contracts with respect to capital
expenditures, which are governed by clause (h) below); provided
that in
no event shall the Seller enter into any procurement contracts which requires
or
involves the payment by the Seller or any of its subsidiaries of more than
$1,000,000 individually
or $5,000,000 in the aggregate;
(h) make
or
commit to make capital expenditures in excess of $2,500,000 in the aggregate
or
$500,000 individually;
(i) except
for any Permitted Acquisition, (A) merge with, enter into a consolidation with
or acquire a material interest in any Person or acquire a substantial portion
of
the assets or business of any Person or any division or line of business thereof
or (B) otherwise acquire (including, through leases, subleases and licenses
of
real property) any assets, except, in the case of this clause (B), in the
ordinary course of business consistent (in type and manner) with past practice;
provided
that no
acquisitions that make it more difficult to obtain any approval or authorization
required in connection with the transactions contemplated hereby under any
Regulatory Law or that would reasonably be expected to prevent, delay, or impede
consummation of the transactions contemplated hereby shall be permitted without
consent;
(j) write
down or write up or fail to write down or write up the value of any receivables
or revalue any assets of the Seller other than in the ordinary course of
business and in accordance with GAAP;
(k) create,
incur or assume any indebtedness for borrowed money (including refinancing
or
modifying any existing indebtedness), assume, guarantee, endorse or otherwise
become liable or responsible (whether, directly, contingently or otherwise)
for
the indebtedness of another Person, enter into any agreement to maintain any
financial statement condition of another Person or enter into any arrangement
having the economic effect of any of the foregoing, except for (A) letters
of
credit or replacement letters of credit entered into in the ordinary course
of
business and consistent with past practice under the Seller’s existing debt
facility; (B) any indebtedness solely involving the Seller and/or any of its
direct or indirect wholly owned subsidiaries or (C) purchase money debt, capital
leases or guarantees in the ordinary course of business not involving
indebtedness of more than $250,000 individually or $1,000,000 in the
aggregate;
(l)
change
any of its methods, principles or practices of financial accounting currently
in
effect other than as required by GAAP;
(m) (i)
modify or amend in a manner that is adverse in a material respect to the Seller
or any of its subsidiaries, or accelerate, terminate or cancel, any material
Contract, (ii) enter into, amend or modify any agreement or arrangement
with Persons that are Affiliates or are executive officers or directors of
the
Seller, (iii) enter into any Contract not in the ordinary course of business
other than as approved in writing by the Parent in connection with a Permitted
Acquisition or (iv) enter into, extend or renew any Contract which, if executed
prior to the date of this Agreement, would have been required to be disclosed
pursuant to Section 5.15(iv), (v), (vi), (vii), (x), (xii) or (xv);
(n) authorize,
recommend, propose or announce an intention to adopt a plan of complete or
partial liquidation or dissolution of the Seller or any of its
subsidiaries;
(o) except
in
connection with any Permitted Acquisition, form any subsidiary;
(p) engage
in
(i) any trade loading practices or any other promotional sales or discount
activity with any customers or distributors with the effect of accelerating
to
prior fiscal quarters (including the current fiscal quarter) sales to the trade
or otherwise that would otherwise be expected to occur in subsequent fiscal
quarters, (ii) any practice which would have the effect of accelerating to
prior
fiscal quarters (including the current fiscal quarter) collections of
receivables that would otherwise be expected to be made in subsequent fiscal
quarters, (iii) any practice which would have the effect of postponing to
subsequent fiscal quarters payments by the Seller or any of its subsidiaries
that would otherwise be expected to be made in prior fiscal quarters (including
the current fiscal quarter) or (iv) any other promotional sales or discount
activity, in each case in this clause (iv) in a manner outside the ordinary
course of business or inconsistent with past practice;
(q) knowingly
take or fail to take any action in breach of this Agreement for the purpose
of
(or which would be reasonably expected to) materially delaying or preventing
the
consummation of the transactions contemplated hereby (other than as required
by
law); and
(r)
authorize
any of, or commit, resolve or agree to take any of, the foregoing actions or
any
other action inconsistent with the foregoing.
(a) The
Seller and each of its subsidiaries will promptly notify the Parent of any
suit,
claim, action, investigation, proceeding or audit pending against or with
respect to the Seller or any of its subsidiaries in respect of any Tax and
will
not settle or compromise any such suit, claim, action, investigation, proceeding
or audit or enter into any material closing agreement that could adversely
affect Parent’s Tax liability without the Parent’s prior written
consent.
(b) Except
as
required by applicable Tax law or with the Parent’s prior written consent, none
of the Seller or any of its subsidiaries will (i) make or change any material
Tax election, (ii) file any material amended Tax Return, (iii) agree to any
material adjustment of any Tax attribute, (iv) change (or make a request
to any
taxing authority to change) any of its methods of reporting income or deductions
for federal income Tax purposes, (v) file any claim for a material refund
of
Taxes, or (vi) consent to any extension or waiver of the limitation period
applicable to any material Tax claim or assessment that could adversely affect
Parent’s Tax liability.
(c) The
Seller and each of its subsidiaries will retain all books, documents and
records
necessary for the preparation of Tax Returns and reports.
(d) The
Seller shall deliver to the Purchaser at or prior to the expiration of the
Offer
a certificate, in form and substance satisfactory to the Purchaser, duly
executed and acknowledged, certifying that the Seller has not been a U.S. real
property holding corporation within the meaning of Section 897(c)(2) of the
Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
6.3
Litigation. The
Seller shall give the Parent the opportunity to participate at the Parent’s
expense in any litigation against the Seller or its directors relating to
this
Agreement or the Offer, the Merger or the other transactions contemplated
by
this Agreement, and shall obtain the prior written consent of the Parent
prior
to settling or satisfying any such claim, it being understood and agreed
that
this Section
6.3
shall
not give the Parent the right to direct such defense.
(a) The
parties hereto shall cooperate with each other and use reasonable best efforts
to promptly (i) prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings as soon as reasonably practicable,
to obtain as promptly as reasonably practicable all permits, consents,
approvals, authorizations and clearances, including under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act (the “HSR
Act”)
of all
third parties and Governmental Authorities which are necessary or advisable
to
consummate the transactions contemplated by this Agreement (including each
of
the Offer and the Merger), and to comply with the terms and conditions of
all
such permits, consents, approvals and authorizations of all such third parties
and Governmental Authorities; (ii) defend any lawsuits or other legal
proceedings (other than those brought by a Governmental Authority) challenging
this Agreement or the consummation of the transactions contemplated by this
Agreement; and (iii) execute and deliver any additional instruments necessary
to
consummate the transactions contemplated by this Agreement. The parties further
agree to use reasonable best efforts to offer to take, or cause to be taken,
all
other actions and do, or cause to be done, all other things necessary, proper
or
advisable to consummate and make effective the transactions contemplated
by this
Agreement, including taking all such further action as reasonably may be
necessary to resolve such objections, if any, as the United States Federal
Trade
Commission, the Antitrust Division of the United States Department of Justice,
state antitrust enforcement authorities or competition authorities of any
other
nation or other jurisdiction or any other Person may assert under Regulatory
Law
(as hereinafter defined) with respect to the transactions contemplated by
this
Agreement, and to avoid or eliminate each and every impediment under any
law
that may be asserted by any Governmental Authority with respect to the
transactions contemplated by this Agreement so as to enable the Merger to
occur
as promptly as reasonably practicable. Notwithstanding the foregoing or any
other provision of this Agreement to the contrary, (i) in no event shall
the
Parent or the Purchaser be obligated to, and the Seller and its subsidiaries
shall not without the prior written consent of the Parent, agree or proffer
to
divest or hold separate, or enter into any licensing or similar arrangement
with
respect to, any assets (whether tangible or intangible) or any portion of
any
business of the Parent, the Purchaser, the Seller or any of their subsidiaries
and (ii) in no event shall the Parent or any of its subsidiaries be obligated
to
litigate or participate in the litigation of any action, suit,
claim or proceeding seeking to (A) make illegal or otherwise prohibit or
materially delay
consummation
of the Offer or the Merger, (B) restrict, prohibit or limit the ownership
or
operation by the Parent or the Purchaser or their subsidiaries of all or
any
portion of the business or assets of the Seller or any of their respective
subsidiaries or compel the Parent or the Purchaser or their subsidiaries
or any
of their respective subsidiaries to dispose of or hold separately all or
any
portion of the business or assets of the Parent or the Purchaser or the
Seller
or any of their respective subsidiaries, or impose any limitation, restriction
or prohibition on the ability of the Parent or the Purchaser or their
subsidiaries to conduct its business or own such assets, (C) impose limitations
on the ability of the Parent or the Purchaser or their subsidiaries effectively
to acquire, hold or exercise full rights of ownership of the shares of
Seller
Common Stock, including the right to vote any shares of Seller Common Stock
acquired or owned by the Purchaser or the Parent or their subsidiaries
pursuant
to the Offer on all matters properly presented to the Seller Stockholders,
or
(D) require divestiture by the Parent or the Purchaser or their subsidiaries
of
any shares of Seller Common Stock. For purposes of this Agreement, “Regulatory
Law”
means
the ▇▇▇▇▇▇▇ Act of 1890, the ▇▇▇▇▇▇▇ Antitrust Act of 1914, the HSR Act,
the
Federal Trade Commission Act of 1914 and all other federal, state or foreign
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines and other laws, including any antitrust, competition or trade
regulation laws that are designed or intended to (i) prohibit, restrict
or
regulate actions having the purpose or effect of monopolization or restraint
of
trade or lessening competition through merger or acquisition or (ii) protect
the
national security or the national economy of any
nation.
(b) Subject
to and in
furtherance of this Section 7.1,
the
Parent and the Seller shall have the right to review in advance, and, to
the
extent practicable, each will consult the other on, in each case subject
to
applicable Laws relating to the exchange of information, (i) in the case of
the Parent, all the information relating to the Seller and any of its
subsidiaries which appear in, and (ii) in the case of the Seller, all the
information relating to the Parent and any of its subsidiaries which is required
to complete, any filing made with, or written materials submitted to, any
third
party or any Governmental Authority in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of
the
parties hereto shall act reasonably and as promptly as reasonably practicable.
The parties hereto agree that they will consult with each other with respect
to
the obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Authorities necessary or advisable to consummate
the transactions contemplated by this Agreement and each party will keep
the
other apprised of the status of matters relating to completion of the
transactions contemplated herein.
(c)
The
Parent and the Seller shall (i) promptly advise each other of (and the Parent
or
the Seller shall so advise with respect to communications received by any
Subsidiary or Affiliate of the Parent or the Seller, as the case may be) any
written or oral communication from any Governmental Authority or third party
whose consent or approval is required for consummation of the transactions
contemplated by this Agreement; (ii) to the extent practicable, not participate
in any substantive meeting or discussion with any Governmental Authority in
respect of any filing, investigation, or inquiry concerning this Agreement
or
the transactions contemplated by this Agreement unless it consults with the
other party in advance, and, to the extent permitted by such Governmental
Authority, gives the other party the opportunity to attend; and (iii) promptly
furnish the other party with copies of all correspondences, filings, and written
communications between them and their Subsidiaries and representatives, on
the
one hand, and any Governmental Authority or its respective staff, on the other
hand, with respect to this Agreement and the transactions contemplated by this
Agreement, except that materials may be redacted (x) to remove references
concerning the valuation of the businesses of the Seller, (y) as necessary
to
comply with contractual arrangements, and (z) as necessary to address reasonable
privilege or confidentiality concerns. Neither the Parent nor the Seller shall
consent to any voluntary extension of any statutory deadline or waiting period
or to any voluntary delay of the consummation of the transactions contemplated
by this Agreement at the behest of any Governmental Authority without the
consent of the other party, which consent shall not be unreasonably withheld
or
delayed.
(d) The
Seller agrees and acknowledges that, notwithstanding anything to the contrary
in
this Section 7.1,
in
connection with any filing or submission required, action to be taken or
commitment to be made by the Seller, the Parent, or any of their respective
subsidiaries to consummate the transactions contemplated by this Agreement,
neither the Seller nor any of the Seller’s subsidiaries shall, without the
Parent’s prior written consent, sell, divest, or dispose of any assets, commit
to any sale, divestiture or disposal of businesses, product lines, or assets
of
the Seller and the Seller’s subsidiaries or take any other action or commit to
take any action that would limit the Seller’s, the Parent’s or any of their
respective subsidiaries’ freedom of action with respect to, or their ability to
retain any of, their businesses, product lines or assets or the Seller;
provided
that the
foregoing shall not relieve any party of its obligations under this
Agreement.
(e) In
furtherance of Section 7.1(a),
each of
the Seller and its board of directors shall (i) take all actions necessary
to
ensure that no state takeover statute or similar statute or regulation is or
becomes applicable to this Agreement or any of the Offer, the Merger and the
other transactions contemplated by this Agreement and (ii) if any state takeover
statute or similar statute or regulation is or becomes applicable to this
Agreement or any of the Offer, the Merger and the other transactions
contemplated by this Agreement, take all actions necessary to ensure that the
Offer, the Merger and the other transactions contemplated by this Agreement
may
be consummated as promptly as reasonably practicable on the terms contemplated
hereby and otherwise to minimize the effect of such statute or regulation on
this Agreement, the Offer, the Merger and the other transactions contemplated
by
this Agreement.
(a) Notwithstanding
any provision of this Agreement to the contrary, the Seller agrees that,
except
as otherwise provided in Section 7.2,
neither
it nor any of its subsidiaries shall, and that it shall not authorize or
permit
any of its or its subsidiaries’ directors, officers, employees, affiliates,
agents, investment bankers, financial advisors, attorneys, accountants,
brokers,
finders, consultants or representatives (collectively, “Representatives”)
to,
directly or indirectly, (i) solicit, initiate, knowingly encourage or knowingly
facilitate (including by way of furnishing or disclosing nonpublic information
or permitting access to personnel or facilities) any inquiries, proposals,
or
the making of any offers (including any offers to the Seller Stockholders)
with
respect to any Acquisition Proposal, (ii) participate in any discussions
or
negotiations with, or provide any information to, any Person (other than
the
Parent) with respect to, or that reasonably may be expected to lead to,
an
Acquisition Proposal, (iii) enter into any agreement providing for an
Acquisition Proposal, or (iv) approve or recommend or consummate an Acquisition
Proposal.
(b) Notwithstanding
Section
7.2(a),
the
Seller or its Representatives may furnish or cause to be furnished nonpublic
information to, and negotiate or otherwise engage in discussions with, any
Person that has made, after the date of this Agreement, a
bona
fide
written
unsolicited Acquisition Proposal if and only to the extent that (i) the
Acceptance Date has not occurred, (ii) the board of directors of the Seller
determines in good faith, after consultation with its financial advisor,
that
such Acquisition Proposal is, or is reasonably likely to lead to, a Superior
Proposal, (iii) prior to furnishing any nonpublic information to such Person,
the Seller shall enter into a confidentiality agreement with such Person
that
contains confidentiality and other provisions that are substantially similar
to
and no less favorable to Seller than the Confidentiality Agreement dated
as of
December 7, 2006 by and between the Parent and Seller (the “Confidentiality
Agreement”)
and
(iv) such Acquisition Proposal did not result from the breach of this
Section
7.2;
provided,
however,
that
Seller shall promptly provide the Parent with any nonpublic information provided
to any third party under this Section
7.2(b)
if such
information has not previously been provided to the Parent.
(c) Upon
execution of this Agreement, the Seller shall cease immediately and cause to
be
terminated any and all existing activities, discussions or negotiations with
any
parties conducted heretofore with respect to, or that may reasonably be expected
to lead to, an Acquisition Proposal and promptly request that all confidential
information with respect thereto furnished on behalf of the Seller be returned
or destroyed. The Seller shall not modify, amend or terminate, or waive, release
or assign any material rights or claims with respect to, any confidentiality
or
standstill provision entered into with any third party.
(d) Except
as
otherwise provided in Section
7.2(e),
neither
the board of directors of the Seller nor any committee of the board of directors
of the Seller may take, or resolve or agree to take, any of the following
actions: (i) withdraw, qualify or modify in a manner adverse to the Parent
the
Seller Recommendations (or propose publicly to do so), or fail to reaffirm
the
Seller Recommendations within five (5) Business Days following a request by
the
Parent or recommend or propose publicly to approve or recommend an Acquisition
Proposal (any of the foregoing, including if effected by amendment to the
Schedule 14D-9, an “Adverse
Recommendation Change”),
(ii)
authorize or permit the Seller or any of its subsidiaries to enter into any
agreement (each, an “Acquisition
Agreement”)
relating to, or that would reasonably be expected to lead to, an Acquisition
Proposal (other than a Confidentiality Agreement in compliance with Section
7.2(b)) or (iii) approve any Acquisition Proposal or resolve or agree to do
so.
(e) Notwithstanding
Section
7.2(d),
at any
time prior to the purchase of any share of Seller Common Stock into the Offer,
the board of directors of the Seller may make an Adverse Recommendation Change
if the board of directors of the Seller determines in good faith after
consultation with outside legal counsel that failure to take such action
would
be inconsistent with the directors’ fiduciary duties to the Seller or its
Stockholders under applicable Law; provided,
however,
that
(I) such action may only be taken at a time that is after the fourth
(4th) Business Day following the Parent’s receipt of written notice from
the Seller that the board of directors of the Seller will take such action
(which notice will specify the material terms of any applicable Acquisition
Proposal) (such notice, an “Adverse
Recommendation Change Notice”)
and
(II) at the end
of
such period, the board of directors of the Seller determines in good faith,
after taking into account all amendments or revisions irrevocably committed
to
by the Parent and after consultation with its financial advisors, that such
Acquisition Proposal remains a Superior Proposal relative to the Transaction,
as
supplemented by any Counterproposal (an “Adverse
Recommendation Change Determination”)
(it is
agreed that if the third party making the Acquisition Proposal referred to
in
this sentence modifies a material term of its proposal, the four (4) Business
Day period referred to in this sentence shall recommence). During any such
four
(4) Business Day period, the Parent shall be entitled to deliver to the Seller
a
counterproposal to such Acquisition Proposal (a “Counterproposal”)
and
the Seller shall in good faith negotiate such Counterproposal with the Parent.
If an Adverse Recommendation Change Determination is not made at the end
of such
four (4) Business Day period, the Adverse Recommendation Change Notice shall
be
deemed withdrawn. If the board of directors of the Seller makes an Adverse
Recommendation Change in favor of a Superior Proposal at the end of the four
(4)
Business Day period referred to in the first sentence of this Section 7.2(e),
the parties hereby agree that, subject to compliance with this
Section 7.2(e) and in order to enable such board of directors to be
sufficiently comfortable that the Superior Proposal resulting in such Adverse
Recommendation Change will remain available to the Seller when and if this
Agreement is terminated, the Seller may enter into a binding agreement with
the
Person making such Superior Proposal, which agreement (x) may provide that
such Person is obligated, on behalf of the Seller, to make the payment required
to be made by the Seller pursuant to the relevant provisions of Section 9.2(b)
of this Agreement upon the termination of this Agreement and (y) may attach
as an exhibit thereto a fully negotiated and executed agreement and plan
of
merger (a “Conditional
Merger Agreement”)
relating to such Superior Proposal providing that such Conditional Merger
Agreement is binding on the Seller and the Person making such Superior Proposal
at that time, but will only become effective on and after (and in no event
before) both the (i) termination of this Agreement in accordance with its
terms
and (ii) the payment by such Person of the fee required to be paid under
Section
9.2(b) on behalf of the Seller to the Parent hereto. Notwithstanding the
foregoing, the parties further agree that in the circumstances described
in the
immediately preceding sentence, until the termination of this Agreement in
accordance with its terms, (1) in no event may the Seller make any SEC or
other
regulatory filings in connection with the transactions contemplated by such
letter agreement and Conditional Merger Agreement until the termination of
this
Agreement except as required by Law or permitted under Section 7.2(g), and
(2)
the Seller shall otherwise remain subject to all of its obligations under
this
Agreement (including Section 7.1 and this
Section 7.2).
(f) From
and
after the execution of this Agreement, the Seller shall notify the Parent
as
promptly as practicable (but in any event within twenty-four hours) of the
receipt, directly or indirectly, of any inquiries, discussions, negotiations,
proposals or expressions of interest with respect to, or that may reasonably
be
expected to lead to, an Acquisition Proposal (including a copy of such
Acquisition Proposal and a summary of the material terms and conditions thereof,
including price, and the identity of the Person or Persons involved). Commencing
upon the provision of any notice referred to above, (A) once, and not more
than
once, each day at mutually reasonably agreeable times, the Seller (or its
outside counsel) shall, in person or by telephone, provide the Parent (or
its
outside counsel) a summary of the progress of negotiations concerning any
Acquisition Proposal and the material resolved or unresolved issues (including
the positions of the parties to such negotiations on such issues) related
thereto, including material amendments or proposed amendments as to price
and
other material terms of any
such
Acquisition Proposal and (B) the Seller shall, promptly upon receipt or delivery
thereof, provide the Parent (or its outside counsel) with copies of all drafts
and final versions (and any comments thereon) of agreements (including schedules
and exhibits thereto) relating to any such Acquisition Proposal exchanged
between the Seller or any of its Representatives, on the one hand, and the
person making an Acquisition Proposal or any of its Representatives, on the
other hand.
(g) Nothing
in this
Section
7.2
shall
prohibit the Seller from complying with Rule 14e-2 or Item 1012(a) of Regulation
M-A promulgated under the Exchange Act with regard to an Acquisition Proposal
if, in the good faith judgment of the board of directors of the Seller, after
consultation with its outside counsel, doing so would be inconsistent with
its
obligations under applicable Laws (it being understood that any such disclosure
made in order to so comply may constitute an Adverse Recommendation Change
under
Section 7.2(d)). The Seller shall provide the Parent with a copy of the
text of any disclosure proposed to be made in order to so comply at the earliest
reasonably practicable time in advance of such disclosure.
(h) For
the
purposes of this Agreement, “Superior
Proposal”
shall
mean any
bona
fide
binding
unsolicited written Acquisition Proposal made by any party (other than the
Parent and its subsidiaries) that did not result from a breach of this
Section 7.2,
if
consummated, would result in such third party (or in the case of a direct merger
between such third party and the Seller, the stockholders of such third party)
acquiring, directly or indirectly, more than 50% of the voting power of the
Seller Common Stock or all or substantially all the assets of the Seller and
its
subsidiaries, taken as a whole, and that the board of directors of the Seller
determines in good faith, after consultation with its financial advisor, to
be
more favorable to the Stockholders than the transactions contemplated by this
Agreement from a financial point of view, taking into account all financial,
regulatory, legal and other aspects of such Acquisition Proposal, including
the
likelihood of consummation.
(i) For
purposes of this Agreement, “Acquisition
Proposal”
means
any proposal or offer for a direct or indirect (i) merger, tender offer,
exchange offer, binding share exchange, recapitalization, reorganization,
liquidation, dissolution, business combination or consolidation, or any similar
transaction, involving the Seller or one or more subsidiaries thereof, (ii)
sale, lease exchange, mortgage, pledge, transfer or other acquisition or
assumption of 15% or more of the fair value of the assets of the Seller and
subsidiaries, taken as a whole, in one or a series of related transactions,
or
(iii) purchase, tender offer, exchange offer or other acquisition (including
by
way of merger, consolidation, share exchange or otherwise) of beneficial
ownership (the term “beneficial ownership” for purposes of this Agreement having
the meaning assigned thereto in Section 13(d) of the Exchange Act and the rules
and regulations thereunder) of securities representing fifteen percent (15%)
or
more of the voting power of the Seller; provided,
however,
that
the term “Acquisition
Proposal”
shall
not include the Transaction or the other transactions contemplated
hereby.
(j) It
is
agreed that any violation of the restrictions set forth in this Section
7.2
by any
Representative of the Seller or any of its subsidiaries shall be deemed to
be a
breach of this Section
7.2
by the
Seller.
(a) Upon
reasonable notice and subject to applicable laws relating to the exchange
of
information, the Seller, shall, and shall cause each of its Subsidiaries
to,
afford to the officers, employees, accountants, counsel and other
representatives of the Parent, reasonable access, during normal business
hours
during the period prior to the Effective Time, to all of its properties,
books,
contracts, commitments and records. The Seller also shall provide the Parent
with reasonable access to the Seller’s officers, employees and agents. Neither
the Seller nor any of its subsidiaries shall be required to provide access
to or
to disclose information where such access or disclosure would contravene
any
law, rule, regulation, order, judgment, decree, or binding agreement entered
into prior to the date of this Agreement or would reasonably be expected
to
violate or result in a loss or impairment of any attorney-client or work
product
privilege. The parties hereto will use reasonable best efforts to make
appropriate substitute disclosure arrangements under circumstances in which
the
restrictions of the preceding sentence apply. No investigation by the Parent
or
any of its officers, employees, accountants, counsel and other representatives
and no receipt of information by the Parent or any of its officers, employees,
accountants, counsel and other representatives shall operate as a waiver
or
otherwise affect any representation or warranty of the Seller or any covenant
or
other provision in this Agreement (other than as otherwise expressly specified
in this Agreement with respect to the Seller Letter).
47
(b) With
respect to all information furnished by the Seller to the Parent or its
representatives under this Agreement, the parties shall comply with, and
shall
cause their respective representatives to comply with, all of their respective
obligations under the Confidentiality Agreement.
(a) Provision
of Benefits.
For the
period commencing at the Effective Time and ending on December 31, 2007,
the
Parent agrees to cause the Surviving Corporation to maintain the compensation
levels, including base salary, annual cash incentive opportunities (but
not
particular historic levels of achievement), retirement, health and welfare
benefits, but not any stock-based benefits, for the employees of the Seller
who
remain employed after the Effective Time (the “Seller
Employees”)
at
levels which are, in the aggregate, comparable to those in effect for the
Seller
Employees on the date hereof; provided
that
neither the Parent nor the Surviving Corporation nor any of their Subsidiaries
shall have any obligation to maintain any plans or arrangements providing
for
stock-based or stock-related compensation or benefits; provided further,
that no
such plans or arrangements of the Seller or any of its subsidiaries shall
be
taken into account in determining whether compensation levels are comparable
in
the aggregate. The Parent will treat, and cause the applicable benefit
plans to
treat, the service of the Seller Employees with the Seller or any subsidiary
of
the Seller attributable to any period before the Effective Time as service
rendered to the Parent or any Subsidiary of the Parent (i) for purposes
of
eligibility for vacation under the Parent’s vacation program, (ii) for purposes
of eligibility and participation under any health or welfare plan maintained
by
the Parent (other than any post-employment health or post-employment welfare
plan) and (iii) for purposes of eligibility and vesting under the Parent’s
defined contribution plans (in the case of each of clauses (i), (ii) and
(iii),
solely to the extent that the Parent makes such plan or program of the
Parent
available to the Seller Employees and not in any case where credit would
result
in duplication of benefits for the same period of service). Without limiting
the
foregoing, to the extent that any Seller Employee participates in any health
or
other group welfare benefit plan of the Parent following the Effective
Time,
(A) the Parent shall cause any pre-existing conditions or limitations,
eligibility waiting periods or required physical examinations under any
health
or similar welfare plan of the Parent to be waived with respect to the
Seller
Employees and their eligible dependents, to the extent waived under the
corresponding plan in which the Seller Employee participated immediately
prior
to the Effective Time, and (B) any deductibles paid by Seller Employee
under any of the Seller’s or its Subsidiaries’ health plans in the plan year in
which the Effective Time occurs shall be credited towards deductibles under
the
health plans of the Parent or any Subsidiary of the Parent. The Parent
will use
reasonable efforts to make appropriate arrangements with its insurance
carrier(s) to ensure such result.
(b) Continuation
of
Plans.
The
Parent shall have sole discretion with respect to the determination as to
whether or when to terminate, merge or continue any employee benefit plans
and
programs of the Seller; provided,
however,
that
the Parent shall continue to maintain the Seller’s 401(k) Retirement Plan and
the Seller’s group welfare benefit plans until the Seller Employees are
permitted to participate in the corresponding similar plans of the Parent
or any
Subsidiary of the Parent in accordance with Section 7.4(a).
(c) Continuation
of Employment.
Without
limiting the scope of Section 10.9,
no
provision of this Section 7.4
shall
create any third-party beneficiary rights in any employee or former employee
(including any beneficiary or dependent thereof) of the Seller or any subsidiary
of the Seller in any respect, including in respect of continued employment
(or
resumed employment) with the Parent, the Surviving Corporation or any of the
Parent’s Subsidiaries, and no provision of this Section 7.4
shall
create such rights in any such Persons in respect of any benefits that may
be
provided, directly or indirectly, under any Seller Benefit Plan, Seller Benefit
Agreement, or any employee program or any plan or arrangement of the Parent
or
any of its subsidiaries. No provision of this Agreement shall constitute a
limitation on the rights to amend, modify or terminate after the Effective
Time
any such plans or arrangements of the Parent, the Seller or any of their
respective Subsidiaries.
(a) The
Parent agrees that any rights to indemnification or exculpation now existing
in
favor of the directors or officers of the Seller and the directors or officers
of the Seller’s Subsidiaries (the “Indemnified
Parties”
and,
each, an “Indemnified
Party”)
as
provided in their respective organizational documents, in effect as of the
date
hereof and the indemnification agreements set forth in Section 7.5
of the
Seller Letter, with respect to matters occurring at or prior to the Acceptance
Date shall survive the Merger (and with respect to the Seller, shall be
reflected in the applicable organizational documents of such entity) and
shall
continue in full force and effect until the expiration of the applicable
statute
of limitations. During such period, the Parent shall not, nor shall it permit
the Surviving Corporation to, amend, repeal or otherwise modify such provisions
for indemnification in any manner that would materially and adversely affect
the
rights thereunder of individuals who at any time on or prior to the Acceptance
Date were directors or officers of the Seller or directors or officers of
any
Subsidiary of the Seller in respect of actions or omissions occurring at
or
prior to the Acceptance Date (including the transactions contemplated by
this
Agreement), unless such modification is required by law; provided,
however,
that in
the event any claim or claims are asserted or made either prior to the
Acceptance Date or the expiration of the applicable statute of limitations,
all
rights to indemnification in respect of any such claim or claims shall continue
until disposition of any and all such claims.
49
(b) At
or
prior to the Effective Time, the Seller shall purchase a “tail” directors’ and
officers’ liability insurance policy for the Seller and its directors and
officers in a form reasonably acceptable to the Parent that shall provide
such
directors and officers with coverage for six (6) years following the Effective
Time of not less than the existing coverage and have other terms not materially
less favorable to the insured Persons (including the Seller) than the directors’
and officers’ liability insurance coverage presently maintained by the Seller;
provided that
the
aggregate cost of such policy shall not exceed 350% of the annual premium
paid
by the Seller for its existing directors’ and officers’ liability insurance
coverage (the “Premium
Limit”),
which
350% amount the Seller represents and warrants to be equal to $1,522,500,
and in
the event that the Premium Limit is insufficient for such coverage, the
Seller
shall purchase the maximum amount of coverage that is available for such
amount.
The Parent shall, and shall cause the Surviving Corporation to, maintain
such
policy in full force and effect, and continue to honor the obligations
thereunder.
(c) The
obligations under this Section 7.5
shall
not be terminated or modified in such a manner as to adversely affect any
indemnitee to whom this Section 7.5
applies
without the consent of such affected indemnitee. It is expressly agreed
that the
indemnitees to whom this Section 7.5
applies
shall be third party beneficiaries of this Section 7.5
and
shall be entitled to enforce the covenants contained herein.
(d) In
the
event the Parent or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other Person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially
all
of its properties and assets, then, and in each such case, to the extent
necessary, proper provision shall be made so that the successors and assigns
of
the Parent and the Surviving Corporation, as the case may be, assume the
obligations set forth in this Section 7.5.
7.6
Additional
Agreements.
In
case
at any time after the Acceptance Date (including after the Effective Time)
any
further action is necessary or desirable to carry out the Transaction or
to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the Merger,
the
proper officers and directors of each party to this Agreement and their
respective subsidiaries shall take all such necessary action as may be
reasonably requested by, and at the sole expense of, the Parent.
7.7
Advice
of Changes.
The
Parent and the Seller shall each promptly notify the other party of any
change
or event having a Parent Material Adverse Effect or a Seller Material
Adverse
Effect, as the case may be, or which it believes would otherwise be reasonably
likely to cause or constitute a material breach of its representations,
warranties or covenants contained herein; provided,
however,
that
the delivery of any notice pursuant to this Section
7.7
shall
not limit or otherwise affect the remedies available hereunder to the
party
receiving such notice.
50
7.8
Publicity.
The
parties agree that the initial press release to be issued with respect
to the
transactions contemplated by this Agreement shall be in the form heretofore
agreed to by the parties. The Parent and the Purchaser, on the one
hand, and the
Seller, on the other hand, shall, to the extent reasonably practicable,
consult
with each other before making, and give each other a reasonable opportunity
to
review and comment upon, any press release or other public statements
with
respect to this Agreement, the Offer, the Merger and the other transactions
contemplated by this Agreement, and shall not issue any such press
release or
make any such public statement prior to such reasonably practicable
consultation, except as may be required by applicable Law, court process
or by
obligations pursuant to any listing agreement with any national securities
exchange or national securities quotation system. The parties agree
that all
formal Seller employee communication programs or announcements with
respect to
the transactions contemplated by this Agreement shall be in the forms
mutually
agreed to by the parties (such agreement not to be unreasonably withheld
or
delayed).
7.9
Rule
16b-3 Actions. Promptly
after the date hereof and prior to the Expiration Date, the Seller
shall take
all such steps as may be required to cause any dispositions of shares
of Seller
Common Stock (including derivative securities with respect to Seller
Common
Stock) resulting from the transactions contemplated by this Agreement
by each
individual who is subject to the reporting requirements of Section
16(a) of the
Exchange Act with respect to the Seller to be exempt under Rule 16b-3
promulgated under the Exchange Act, to the extent permitted by applicable
Law.
7.10
Rule
14d-10 Matters.
(a)
Notwithstanding anything in this Agreement to the contrary, the Seller
and its
Subsidiaries will not, after the date hereof, enter into, establish,
amend or
modify any plan, program, agreement or arrangement pursuant to which
compensation is paid or payable, or pursuant to which benefits are
provided, in
each case to any Seller Personnel unless, prior to such entry into,
establishment, amendment or modification, the Seller Compensation Committee
shall have taken all such steps as may be necessary to (i) approve
as an
Employment Compensation Arrangement each such plan, program, agreement
or
arrangement and (ii) satisfy the requirements of the non-exclusive
safe harbor
under Rule 14d-10(d)(2) under the Exchange Act with respect to such
plan,
program, agreement, arrangement, understanding, payment or
benefit.
(b) In
the
event that, during the period beginning on the date of this Agreement and
ending
not less than five days prior to Expiration Date, the Parent requests that
the
Seller Compensation Committee consider whether any plan, program, agreement
or
arrangement that the Parent would like to enter into, establish, amend or
modify
pursuant to which compensation is paid or payable, or pursuant to which benefits
are provided, in each case to any Seller Personnel (each such plan, program,
agreement or arrangement, a “Post-Signing
Arrangement”),
would
constitute an Employment Compensation Arrangement and provides the Seller
with
such information with respect to such Post-Signing Arrangement as the Seller
may
reasonably request, the Seller Compensation Committee will promptly, and
in any
event prior to the Expiration Date, consider such Post-Signing Arrangement
at a
meeting duly called and held. In the event that, following such consideration,
the Seller Compensation Committee believes in good faith that such Post-Signing
Arrangement constitutes an Employment Compensation Arrangement, at such meeting
the Seller Compensation Committee shall take all such steps as may be necessary
to (i) approve as an Employment Compensation Arrangement such plan, program,
agreement or arrangement and (ii) satisfy the requirements of the non-exclusive
safe harbor under Rule 14d-10(d)(2) under the Exchange Act with respect to
such
plan, program, agreement, arrangement, understanding, payment or
benefit.
(c) At
the
time of any action by the Seller Compensation Committee described in this
Section 7.10,
each
member of the Seller Compensation Committee shall be an “independent director”
in accordance with the requirements of Rule 14d-10(d)(2) under the Exchange
Act.
7.11
Retention
Agreements. The
Seller shall use its reasonable best efforts to, prior to the Acceptance
Date,
cause each of the employees of the Seller and its subsidiaries listed on
Exhibit
A
to this
Agreement to enter into a Retention Letter Agreement with the Parent on terms
and conditions reasonably acceptable to the Parent.
7.12
2006
Financial Statements.
The
Seller shall use its reasonable best efforts to, prior to the Acceptance
Date,
deliver to the Parent (i) the 2006 Financial Statements, accompanied by the
audit report of Ernst & Young LLP, independent public accountants for the
Seller, which audit report shall be without qualification or exception and
without qualification or exception as to the scope of the audit and (ii)
a
certificate from the Chief Executive Officer and the Chief Financial Officer
of
the Seller containing the information, as of March 31, 2007, required to be
included in management’s report on internal control over financial reporting by
Item 308 of Regulation S-K under the Exchange Act, which certificate shall
state
that there are no “material weaknesses” in the internal control over financial
reporting of the Seller, and the related attestation report of Ernst & Young
LLP required by Item 308(b) of Regulation S-K under the Exchange Act. The
Seller
shall, and shall cause each of its subsidiaries to, afford to the Parent
full
access to all Persons involved in the preparation or audit of the 2006 Financial
Statements and the preparation of the management’s report and related
attestation referred to in clause (ii) of the first sentence of this Section
7.12. The Seller shall use its reasonable best efforts to cause the Parent
to be
afforded with full access (subject to the execution of customary release
letters) to the Seller’s independent auditor’s workpapers.
8.1
Conditions.
The
respective obligations of the Parent, the Purchaser and the Seller to consummate
the Merger are subject to the satisfaction, at or before the Closing Date,
of
each of the following conditions:
(a) Stockholder
Approval.
The
Seller Stockholder Approval shall have been obtained if required by applicable
Laws.
(b) Purchase
of Common Shares.
The Purchaser shall have accepted for payment and paid for shares of
Seller Common Stock pursuant to the Offer in accordance with the terms
hereof
and thereof.
(c) Other
Approvals.
All
regulatory approvals required to consummate the transactions contemplated
hereby
shall have been obtained and shall remain in full force and effect and
all
statutory waiting periods applicable to the Offer or the Merger shall have
expired or been terminated (all such approvals and the expiration of all
such
waiting periods being referred to herein as “Requisite
Regulatory Approvals”).
(d) No
Injunctions or Restraints; Illegality.
No order, injunction, judgment, ruling or decree issued by any court or
agency of competent jurisdiction or any Governmental Authority or other
legal
restraint or prohibition preventing the consummation of the Merger shall
be in
effect. No statute, rule, regulation, order, injunction or decree shall
have
been enacted, entered, promulgated, deemed applicable to the Merger or
enforced
by any Governmental Authority which prohibits, or makes illegal, consummation
of
the Merger.
9.1
Termination.
This
Agreement may be terminated and the Merger may be abandoned at any time
prior to
the Effective Time, whether before or after the Seller Stockholder
Approval:
(a) by
mutual
written consent of the Seller and the Parent;
(b) by
the
Parent or the Seller if (i) the Purchaser fails to commence the Offer as
provided in Article
I
or
(ii) the Purchaser shall not have accepted for payment and paid for the
shares of Seller Common Stock tendered pursuant to the Offer in accordance
with
the terms hereof and of the Offer, in the case of either (i) or (ii),
on or
before September 30, 2007 (the “Outside
Date”);
provided,
however,
that
the Seller may not terminate this Agreement pursuant to this Section 9.1(b)
if such
failure to commence the Offer or accept for payment and pay for the
shares of
Seller Common Stock resulted from the breach of this Agreement by the
Seller,
and the Parent may not terminate this Agreement pursuant to this Section 9.1(b)
if such
failure to commence the Offer or accept for payment and pay for the
shares of
Seller Common Stock resulted from the breach of this Agreement by the
Parent or
the Purchaser;
(c) by
the
Parent or the Seller if the Offer is terminated or withdrawn pursuant
to its
terms and the terms of this Agreement without any shares of Seller
Common Stock
being purchased thereunder; provided,
however,
that a
party may not terminate this Agreement pursuant to this Section 9.1(c)
if such
termination or withdrawal resulted from such party’s breach of this
Agreement;
(d) by
either
the Parent or the Seller if any Governmental Authority of competent
jurisdiction
shall have issued a final and non-appealable order, decree, judgment,
injunction
or ruling or taken any other action enjoining, restraining or otherwise
prohibiting the consummation of the Transaction; provided,
that
the party seeking to terminate this Agreement shall have used its reasonable
best efforts to have such order, decree, judgment, injunction or ruling
lifted
if and to the extent required by Section
7.1;
(e) by
the
Parent (A) prior to the purchase of shares of Seller Common Stock pursuant
to
the Offer, in the event of a breach by the Seller of any representation,
warranty, covenant or other agreement contained herein, or if a representation
or warranty of the Seller shall have become untrue, which situation
in any case
(1) would result in any of the events set forth
in
clauses (e) or (f) of Annex
I
to occur
and (2) has not been cured within 30 days following notice by the Parent
or, if
the Outside Date is less than 30 days from the notice by the Parent,
has not
been or cannot reasonably be expected to be cured by the Outside Date
or (B) if
any order, decree, judgment, injunction or ruling having the effects
referred to
in clauses (i) through (iv) of paragraph (a) of Annex
I
shall
have become final and nonappealable;
(f) by
the
Seller prior to the purchase of shares of Seller Common Stock pursuant
to the
Offer, in the event of a breach by the Parent or the Purchaser of
any
representation, warranty, covenant or other agreement contained herein,
or if a
representation or warranty of the Parent or the Purchaser shall have
become
untrue, which situation in any case (1) would result in any of the
representations and warranties of the Parent and the Purchaser set
forth in this
Agreement not being true and correct (without giving effect to any
limitation as
to “materiality” or “Material Adverse Effect” or similar terms set forth
therein) except where the failure to be so true and correct does
not have, and
would not reasonably be expected to have, individually or in the
aggregate, a
Parent Material Adverse Effect or would
result in a failure by the Parent or the Purchaser to perform in
all material
respects its obligations and covenants required to be performed by
it under this
Agreement
and (2)
has not been cured within 30 days following notice by the Seller
or, if the
Outside Date is less than 30 days from the notice by the Seller,
has not been or
cannot reasonably be expected to be cured by the Outside
Date;
(g) by
the
Parent, if prior to the purchase of shares of Seller Common Stock pursuant
to
the Offer (i) the board of directors of the Seller shall have failed to publicly
recommend to the Seller Stockholders that they tender their shares into the
Offer and/or vote in favor of the approval and adoption of this Agreement,
(ii)
an Adverse Recommendation Change Notice shall have been delivered, or the Seller
or the board of directors of the Seller shall have effected an Adverse
Recommendation Change, (iii) the board of directors of the Seller shall have
recommended that the stockholders accept or approve an Acquisition Proposal,
or
(iv) the board of directors of the Seller shall have resolved to do any of
the foregoing;
(h) by
the
Parent, if prior to the purchase of shares of Seller Common Stock pursuant
to
the Offer an Acquisition Proposal has been publicly announced or otherwise
becomes publicly known and the Minimum Condition shall not have been satisfied
(at a time when all other Tender Offer Conditions are satisfied or waived)
by
the close of business on the Business Day immediately preceding the Expiration
Date; or
(i)
by
the
Seller in the event that a Termination Trigger Date shall have occurred,
(x) in the case of a Cash Superior Proposal, after the second (2nd)
Business Day following such Termination Trigger Date or (y) in the case of
a
Non-Cash Superior Proposal, after the third (3rd) Business Day following such
Termination Trigger Date, in each case unless the Minimum Condition shall have
been satisfied at any time after such Termination Trigger Date and prior to
such
termination; provided,
however,
that
the Seller pays the Parent the Termination Amount payable under Section
9.2(b)(i)
prior to
such termination.
Any
purported termination pursuant to this Section
9.1(i)
that is
not in compliance with all of the terms of this Section
9.1(i)
shall be
null and void and of no effect.
(a) In
the
event of a termination and abandonment of this Agreement by either the Parent
or
the Seller as provided in Section 9.1,
this
Agreement shall immediately become void and have no effect, and none of the
Parent, the Purchaser, the Seller, any of their respective subsidiaries or
any
of the officers or directors of any of them shall have any liability or
obligation of any nature whatsoever hereunder, or in connection with the
transactions contemplated hereby, except that (i) Sections 5.6
(Broker’s Fees), 7.3
(Access
to Information) and 9.2
(Effect
of Termination), Article
X
(Miscellaneous) and all other obligations of the parties specifically intended
to be performed after the termination of this Agreement shall survive any
termination of this Agreement; and (ii) notwithstanding anything to the contrary
contained in this Agreement, neither the Parent nor the Seller shall be relieved
or released from any liabilities or damages arising out of its willful breach
of
any provision of this Agreement or any other agreement delivered in connection
herewith or any fraud.
54
(b) (i) In
the
event this Agreement is terminated by:
(A) the
Parent pursuant to Section 9.1(g);
or
(B) the
Seller pursuant to Section
9.1(i),
then
Seller shall make a cash payment to the Parent in the amount of $34,380,000(the
“Termination
Amount”).
(ii) In
the
event this Agreement is terminated by the Parent pursuant to Section 9.1(h)
and
within twelve (12) months following such termination, (x) the Seller
enters into
a definitive agreement to engage in a transaction qualifying as an Acquisition
Proposal (with all references to 15% in the definition thereof being
treated as
references to 40% for purposes hereof) with any Person other than the
Parent or
any Affiliate of the Parent or (y) the Seller enters into a transaction
qualifying as an Acquisition Proposal (with all references to 15% in
the
definition thereof being treated as references to 40% for purposes hereof)
with
any Person other than the Parent or any Affiliate of the Parent, then
Seller
shall make a cash payment to the Parent of the Termination Amount.
(c) If
required under this Section 9.2,
the
Termination Amount shall be paid in immediately available funds within
two (2)
Business Days after the date of the event giving rise to the obligation
to make
such payment, unless the Termination Amount are payable as a result of
a
termination pursuant to Section 9.1(i),
in
which case, the Termination Amount are payable prior to and as a condition
to
the termination. The parties acknowledge and agree that the provisions
for
payment of the Termination Amount are an integral part of the transactions
contemplated by this Agreement and are included herein in order to induce
the
Parent to enter into this Agreement and to reimburse the Parent for incurring
the costs and expenses related to entering into this Agreement and consummating
the transactions contemplated by this Agreement.
9.3 Amendment. Subject
to compliance with applicable Law, this Agreement may be amended by
the parties
hereto at any time before or after approval of the matters presented
in
connection with the Merger to the stockholders of the Seller; provided,
however,
that
after any approval of the transactions contemplated by this Agreement
by the
stockholders of the Seller, no amendment of this Agreement shall be
made which
by law requires further approval by the stockholders of the Seller
without
obtaining such approval. This Agreement may not be amended except by
an
instrument in writing signed on behalf of each of the parties
hereto.
9.4 Extension;
Waiver.
At
any
time prior to the Effective Time, the parties hereto may, to the extent
legally
allowed, (a) extend the time for the performance of any of the obligations
or
other acts of the other parties hereto, (b) waive any inaccuracies
in the
representations and warranties contained herein or in any document
delivered
pursuant hereto and (c) waive compliance with any of the agreements
or
conditions contained herein; provided,
however,
that
after the adoption of this Agreement and the approval of the transactions
contemplated hereby by the stockholders of the Seller, no extension
or waiver of
this Agreement or any portion thereof shall be made which by law requires
further approval by the stockholders of the Seller without obtaining
such
approval. Any agreement on the part of a party hereto to any such extension
or
waiver shall be valid only if set forth in a written instrument signed
on behalf
of such party, but such extension or waiver or failure to insist on
strict
compliance with an obligation, covenant, agreement or condition shall
not
operate as a waiver of, or estoppel with respect to, any subsequent
or other
failure.
10.1
Nonsurvival
of Representations, Warranties and Agreements.
None
of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective
Time. This
Section 10.1
shall
not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time or relates to delivery
of the
Exchange Fund in full.
10.2
Expenses.
Except
as
may otherwise be agreed to hereunder or in other writing by the parties,
all
legal and other costs and expenses incurred in connection with this
Agreement
and the transactions contemplated hereby shall be paid by the party
incurring
such costs and expenses.
10.3
Notices.
All
notices or other communications hereunder shall be in writing and
shall be
deemed given if delivered personally, sent by nationally recognized
overnight
courier (providing proof of delivery) or mailed by prepaid registered
or
certified mail (return receipt requested) or by telecopy (providing
confirmation
of transmission) addressed as follows:
(a) If
to the
Parent or the Purchaser, to:
Xerox
Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇.▇.
▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇
▇▇▇▇▇
Telecopy:
(▇▇▇)
▇▇▇-▇▇▇▇
Attn:
Chief Financial
Officer
with
required copies
to:
Xerox
Corporation
▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇
▇.▇.
▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇
▇▇▇▇▇
Telecopy:
(▇▇▇)
▇▇▇-▇▇▇▇
Attn:
General
Counsel; and
Cravath,
Swaine & ▇▇▇▇▇ LLP
Worldwide
Plaza
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
Attn:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(b) If
to the
Seller, to:
Global
Imaging Systems, Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
Attn:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
with
required copies to:
▇▇▇▇▇▇▇
Procter LLP
▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
▇▇▇▇▇▇▇
Procter LLP
▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
Attn:
▇. ▇▇▇▇▇ ▇▇▇▇
or
such
other address as shall be furnished in writing by any party, and any
such notice
or communication shall be deemed to have been given as of the date so
mailed or
otherwise sent as provided above.
10.4
Interpretation.
When
a
reference is made in this Agreement to Sections, Exhibits, Schedules
or Annexes,
such reference shall be to a Section of or Exhibit, Schedule or Annex to
this Agreement unless otherwise indicated. The table of contents and
headings
contained in this Agreement are for reference purposes only and shall
not affect
in any way the meaning or interpretation of this Agreement. Whenever
the words
“include”, “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation.” The words “hereof”,
“hereto”, “hereby”, “herein” or “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not
to any
particular provision of this Agreement. The term “or” is not exclusive. Any
capitalized terms used in any Schedule, Exhibit or Annex, but not otherwise
defined therein, shall have the meaning as defined in this
Agreement.
10.5
Counterparts. This
Agreement may be executed in counterparts, all of which shall be considered
one
and the same agreement and shall become effective when counterparts have
been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
10.6
Entire
Agreement. This
Agreement, together with, the exhibits, annexes and schedules hereto and
any
documents delivered by the parties in connection herewith and the
Confidentiality Agreement constitute the entire agreement and supersede
all
prior agreements and understandings, both written and oral, among the parties
hereto, or any of them, with respect to the subject matter hereof.
10.7
Governing
Law; Jurisdiction and Venue; Waiver of Jury
Trial. This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Delaware without regard to its rules of conflict of laws. Each
of the
Parent and the Seller hereby irrevocably and unconditionally consents to
submit
to the exclusive jurisdiction of the courts of the State of Delaware and
of the
United States of America located in the State of Delaware (the “Delaware
Courts”)
for
any litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any litigation relating
thereto
except in such courts), waives any objection to the laying of venue of
any such
litigation in the Delaware Courts and agrees not to plead or claim in any
Delaware Court that such litigation brought therein has been brought in
any
inconvenient forum. Each of the parties hereto agrees, (a) to the extent
such
party is not otherwise subject to service of process in the State of Delaware,
to appoint and maintain an agent in the State of Delaware as such party’s agent
for acceptance of legal process, and (b) that service of process may also
be
made on such party by prepaid certified mail, with a proof of mailing receipt
validated by United States Postal Service constituting evidence of valid
service. Service made pursuant to (a) or (b) above shall have the same
legal
force and effect as if served upon such party personally with the State
of
Delaware. Each party hereto hereby waives, to the fullest extent permitted
by
applicable Law, any right it may have to a trial by jury in respect of
any suit,
action or other proceeding directly or indirectly arising
out of, under or in connection with this Agreement. Each party hereto (a)
certifies that no representative, agent or attorney of any other party
has
represented, expressly or otherwise, that such party would not, in the
event of
any action, suit or proceeding, seek to enforce the foregoing waiver and
(b)
acknowledges that it and the other parties hereto have been induced to
enter
into this Agreement, by, among other things, the mutual waiver and
certifications in this Section 10.7.
10.8
Consent
and Approvals.
For
any
matter under this Agreement requiring the consent or approval of any party
to be
valid and binding on the parties hereto, such consent or approval must
be in
writing and executed and delivered to the other parties by a Person duly
authorized by such party to do so.
10.9
Assignment;
Reliance of Other Parties. Neither
this Agreement nor any of the rights, interests or obligations hereunder
shall
be assigned by any of the parties hereto in whole or in part (whether by
operation of law or otherwise) without the prior written consent of the
other
parties and any attempt to make any such assignment without such consent
shall
be null and void. Subject to the preceding sentence, this Agreement will
be
binding upon, inure to the benefit of and be enforceable by the parties
and
their respective successors and assigns; provided,
however,
that
each of the Parent and the Purchaser may assign their rights and obligations
hereunder to any direct or indirect wholly owned subsidiary of the Parent
to the
extent the Purchaser and/or the Parent, as applicable, agree to remain
liable
for the performance of such wholly owned subsidiary of its obligations
hereunder. Except as provided in Section 7.5
(Directors’ and Officers’ Indemnification and Insurance) hereof, this Agreement
(including the documents and instruments referred to herein) is not intended
to
confer upon any Person other than the parties hereto any rights or remedies
under or by reason of this Agreement.
10.10
Specific
Performance. The
parties hereto agree that irreparable damage would occur in the event that
the
provisions contained in this Agreement were not performed in accordance with
its
specific terms or were otherwise breached. It is accordingly agreed that
the
parties shall be entitled to an injunction or injunctions, without the posting
of any bond, to prevent breaches of this Agreement and to enforce specifically
the terms and provisions thereof in any court of the United States or any
state
having jurisdiction, this being in addition to any other remedy to which
they
are entitled at law or in equity.
10.11
Definitions. Except
as
otherwise provided herein or as otherwise clearly required by the context,
the
following terms shall have the respective meanings indicated when used in
this
Agreement:
“2006
Financial Statements”
shall
mean the audited consolidated balance sheet of the Seller and its subsidiaries
as of March 31, 2007, and the related consolidated statement of income,
consolidated statement of stockholders’ equity and comprehensive income and
consolidated statement of cash flows for the fiscal year ending March 31,
2007.
“Acceptance
Date”
shall
have the meaning ascribed thereto in Section
1.1(a)
hereof.
“Acquisition
Agreement”
shall
have the meaning ascribed thereto in Section
7.2(d)
hereof.
59
“Acquisition
Proposal”
shall
have the meaning ascribed thereto in Section 7.2(i)
hereof.
“Adverse
Recommendation Change”
shall
have the meaning ascribed thereto in Section
7.2(d)
hereof.
“Adverse
Recommendation Change Determination”
shall
have the meaning ascribed thereto in Section
7.2(e)
hereof.
“Adverse
Recommendation Change Notice”
shall
have the meaning ascribed thereto in Section
7.2(e)
hereof.
“Affiliate”
shall
mean, with respect to any Person, any other Person controlling, controlled
by or
under common control with such Person. As used in this definition, “control”
(including, with its correlative meanings, “controlled by” and “under common
control with”) means the possession, directly or indirectly, of power to direct
or cause the direction of the management and policies of a Person whether
through the ownership of voting securities, by contract or
otherwise.
“Agreement”
shall
have the meaning ascribed thereto in the recitals.
“Appraisal
Rights Provisions”
shall
have the meaning ascribed thereto in Section 3.4(a)
hereof.
“Arrangements”
shall
have the meaning ascribed thereto in Section
5.13(k)
hereof.
“Associate”
shall
have the meaning ascribed to such term in the Exchange Act and shall also
include, with respect to any Person, such Person’s parents, children,
step-children, siblings, step-siblings, mothers and fathers-in-law, sons
and
daughters-in-law and brothers and sisters-in-law.
“Business
Day”
shall
have the meaning ascribed thereto in Rule 14d-1(g)(3) under the Exchange
Act.
“Cash
Superior Proposal”
shall
mean a Superior Proposal in which all of the consideration to be received
by the
stockholders of the Seller will be cash.
“Certificates”
shall
have the meaning ascribed thereto in Section 3.3(b)
hereof.
“Certificate
of Merger”
shall
have the meaning ascribed thereto in Section 2.2
hereof.
“Change
in Control Arrangement”
shall
mean each plan, program, agreement, arrangement or understanding of the Seller
or any of its subsidiaries pursuant to which any holder of Seller Common
Stock
could become entitled to (a) any additional compensation, enhanced severance
or
other benefits or any acceleration of the time of payment or vesting of any
compensation, severance or other benefits or any funding of any compensation
or
benefits by the Seller
or
any of its subsidiaries, in each case as a result of the Offer, the Merger
or
any of the other transactions contemplated by this Agreement (alone or in
combination with any other event), or (b) any other compensation or benefits
from the Seller or any of its subsidiaries related to or contingent upon
or the
value of which would be calculated on the basis of the Offer, the Merger
or any
of the other transactions contemplated by this Agreement (alone or in
combination with any other event).
60
“Closing”
shall
have the meaning ascribed thereto in Section
2.2
hereof.
“Closing
Date”
shall
have the meaning ascribed thereto in Section
2.2
hereof.
“Code”
shall
mean the Internal Revenue Code of 1986, as amended.
“Conditional
Merger Agreement”
shall
have the meaning ascribed thereto in Section 7.2(e)
hereof.
“Confidentiality
Agreement”
shall
have the meaning ascribed thereto in Section 7.2(b)
hereof.
“Contracts”
shall
mean any loan or credit agreement, bond, debenture, note, mortgage, indenture,
guarantee, lease or other contract, commitment, agreement, instrument, legally
binding arrangement, legally binding understanding, obligation, undertaking
or
license, whether oral or written.
“Copyrights”
shall
have the meaning ascribed thereto in Section 5.19(c)
hereof.
“Counterproposal”
shall
have the meaning ascribed thereto in Section
7.2(e)
hereof.
“Covered
Securityholders”
shall
have the meaning ascribed thereto in Section
4.7
hereof.
“Delaware
Courts”
shall
have the meaning ascribed thereto in Section 10.7
hereof.
“DGCL”
shall
have the meaning ascribed thereto in the recitals.
“Dissenting
Shares”
shall
have the meaning ascribed thereto in Section
3.4(a)
hereof.
“Dissenting
Stockholders”
shall
have the meaning ascribed thereto in Section 3.4(a)
hereof.
“Effective
Time”
shall
have the meaning ascribed thereto in Section 2.2
hereof.
“Employment
Compensation Arrangement”
shall
have the meaning ascribed thereto in Section 5.13(k) hereof.
“Encumbrances”
shall
mean all transfer restrictions, liens, security interests, mortgages, pledges,
hypothecations, easements, covenants, declarations, conditions and restrictions
in respect of real property; defects in or clouds on title and other
encumbrances of every kind and nature (including agreements to grant or create
the same, including options, rights of first negotiation and rights of first
refusal), whether arising by agreement, operation of law or
otherwise.
“Environmental,
Health and Safety Claim”
means
any and all administrative, regulatory or judicial actions, suits, orders,
demands, directives, claims, liens, investigations, proceedings or written
or
oral notices of noncompliance or violation by or from any Person alleging
liability of whatever kind of nature (including liability for the costs of
enforcement proceedings, investigations, cleanup, governmental response, removal
or remediation, natural resources damages, property damages, personal injuries,
medical monitoring, penalties, contribution, indemnification and injunctive
relief) arising out of, based on or resulting from (y) the presence, release
or
disposal of, or exposure to, any Hazardous Materials at any location; or (z)
the
failure to comply with any Environmental, Health and Safety Law.
“Environmental,
Health and Safety Laws”
means
all common law and applicable federal, state, local and foreign laws, rules,
regulations, orders, decrees, judgments, directives, legally binding agreements
or permits issued, promulgated or entered into by or with any Governmental
Authority, relating to (A) pollution, natural resources or protection of
endangered or threatened species, human health, workplace safety, product safety
or the environment or (B) the collection, receipt, storage, handling, transport,
recycling, reclaiming or disposal of any electronic equipment or products
(including copiers, printers, multifunction devices, computers or monitors)
or
any related components or waste.
“ERISA”
shall
mean the Employee Retirement Income Security Act of 1974, as
amended.
“ERISA
Affiliate”
means,
with respect to any entity, trade or business, any other entity, trade or
business that is, or was at the relevant time, a member of a group described
in
Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA
that
includes or included the first entity, trade or business, or that is, or was
at
the relevant time, a member of the same “controlled group” as the first entity,
trade or business pursuant to Section 4001(a)(14) of ERISA.
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended.
“Exchange
Fund”
shall
have the meaning ascribed thereto in Section 3.3(a)
hereof.
“Expiration
Date”
shall
have the meaning ascribed thereto in Section
1.1(b)
hereof.
“fully
diluted basis”
shall
have the meaning ascribed thereto in Annex I.
“GAAP”
shall
mean generally accepted accounting principles and practices in effect from
time
to time within the United States applied consistently throughout the period
involved.
“Governmental
Authority”
shall
mean any United States or foreign, federal, state or local governmental
commission, board, body, bureau, or other regulatory authority, agency,
including courts and other judicial bodies, or any self-regulatory body or
authority, including any instrumentality or entity designed to act for or on
behalf of the foregoing.
“Grant
Date”
shall
have the meaning ascribed thereto in Section
5.2(c)
hereof.
“Hazardous
Materials”
means
(y) any petroleum or petroleum products, radioactive materials or wastes,
asbestos in any form and polychlorinated biphenyls; and (z) any other chemical,
material, substance or waste that is prohibited, limited or regulated under
any
Environmental, Health and Safety Law.
“HSR
Act”
shall
have the meaning ascribed thereto in Section 7.1(a)
hereof.
“indebtedness”
shall
have the meaning ascribed thereto in Section
5.2(d)
hereof.
“Indemnified
Parties”
shall
have the meaning ascribed thereto in Section 7.5(a)
hereof.
“Independent
Director”
shall
have the meaning ascribed thereto in Section
5.3(a)
hereof.
“Information
Statement”
shall
have the meaning ascribed thereto in Section
1.3(b)
hereof.
“Intellectual
Property Assets”
shall
have the meaning ascribed thereto in Section 5.19(c)
hereof.
“internal
control over financial reporting”
shall
have the meaning ascribed thereto in Rule 13a-15 enacted under the Exchange
Act.
“IRS”
shall
mean the Internal Revenue Service.
“Key
Personnel”
shall
mean any director or officer of the Seller or any of its
subsidiaries.
“Laws”
shall
mean any federal, state, local or foreign law, statute, code or ordinance,
common law, or any rule, regulation, standard, judgment, order, writ,
injunction, decree, arbitration award, agency requirement, license or permit
of
any Governmental Authority, including Environmental, Health and Safety
Laws.
“leases
and subleases”
shall
have the meaning ascribed thereto in Section
5.16(a)
hereof.
“Major
Supplier”
shall
mean any Person that, when taken together with its Affiliates, was one of the
30
largest suppliers (determined on the basis of payments) of the Seller and its
subsidiaries, taken as a whole, in either of the Seller’s last two completed
fiscal years.
“Major
Supplier Contracts”
shall
have the meaning ascribed thereto in Section
5.15
hereof.
“Marks”
shall
have the meaning ascribed thereto in Section 5.19(c)
hereof.
“Merger”
shall
have the meaning ascribed thereto in the recitals.
“Merger
Consideration”
shall
have the meaning ascribed thereto in Section 3.1(c)
hereof.
“Minimum
Condition”
shall
have the meaning ascribed thereto in Annex
I.
“National
Account Customer”
shall
mean any Person that has a business relationship with the Seller or any of
its
subsidiaries that primarily involves the performance of services by the Seller
or its subsidiaries on behalf of a manufacturer of products that were sold
by
such manufacturer directly to such Person.
“Non-Cash
Superior Proposal”
shall
mean any Superior Proposal other than a Cash Superior Proposal.
“Offer”
shall
have the meaning ascribed thereto in the recitals.
“Offer
Documents”
shall
have the meaning ascribed thereto in Section
1.1(c)
hereof.
“Offer
Price”
shall
have the meaning ascribed thereto in the recitals.
“Outside
Date”
shall
have the meaning ascribed thereto in Section
9.1(b)
hereof.
“Parent”
shall
have the meaning ascribed thereto in the recitals.
“Parent
Arrangement”
shall
have the meaning ascribed thereto in Section
4.7
hereof.
“Parent
Material Adverse Effect”
shall
mean, with respect to the Parent, an effect, event or change which would
reasonably be expected to prevent or materially delay the consummation of the
Transaction and the other transactions contemplated by this Agreement or prevent
or materially impair or delay the ability of the Parent to perform its
obligations under this Agreement.
“Patents”
shall
have the meaning ascribed thereto in Section 5.19(c)
hereof.
“Paying
Agent”
shall
have the meaning ascribed thereto in Section 3.3(a)
hereof.
“Permitted
Acquisition”
shall
mean any acquisition by the Seller or any of its subsidiaries of a company
or
business engaged in the Seller’s industry, whether by merger, stock purchase or
asset purchase, which has been previously approved by the Chief Financial
Officer of the Parent in writing.
“Permitted
Liens”
shall
mean (a) liens, security interests or Encumbrances for taxes not yet due and
payable, that are payable without penalty or that are being contested in good
faith and for which adequate reserves have been recorded, (b) liens, security
interests or Encumbrances for assessments and other governmental charges or
landlords’, carriers’, warehousemen’s, mechanics’, repairmen’s, workers’ and
similar Encumbrances incurred in the ordinary course of business, consistent
with past practice, in each case for sums not yet due and payable or due but
not
delinquent or being contested in good faith by appropriate proceedings, (c)
liens, security interests or Encumbrances incurred in the ordinary course of
business, consistent with past practice, in connection with workers’
compensation, unemployment insurance and other types of social security or
to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return of money
bonds
and similar obligations, (d) liens, security interests or Encumbrances incurred
in the ordinary course of business consistent with past practice and (e) liens,
security interests or Encumbrances that are not reasonably likely to adversely
interfere in a material way with the use of properties or assets encumbered
thereby.
“Person”
shall
mean any individual, corporation, limited liability company, partnership, joint
venture, association, trust, unincorporated organization or other legal entity,
or any Governmental Authority or political subdivision thereof.
“Post-signing
Arrangement”
shall
have the meaning ascribed thereto in Section
7.10(b)
hereof.
“Premium
Limit”
shall
have the meaning ascribed thereto in Section
7.5(b)
hereof.
“Proceeding”
shall
have the meaning ascribed thereto in Section
5.8
hereof.
“Proxy
Statement”
shall
have the meaning ascribed thereto in Section
2.6(a)
hereof.
“Purchaser”
shall
have the meaning ascribed thereto in the recitals.
“Purchaser
Insiders”
shall
have the meaning ascribed thereto in Section
1.3(a)
hereof.
“Regulatory
Law”
shall
have the meaning ascribed thereto in Section
7.1(a)
hereof.
“Representatives”
shall
have the meaning ascribed thereto in Section
7.2(a)
hereof.
“Requisite
Regulatory Approvals”
shall
have the meaning ascribed thereto in Section
8.1(c)
hereof.
“Retention
Letter Agreement”
shall
mean a letter agreement between the Parent and an employee of the Seller or
its
Subsidiaries regarding
the employment of such employee following the consummation of the
Merger.
“Schedule
14D-9”
shall
have the meaning ascribed thereto in Section 1.2(a)
hereof.
“Schedule
TO”
shall
have the meaning ascribed thereto in Section
1.1(c)
hereof.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended.
“Seller”
shall
have the meaning ascribed thereto in the recitals.
“Seller
Balance Sheet”
shall
have the meaning ascribed thereto in Section 5.5
hereof.
“Seller
Benefit Agreement”
shall
have the meaning ascribed thereto in Section 5.13(a).
“Seller
Benefit Plans”
shall
have the meaning ascribed thereto in Section 5.13(a)
hereof.
“Seller
Common Stock”
shall
have the meaning ascribed thereto in the recitals.
“Seller
Companies”
shall
have the meaning ascribed thereto in Section 5.12(a)hereof.
“Seller
Compensation Committee”
shall
have the meaning ascribed thereto in Section 5.13(k) hereof.
“Seller
Contracts”
shall
have the meaning ascribed thereto in Section 5.15
hereof.
“Seller
Copyrights”
shall
have the meaning ascribed thereto in Section 5.19(a)
hereof.
“Seller
Employees”
shall
have the meaning ascribed thereto in Section 7.4(a)
hereof.
“Seller
Intellectual Property Assets”
shall
have the meaning ascribed thereto in Section 5.19(c)
hereof.
“Seller
Letter”
shall
have the meaning ascribed thereto in Article
V
hereof.
“Seller
Marks”
shall
have the meaning ascribed thereto in Section 5.19(a)
hereof.
“Seller
Material Adverse Effect”
shall
mean, with respect to the Seller, a change, event or effect (an “Effect”)
that,
individually or in the aggregate, has a material adverse effect on the business,
operations, assets, liabilities, results of operations, or financial condition
of the Seller and its subsidiaries, taken as a whole, or which would reasonably
be expected to prevent or materially delay the consummation of the Transaction
or prevent or materially impair or delay the ability of the Seller to perform
its obligations under this Agreement, other than (a) any Effect resulting from
(i) general changes in the economy or financial markets of the United States
or
any other region outside of the United States to the extent they do not
disproportionately affect the Seller and its subsidiaries, taken as a whole,
in
relation to other companies in the industries in which the Seller and its
subsidiaries conduct business, (ii) changes in general legal, regulatory,
political, economic or business conditions (including the commencement or
escalation of a war or material armed hostilities, acts of terrorism, or the
occurrence of natural disasters) that generally affect industries in which
the
Seller and its Subsidiaries conduct business to the extent they do not
disproportionately affect the Seller and its subsidiaries, taken as a whole,
in
relation to other companies in the industries in which the Seller and its
subsidiaries conduct business, (iii) changes in GAAP that generally affect
industries in which the Seller and its Subsidiaries conduct business, (iv)
the
announcement of this Agreement or pendency or consummation of the Offer or
the
Merger (except for any Effect resulting from the termination by any customer
(other than a National Account Customer) of its relationship with the Seller
or
any of its subsidiaries), (v) the identity of the Parent, the Purchaser, or
any
of their Affiliates as the acquiror of the Seller (except for any Effect
resulting from the termination by any customer (other than a National Account
Customer) of its relationship with the Seller or any of its subsidiaries),
(vi) the termination by any National Account Customer of its relationship
with the Seller or any of its subsidiaries, (vii) the termination by employees
of their employment with the Seller or any of its subsidiaries for reasons
primarily relating to the announcement or pendancy of this Agreement or (viii)
threatened or actual reduction, suspension or termination by any business
equipment or other suppliers or vendors of their relationship with the Seller
or
any of its subsidiaries, or (b) any decline in the market price, or change
in trading volume, of the capital stock of the Seller or any failure to meet
internal or published projections, forecasts or revenue or earning predictions
for any period (it being understood that the cause or causes underlying any
such
decline, change or failure may be deemed either alone or in combination with
other events to constitute a Seller Material Adverse Effect).
“Seller
Pension Plans”
shall
have the meaning ascribed thereto in Section 5.13(a)
hereof.
“Seller
Permits”
shall
have the meaning ascribed thereto in Section 5.11
hereof.
“Seller
Personnel”
shall
have the meaning ascribed thereto in Section
5.12(p)
hereof.
“Seller
Preferred Stock”
shall
have the meaning ascribed thereto in Section 5.2(a) hereof.
“Seller
Recommendations”
shall
have the meaning ascribed thereto in Section
1.2(a)
hereof.
“Seller
Reports”
shall
have the meaning ascribed thereto in Section 5.9(a)
hereof.
“Seller
Restricted Shares”
shall
have the meaning ascribed thereto in Section 3.1(c)
hereof.
“Seller
SEC Reports”
shall
have the meaning ascribed thereto in Section 5.9(a)
hereof.
“Seller
Software”
shall
have the meaning ascribed thereto in Section
5.19(c)
hereof.
“Seller
Stock Option”
shall
mean an option to purchase shares of Seller Common Stock issued under any of
the
Seller Stock Plans or otherwise.
“Seller
Stock Plans”
shall
mean the Seller’s 2001 Amended and Restated Stock Option Plan, the 2004 Omnibus
Long-Term Incentive Plan and the Amended and Restated 1998 Stock Option and
Incentive Plan.
“Seller
Stockholder Approval”
shall
have the meaning ascribed thereto in Section 5.18(b)
hereof.
“Seller
Stockholders”
shall
mean the holders of Seller Common Stock.
“Seller
Trade Secrets”
shall
have the meaning ascribed thereto in Section 5.19(c)
hereof.
“Seller’s
Business”
shall
have the meaning ascribed thereto in Section 5.19(c)
hereof.
“Seller’s
Financial Advisors”
shall
have the meaning ascribed thereto in Section 5.6
hereof.
“Software”
shall
have the meaning ascribed thereto in Section
5.19(c)
hereof.
“Special
Meeting”
shall
have the meaning ascribed thereto in Section 2.6(a)
hereof.
“Specified
Parachute Payments”
shall
have the meaning ascribed thereto in Section
5.12(p)
hereof.
“Subsidiaries”
or
“subsidiaries”
shall
mean, when used with reference to a party, any corporation or other
organization, whether incorporated or unincorporated, of which such party or
any
other subsidiary of such party is a general partner (excluding partnerships
the
general partnership interests of which held by such party or any subsidiary
of
such party do not have a majority of the voting interests in such partnership)
or serves in a similar capacity, or, with respect to such corporation or other
organization, at least fifty percent (50%) of the securities or other interests
having by their terms ordinary voting power to elect a majority of the board
of
directors or others performing similar functions is directly or indirectly
owned
or controlled by such party or by any one or more of its subsidiaries, or by
such party and one or more of its subsidiaries.
“Superior
Proposal”
shall
have the meaning ascribed thereto in Section 7.2(h)
hereof.
“Surviving
Corporation”
shall
have the meaning ascribed thereto in Section 2.1
hereof.
“Tax”
shall
mean (a) any and all taxes, customs, duties, tariffs, imposts, charges,
deficiencies, assessments, levies or other like governmental charges, including
income, gross receipts, excise, real or personal property, ad valorem, value
added, estimated, alternative minimum, stamp, sales, withholding, social
security, occupation, use, service, service use, license, net worth, payroll,
franchise, transfer and recording taxes and charges, imposed by the IRS or
any
other taxing authority (whether domestic or foreign including any state, county,
local or foreign government or any subdivision or taxing agency thereof
(including a United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall include
any interest, fines, penalties or additional amounts attributable to, or imposed
upon, or with respect to, any such amounts, (b) any liability for the payment
of
any amounts described in (a) as a result of being a member of an affiliated,
consolidated, combined, unitary, or similar group or as a result of transferor
or successor liability, and (c) any liability for the payment of any amounts
as
a result of being a party to any tax sharing agreement or as a result of any
obligation to indemnify any other Person with respect to the payment of any
amounts of the type described in (a) or (b).
“Tax
Return”
shall
mean any report, return, document, declaration, election or other information
or
filing required to be supplied to any taxing authority or jurisdiction (foreign
or domestic) with respect to Taxes, including information returns and any
documents with respect to or accompanying payments of estimated Taxes or
requests for the extension of time in which to file any such report, return,
document, declaration or other information.
“Tender
Offer Conditions”
shall
have the meaning ascribed thereto in Section 1.1(a)
hereof.
“Termination
Amount”
shall
have the meaning ascribed thereto in Section 9.2(b)
hereof.
“Termination
Trigger Date”
shall
mean, if any Adverse Recommendation Change shall have been made, the first
day
after the twenty-fifth (25th) Business Day following the commencement of the
Offer (determined pursuant to Rule 14d-1(g)(3) under the Exchange Act) on which
(a) none of the events set forth in clause (ii) of Annex
I
shall
have occurred and be continuing, (b) there shall not be in effect any Law or
interpretation or position of the SEC which requires the Offer to remain open
and (c) no order, injunction, judgment, ruling or decree issued by any
Governmental Authority, or other legal restraint or prohibition, preventing
the
consummation of the Offer or the Merger is in effect.
“Top-Up
Option”
shall
have the meaning ascribed thereto in Section
1.4
hereof.
“Top-Up
Shares”
shall
have the meaning ascribed thereto in Section
1.4
hereof.
“Trade
Secrets”
shall
have the meaning ascribed thereto in Section 5.19(c)
hereof.
“Transaction”
shall
have the meaning ascribed thereto in the recitals.
“Unaudited
Balance Sheet”
shall
have the meaning ascribed thereto in Section 5.5
hereof.
“U.S.”
shall
mean the United States.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF,
the
Parent, the Purchaser and the Seller have caused this Agreement to be executed
as a sealed instrument by their duly authorized officers as of the day and
year
first above written.
|
XEROX
CORPORATION
|
||||
|
By:
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/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |||
|
|
||||
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Name:
|
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |||
|
Title:
|
Senior Vice President and Chief Financial Officer | |||
|
RG
ACQUISITION I CORP.
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||||
|
By:
|
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |||
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|
||||
|
Name:
|
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |||
|
Title:
|
President and Chief Executive Officer | |||
|
GLOBAL
IMAGING SYSTEMS, INC.
|
||||
|
By:
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
|
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||||
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Name:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
|
Title:
|
Chairman and Chief Executive Officer | |||
ANNEX
I
ANNEX
I
CONDITIONS
OF THE OFFER
Notwithstanding
any other provisions of the Offer, the Purchaser shall not be required to,
and
the Parent shall not be required to cause the Purchaser to, accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) promulgated under the Exchange Act, pay for any tendered shares of
Seller Common Stock and, subject to the terms of the Agreement, may terminate
or
amend the Offer, if (i) there shall not be validly tendered and not withdrawn
prior to the Expiration Date for the Offer that number of shares of Seller
Common Stock which, when added to any shares of Seller Common Stock already
owned by the Parent or any of its controlled Subsidiaries, represents at least
a
majority of the total number of outstanding shares of Seller Common Stock
(including the Seller Restricted Shares) on a “fully diluted basis” (which
assumes conversion or exercise of all derivative securities regardless of the
conversion or exercise price, the vesting schedule or other terms and conditions
thereof) on the Expiration Date (the “Minimum
Condition”),
(ii)
any applicable waiting period or approval under the HSR Act or other applicable
foreign statutes or regulations shall not have expired or been terminated or
obtained prior to the Expiration Date, or (iii) at any time on or after the
date
of the Agreement and prior to the Acceptance Date, any of the following events
shall exist:
(a) there
shall be any action taken, or any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction enacted, enforced, amended,
issued, in effect or deemed applicable to the Offer, by any legislative body,
court, government or governmental, administrative or regulatory authority or
agency, domestic or foreign, other than the application of the waiting period
provisions of the HSR Act to the Offer or to the Merger, the effect of which
is
to, or would reasonably be expected to, directly or indirectly: (i) make
illegal or otherwise prohibit or materially delay consummation of the Offer
or
the Merger, (ii) except to the extent required by Section 7.1
of the
Agreement, restrict, prohibit or limit the ownership or operation by the Parent
or the Purchaser or their subsidiaries of all or any portion of the business
or
assets of the Seller or any of their
respective
subsidiaries or compel the Parent or the Purchaser or their subsidiaries or
any
of their respective subsidiaries to dispose of or hold separately all or any
portion of the business or assets of the Parent or the Purchaser or the Seller
or any of their respective subsidiaries, or impose any limitation, restriction
or prohibition on the ability of the Parent or the Purchaser or their
subsidiaries to conduct its business or own such assets, (iii) impose
limitations on the ability of the Parent or the Purchaser or their subsidiaries
effectively to acquire, hold or exercise full rights of ownership of the shares
of Seller Common Stock, including the right to vote any shares of Seller Common
Stock acquired or owned by the Purchaser or the Parent or their subsidiaries
pursuant to the Offer on all matters properly presented to the Seller
Stockholders, or (iv) require divestiture by the Parent or the Purchaser or
their subsidiaries of any shares of Seller Common Stock; or
(b) there
shall be (i) instituted or pending any action or proceeding (other than for
breaches of fiduciary duties or failures to provide adequate disclosure in
connection with the Agreement and the transactions contemplated hereby) by
any
Person (other than a Governmental Authority) with a reasonable likelihood of
success that would reasonably be expected to result in, or (ii) instituted
or
pending any action or proceeding by any Governmental Authority seeking, or
any
Governmental Authority shall have informed the Purchaser or the Seller or
counsel therefor that it intends to commence any action or proceeding to seek,
any of the consequences referred to in clauses (i) through (iv) of paragraph
(a)
above; or
(c) (A)
at
any time after an Adverse Recommendation Change Notice shall have been delivered
unless such notice shall have been deemed withdrawn in accordance with Section
7.2(e) or (B) the Seller shall have entered into, or publicly announced its
intention to enter into, an Acquisition Agreement and such announcement shall
not have been withdrawn and such Acquisition Agreement shall remain in effect;
or
(d) the
Seller and the Purchaser and the Parent shall have reached an agreement that
the
Offer or the Agreement be terminated, or the Agreement shall have been
terminated in accordance with its terms; or
(e) (i) (A)
any
of the representations and warranties of the Seller set forth in Sections 5.1,
5.2, 5.3(a), 5.6, 5.13(k), 5.18 and 5.22 of the Agreement that are qualified
as
to materiality shall not be true and correct, (B) any of the representations
and
warranties of the Seller set forth in Sections 5.1, 5.2, 5.3(a), 5.6, 5.13(k),
5.18 and 5.22 of the Agreement that are not so qualified shall not be true
and
correct in all material respects or (C) the representation and warranty set
forth in Section 5.15(vi) of the Agreement shall not be true and correct in
all
material respects;
(ii) (A)
any
of the representations and warranties of the Seller set forth in Sections 5.5,
5.7, 5.8, 5.9, 5.10 and 5.11 of the Agreement that are qualified as to
materiality shall not be true and correct or (B) any of the representations
and
warranties of the Seller set forth in Sections 5.5, 5.7, 5.8, 5.9, 5.10 and
5.11
of the Agreement that are not so qualified shall not be true and correct in
all
material respects, except to the extent that the facts or matters as to which
such representations and warranties are not so true and correct are not or
would
not, individually or in the aggregate, reasonably be expected to be material
to
the Seller and its subsidiaries, taken as a whole; or
(iii) any
representations and warranties of the Seller set forth in the Agreement (other
than those listed in the preceding clauses (i) and (ii)) shall not be true
and
correct, except to the extent that the facts or matters as to which such
representations and warranties are not so true and correct (without giving
effect to any qualifications and limitations as to “materiality” or “Seller
Material Adverse Effect” set forth therein), individually or in the aggregate,
have not had and would not reasonably be expected to have a Seller Material
Adverse Effect
;
in each
case for clauses (i), (ii) or (iii) above as of the date of the Agreement and
as
of such time (except to the extent such representations and warranties relate
to
an earlier date, in which case as of such earlier date);
(f) the
Seller shall have failed to perform in all material respects any obligation,
agreement or covenant required to be performed by it under the Agreement and
such failure to perform shall not have been cured to the good faith satisfaction
of the Parent; or
(g) there
shall have occurred any change, event, effect or occurrence arising after the
time of this Agreement which has had or would reasonably be expected have,
either individually or in the aggregate, a Seller Material Adverse
Effect.
The
foregoing conditions are for the benefit of the Parent and the Purchaser and
may
be asserted by the Parent or the Purchaser regardless of the circumstances
giving rise to any such conditions and may be waived by the Parent or the
Purchaser in whole or in part at any time and from time to time in their sole
discretion (except for the Minimum Condition), in each case, subject to the
terms of the Agreement and the applicable rules and regulations of the SEC.
The
failure by the Parent or the Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
ANNEX
II
CERTIFICATE
OF INCORPORATION
OF
SURVIVING
CORPORATION
1. The
name
of the Corporation is:
[NAME
OF
CORPORATION]
2. The
address of its registered agent in the State of Delaware is 2711 Centerville
Road, in the City of Wilmington, County of New Castle. The name of its
registered agent at such address is Corporation Service Company.
3. The
nature of the business or purposes to be conducted or promoted is to engage
in
any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
4. The
total
number of shares of Common Stock which the Corporation shall have authority
to
issue is One Thousand (1,000) and the par value of each such share is One Dollar
($1.00) amounting in the aggregate to One Thousand Dollars
($1,000.00).
5. The
Board
of Directors is authorized to make, alter, or repeal the By-Laws of the
Corporation. Election of directors need not be by written ballot.
6. The
name
and address of the incorporator is:
[NAME]
[ADDRESS]
[ADDRESS]
7. No
director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director;
provided
that to
the extent required by the General Corporation Law of the State of Delaware,
this provision shall not eliminate or limit the liability of a director (a)
for
any breach of the director’s duty of loyalty to the Corporation or its
stockholders, (b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) under Section 174
of
the General Corporation Law of the State of Delaware or (d) for any transaction
from which the director derived an improper personal benefit. Any repeal or
modification of this Article 7 shall be prospective only and shall not adversely
affect any right or protection of, or any limitation of the liability of, of
a
director of the Corporation existing at, or arising out of facts or incidents
occurring prior to, the effective date of such repeal or
modification.
8. Each
person who is or was or had agreed to become a director or officer of the
Corporation, and each such person who is or was serving or who had agreed
to
serve at the request of the Corporation as a director, officer, partner,
member,
employee or agent of another corporation, partnership, limited liability
company, joint venture, trust or other enterprise (including the heirs,
executor, administrators or estate of such person), shall be indemnified
by the
Corporation to the fullest extent permitted from time to time by applicable
law. Any repeal or modification of this Article 8 shall not adversely
affect any right to indemnification of any person existing at the time of
such
repeal or modification with respect to any matter occurring prior to such
repeal
or modification.
I,
THE
UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of
forming a corporation pursuant to the General Corporation Law of the State
of
Delaware, do make this certificate, hereby declaring and certifying that this
is
my act and deed and the facts herein stated are true, and accordingly have
hereunto set my hand this _____ day of _____, 2007.
|
[NAME]
|
II-2