EXHIBIT 2
EXECUTION COPY
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AGREEMENT AND
PLAN OF MERGER
by and among
NOVARTIS AG,
WJ ACQUISITION CORP.
and
▇▇▇▇▇▇ ▇▇▇▇▇▇ VISIONCARE, INC.
dated as of May 30, 2000
TABLE OF CONTENTS
Page
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ARTICLE I
THE OFFER
1.1 The Offer............................................................................... 2
1.2 Company Action.......................................................................... 4
1.3 Directors............................................................................... 6
ARTICLE II
THE MERGER
2.1 The Merger.............................................................................. 8
2.2 Effective Time.......................................................................... 8
2.3 Closing of the Merger................................................................... 8
2.4 Effects of the Merger................................................................... 8
2.5 Certificate of Incorporation and By-laws................................................ 8
2.6 Directors............................................................................... 9
2.7 Officers................................................................................ 9
2.8 Conversion of Shares.................................................................... 9
2.9 Delivery of Merger Consideration........................................................ 9
2.10 Dissenting Shares...................................................................... 12
2.11 Treatment of Company Options........................................................... 12
2.12 Adjustments............................................................................ 13
2.13 Shareholders Meeting................................................................... 13
2.14 Merger Without Meeting of Shareholders................................................. 14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization, Standing and Power; Subsidiaries.......................................... 14
3.2 Capital Structure....................................................................... 15
3.3 Authority; No Conflicts................................................................. 17
3.4 Reports and Financial Statements........................................................ 18
3.5 Litigation; Compliance with Laws........................................................ 19
3.6 Absence of Certain Changes or Events.................................................... 19
3.7 Environmental Matters................................................................... 20
3.8 Intellectual Property................................................................... 21
3.9 Brokers or Finders...................................................................... 22
3.10 Employment Agreements.................................................................. 22
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3.11 Taxes.................................................................................. 22
3.12 Certain Contracts...................................................................... 24
3.13 Company Shareholder Rights Plan........................................................ 24
3.14 ERISA Compliance....................................................................... 24
3.15 Schedule 14D-9; Proxy Statement; Schedule TO........................................... 27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
4.1 Organization, Standing and Power........................................................ 28
4.2 Authority; No Conflicts................................................................. 28
4.3 Financial Capability.................................................................... 29
4.4 Capitalization of Purchaser............................................................. 29
4.5 No Prior Activities..................................................................... 29
4.6 Offer Documents......................................................................... 29
ARTICLE V
COVENANTS
5.1 Conduct of Business by the Company Pending the Merger................................... 30
5.2 No Solicitation......................................................................... 33
5.3 Access to Information; Confidentiality.................................................. 35
5.4 Consents; Approvals..................................................................... 36
5.5 Indemnification and Insurance........................................................... 37
5.6 Employee Benefits....................................................................... 38
5.7 Notification of Certain Matters......................................................... 40
5.8 Other Cooperation and Further Assurances................................................ 40
5.9 Public Announcements.................................................................... 40
5.10 Financial Information.................................................................. 41
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Offer................................................................................... 41
6.2 Shareholder Approval.................................................................... 41
6.3 No Injunction or Action................................................................. 41
ARTICLE VII
TERMINATION
7.1 Termination............................................................................ 41
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7.2 Effect of Termination.................................................................. 44
7.3 Fees and Expenses...................................................................... 44
ARTICLE VIII
GENERAL PROVISIONS
8.1 Nonsurvival of Representations, Warranties and Agreements............................... 45
8.2 Notices................................................................................. 45
8.3 Assignment; Binding Effect.............................................................. 47
8.4 Entire Agreement........................................................................ 47
8.5 Amendment............................................................................... 48
8.6 Governing Law; Consent to Jurisdiction.................................................. 48
8.7 Counterparts............................................................................ 48
8.8 Headings................................................................................ 48
8.9 Interpretation.......................................................................... 48
8.10 Waivers................................................................................ 49
8.11 Incorporation of Company Disclosure Letter............................................. 49
8.12 Severability........................................................................... 49
8.13 Enforcement of Agreement............................................................... 50
8.14 Waiver of Jury Trial................................................................... 50
8.15 Company Disclosure Letter.............................................................. 50
8.16 Execution.............................................................................. 50
8.17 Personal Liability..................................................................... 50
8.18 Date for any Action.................................................................... 51
8.19 Obligation of Parent and the Company................................................... 51
8.20 Certain Definitions.................................................................... 51
ANNEX A....................................................................................Annex A-1
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of May
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30, 2000, is by and among Novartis AG, a Swiss corporation ("Parent"), WJ
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Acquisition Corp., a Delaware corporation and an indirect wholly owned
subsidiary of Parent ("Purchaser"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇ VisionCare, Inc., a
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Delaware corporation (the "Company").
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RECITALS
WHEREAS, the Company and Parent have determined to engage in the
transactions (the "Transactions") contemplated by this Agreement, including (a)
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the commencement of an Offer (as defined below) by Purchaser to purchase for
cash all of the outstanding shares of common stock, $.01 par value, of the
Company (the "Company Common Stock") together with the associated rights to
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purchase preferred stock (the "Rights"), issued pursuant to the Rights
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Agreement, dated as of November 16, 1999, as amended (the "Rights Agreement"),
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between the Company and American Stock Transfer and Trust Company, as Rights
Agent, and (b) a business combination whereby Purchaser will be merged with and
into the Company in accordance with the Delaware General Corporation Law (the
"DGCL"), with the Company continuing as the surviving corporation of such
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merger and an indirect wholly-owned subsidiary of Parent (the "Merger");
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WHEREAS, the respective boards of directors of the Company, Parent and
Purchaser have each approved and declared advisable this Agreement and the
Transactions;
WHEREAS, the Board of Directors of the Company (the "Board") (i) has
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determined that the Merger is advisable and in the best interests of the Company
and its shareholders, (ii) has approved the Merger, the Offer, this Agreement
and the other transactions contemplated hereby and (iii) recommends that the
Company's shareholders adopt this Agreement and the Merger and that the
Company's shareholders tender their shares pursuant to the Offer;
WHEREAS, the Agreement and Plan of Merger (the "Ocular Merger
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Agreement"), dated as of March 19, 2000, among the Company, OSI Acquisition
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Corp. and Ocular Sciences, Inc. ("Ocular") has been terminated;
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WHEREAS, the Company has entered into an agreement to pay Ocular a fee
of $25,000,000 (the "Ocular Fee") in connection with the termination of the
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Ocular Merger Agreement;
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representation, warranties and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER
1.1 The Offer.
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(a) Provided that this Agreement shall not have been terminated in
accordance with Article VII and none of the events set forth in Annex A hereto
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shall have occurred or be existing, Purchaser shall, and Parent shall cause
Purchaser to, as promptly as practicable after the date hereof (but in no event
later than the fifth business day after the public announcement of the terms of
this Agreement), commence (within the meaning of Rule 14d-2(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), an offer (the "Offer")
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to purchase all of the outstanding shares of Company Common Stock (and
associated Rights) at a price of 38.50 United States Dollars ($38.50) per share
and associated Right (the "Offer Price"), net to the seller in cash, subject to
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reduction for any applicable withholding taxes and, but only if such payment is
to be made other than to the registered holder, any applicable stock transfer
taxes payable by such holder. The Offer will be made pursuant to an Offer to
Purchase and related Letter of Transmittal containing the terms and conditions
set forth in this Agreement. The initial expiration date of the Offer shall be
the twentieth business day from and after the date the Offer is commenced (the
"Initial Expiration Date"). The obligation of Purchaser to accept for payment,
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purchase and pay for any shares of Company Common Stock (and associated Rights)
tendered pursuant to the Offer shall be subject, except as provided in Section
1.1(b), only to the satisfaction of (i) the condition that a number of shares of
Company Common Stock representing not less than fifty-one percent (51%) of the
total issued and outstanding shares of Company Common Stock on a diluted basis
(after giving effect to the conversion or exercise of all outstanding options,
warrants and other rights or securities convertible into shares of Company
Common Stock) (excluding any shares of Company Common Stock held by the Company
or any of its Subsidiaries (as defined below)) on the date such shares are
purchased pursuant to the Offer have been validly tendered and not withdrawn
prior to the expiration of the Offer (the "Minimum Condition") and (ii) the
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other conditions set forth in Annex A hereto; provided, however, that Purchaser
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expressly reserves the right to waive any of the conditions to the Offer (other
than the
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Minimum Condition) and to make any change in the terms or conditions of the
Offer in its sole discretion, subject to Section 1.1(b).
(b) Without the prior written consent of the Company, neither Parent
nor Purchaser will (i) decrease the price per share of Company Common Stock
payable in the Offer, (ii) decrease the number of shares of Company Common Stock
sought in the Offer, (iii) change the form of consideration payable in the
Offer, (iv) impose conditions to the Offer in addition to those set forth in
Annex A, (v) except as provided below or required by any rule, regulation,
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interpretation or position of the Securities and Exchange Commission (the
"SEC") applicable to the Offer, change the expiration date of the Offer, or (vi)
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otherwise amend or change any term or condition of the Offer in a manner
materially adverse to the holders of shares of Company Common Stock.
Notwithstanding anything in this Agreement to the contrary, without the consent
of the Company, Purchaser shall have the right to extend the Offer beyond the
Initial Expiration Date in the following events: (i) from time to time if, at
the Initial Expiration Date (or extended expiration date of the Offer, if
applicable), any of the conditions to the Offer (other than the Minimum
Condition to which this clause does not apply) shall not have been satisfied or
waived, until such conditions are satisfied or waived; (ii) for any period
required by any rule, regulation, interpretation or position of the SEC or the
Staff thereof applicable to the Offer or any period required by applicable law;
(iii) if all conditions to the Offer other than the Minimum Condition are
satisfied or waived, but the Minimum Condition has not been satisfied, for one
or more periods not to exceed ten (10) business days each (or an aggregate of
thirty (30) business days for all such extensions); or (iv) if all of the condi-
tions to the Offer are satisfied or waived but the number of shares of Company
Common Stock validly tendered and not withdrawn is less than ninety percent
(90%) of the then outstanding number of shares of Company Common Stock on a
diluted basis, for an aggregate period not to exceed twenty (20) business days
(for all such extensions), provided that Purchaser shall accept and promptly pay
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for all securities tendered prior to the date of such extension and shall
otherwise meet the requirements of Rule 14d-11 under the Exchange Act in
connection with each such extension. In addition, Parent and Purchaser agree
that Purchaser shall from time to time extend the Offer, if requested by the Com
pany, if at the Initial Expiration Date (or any extended expiration date of the
Offer, including pursuant to this sentence, if applicable), all of the
conditions to the Offer other than the Minimum Condition and/or the conditions
set forth in clause (a) or clause (b) of Annex A shall have been waived or
satisfied and the Minimum Condition and/or the conditions set forth in clause
(a) or clause (b) of Annex A shall not have been satisfied, until the earlier of
ten (10) business days after such expiration date or September 30, 2000 in the
case of the Minimum Condition or November 30, 2000 in the case of clause (a) or
clause (b) or such earlier date upon which either such condition shall not be
reasonably capable of being satisfied prior to November 30, 2000. Upon the
prior satisfaction or waiver of all the conditions to the Offer, and subject to
the terms and conditions of this
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Agreement, Purchaser will, and Parent will cause Purchaser to, accept for
payment, pur chase and pay for, in accordance with the terms of the Offer, all
shares of Company Com mon Stock validly tendered and not withdrawn pursuant to
the Offer as soon as reasonably practicable after the expiration of the Offer.
(c) As soon as reasonably practicable on the date of commencement of
the Offer, Parent and Purchaser shall file or cause to be filed with the SEC a
Tender Offer Statement on Schedule TO (together with any amendments or
supplements thereto, the "Schedule TO") with respect to the Offer. The Schedule
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TO will comply as to form and content in all material respects with the
applicable provisions of the federal securities laws and will contain the offer
to purchase and form of the related letter of transmittal (such Schedule TO and
such documents included therein pursuant to which the Offer will be made,
together with any supplements or amendments thereto, the "Offer Documents").
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Parent and the Company each agrees to correct promptly any information provided
by it for use in the Offer Documents if and to the extent that such information
shall have be come false or misleading in any material respect and to supplement
the information provided by it specifically for use in the Schedule TO or the
other Offer Documents to include any information that shall become necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Parent and Purchaser agree to take all steps
necessary to cause the Offer Documents as so corrected or supplemented to be
filed with the SEC and be disseminated to holders of shares of Company Common
Stock, in each case, as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents prior to their being
filed with the SEC. Parent and Purchaser agree to provide to the Company and
its counsel any comments or other communications which Parent, Purchaser or
their counsel may receive from the Staff of the SEC with respect to the Offer
Documents promptly after receipt thereof.
1.2 Company Action.
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(a) The Company hereby consents to the Offer and represents and war-
rants that the Board, at a meeting duly called and held, has unanimously (i)
determined that this Agreement and the Transactions, including the Offer, the
Merger, and the purchase of shares of Company Common Stock and associated
Rights contemplated by the Offer, are advisable and fair to and in the best
interests of the Company and the Company's shareholders, (ii) approved and
adopted this Agreement and the Transactions, including the Offer, the Merger,
and the purchase of shares of Company Common Stock and associated Rights
contemplated by the Offer, in accordance with the requirements of the DGCL,
which approval satisfies in full the requirements of prior approval contained in
Section 203(a)(1) of the DGCL, (iii) resolved to recommend that the shareholders
of
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the Company accept the Offer, tender their shares of Company Common Stock and
associated Rights pursuant to the Offer and approve and adopt this Agreement and
the Merger and (iv) resolved to amend the Rights Agreement as contemplated
herein. The Company hereby consents to the inclusion in the Offer Documents, the
Schedule 14D-9 (as defined below) and the Proxy Statement (as defined below) (if
any) of such recommendation of the Board. The Company represents that the Board
has received the written opinion (the "Bear ▇▇▇▇▇▇▇ Fairness Opinion") of Bear,
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▇▇▇▇▇▇▇ & Co. Inc. ("Bear ▇▇▇▇▇▇▇"), stating that the proposed consideration to
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be received by the holders of shares of Company Common Stock pursuant to the
Offer and the Merger is fair to such holders from a financial point of view. The
Company has been authorized by Bear ▇▇▇▇▇▇▇ to permit, subject to the prior
review and consent by Bear ▇▇▇▇▇▇▇ (such consent not to be unreasonably with-
held), the inclusion of the Bear ▇▇▇▇▇▇▇ Fairness Opinion (or a reference
thereto) in the Offer Documents and the Schedule 14D-9. The Company has been
advised by each of its directors and by each executive officer of the Company
who as of the date hereof is actually aware (to the knowledge of the Company)
of the Transactions that each such person intends to tender pursuant to the
Offer all shares of Company Common Stock owned by such person.
(b) The Company will cause its transfer agent to promptly furnish
Parent and Purchaser with a list of the Company's shareholders, mailing labels
and any available listing or computer file containing the names and addresses of
all record holders of shares of Company Common Stock and lists of securities
positions of shares of Company Common Stock held in stock depositories and to
provide to Parent and Purchaser such additional information (including, without
limitation, updated lists of shareholders, mailing labels and lists of
securities positions) and such other assistance as Parent or Purchaser or their
agents may reasonably request in connection with the Offer. Subject to the
require ments of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Transactions, Parent and Purchaser and each of their affiliates, associates
and agents will hold in confidence the information contained in any such
labels, listings and files, will use such information only in connection with
the Offer and the Merger and, if this Agreement is terminated, will deliver,
and will use their reasonable efforts to cause their agents to deliver, to the
Company all copies and any extracts or summaries from such information then in
their possession or control.
(c) As soon as reasonably practicable on the date of commencement of
the Offer, the Company shall file with the SEC and disseminate to holders of
shares of Company Common Stock, in each case as and to the extent required by
applicable federal securities laws, a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any amendments or supplements thereto, the
"Schedule 14D-9") that shall reflect the recommendations of the Board referred
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to above. The Company and Parent each agrees
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promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that it shall have become false or misleading in any
material respect and to supplement the information provided by it specifically
for use in the Schedule 14D-9 to include any information that shall become
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected or supplemented to be
filed with the SEC and to be disseminated to holders of shares of Company Common
Stock, in each case, as and to the extent required by applicable federal
securities laws. Parent and its counsel shall be given a reasonable opportunity
to review and comment on the Schedule 14D-9 prior to its being filed with the
SEC. The Company agrees to provide to Parent and Purchaser and their counsel
with any comments or other communications which the Company or its counsel may
receive from the Staff of the SEC with respect to the Schedule 14D-9 promptly
after receipt thereof. Parent, Purchaser and the Company each hereby agree to
provide promptly such information necessary to the preparation of the exhibits
and schedules to the Schedule 14D-9 and the Offer Documents which the respective
party responsible therefor will reasonably request.
1.3 Directors.
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(a) Promptly following the purchase of and payment for a number of
shares of Company Common Stock that satisfies the Minimum Condition, and from
time to time thereafter, Purchaser shall be entitled to designate the number of
directors, rounded up to the next whole number, on the Board that equals the
product of (i) the total number of directors on the Board (giving effect to the
election of any additional directors pursuant to this Section) and (ii) the
percentage that the number of shares of Company Common Stock beneficially owned
by Parent and Purchaser (including shares of Company Common Stock paid for
pursuant to the Offer), upon such acceptance for payment, bears to the total
number of shares of Company Common Stock outstanding, and the Company shall take
all action within its power to cause Purchaser's designees to be elected or
appointed to the Board, including, without limitation, increasing the number of
directors, and seeking and accepting resignations of incumbent directors. At
such time, the Company will also use its best efforts to cause individual
directors designated by Purchaser to constitute the number of members, rounded
up to the next whole number, on (i) each committee of the Board other than any
such committee of such board established to take action under this Agreement and
(ii) each board of directors of each Subsidiary (as defined below) of the
Company, and each committee thereof, that represents the same percentage as such
individuals represent on the Board. Notwithstanding the foregoing, in the event
that Purchaser's designees are to be appointed or elected to the Board, until
the Effective Time (as defined below), such board of directors shall have at
least two directors who are directors on the date of this Agreement and who are
not officers of the Company (the "Continuing Directors"); provided that in the
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event that the number of Continu-
6
ing Directors shall be reduced below two for any reason whatsoever, any
remaining Con tinuing Directors (or Continuing Director, if there shall be only
one remaining) shall be entitled to designate persons to fill such vacancies who
shall be deemed to be Continuing Directors for purposes of this Agreement. As
used in this Agreement, the term "Subsidiary" when used with respect to any
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party means any corporation or other organization, whether incorporated or
unincorporated, of which such party directly or indirectly owns or controls at
least a majority 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 with respect to such corporation or other
organization, or any organization of which such party is a general partner.
(b) The Company's obligations to appoint Purchaser's designees to the
Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions, and shall
include in the Schedule 14D-9 such information with respect to the Company and
its officers and directors, as Section 14(f) and Rule 14f-1 require in order to
fulfill its obligations under this Section. Parent and Purchaser shall supply to
the Company, and be solely responsible for, any information with respect to
themselves and their nominees, officers, directors and affiliates required by
Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Purchaser's designees
pursuant to Section 1.3(a) and until the Effective Time, the approval of the
Continuing Directors shall be required to authorize (and such authorization
shall constitute the authorization of the Company's board of directors and no
other action on the part of the Company, including any action by any other
director of the Company, shall be required to authorize) any termination of
this Agreement by the Company, any amendment of this Agree ment requiring action
by the Company's board of directors, any amendment of the certificate of
incorporation or bylaws of the Company, any extension of time for performance of
any obligation or action hereunder by Parent or Purchaser, any waiver of
compliance with any of the agreements or conditions contained herein for the
benefit of the Company and any material transaction with Parent, Purchaser or
any affiliate thereof.
ARTICLE II
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THE MERGER
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2.1 The Merger. At the Effective Time (as defined in Section 2.2
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below) and upon the terms and subject to the conditions of this Agreement and in
accordance with the DGCL, Purchaser will be merged with and into the Company.
Following the Merger, the Company will continue as the surviving corporation
(the "Surviving Corporation") and as an indirect wholly owned subsidiary of
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Parent, and the separate corporate existence of Purchaser will cease in
accordance with the DGCL. Subject to the terms and conditions of this
Agreement, Parent and Purchaser agree to use all reasonable efforts to cause the
Effective Time to occur as soon as practicable after the Shareholders Meeting
(as defined below) with respect to the Merger or the purchase by Purchaser of
90% or more of the outstanding shares of Company Common Stock pursuant to the
Offer.
2.2 Effective Time. Subject to the provisions of this Agreement, the
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parties will cause the Merger to be consummated by filing an appropriate
certificate of merger (the "Certificate of Merger") with the Secretary of State
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of the State of Delaware in such form as required by, and executed in accordance
with, the relevant provisions of the DGCL as soon as practicable on or after the
Closing Date (as defined in Section 2.3 below). The Merger will become
effective upon such filing or at such time thereafter as is provided in the
Certificate of Merger (the "Effective Time," and the date of such effectiveness
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shall be the "Effective Date").
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2.3 Closing of the Merger. The closing of the Merger (the "Closing")
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will take place at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
(Illinois), ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on a
date to be specified by the parties, which shall be no later than the second
business day after satisfaction or waiver (as permitted by this Agreement and
applicable law) of all of the conditions set forth in ARTICLE VI hereof (other
than those conditions that by their nature are to be satisfied at the Closing,
but subject to the fulfillment or waiver of those conditions) (the "Closing
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Date"), unless the parties agree to another time, date or place in writing.
2.4 Effects of the Merger. The Merger will have the effects set
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forth in the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all properties, rights, privileges,
powers and franchises of the Company and Purchaser will vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Purchaser
will become the debts, liabilities and duties of the Surviving Corporation.
2.5 Certificate of Incorporation and By-laws. Subject to the
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provisions of Section 5.5, the certificate of incorporation and bylaws of
Purchaser in effect immediately prior to the Effective Time will be the
certificate of incorporation and bylaws of the Surviving Corporation until
respectively amended in accordance with their terms and applicable law.
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2.6 Directors. The directors of Purchaser at the Effective Time will
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be the initial directors of the Surviving Corporation, each to hold office in
accordance with the certificate of incorporation and bylaws of the Surviving
Corporation until such director's successor is duly elected and qualified.
2.7 Officers. The officers of the Company as of the Effective Time
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will be the initial officers of the Surviving Corporation until such officer's
successor is duly elected or appointed and qualified.
2.8 Conversion of Shares. At the Effective Time and without any
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action on the part of the holder thereof, subject to Section 2.10, each issued
and outstanding share of Company Common Stock will convert into the right to
receive an amount in cash, without interest, equal to 38.50 United States
Dollars ($38.50) (the "Merger Consideration"). As a result of the Merger, each
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issued and outstanding share of common stock of Purchaser will be converted into
and become one fully paid and non-assessable share of common stock of the
Surviving Corporation. Notwithstanding anything con tained in this Section 2.8
to the contrary, each share of Company Common Stock issued and held in the
Company's treasury immediately before the Effective Time, and each share of
Company Common Stock held by Parent, Purchaser, any other Subsidiary of Parent
or any Subsidiary of the Company immediately before the Effective Time, will, by
virtue of the Merger, cease to be outstanding and will be cancelled and retired
without payment of any consideration therefor.
2.9 Delivery of Merger Consideration.
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(a) Promptly after the Effective Time, Parent shall deposit or cause
to be deposited in trust (the "Payment Fund") with an agent designated by Parent
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(the "Payment Agent") for the benefit of the holders of certificates
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representing the shares of Com pany Common Stock issued and outstanding as of
the Effective Time (collectively "Certificates"), the aggregate Merger
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Consideration to be paid in respect of the shares of Com pany Common Stock. The
Payment Fund shall not be used for any other purpose. The Payment Fund may be
invested by the Payment Agent, as directed by Surviving Corporation, in (i)
obligations of or guaranteed by the United States, (ii) commercial paper rated
A-1, P-1 or A-2, P-2, and (iii) certificates of deposit, bank repurchase
agreements and bankers acceptances of any bank or trust company organized under
federal law or under the law of any state of the United States or of the
District of Columbia that has capital, surplus and undivided profits of at least
$1 billion or in money market funds which are invested substantially in such
investments. Any net earnings with respect thereto shall be paid to the
Surviving Corporation as and when requested by the Surviving Corporation.
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(b) As soon as reasonably practicable after the Effective Time,
Parent will instruct the Payment Agent to mail to each holder of record of
Company Common Stock immediately before the Effective Time (excluding any shares
of Company Common Stock cancelled pursuant to Section 2.8):
(1) a letter of transmittal (the "Letter of Transmittal") (whic
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will specify that delivery will be effected, and risk of loss and title to the
Certificates will pass, only upon delivery of such Certificates to the Payment
Agent and will be in such form and have such other provisions as Parent
reasonably specifies), and
(2) instructions for use in effecting the surrender of each
Certifi cate in exchange for the aggregate Merger Consideration with respect to
the shares of Company Common Stock formerly represented thereby.
(c) Parent and the Surviving Corporation shall cause the Payment
Agent to pay to the holders of a Certificate, as soon as practicable after
receipt of any Certificate (or in lieu of any such Certificate which has been
lost, stolen or destroyed, an affidavit of lost, stolen or destroyed share
certificates (including customary indemnity or bond against loss) in form and
substance reasonably satisfactory to Parent) together with the Letter of
Transmittal, duly executed, and such other documents as Parent or the Payment
Agent reasonably request, in exchange therefor a check in the amount equal to
the cash, if any, which such holder has the right to receive pursuant to the
provisions of this ARTICLE II. No interest shall be paid or accrued on any
cash payable upon the surrender of any Certificate. Each Certificate
surrendered in accordance with the provisions of this Section 2.9(c) shall be
cancelled forthwith.
(d) In the event of a transfer of ownership of shares of Company
Common Stock which is not registered in the transfer records of the Company, the
Merger Consideration may be paid to the transferee only if (i) the Certificate
representing such shares of Company Common Stock surrendered to the Payment
Agent in accordance with Section 2.9(c) hereof is properly endorsed for transfer
or is accompanied by appropriate and prop erly endorsed stock powers and is
otherwise in proper form to effect such transfer, (ii) the person requesting
such transfer pays to the Payment Agent any transfer or other taxes payable by
reason of such transfer or establishes to the satisfaction of the Payment Agent
that such taxes have been paid or are not required to be paid, and (iii) such
person establishes to the reasonable satisfaction of Parent that such transfer
would not violate any applicable federal or state securities laws.
(e) At and after the Effective Time, each holder of a Certificate
that represented issued and outstanding shares of Company Common Stock
immediately prior to the Effective Time shall cease to have any rights as a
shareholder of the Company, except
10
for the right to surrender his or her Certificate in exchange for the Merger
Consideration multiplied by the number of shares represented by such Certificate
and except as other wise provided by applicable law, and no transfer of shares
of Company Common Stock shall be made on the stock transfer books of the
Surviving Corporation. If, after the Effective Time, Certificates are presented
to the Surviving Corporation or the Payment Agent for any reason, they will be
canceled and exchanged as provided in this ARTICLE II, except as otherwise
provided by applicable law.
(f) The Merger Consideration paid in the Merger shall be net to the
holder of shares of Company Common Stock in cash, and without interest thereon,
subject to reduction only for any applicable withholding taxes and, but only if
the Merger Consideration is to be paid other than to the registered holder, any
applicable stock transfer taxes payable by such holder. To the extent that
amounts are withheld by the Surviving Corporation, such amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the shares.
(g) Promptly following the date which is six (6) months after the
Effective Time, the Payment Agent shall deliver to the Surviving Corporation all
cash, certificates and other documents in its possession relating to the
Transactions, and the Payment Agent's duties shall terminate. Thereafter, each
holder of a certificate representing shares of Company Common Stock (other than
certificates representing dissenting shares of Company Common Stock) may
surrender such certificate to the Surviving Corporation and (subject to any
applicable abandoned property, escheat or similar law) receive in consideration
therefor the aggregate Merger Consideration relating thereto, without any
interest thereon. Any portion of the Merger Consideration remaining unclaimed
by holders of shares of Company Common Stock five years after the Effective
Time (or such earlier date immediately prior to such time as such amounts would
otherwise escheat to or become property of any Governmental Entity (as defined
in Section 3.3(c)) shall, to the extent permitted by law, become the property of
the Surviving Corporation free and clear of any claims or interest of any person
previously entitled thereto. Notwithstanding the foregoing, none of Parent, the
Surviving Corporation, the Company or the Payment Agent shall be liable to a
holder of a Certificate for any Merger Consideration properly delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(h) Any portion of the Merger Consideration made available to the
Payment Agent pursuant to Section 2.9(a) to pay for shares of Company Common
Stock for which appraisal rights have been perfected shall be returned to Parent
upon
demand.
11
2.10 Dissenting Shares. Notwithstanding anything in this Agreement to
-----------------
the contrary, shares of Company Common Stock that are issued and outstanding
immediately before the Effective Time and that are held by shareholders who
have not voted in favor of the Merger or consented thereto in writing and who
have properly exercised appraisal rights with respect thereto in accordance with
Section 262 of the DGCL (insofar as such Section is applicable to the Merger and
provides for appraisal rights with respect to it), shall not be converted into
the right to receive the Merger Consideration as provided in Section 2.8
hereof, unless such holders fail to perfect or withdraw or otherwise lose their
rights to appraisal. Instead, ownership of such shares will entitle the holder
thereof to receive the consideration determined pursuant to Section 262 of the
DGCL; provided, however, that if such holder fails to perfect or effectively
-------- -------
withdraws such holder's right to appraisal and payment under the DGCL, each of
such shares shall there upon be deemed to have been converted, at the Effective
Time, into the right to receive the Merger Consideration, without any interest
thereon, upon surrender of the Certificate or Certificates in the manner
provided in Section 2.8 hereof. The Company will give Parent (a) prompt notice
of any demands (or withdrawals of demands) for appraisal received by the
Company pursuant to the applicable provisions of the DGCL and any other
instruments served pursuant to the DGCL and received by the Company and (b) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the DGCL. The Company will not, except with the prior
consent of Parent, make any payment with respect to any such demands for
appraisal or offer to settle, or settle, any such demands.
2.11 Treatment of Company Options.
----------------------------
(a) Prior to the Initial Expiration Date, the Company shall take all
actions necessary and appropriate to provide that, upon the Effective Time, each
outstanding Company Stock Option (as defined in Section 3.2(a)) granted under
any of the Company Stock Option Plans (as defined in Section 3.2(a)) or under
any other plan or arrangement, each outstanding warrant and option to purchase
shares described in Section 3.2 of the Company Disclosure Letter, whether or not
then exercisable or vested, and each right to purchase shares of Company Common
Stock under the Company Purchase Plans (as defined in Section 3.2(a)), shall be
cancelled and, in exchange therefor, each holder of such Company Stock Option,
warrant, option or right to purchase shall receive an amount in cash in respect
thereof, if any, equal to the product of (i) the excess, if any, of the Merger
Consideration over the per share exercise price thereof and (ii) the number of
shares subject thereto (such payment to be net of applicable withholding taxes).
(b) The Company shall use its reasonable best efforts to obtain all
necessary waivers, consents or releases from holders of Company Stock Options,
other options, warrants, and rights to purchase shares of Common Stock and shall
take any such action
12
as may be reasonably necessary to give effect to, and to accomplish the
transactions con templated by, this Section 2.11.
2.12 Adjustments. If, during the period between the date of this
-----------
Agreement and the Effective Time, any change in the outstanding shares of
Company Common Stock shall occur, including by reason of any reclassification,
recapitalization, stock split or combination, exchange or readjustment of shares
of Company Common Stock, or stock dividend thereon with a record date during
such period, the cash payable pursuant to the Offer, the Merger Consideration
and any other amounts payable pursuant to this Agreement shall be appropriately
adjusted.
2.13 Shareholders Meeting. If required by applicable law to
--------------------
consummate the Merger, the Company, acting through the Board, shall, in
accordance with and to the extent permitted by applicable law:
(a) duly call, give notice of, convene and hold a special meeting of
its shareholders (the "Shareholders Meeting") as soon as practicable following
--------------------
the date on which Purchaser completes the purchase of shares of Company Common
Stock pursuant to the Offer (the "Offer Completion Date") for the purpose of
---------------------
considering and taking action upon this Agreement;
(b) subject to its fiduciary duties under applicable law, include in
the Proxy Statement (as defined below) the recommendation of the Board that
shareholders of the Company vote in favor of the approval and adoption of this
Agreement and the Merger; and
(c) prepare and file with the SEC a preliminary proxy or information
statement relating to this Agreement and the Merger and use its reasonable best
efforts to obtain and furnish the information required to be included in the
Proxy Statement and, after consultation with Parent and Purchaser, respond
promptly to any comments made by the SEC with respect to the preliminary proxy
statement or information statement and cause a definitive proxy or information
statement relating to this Agreement and the Merger (such proxy or information
statement together with any and all amendments or supplements thereto, the
"Proxy Statement") to be mailed to its shareholders at the earliest practicable
---------------
time following the expiration or termination of the Offer.
At the Shareholders Meeting, Parent and Purchaser and any of their
respective Subsidiaries will vote, or cause to be voted, all shares of Company
Common Stock owned by them in favor of this Agreement and the Transactions.
13
2.14 Merger Without Meeting of Shareholders. If Parent, Purchaser or
--------------------------------------
any other Subsidiary of Parent shall acquire at least 90% of the outstanding
shares of Company Common Stock pursuant to the Offer or otherwise, the parties
hereto agree, subject to satisfaction or (to the extent permitted hereunder)
waiver of all conditions to the Merger, to take all necessary and appropriate
action to cause the Merger to be effective as soon as practicable after the
acceptance for payment and purchase of shares of Company Common Stock pursuant
to the Offer without the Shareholders Meeting.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter delivered prior to
the execution of this Agreement to Parent (the "Company Disclosure Letter"), the
Company represents and warrants to Parent and Purchaser as of the date of this
Agreement as follows:
3.1 Organization, Standing and Power; Subsidiaries.
----------------------------------------------
(a) Each of the Company and each of its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failures to be so organized, existing
and in good standing or to have such power and authority, in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on the
Company, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary other than in such
jurisdictions where the failures so to qualify or to be in good standing, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect
on the Company. The copies of the certificate of incorporation and bylaws of the
Company, which were previously furnished or made available to Parent, are true,
complete and correct copies of such documents as in effect on the date of this
Agreement. As used in this agreement, the term "Material Adverse Effect" means,
-----------------------
with respect to any entity, any event, change, circumstance or effect that is or
is reasonably likely to be materially adverse to (i) the business, financial
condition or results of operations of such entity and its Subsidiaries taken as
a whole, other than any event, change, circumstance or effect relating to (v)
the economy or financial markets in general, (w) the industries in which such
entity operates in general and not specifically relating to (or having the
effect of specifically relating to or having a materially disproportionate
effect (relative to most other industry participants) on) such entity, (x) the
announcement or pendency of the Offer or the Merger, (y) changes after the date
hereof
14
in laws or regulations relating to the design, manufacture or distribution of
contact lenses or (z) a change in the market price or trading volume of the
shares of such entity (provided that a change in the market price or trading
price may be used, if applicable, as evidence of some other event, change,
circumstance or effect that has or is reasonably likely to have a Material
Adverse Effect), or (ii) the ability of such entity to consummate the
Transactions.
(b) Section 3.1(b) of the Company Disclosure Letter sets forth all
the Subsidiaries of the Company which, as of the date of this Agreement, are
Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC)
. All the outstanding shares of capital stock of, or other equity interests in,
each such Significant Subsidiary have been validly issued and are fully paid and
nonassessable and are, except as set forth on the Company Disclosure Letter,
owned directly or indirectly by the Company, free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever (collectively "Liens") and free of any other restriction
-----
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other ownership interests), except for restrictions
imposed by applicable securities laws. Except as set forth in the Company
Reports (as defined below) filed prior to the date hereof, as of the date of
this Agreement, neither the Company nor any of its Subsidiaries directly or
indirectly owns any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any corporation, partnership, joint
venture or other business association or entity (other than Subsidiaries), that
is or would reasonably be expected to be material to the Company and its
Subsidiaries taken as a whole.
3.2 Capital Structure.
-----------------
(a) As of May 23, 2000, the authorized capital stock of the Company
consisted of (A) 50,000,000 shares of Company Common Stock of which 18,175,585
shares were issued, consisting of 17,671,246 shares outstanding and 504,339
shares held in the treasury of the Company and (B) 5,000,000 shares of Preferred
Stock, par value $0.01 per share, of which 50,000 shares have been designated
Junior Participating Preferred Stock, Series A and reserved for issuance upon
exercise of the Rights. Since May 23, 2000 to the date of this Agreement, there
have been no issuances of shares of the capital stock of the Company or any
other securities of the Company other than issuances of shares (and accompanying
Rights) pursuant to options or rights outstanding as of May 23, 2000 under the
Company's Benefit Plans (as defined below). All issued and outstanding shares
of the capital stock of the Company are duly authorized, validly issued, fully
paid and nonassessable and free of any preemptive rights. There were
outstanding as of May 23, 2000, no options, warrants or other rights to acquire
capital stock from the Company other than (w) options, warrants or other rights
to acquire capital stock from the Company disclosed in Section 3.2(a) of the
Company Disclosure Letter, (x) the Rights,
15
(y) options to acquire capital stock from the Company representing in the
aggregate the right to purchase approximately 2,677,475 shares of Company Common
Stock (collectively, the "Company Stock Options") under the Company's 1995
---------------------
Stock Purchase and Option Plan, 1996 Stock Option Plan, Stock Incentive Plan and
Non-Employee Director Stock Option Plan (collectively, the "Company Stock Option
--------------------
Plans") and (z) rights to purchase an aggregate of no more than approximately
-----
12,000 shares of Company Common Stock under the Company's Employee Stock
Discount Purchase Plan and the International Employee Discount Purchase Plan
(collectively, the "Company Purchase Plans"). Section 3.2(a) of the Company
----------------------
Disclosure Letter sets forth a complete and correct list, as of May 23, 2000,
of the number of shares of Company Common Stock subject to Company Stock Options
or other rights to purchase or receive Company Common Stock granted under the
Company's Benefit Plans or otherwise, the dates of grant and the exercise prices
thereof. For purposes of this agreement, "Benefit Plans" means, with respect to
-------------
any Person, each employee benefit plan, program, arrangement and contract
(including, without limitation, any "employee benefit plan," as defined in
Section (3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and any bonus, deferred compensation, stock bonus, stock purchase,
-----
restricted stock, stock option, employment, termination, stay agreement or
bonus, change in control and severance plan, program, arrangement and contract)
in effect on the date of this Agreement or disclosed on the Company Disclosure
Letter, to which such Person or its Subsidiary is a party, which is maintained
or contributed to by such Person, or with respect to which such Person could
incur material liability under Section 4069, 4201 or 4212(c) of ERISA.
(ii) No bonds, debentures, notes or other indebtedness of the Company
having the right to vote on any matters on which holders of capital stock of the
Company may vote are issued or outstanding.
(iii) Except as otherwise set forth in this Section 3.2 or in Section 3.2
of the Company Disclosure Letter, as of the date of this Agreement, there are
no securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the Company
or any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting securities
of the Company or any of its Subsidiaries or obligating the Company or any of
its Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
As of the date of this Agreement, there are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its Subsidiaries.
16
3.3 Authority; No Conflicts.
-----------------------
(a) The Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the Transactions. The execution and
delivery of this Agreement and the consummation of the Transactions have been
duly authorized by all necessary corporate action on the part of the Company.
This Agreement has been duly executed and delivered by the Company and
constitutes the valid and binding agreement of the Company, enforceable against
it in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws relating to
or affecting creditors generally or by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(b) Except as set forth in Section 3.3(b) of the Company Disclosure
Letter, the execution and delivery of this Agreement by the Company does not,
and the consummation by the Company of the Merger and the other Transactions
will not, conflict with, or result in any violation of, or constitute a default
(with or without notice or lapse of time, or both) under, or give rise to a
right of, or result by its terms in the, termination, amendment, cancellation or
acceleration of any obligation or the loss of a material benefit under, or the
creation of a lien, pledge, security interest, charge or other encumbrance on,
or the loss of, any assets, including Intellectual Property (any such conflict,
violation, default, right of termination, amendment, cancellation or
acceleration, loss or creation, a "Violation") pursuant to: (A) any provision of
---------
the certificate of incorporation or bylaws of the Company or any material
Subsidiary of the Company, or (B) except as, in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company,
subject to obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (c) below, any
loan or credit agreement, note, mortgage, bond, indenture, lease, benefit plan
or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company, any material Subsidiary, or their respective
properties or assets.
(c) No consent, approval, order or authorization of, or registration,
decla ration or filing with, any supranational, national, state, municipal,
local or foreign government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any quasi-
governmental or private body exercising any regulatory, taxing, importing or
other governmental or quasi-governmental authority (a "Governmental Entity"),
-------------------
is required by or with respect to the Company or any Subsidiary of the Company
in connection with the execution and delivery of this Agreement by the Company
or the consummation of the Merger and the other Transactions, except for those
required under or in relation to (A) the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of
17
1976, as amended (the "HSR Act"), (B) state securities or "blue sky" laws (the
-------
"Blue Sky Laws"), (C) the Securities Act of 1933, as amended (the "Securities
------------- ----------
Act"), (D) the Exchange Act, (E) the DGCL with respect to the filing of the
---
Certificate of Merger, (F) rules and regulations of the Nasdaq, (G) antitrust or
other competition laws of other jurisdictions, and (H) such consents,
approvals, orders, authorizations, registrations, declarations and filings the
failures of which to make or obtain, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company. Consents, approvals,
orders, authorizations, registrations, declarations and filings required under
or in relation to any of the foregoing clauses (A) through (G) are hereinafter
referred to as "Necessary Consents."
------------------
3.4 Reports and Financial Statements.
--------------------------------
(a) The Company has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other documents
required to be filed by it with the SEC since January 1, 1999 (collectively,
including all exhibits thereto, the "Company Reports"). No Subsidiary of the
---------------
Company is required to file any form, report, registration statement, prospectus
or other document with the SEC. None of the Company Reports, as of their
respective dates (and, if amended or superseded by a filing prior to the date of
this Agreement or the Closing Date, then on the date of such filing), contained
or will contain any untrue statement of a material fact or omitted or will omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the financial statements (including the related notes)
included in the Company Reports presents fairly, in all material respects, the
consolidated financial position and consolidated results of operations and cash
flows of the Company and its consolidated Subsidiaries as of the respective
dates or for the respective periods set forth therein, all in conformity with
generally accepted accounting principles ("GAAP") consistently applied during
----
the periods involved except as otherwise noted therein, and subject, in the case
of the unaudited interim financial statements, to the absence of notes and
normal year-end adjustments that have not been and are not expected to be
material in amount. All of such Company Reports, as of their respective dates
(and as of the date of any amendment to the respective Company Report), complied
as to form in all material respects with the applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder.
(b) Except as disclosed in the Company Reports filed prior to the
date hereof, since December 31, 1999, the Company and its Subsidiaries have not
incurred any liabilities that are of a nature that would be required to be
disclosed on a balance sheet of the Company and its Subsidiaries or the
footnotes thereto prepared in conformity with GAAP, other than (A) liabilities
incurred in the ordinary course of business or (B) liabili-
18
ties that, in the aggregate, would not reasonably be expected to have a Material
Adverse Effect on the Company.
3.5 Litigation; Compliance with Laws.
--------------------------------
(a) Except as disclosed in the Company Reports filed prior to the
date of this Agreement, there are no suits, actions or proceedings (collectively
"Actions") pending or, to the knowledge of the Company, threatened, against or
-------
affecting the Company or any Subsidiary of the Company which, in the aggregate,
would reasonably be expected to have a Material Adverse Effect on the Company,
nor are there any judgments, decrees, injunctions, rules or orders of any
Governmental Entity or arbitrator outstanding against the Company or any
Subsidiary of the Company which, in the aggregate, would reasonably be expected
to have a Material Adverse Effect on the Company.
(b) Except as disclosed in the Company Reports filed prior to the
date of this Agreement and except as, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company, the Company and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities which are necessary for the operation of
the businesses of the Company and its Subsidiaries, taken as a whole (the
"Company Permits"). The Company and its Subsidiaries are in compliance with the
---------------
terms of the Company Permits, except where the failures to so comply, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company. Except as disclosed in the Company Reports filed prior to the date
of this Agreement, neither the Company nor its Subsidiaries is in violation of,
and the Company and its Subsidiaries have not received any notices of violations
with respect to, any laws, ordinances or regulations of any Governmental Entity,
except for violations which, in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on the Company.
3.6 Absence of Certain Changes or Events.
------------------------------------
(a) Except for liabilities incurred in connection with this Agreement
or the Transactions, except as disclosed in the Company Reports filed prior to
the date of this Agreement or as set forth in Section 3.6(a) of the Company
Disclosure Letter, and except as permitted by ARTICLE V, since December 31,
1999, (i) the Company and its Subsidiaries have conducted their business only
in the ordinary course and (ii) there has not been any action taken by the
Company or any of its Subsidiaries during the period from December 31, 1999
through the date of this Agreement that, if taken during the period from the
date of this Agreement through the Effective Time, would constitute a breach of
ARTICLE V. Except as disclosed in the Company Reports filed prior to the date of
this Agreement, since December 31, 1999, there have not been any changes,
circumstances or
19
events which, in the aggregate, have had, or would reasonably be expected to
have, a Material Adverse Effect on the Company.
(b) Since December 31, 1999 and except for as set forth in Section
3.6(b) of the Company Disclosure Letter, there has not been any (i) adoption by
the Company or any of its Subsidiaries of any Benefit Plan to which any of the
Company's officers or employees is a participant or (ii) amendment to any of the
Company's Benefit Plans that resulted in material increase in the benefits
received or to be received thereunder by any officer or employees of the
Company. Since December 31, 1999, there has not been any material increase in
the aggregate benefits provided under the Company's Benefit Plans.
3.7 Environmental Matters. Except as, in the aggregate, would not
---------------------
reasonably be expected to have a Material Adverse Effect on the Company and
except as disclosed in the Company Reports filed prior to the date of this
Agreement or as set forth in Section 3.7 of the Company Disclosure Letter (i)
the operations of the Company and its Subsidiaries have been and are in
compliance with all Environmental Laws (as defined below), and with all Company
Permits required by Environmental Laws, (ii) there are no pending or, to the
knowledge of the Company, threatened, Actions under or pursuant to Environmental
Laws against the Company or its Subsidiaries or involving any real property
currently or, to the knowledge of the Company, formerly owned, operated or
leased by the Company or its Subsidiaries, (iii) the Company and its
Subsidiaries are not subject to any Environmental Liabilities (as defined
below), and, to the knowledge of the Company, no facts, circumstances or
conditions relating to, arising from, associated with or attributable to any
real property currently or, to the knowledge of the Company, formerly owned,
operated or leased by the Company or its Subsidiaries or operations thereon
would reasonably be expected to result in Environmental Liabilities, (iv) all
real property owned and, to the knowledge of the Company, all real property
operated or leased by the Company or its Subsidiaries is free of contamination
from Hazardous Material (as defined below) that would have an adverse effect on
human health or the environment and (v) there is not now, nor, to the knowledge
of the Company, has there been in the past, on, in or under any real property
owned, leased or operated by the Company or any of its predecessors (a) any
underground storage tanks regulated pursuant to 40 C.F.R. Part 280 or delegated
state programs, dikes or impoundments containing more than a reportable quantity
of Hazardous Materials, (b) any friable asbestos-containing materials or (c) any
polychlorinated biphenyls.
As used in this Agreement, "Environmental Laws" means any and all federal,
------------------
state, foreign, interstate, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decisions, injunctions, orders, decrees,
requirements of any Governmental Entity, any and all common law requirements,
rules and bases of liability regulating, relating to or imposing liability or
standards of conduct concerning pollution, Hazardous
20
Materials or protection of human health, safety or the environment, as currently
in effect and includes, without limitation, 42 U.S.C. ss. 7401 et seq., the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
ss. 9601 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. ss.
5101 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et
seq., the Clean Water Act, 33 U.S.C. ss. 1251 et seq., the Clean Air Act, 42
U.S.C. ss. 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et
seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss. 136
et seq., Occupational Safety and Health Act, 29 U.S.C. ss. 651 et seq. and the
Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq., as such laws have been
amended or supplemented, and the regulations promulgated pursuant thereto, and
all analogous state or local statutes. As used in this Agreement, "Environmental
-------------
Liabilities" with respect to any person means any and all liabilities of or
-----------
relating to such person or any of its Subsidiaries (including any entity which
is, in whole or in part, a predecessor of such person or any of such
Subsidiaries), whether vested or unvested, contingent or fixed, actual or
potential, known or unknown, which (i) arise under or relate to matters covered
by Environmental Laws and (ii) relate to actions occurring or conditions
existing on or prior to the Closing Date. As used in this Agreement, "Hazardous
---------
Materials" means any materials or wastes, defined, listed, classified or
---------
regulated as hazardous, toxic, a pollutant, a contaminant or dangerous in or
under any Environmental Laws which includes petroleum, petroleum products,
friable asbestos, urea formaldehyde, radioactive materials and polychlorinated
biphenyls.
3.8 Intellectual Property. Except as, in the aggregate, would not
---------------------
reason ably be expected to have a Material Adverse Effect on the Company and
except as disclosed in the Company Reports filed prior to the date of the
Agreement: (a) the Company and each of its Subsidiaries owns, controls or is
licensed to use (in each case, free and clear of any Liens), all Intellectual
Property (as defined below) used in or necessary for the conduct of its business
as currently conducted; (b) the Company and its Subsidiaries are not infringing
or otherwise violating the Intellectual Property of any Person and are acting in
accordance with any applicable license pursuant to which the Company or any
Subsidiary acquired the right to use any Intellectual Property; (c) no Person is
challenging or claiming the invalidity or unenforceability of any Intellectual
Property owned or con trolled by and/or licensed to the Company or its
Subsidiaries used in or necessary for the conduct of its business as currently
conducted; and (d) neither the Company nor any of its Subsidiaries has received
any written notice or otherwise has knowledge of any pending or threatened
claim, order or proceeding with respect to any Intellectual Property owned,
controlled, licensed or used by the Company or its Subsidiaries and no
Intellectual Property owned, controlled and/or licensed by the Company or its
Subsidiaries is being used or enforced in a manner that would reasonably be
expected to result in the abandonment, cancellation or unenforceability of such
Intellectual Property. For purposes of this Agree ment, "Intellectual Property"
---------------------
shall mean trademarks, service marks, brand names, certifi-
21
cation marks, trade dress and other indications of origin, the goodwill
associated with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including, without limitation,
utility models and all divisions, continuations, continuations in part and
renewal applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; nonpublic informa tion, trade secrets and confidential or
proprietary information and rights in any jurisdiction to limit the use or
disclosure thereof by any person; writings and other works, whether
copyrightable or not, in any jurisdiction; and registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; any similar intellectual property or proprietary rights.
3.9 Brokers or Finders. No agent, broker, investment banker,
------------------
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the Transactions based upon arrangements made by or on behalf of the Company
except as disclosed in Section 3.9 of the Company Disclosure Letter, each of
whose fees and expenses will be paid by the Company in accordance with the
Company's agreement with such firm, copies of which have been provided to
Parent.
3.10 Employment Agreements. Except as disclosed in the Company
---------------------
Reports or Section 3.10 of the Company Disclosure Letter, there are no
employment, consulting, severance or indemnification arrangements, agreements or
understandings between the Company or any Subsidiary, on the one hand, and any
directors, officers or other management employees of the Company or any
Subsidiary, on the other hand.
3.11 Taxes.
-----
(a) Each of the Company and its Subsidiaries has filed all Tax
Returns required to have been filed (or extensions have been duly obtained) and
has paid all Taxes required to have been paid by it, except where failure to
file such Tax Returns or pay such Taxes would not, in the aggregate, have a
Material Adverse Effect on the Company. All such Tax Returns are correct and
complete in all material respects.
(b) Each of the Company and its Subsidiaries has paid all Taxes which
have become due and payable, except where the failure to pay such Taxes would
not have a Material Adverse Effect on the Company. Each of the Company and its
Subsidiaries has made adequate provision in reserves established in its
financial statements and accounts for all Taxes which have accrued but are not
yet due and payable.
22
(c) Except as set forth in Section 3.11(c) of the Company Disclosure
Let ter, there is no action, suit, taxing authority proceeding or audit now in
progress or pending with respect to the Company or any of its Subsidiaries.
Neither the Company nor any of its Subsidiaries has waived or extended, or
requested any waiver of extension of, any limitation period for audit or
assessment of any Tax liability.
(d) Except as set forth in Section 3.11(c) of the Company Disclosure
Letter, no deficiency for any amount of Tax has been asserted or assessed
against the Company or any of its Subsidiaries which (i) has not been paid,
settled or adequately provided for through reserves established in the financial
statements and accounts and (ii) would have a Material Adverse Effect on the
Company if required to be paid.
(e) No election under Section 341(f) of the Internal Revenue Code of
1986, as amended (the "Code"), has been made to treat the Company or any of its
----
Subsidiaries as a consenting corporation (as defined in Section 341(f) of the
Code). Neither the Company nor any of its Subsidiaries is a U.S. real property
holding corporation within the meaning of Section 897(c)(2) of the Code.
(f) Except as disclosed in Section 3.11(f) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to any
agreement, contract, arrangement, or plan that has resulted or would result,
separately or in the aggregate, in the payment of any "excess parachute
payment" within the meaning of Section 280G of the Code (or any similar
provision of state, local or foreign law) as a result of the Transactions.
(g) Except as disclosed in Section 3.11(c) of the Company Disclosure
Letter, there are no Tax Liens upon any property or assets of the Company or any
of its Subsidiaries other than Liens for Taxes that (i) are being contested in
good faith, (ii) are not yet due and payable, or (iii) would not, individually
or in the aggregate, have a Material Adverse Effect on the Company if required
to be paid.
For purposes of this Agreement: (i) "Tax" (and, with correlative meaning,
---
"Taxes") means any federal, state, local or foreign income, gross receipts,
-----
property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add on minimum, ad valorem, transfer or excise tax,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty, imposed by
any governmental authority or any obligation to pay Taxes imposed on any entity
for which a party to this Agreement is liable as a result of any indemnification
provision or other contractual obligation, and (ii) "Tax Return" means any
----------
return, report or similar statement required to be filed with respect to any Tax
(including any
23
attached schedules), including, without limitation, any information return,
claim for re fund, amended return or declaration of estimated Tax.
3.12 Certain Contracts. As of the date hereof, except as set forth in
-----------------
the Company Reports filed prior to the date of this Agreement or Section 3.12 of
the Company Disclosure Letter, neither the Company nor any of its Subsidiaries
is a party to or bound by (i) any "material contracts" (as such term is defined
in Item 601(b) (10) of Regulation S-K of the SEC) or (ii) any non-competition
agreements or any other agreements or arrangements that limit or otherwise
restrict the Company or any of its Subsidiaries or any of their respective
affiliates or any successor thereto, or that would, after the Effective Time,
to the knowledge of the Company, limit or restrict Purchaser or any of its
affiliates (including the Surviving Corporation) or any successor thereto, from
engaging or competing in any line of business or in any geographic area
(collectively, "Material Contracts"), which agreements or arrangements, in the
------------------
aggregate, would reasonably be expected to have a Material Adverse Effect on
Purchaser and its Subsidiaries (including the Surviving Corporation and its
Subsidiaries), taken together, after giving effect to the Merger.
3.13 Company Shareholder Rights Plan. The Board of Directors of the
-------------------------------
Company has amended the Rights Agreement in accordance with its terms to render
it inapplicable to the Transactions. The Company has delivered to Parent a true
and correct copy of the Rights Agreement, as amended, in effect as of execution
and delivery of this Agreement.
3.14 ERISA Compliance.
----------------
(a) With respect to the Company's Benefit Plans, no event has
occurred and, to the knowledge of the Company, there exists no condition or set
of circumstances, in connection with which the Company or any of its
Subsidiaries could be subject to any liability that individually or in the
aggregate would have a Material Adverse Effect on the Company under ERISA, the
Code or any other applicable law.
(b) Each of the Company's Benefit Plans has been administered in
accordance with its terms, all applicable laws, including ERISA and the Code,
and the terms of all applicable collective bargaining agreements, except for any
failures so to administer any of the Company's Benefit Plans that individually
or in the aggregate would not rea sonably be expected to have a Material Adverse
Effect on the Company. The Company, its Subsidiaries and all of the Company's
Benefit Plans are in compliance with the applicable provisions of ERISA, the
Code and all other applicable laws and the terms of all applicable collective
bargaining agreements, except for any failures to be in such compli ance that
individually or in the aggregate would not reasonably be expected to have a
24
Material Adverse Effect on the Company. Each of the Company's Benefit Plans
that is intended to be qualified under Section 401(a) or 401(k) of the Code has
received a favor able determination letter from the Internal Revenue Service
(the "IRS") that it is so qualified and each trust established in connection
---
with any of the Company's Benefit Plans that is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that such trust is so exempt. To the knowledge
of the Company, no fact or event has occurred since the date of any
determination letter from the IRS which is reasonably likely to affect adversely
the qualified status of any such Company Benefit Plan or the exempt status of
any such trust, except for any occurrence that individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect on the
Company, and to the knowledge of the Company, all contributions to, and
payments from, such Benefit Plans which are required to be made in accordance
with such Benefit Plans, ERISA or the Code have been timely made other than any
failures that individually or in the aggregate would not reasonably be expected
to have a Material Adverse Effect on the Company.
(c) Except as any of the following either individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect on
the Company, (x) neither the Company nor any trade or business, whether or not
incorporated (an "ERISA Affiliate"), which together with the Company would be
---------------
deemed to be a "single employer" within the meaning of Section 4001(b) of
ERISA, has incurred any liability under Title IV of ERISA and no condition
exists that presents a risk to the Company or any ERISA Affiliate of the Company
of incurring any such liability (other than liability for benefits or premiums
to the Pension Benefit Guaranty Corporation arising in the ordinary course), (y)
none of the Company's Benefit Plan has incurred an "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA or Section 412 of the
Code) whether or not waived and (z) to the knowledge of the Company, there are
not any facts or circumstances that would materially change the funded status of
any of the Company's Benefit Plans that is a "defined benefit" plan (as defined
in Section 3(35) of ERISA) since the date of the most recent actuarial report
for such plan.
(d) Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining or other labor union contract applicable to persons
employed by the Company or any of its Subsidiaries and no collective bargaining
agreement is being negotiated by the Company or any of its Subsidiaries, in
each case that is material to the Company and its Subsidiaries taken as a
whole. As of the date of this Agreement, there is no labor dispute, strike or
work stoppage against the Company or any of its Subsidiaries pending or, to the
knowledge of the Company, threatened which may interfere with the respective
business activities of the Company or any of its Subsidiaries, except where such
dispute, strike or work stoppage individually or in the aggregate would not
reason ably be expected to have a Material Adverse Effect on the Company. To the
knowledge
25
of the Company, none of the Company, any of its Subsidiaries or any of their
respective representatives or employees has committed any unfair labor practice
in connection with the operation of the respective businesses of the Company or
any of its Subsidiaries except where such practice individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect on
the Company. There is no charge or complaint against the Company or any of its
Subsidiaries by the National Labor Relations Board or any comparable
governmental agency pending or threatened in writing, except for any occurrence
that individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect on the Company.
(e) Except as disclosed in Section 3.14 of the Company Disclosure
Letter, none of the Company's Benefit Plans provides medical benefits (whether
or not insured) with respect to current or former employees after retirement or
other termination of service the cost of which is material to the Company and
its Subsidiaries taken as a whole.
(f) With respect to each of the Company's Benefit Plans: (i) no
actions, suits, claims or disputes are pending or, to the knowledge of the
Company, threatened, other than claims for benefits made in accordance with the
terms of such Company Benefit Plan, except for such actions, suits, claims or
disputes that individually or in the aggregate would not reasonably be expected
to have a Material Adverse Effect on the Company; (ii) no audits are pending
with any governmental or regulatory agency and to the knowledge of the Company
there are no facts which could give rise to any liability in the event of such
an audit that either individually or in the aggregate would have a Material
Adverse Effect on the Company; and (iii) to the knowledge of the Company, all
reports and returns required to be filed with any governmental agency or
distributed to any participant in any of the Company's Benefit Plans have been
so duly filed or distributed other than any failure to file or distribute such
reports or returns that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Company.
(g) The Company has not incurred any liability under Code Section
4975, and no fact exists which could result in a liability to the Company under
Code Section 4975 that would reasonably be expected to have a Material Adverse
Effect on the Company.
(h) Neither the Company nor any ERISA Affiliate contributes to a
multiemployer plan described in Section 3(37) of ERISA, no withdrawal liability
has been incurred with respect to any such plan and no withdrawal liability
would be incurred upon the withdrawal from any such plan by the Company or any
ERISA Affiliate as of
26
the date hereof, except for any withdrawal that individually or in the aggregate
would not have a Material Adverse Effect on the Company.
(i) Except as disclosed in the Company Disclosure Letter, the
consummation of the transactions contemplated by this Agreement will not,
either alone or in combination with another event, (A) entitle any current or
former employee, officer or director of the Company to severance pay,
unemployment compensation or any other payment, (B) accelerate the time of
payment or vesting, or increase the amount of compensation due any such
employee, officer or director, or (C) constitute a "change of control" under any
Company Benefit Plan.
3.15 Schedule 14D-9; Proxy Statement; Schedule TO. Neither the
--------------------------------------------
Schedule 14D-9 nor any information supplied by the Company for inclusion in the
Schedule TO will, at the respective times the Schedule 14D-9 and the Schedule TO
are filed with the SEC and first published, sent or given to the Company's
shareholders, contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading. If a Proxy Statement is mailed to the Company's
shareholders, on the date the Proxy Statement is mailed to the Company's
shareholders and on the date of the Shareholders Meeting, if there is one, none
of the information supplied by the Company for inclusion in the Proxy Statement
will contain any untrue statement of a material fact or will 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 or necessary to correct any statement in any earlier
communication with respect to the Shareholders Meeting or the solicitation of
proxies to used at the Shareholders Meeting which shall have become false or
misleading. However, the Company does not make any representations or
warranties with respect to information supplied by the Parent, Purchaser or any
of their affiliates or representatives for inclusion in the Schedule 14D-9, or
with respect to the Schedule TO or the Proxy Statement (except to the extent of
information supplied by the Company for inclusion in the Schedule TO or the
Proxy Statement). The Schedule 14D-9 will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder.
27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser each represents and warrants to the Company as of
the date of this Agreement as follows:
4.1 Organization, Standing and Power. Each of Parent and Purchaser
--------------------------------
is a corporation duly organized, validly existing and, in the case of Purchaser,
in good standing under the laws of its jurisdiction of incorporation or
organization, has the requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted, except
where the failures to be so organized, existing and in good standing or to have
such power and authority, in the aggregate, would not reasonably be expected to
have a material adverse effect on Parent's or Purchaser's ability to consummate
the Offer or the Merger, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary other
than in such jurisdictions where the failures so to qualify or to be in good
standing, in the aggregate, would not reasonably be expected to have a Material
Adverse Effect on Parent and its Subsidiaries, taken as a whole. The copies of
the certificate of incorporation and bylaws of Parent and Purchaser, which were
previously furnished or made available to the Company, are true, complete and
correct copies of such documents as in effect on the date of this Agreement.
4.2 Authority; No Conflicts.
-----------------------
(a) Each of Parent and Purchaser has all requisite corporate power
and authority to enter into this Agreement and to consummate the Transactions.
The execu tion and delivery of this Agreement and the consummation of the
Transactions have been duly authorized by all necessary corporate action on the
part of Parent and Purchaser. This Agreement has been duly executed and
delivered by each of Parent and Purchaser and constitutes the valid and binding
agreement of Parent and Purchaser, enforceable against each of them in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws relating to
or affecting creditors generally or by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(b) The execution and delivery of this Agreement by each of Parent
and Purchaser does not, and the consummation by Purchaser of the Merger and the
other Transactions will not, conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse of time, or both) under,
or give rise to a Violation pursu-
28
ant to: (A) any provision of the certificate of incorporation or bylaws (or
equivalent organizational documents) of Parent or Purchaser or any material
Subsidiary of Parent, or (B) except as, in the aggregate, would not reasonably
be expected to have a material adverse effect on Parent's or Purchaser's ability
to consummate the Offer or the Merger, subject to obtaining or making the
consents, approvals, orders, authorizations, registrations, declarations and
filings referred to in paragraph (c) below, any loan or credit agreement, note,
mortgage, bond, indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or Purchaser,
any material Subsidiary, or their respective properties or assets.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Parent or Purchaser or any Subsidiary of Parent in connection with
the execution and delivery of this Agreement by Parent or Purchaser or the
consummation of the Merger and the other Transactions, except for Necessary
Consents.
4.3 Financial Capability. Parent and Purchaser have sufficient funds
--------------------
to purchase all of the Common Stock outstanding on the Expiration Date, as such
date may be extended, and the Effective Time, to pay all fees and expenses
pursuant to Sections 1.1 and 2.9 and to pay all fees and expenses related to the
Transactions.
4.4 Capitalization of Purchaser. The authorized capital stock of
---------------------------
Purchaser consists of 1,000 shares common stock, par value $0.01 (the "Purchaser
---------
Common Stock"). As of the date hereof, 1,000 shares of Purchaser Common Stock
------------
are outstanding, all of which (i) were validly issued, and are fully paid and
nonassessable and (ii) are owned, directly or indirectly, by Parent.
4.5 No Prior Activities. Purchaser was formed for the purpose of
-------------------
effecting the Offer, the Merger and the Transactions, and does not have any
Subsidiaries and has not undertaken any business or other activities other than
in connection with pursuing the Offer and entering into this Agreement and
engaging in the Transactions.
4.6 Offer Documents. Neither the Offer Documents nor any information
---------------
supplied by Parent or Purchaser for inclusion in the Schedule 14D-9 will, at the
respective times the Schedule TO and Schedule 14D-9 are filed with the SEC and
first published, sent or given to the Company's shareholders, contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. If a Proxy
Statement is mailed to the Company's shareholders, on the date the Proxy
Statement is mailed to the Company's shareholders and on the date of
29
the Shareholders Meeting, if there is one, none of the information supplied by
Parent and Purchaser for inclusion in the Proxy Statement will contain any
untrue statement of a material fact or will 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
or necessary to correct any statement in any earlier communication with respect
to the Shareholders Meeting or the solicitation of proxies to used at the
Shareholders Meeting which shall have become false or misleading. However,
Parent and Purchaser do not make any representations or warranties with respect
to information supplied by the Company or any of its affiliates or
representatives for inclusion in the Offer Documents, or with respect to the
Schedule 14D-9 or the Proxy Statement (except to the extent of information
supplied by Parent and Purchaser for inclusion in the Schedule 14D-9 or the
Proxy Statement). The Offer Documents will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations thereunder.
ARTICLE V
COVENANTS
5.1 Conduct of Business by the Company Pending the Merger. The
-----------------------------------------------------
Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Offer Completion Date, unless Parent shall otherwise agree in writing,
and except as set forth in Section 5.1 of the Company Disclosure Letter or as
contemplated hereby, the Company shall conduct its business and shall cause the
businesses of its Subsidiaries to be conducted only in, and the Company and its
Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use reasonable commercial efforts to preserve substantially intact the business
organization of the Company and its Subsidiaries, to keep available the services
of the present officers, employees and consultants of the Company and its
Subsidiaries and to preserve the present relationships of the Company and its
Subsidiaries with customers, suppliers and other persons with which the Company
or any of its Subsidiaries has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement, or
as required by applicable law or rule of any stock exchange or over-the-counter
market, neither the Company nor any of its Subsidiaries shall, during the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Offer Completion Date, and except as set
forth in Section 5.1 of the Company Disclosure Letter, directly or indirectly
do, or propose to do, any of the following without the prior written consent of
Parent:
30
(a) Amend or otherwise change its certificate of incorporation or by-
laws, or amend the Rights Agreement or reduce the rights issued thereunder;
(b) Issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in the
Company, any of its Subsidiaries or affiliates (except for the issuance of
shares of Company Common Stock issuable pursuant to Company Stock Options under
the Company Stock Option Plans, which options are outstanding on the date
hereof; provided that the occurrence of a separation of the rights under the
--------
Rights Agreement, and the related issuance of shares of Company Common Stock to
the Company's shareholders thereunder shall not be deemed a breach of this
Agreement to the extent that (i) the occurrence of such separation occurred as a
result of an unsolicited acquisition of Company Common Stock by a third party,
and (ii) such acquisition did not occur as a result of the Company breaching
Section 5.2 hereof);
(c) Sell, pledge, dispose of or encumber any assets of the Company or
any of its Subsidiaries (except for (i) sales of inventory in the ordinary
course of business and in a manner consistent with past practice and (ii)
dispositions of obsolete or worthless assets);
(d) (i) Declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly-owned Subsidiary of
the Company may declare and pay a dividend to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, (iii) except as required by the terms of any
security as in effect on the date hereof or expressly permitted hereunder, amend
the terms or change the period of exercisability of, purchase, repurchase,
redeem or otherwise acquire, or permit any Subsidiary to amend the terms or
change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, any of its securities or any securities of its subsidiaries,
including, without limitation, shares of Company Common Stock, or any option,
warrant or right, directly or indirectly, to acquire any such securities, or
propose to do any of the foregoing, or (iv) commence any claim, suit or other
action or settle, pay or discharge any claim, suit or other action brought or
threatened against the Company other than any claim, suit or action with respect
to or arising out of the ordinary course of business which is not material to
the Company considered as a whole;
31
(e) (i) Acquire (by merger, consolidation, or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money, except in the
ordinary course of business or issue any debt securities or assume, guarantee
(other than guarantees of the Company's Subsidiaries entered into in the
ordinary course of business) or endorse or otherwise as an accommodation become
responsible for, the obligations of any person, make any loans or advances,
except in the ordinary course of business consistent with past practice; (iii)
commit to make any capital expenditures or purchases of fixed assets; except in
the ordinary course of business consistent with past practice; or (iv) enter
into any lease agreement other than in the ordinary course of business
consistent with past practices;
(f) Increase the compensation or severance payable or to become
payable to its directors, officers or employees, except for increases in salary
or wages of employees of the Company or its Subsidiaries (who are not directors
or executive officers of the Company) in accordance with past practices, or
grant any severance or termination pay (except payments required to be made
under obligations existing on the date hereof that are disclosed to Parent or
Purchaser in accordance with the terms of such obligations) to, or enter into
any employment or severance agreement with, any employee of the Company or any
of its Subsidiaries, except for agreements with new employees entered into in
the ordinary course of business and providing for annual base and bonus
compensation not to exceed $150,000, or establish, adopt, enter into or amend
any collective bargaining agreement, any of the Company's Benefit Plans (within
the meaning of Section 3.2(a)), trust, fund, policy or arrangement for the
benefit of any current or former directors, officers or employees or any of
their beneficiaries, except, in each case, as may be required by law or as would
not result in a material increase in the cost of maintaining such collective
bargaining agreement, Benefit Plan, trust, fund, policy or arrangement;
(g) Take any action to change material accounting policies or
procedures (including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable), except as required by a change in GAAP or SEC position occurring
after the date hereof;
(h) Except in the ordinary course of business, make any Tax election
or settle or compromise any material United States federal, state, local or non-
United States Tax liability;
(i) Pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the financial statements contained in the
32
Company Reports or incurred in the ordinary course of business and consistent
with past practice;
(j) Enter into any contract or agreement which is material to the
Company other than in the ordinary course of business and consistent with past
practices, or amend, modify or consent to the termination of any Material
Contract, other than in the ordinary course of business and consistent with past
practices; or
(k) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 5.1(a) through (i) above, or any action which
would make any of the representations or warranties of the Company contained in
this Agreement untrue or in correct or prevent the Company from performing or
cause the Company not to perform its covenants hereunder.
5.2 No Solicitation. Except as otherwise provided in this Agreement,
---------------
the Company shall not, directly or indirectly, or through any officer, director,
employee, representative or agent of the Company or any of its Subsidiaries, and
shall not permit any such officer, director, employee, representative or agent
to, solicit or encourage the initiation of (including by way of furnishing
information) any inquiries or proposals regarding, or participate in
negotiations or discussions concerning any merger, sale of assets, sale of
shares of capital stock (including without limitation by way of a tender offer)
or similar transactions involving the Company or any Subsidiaries of the Company
that if consummated would constitute an Alternative Transaction (as defined in
Section 7.1) (any of the foregoing inquiries or proposals being referred to
herein as an "Acquisition Proposal"). Upon the execution of this Agreement, the
--------------------
Company shall immediately cease any discussions or negotiations with any person,
entity or group (other than Parent or any of its affiliates or representatives)
concerning any such transaction or any Acquisition Proposal that are continuing
on the date hereof and thereafter shall seek to have returned to the Company any
confidential information that has been provided in any such discussions or
negotiations. Nothing in this section shall prevent the Board from (i)
furnishing information to a Third Party (as defined in Section 7.1) which has
made a bona fide written Acquisition Proposal that the Board reasonably
---- ----
determines is likely to lead to a Superior Proposal (as defined below) not
solicited in violation of this Agreement, provided that, with respect to any
person that is not currently party to a confidentiality agreement with the
Company, such person has executed an agreement with confidentiality and other
provisions substantially similar to those then in effect between the Company and
Parent, or (ii) subject to compliance with the other terms of this Section 5.2,
considering and negotiating a bona fide written Acquisition Proposal that is a
Superior Proposal not solicited in violation of this Agreement; provided,
--------
however, that, as to each of clauses (i) and (ii), (x) such actions occur at a
-------
time prior to the consummation (or, if the Offer is consummated and extended,
the initial consummation) of the Offer and (y) the Board deter-
33
mines in good faith (based on the advice of its financial advisor and counsel)
that the failure to take such actions would be inconsistent with its fiduciary
duties to the Com pany's shareholders under applicable law. For purposes of this
Agreement, a "Superior Proposal" means any written proposal made by a third
-----------------
person to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, all of the equity securities of the Company entitled to vote
generally in the election of directors or all or substantially all the assets of
the Company, if, and only if, the Board reasonably determines (after
consultation with its financial advisor and counsel) (i) that the proposed
transaction would be more favorable from a financial point of view to its
shareholders than the Offer and the Merger and the Transactions taking into
account at the time of determination any changes to the terms of this Agreement
which as of that time had been proposed by Parent and (ii) that the person or
entity making such Acquisition Proposal is capable of consummating such
Acquisition Proposal (based upon, among other things, the availability of
financing and the degree of certainty of obtaining financing, the expectation of
obtaining required regulatory approvals and the identity and background of such
person).
(a) The Company shall notify Parent promptly upon receipt of any
Acquisition Proposal, or any modification of or amendment to any Acquisition
Proposal, or any request for nonpublic information relating to the Company or
any of its Subsidiaries in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company or any Subsidiary by any
person or entity that informs the Board or such Subsidiary that it is
considering making, or has made, an Acquisition Proposal. Such notice to Parent
shall be made orally and in writing, and shall indicate the identity of the
person making the Acquisition Proposal or intending to make an Acquisition
Proposal or requesting non-public information or access to the books and records
of the Company, the terms of any such Acquisition Proposal or modification or
amendment to an Acquisition Proposal, and whether the Company is providing or
intends to provide the person making the Acquisition Proposal with access to
information concerning the Company as provided in this Section 5.2. the Company
shall also promptly notify Parent, orally and in writing, if it enters into
negotiations concerning any Acquisition Proposal.
(b) Except as provided in the following sentence, neither the Company
nor the Board shall withdraw or modify in a manner adverse to Parent or
Purchaser, or propose to withdraw or modify in a manner adverse to Parent or
Purchaser, or fail at Parent's request to reaffirm, the approval by such Board
of this Agreement, the Offer or the Merger or the favorable recommendation of
the Board with respect thereto. The foregoing notwithstanding, in the event
that, after the Company has received a bona fide written Acquisition Proposal
---------
not solicited in violation of this Agreement, the Board determines (based on
the advice of its counsel), prior to the consummation (or, if the Offer is
consummated and extended, the initial consummation) of the Offer, that the
failure to take such actions would be inconsistent with its fiduciary duties to
the Company's share-
34
holders under applicable law, the Board may (x) withdraw or modify its approval
or recommendation of this Agreement, the Offer or the Merger and disclose to
the Company's shareholders a position contemplated by Rule 14d-9 or Rule 14e-
2(a) promulgated under the Exchange Act or otherwise make disclosure to them, or
(y) approve or recommend such an Acquisition Proposal that is a Superior
Proposal; provided, however, that in no event may the Board take either such
-------- -------
action earlier than the second full business day following Parent's receipt of
written notice of the intention of the Board to do so.
(c) The Company and the Board shall not (i) redeem the Rights under
the Rights Agreement, or waive or amend any provision of the Rights Agreement,
in any such case to permit or facilitate the consummation of any Acquisition
Proposal or Alternative Transaction, or (ii) enter into any agreement with
respect to, or otherwise approve or recommend to shareholders, or publicly
propose to approve or recommend, any Acquisition Proposal or Alternative
Transaction, unless this Agreement has been terminated in accordance with its
terms.
(d) The Company shall not release any third party from the
confidentiality provisions of any agreement to which the Company is a party.
5.3 Access to Information; Confidentiality. (a) The Company shall
--------------------------------------
(and shall cause its Subsidiaries to):
(i) afford to the officers, employees, accountants, counsel,
financing sources and other representatives of Parent, reasonable access
during normal business hours to its properties, books, contracts,
commitments and records;
(ii) furnish to Parent all information concerning its business,
properties and personnel as Parent may reasonably request or has
reasonably requested; and
(iii) make available during normal business hours to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent the appropriate individuals (including management
personnel, attorneys, accountants and other professionals) for discussion
of the Company's business, properties, prospects and personnel as Parent
may reasonably request.
(b) Parent shall keep all information disclosed to it pursuant to
this Agreement confidential in accordance with the terms of the confidentiality
letter, dated May 10, 2000 (the "Confidentiality Letter"), between Parent and
----------------------
the Company.
35
5.4 Consents; Approvals.
-------------------
(a) Subject to the terms and conditions herein provided, Parent and
the Company shall (i) promptly make all filings necessary in connection with
their respective Necessary Consents and (ii) use reasonable best efforts to
cooperate with one another in (y) determining whether any filings are required
to be made with, or consents, permits, authorizations or approvals are required
to be obtained from, any third party or other Governmental Entity in connection
with the execution and delivery of this Agreement and the consummation of the
Transactions and (z) timely making all such filings and timely seeking all such
consents, permits, authorizations or approvals, including such party's Necessary
Consents. The parties shall cooperate with one another in connection with the
making of all such filings, including providing copies of all such documents to
the non-filing or non-submitting party and its advisors prior to filing or
otherwise submitting.
(b) (i) Without limiting the generality of the undertakings of Parent
and the Company pursuant to Section 5.4(a), Parent and Purchaser agree to (1)
promptly effect all necessary registrations and filings, including, but not
limited to, filings and submissions of information under the HSR Act, and
applicable foreign laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization, restraint of
trade or limitation of competition (collectively, "Antitrust Laws"), and (2) use
--------------
reasonable best efforts to promptly take, or cause their affiliates to take, if
required by the Federal Trade Commission (the "FTC") or its staff, the Assistant
---
Attorney General in charge of the Antitrust Division and his staff, or any state
attorney general or its staff, or any comparable person under applicable foreign
Antitrust Laws, in each case in order to consummate the Transactions, all
commercially reasonable actions and things (including, without limitation,
executing agreements and submitting to judicial or administrative orders) to
secure federal, state and applicable foreign antitrust clearance (includ ing by
avoiding or setting aside any preliminary or permanent injunction or other order
of any United States federal, state, local, or foreign court or other
Governmental Entity). The existence of the conditions set forth in Sections 6.2
and clauses (a) and (b) of Annex A shall not limit or diminish Parent's
-------
obligations pursuant to the foregoing sentence or relieve Parent of any
liability or damages that may result from its breach of its obligations under
this Section 5.4(b)(i). In connection with the foregoing, the Company ▇▇▇▇
▇▇▇▇▇▇ ate with and assist Parent, and, with respect to matters that are within
its power or control will use its reasonable best efforts to promptly (x) take,
or cause to be taken, all actions and to do, or cause to be done, all
commercially reasonable things necessary, proper or advisable under applicable
Antitrust Laws to consummate the Transactions as soon as practicable, including,
without limitation, preparing and filing as promptly as practicable all
documentation to effect all necessary filings, notices, petitions, statements,
registra tions, submissions of information, applications and other documents and
(y) obtain and
36
maintain all approvals, consents, registrations, permits, authorizations and
other confirmations required to be obtained from any third party that are
necessary, proper or advisable to consummate the Merger and the other
Transactions. Subject to applicable laws relating to the exchange of
information, Parent and the Company shall have the right to review in advance,
and to the extent practicable each will consult with the other on, all the
information relating to their respective Subsidiaries that appears in any filing
made with, or written materials submitted to, any third party and/or any
Governmental Entity in connection with the Merger and the other Transactions.
(ii) In furtherance and not in limitation of the foregoing, and
to the extent that any such action has not heretofore been taken or completed,
each of Parent and the Company agrees to (x) make an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby as promptly as practicable and in any event
within ten business days of the date hereof, (y) supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and (z) complete the review process under the
HSR Act to permit the consummation of the Merger including, but not limited to,
causing the expiration of termination of the applicable waiting periods under
the HSR Act as soon as practicable.
5.5 Indemnification and Insurance.
-----------------------------
(a) The certificate of incorporation and by-laws of the Surviving
Corporation shall contain provisions with respect to indemnification
substantially to the same effect as those set forth in the certificate of
incorporation and the by-laws of the Company on the date hereof, which
provisions shall not be amended, modified or otherwise repealed for a period of
six years after the Effective Time in any manner that would adversely affect
the rights thereunder as of the Effective Time of individuals who at the
Effective Time were directors, officers, employees or agents of the Company,
unless such modification is required after the Effective Time by law.
(b) Parent shall cause the Surviving Corporation, to the fullest
extent permitted under applicable law or under the Surviving Corporation's
certificate of incorporation or by-laws, to indemnify and hold harmless, each
present and former director, officer or employee of the Company or any of its
Subsidiaries (collectively, the "Indemnified Parties") against any costs or
--------------------
expenses (including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, (x) arising out of or pertaining to the Transactions or (y)
otherwise with respect to any acts or omissions occurring at or prior to the
Effective Time, to the same extent as provided in the Company's certificate of
incorporation or by-laws or
37
any applicable contract or agreement as in effect on the date hereof, in each
case for a period of six years after the date hereof. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time) and subject to the specific terms of any
indemnification contract, (i) any counsel retained by the Indemnified Parties
for any period after the Effective Time shall be reasonably satisfactory to the
Surviving Corporation, (ii) after the Effective Time, the Surviving Corporation
shall pay the reasonable fees and expenses of such counsel, promptly after
statements therefor are received and (iii) the Surviving Corporation will
cooperate in the defense of any such matter; provided, however,that the
-------- -------
Surviving Corporation shall not be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld or
delayed); and provided, further, that, in the event that any claim or claims
-------- -------
for indemnification are asserted or made within such six-year period, all rights
to indemnification in respect of any such claim or claims shall continue until
the disposition of any and all such claims. The Indemnified Parties as a group
may retain only one law firm to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more Indemnified
Parties, in which case each Indemnified Person with respect to whom such a
conflict exists (or group of such Indemnified Persons who among them have no
such conflict) may retain one separate law firm.
(c) In addition, Parent will provide, or cause the Surviving
Corporation to provide, for a period of not less than six years after the
Effective Time, the Company's current directors and officers an insurance and
indemnification policy that provides coverage for events occurring at or prior
to the Effective Time (the "D&O Insurance") that is no less favorable than the
-------------
existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; provided, however, that Parent and the
-------- -------
Surviving Corporation shall not be required to pay an annual premium for the D&O
Insurance in excess of twice the annual premium currently paid by the Company
for such insurance (which annual premium the Company represents to currently be
$380,000), but in such case shall purchase as much such coverage as possible for
such amount.
(d) This Section shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, the Surviving Corporation
and the Indemnified Parties, shall be binding on all successors and assigns of
the Surviving Cor poration and shall be enforceable by the Indemnified Parties.
5.6 Employee Benefits.
-----------------
(a) Effective as of the Effective Time and for a one-year period
following the Effective Time, Parent shall provide, or cause the Surviving
Corporation and its Subsidiaries and successors to provide, those persons who,
immediately prior to the Effective
38
Time, were employees of the Company and its Subsidiaries and who continue in
such employment ("Continuing Employees"), with benefits and compensation that
--------------------
are substantially comparable, in the aggregate, to the compensation and
benefits provided to such employees as of the date of this Agreement; provided,
--------
Surviving Corporation from terminating the employment of any such employees in
accordance with applicable laws and contractual rights, if any, of such
employees.
(b) Except with respect to accruals under any defined benefit pension
plan, Parent will, or will cause the Surviving Corporation and its Subsidiaries
to, give Continuing Employees full credit for purposes of eligibility, vesting
and determination of the level of benefits under any employee benefit plans or
arrangements maintained by Parent, the Surviving Corporation or any Subsidiary
of Parent or the Surviving Corporation for such Continuing Employees' service
with the Company or any Subsidiary of the Company to the same extent recognized
by the Company for similar purposes immediately prior to the Effective Time.
Parent will, or will cause the Surviving Corporation and its Subsidiaries to,
(i) waive all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable to
the Continuing Employees under any welfare plan that such employees may be
eligible to participate in after the Effective Time, other than limitations or
waiting periods that are already in effect with respect to such employees and
that have not been satisfied as of the Effective Time under any welfare plan
maintained for the Continuing Employees immediately prior to the Effective
Time, and (ii) provide each Continuing Employee with credit for any co-payments
and deductibles paid prior to the Effective Time in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that such
employees are eligible to participate in after the Effective Time to the same
extent as if those deductibles or co-payments had been paid under the welfare
plans for which such employees are eligible after the Effective Time.
(c) For purposes of the Company's Benefit Plans, the Offer Completion
Date will constitute a "change in control" of the Company (as such term or
similar term is defined in an applicable Benefit Plan). The Parent shall (i)
cause the Surviving Corporation after the Offer Completion Date to pay all
amounts provided under all of the Company's Benefit Plans in accordance with
their terms, and (ii) honor and cause the Surviving Corporation to honor all
rights, privileges and modifications to or with respect to any such Company
Benefit Plans which become effective as a result of such change in control.
39
5.7 Notification of Certain Matters. The Company shall give prompt
-------------------------------
notice to Parent and Parent shall give prompt notice to the Company, of (i) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which is reasonably likely to cause any representation or warranty of such party
contained in this Agreement to be materially untrue or inaccurate, (ii) any
failure of the Company or Parent, as the case may be, materially to comply with
or satisfy, or the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which is reasonably likely to cause the failure by such party
materially to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; (iii) the Company obtaining
knowledge of a material breach by Parent, or Parent obtaining knowledge of a
material breach by the Company, of their respective representations, warranties,
or covenants hereunder of which the breaching party has not already given notice
pursuant to clauses (i) or (ii); or (iv) the occurrence of any other event which
would be reasonably likely (A) to have a Material Adverse Effect on the Company
or (B) to cause any condition set forth in Annex A hereto to be unsatisfied in
-------
any material respect at any time prior to the consummation of the Offer;
provided, however, that the delivery of any notice pursuant to this Section 5.7
-------- -------
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
5.8 Other Cooperation and Further Assurances. If required by appli-
----------------------------------------
cable law, as soon as practicable following consummation of the Offer, Parent
and the Company shall together, or pursuant to any reasonable allocation of
responsibility between them, cooperate with one another in taking all
commercially reasonable efforts in order to lift any injunctions or remove any
other impediment to the consummation of the Transactions. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of each of
the parties to this Agreement shall take all such necessary action.
5.9 Public Announcements. Parent and the Company shall consult with
--------------------
each other before issuing any press release or making any written public
statement with respect to the Offer or Merger or this Agreement and shall not
issue any such press release or make any such public statement without the
prior consent of the other party, which shall not be unreasonably withheld;
provided, however, that either party may, without the prior consent of the
-------- -------
other, issue such press release or make such public state ment as may upon the
advice of counsel be required by law or the rules and regulations of the
National Association of Securities Dealers, the New York Stock Exchange, or the
Stock Exchange of Switzerland in advance of obtaining such prior consent, if it
has used all reasonable efforts to consult with the other party.
40
5.1 Financial Information. The Company will deliver to Parent, as
---------------------
soon as reasonably practicable, such financial information as Parent may request
to the extent such financial information is regularly prepared by the Company
for the Board or for management.
ARTICLE VI
CONDITIONS TO THE MERGER
The respective obligations of each party to effect the Merger shall be
subject to the fulfillment or waiver at or prior to the Effective Time of the
following conditions:
6.1 Offer. The Offer Completion Date shall have occurred.
-----
6.2 Shareholder Approval. If required by applicable law, this
--------------------
Agreement shall have been adopted at or prior to the Effective Time by the
requisite vote of the shareholders of the Company in accordance with the DGCL.
6.3 No Injunction or Action. No order, statute, rule, regulation,
-----------------------
executive order, stay, decree, judgment or injunction shall have been enacted,
entered, promulgated or enforced by any court or other Governmental Entity
which prohibits or prevents the consummation of the Merger which has not been
vacated, dismissed or withdrawn prior to the Effective Time. The Company and
Parent shall use reasonable best efforts to have any of the foregoing vacated,
dismissed or withdrawn by the Effective Time.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated at any time prior
-----------
to the Effective Time, notwithstanding approval thereof by the shareholders of
the Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company; or
41
(b) by either Parent or the Company if the initial consummation of
the Offer shall not have occurred on or prior to September 30, 2000; provided,
--------
however, that either party may by written notice to the other party delivered on
-------
or prior to September 30, 2000 extend such date until November 30, 2000 if the
failure to consummate the Offer on or prior to September 30, 2000 shall have
resulted from the failure of the conditions set forth in clause (a) of Annex A
and/or clause (b) of Annex A to be satisfied; and provided, further, that the
-------- -------
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Offer to be
consummated on or prior to such date; or
(c) by either Parent or the Company if, as the result of the failure
of the Minimum Condition or any of the other conditions set forth in Annex A
-------
hereto, the Offer shall have terminated or expired in accordance with its terms
without Purchaser having purchased any shares of Company Common Stock pursuant
to the Offer; or
(d) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a nonappealable final order, decree or ruling or taken any
other nonappealable final action having the effect of permanently restraining,
enjoining or otherwise prohibiting the Offer or the Merger; provided that the
--------
party seeking to terminate this Agreement shall have used its reasonable best
efforts to remove or lift such order decree or ruling; or
(e) by Parent, if, whether or not permitted to do so by this
Agreement, the Board or the Company shall, prior to the Offer Completion Date
(x) (i) withdraw, modify or change its approval or recommendation of the Offer,
this Agreement or the Merger in a manner adverse to Parent, (ii) approve or
recommend to the shareholders of the Company an Acquisition Proposal or
Alternative Transaction; or (iii) approve or recommend that the shareholders of
the Company tender their shares in any tender or exchange offer that is an
Alternative Transaction or (y) take any public position or make any disclosures
to the Company's shareholders, whether or not permitted pursuant to Section 5.2,
which has the effect of any of the foregoing; or
(f) by Parent or the Company, upon a material breach of any
representation, warranty, covenant or agreement on the part of the Company or
Parent, respectively, set forth in this Agreement (a "Terminating Breach");
------------------
provided that, except for any breach of the Company's obligations under Section
--------
5.2, if such Terminating Breach is curable prior to the Initial Expiration Date
(or any extension thereof) by the Company or Parent, as the case may be, through
the exercise of its reasonable best efforts and for so long as the Company or
Parent, as the case may be, continues to exercise such reasonable
42
best efforts, neither Parent nor the Company, respectively, may terminate this
Agreement under this Section 7.1(g) until such date; or
(g) by the Company, in order to accept a Superior Proposal; provided
--------
that (A) the Offer shall not theretofore have been consummated (or, if the Offer
is consummated and extended, initially consummated); (B) the Board determines
(based on the advice of counsel) that the failure to take such actions would be
inconsistent with its fiduciary duties to the Company's shareholders under
applicable law; (C) the Company has given Parent two full business days' advance
notice of the Company's intention to accept such Superior Proposal; (D) the
Company shall have paid the Fee and the Expense Reimbursement pursuant to
Section 7.3(b); and (E) the Company shall have complied in all respects with the
provisions of Section 5.2.
Notwithstanding the foregoing, the right to terminate this Agreement
pursuant to clauses (e) and (f) above shall not be available to Parent if
Purchaser or any other affiliate of Parent shall have acquired shares of Company
Common Stock pursuant to the Offer.
As used herein, "Alternative Transaction" means any of (i) a
-----------------------
transaction pursuant to which any person (or group of persons (including the
shareholders of any party to such transaction)) other than Parent or its
affiliates (a "Third Party") acquires or would acquire more than 30% of the
-----------
outstanding shares of any class of equity securities of the Company, whether
from the Company or pursuant to a tender offer or exchange offer or otherwise,
(ii) a merger or other business combination involving the Company pursuant to
which any Third Party acquires more than 30% of the outstanding equity
securities of the Company or the entity surviving such merger or business
combination, (iii) any transaction pursuant to which any Third Party acquires or
would acquire control of assets (including for this purpose the outstanding
equity securities of Subsidiaries of the Company and securities of the entity
surviving any merger or business combination including any of the Company's
Subsidiaries) of the Company, or any of its Subsidiaries having a fair market
value (as determined by the Board in good faith) equal to more than 30% of the
fair market value of all the assets of the Company and its Subsidiaries, taken
as a whole, immediately prior to such transaction, or (iv) any other
consolidation, business combination, recapitalization or similar transaction
involving the Company or any of the Company Subsidiaries that are "significant"
under Regulation S-X at a level of 30% or more, other than the Transactions;
provided, however, that the term Alternative Transaction shall not include any
-------- -------
acquisition of securities by a broker dealer in connection with a bona fide
public offering of such securities.
43
7.2 Effect of Termination. In the event of the termination of this
---------------------
Agreement pursuant to Section 7.1, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become void
and there shall be no liability on the part of any party hereto or any of its
affiliates, directors, officers or shareholders except for any obligation of
the Company or Parent set forth in Section 7.3 hereof. Notwithstanding the
foregoing, nothing herein shall relieve the Company or Parent from liability for
any willful breach hereof (it being understood that the provisions of Section
7.3 do not constitute a sole or exclusive remedy for such willful breach).
7.3 Fees and Expenses.
-----------------
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, whether or not the Merger is consummated.
(b) The Company shall pay Parent a fee of $30,000,000 (the "Fee")
---
(and shall also pay Parent up to $1,000,000 to reimburse Parent for its itemized
out-of-pocket expenses in connection with the Transactions (the "Expense
-------
Reimbursement") upon the first to occur of any of the following events:
-------------
(1) the termination of this Agreement by Parent pursuant to
Section 7.1(e) or Section 7.1(f); or
(2) the termination of this Agreement by the Company pursuant to
Section 7.1(g).
(c) Parent shall reimburse the Company for the Ocular Fee (the
"Parent Expense Reimbursement") upon the termination of this Agreement by (i) by
-----------------------------
either Parent or the Company pursuant to Section 7.1(b), Section 7.1(c), or
Section 7.1(d) if the failure to consummate the Offer is the result of the
failure of the conditions set forth in any of clauses (a) or (b) of Annex A to
-------
be satisfied or (ii) the Company pursuant to Section 7.1(f); provided, however,
-------- -------
if within twelve months of termination of this Agreement pursuant to clause (i)
of this paragraph, an Alternative Transaction is consummated, then the Company
shall pay to Parent, not later than two days after the date such Alternative
Transaction is consummated, an amount equal to the Ocular Fee previously
reimbursed to the Company by Parent pursuant to the provisions hereof.
(d) The Fee and the Expense Reimbursement and Parent Expense
Reimbursement shall be paid by wire transfer of same day funds to an account
designated by Parent or the Company, as applicable within two business days
after a demand for payment
44
following (i) in the case of the Fee and the Expense Reimbursement, the first to
occur of any of the events described in Section 7.3(b); provided that, in the
--------
event of a termination of this Agreement under Section 7.1(g), the Fee and the
Expense Reimbursement shall be paid as therein provided as a condition to the
effectiveness of such termination; and (ii) in the case of the Parent Expense
Reimbursement, the first to occur of any of the events described in Section
7.3(c).
(e) The agreements contained in this Section 7.3 are an integral part
of the Transactions and do not constitute a penalty. In the event of any
dispute between the Company and Parent as to whether the Fee and the Expense
Reimbursement or the Parent Expense Reimbursement under this Section 7.3 is due
and payable, the prevailing party shall be entitled to receive from the other
party the reasonable costs and expenses (including reasonable legal fees and
expenses) in connection with any action, including the filing of any lawsuit or
other legal action, relating to such dispute. Interest shall be paid on the
amount any unpaid fee at the publicly announced prime rate of Bank One, N.A.
from the date such fee was required to be paid.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Nonsurvival of Representations, Warranties and Agreements. The
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representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall not survive the Merger,
provided that the representations and warranties of the Company shall not
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survive the Offer Completion Date, and provided further that the agreements
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contained in Section 2.4, Section 2.9, Section 2.10, Section 2.11, Section 5.5
and this ARTICLE VIII will survive the Merger.
8.2 Notices. Any notice required to be given hereunder will be
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sufficient if in writing, and sent by facsimile transmission (provided that any
notice received by facsimile transmission or otherwise at the addressee's
location on any business day after 5:00 p.m. (addressee's local time) shall be
deemed to have been received at 9:00 a.m. (addressee's local time) on the next
business day), by courier service (with proof of service), hand delivery or
certified or registered mail (return receipt requested and first-class postage
prepaid), addressed as follows:
If to Parent or Purchaser:
Novartis ▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Attention: Urs Barlocher
Telecopier No.: 011-4161-697-3921
WJ Acquistion Corp.
▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇/▇▇/ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
CIBA Vision Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: R. ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: 212-848-7179
If to the Company:
▇▇▇▇▇▇ ▇▇▇▇▇▇ VisionCare, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇▇ ▇▇▇ & Blinkoff LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed. Any party to this Agreement
may notify any other party of any changes to the address or any of the other
details specified in this paragraph, provided that such notification shall only
be effective on the date specified in such notice or five (5) business days
after the notice is given, whichever is later. Rejection or other refusal to
accept or the inability to deliver because of changed address of which no notice
was given shall be deemed to be receipt of the notice as of the date of such
rejection, refusal or inability to deliver.
8.3 Assignment; Binding Effect. Neither this Agreement nor any of
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the rights, interests or obligations hereunder may be assigned by any of the
parties (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon and shall inure to the benefit of the parties and their
respective successors and permitted assigns. Notwithstanding anything
contained in this Agreement to the contrary, except for the provisions of
Section 5.5, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
8.4 Entire Agreement. This Agreement, the Company Disclosure Letter,
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and any documents delivered by the parties in connection herewith constitute the
entire agreement among the parties with respect to the subject matter of this
Agreement and supersede all prior representations, warranties, agreements and
understandings among the parties, both written and oral, with respect thereto
except the Confidentiality Letter which shall continue in full force and effect,
provided that if there is any conflict between the Confidentiality Letter and
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this Agreement, this Agreement shall prevail. No prior drafts of this Agreement
or portions thereof shall be admissible into evidence in any action, suit or
other proceeding involving this Agreement.
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8.5 Amendment. This Agreement may be amended by the parties hereto,
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by action taken by their respective boards of directors, at any time before or
after approval of matters presented in connection with the Merger by the
shareholders of the Company, but after any such shareholder approval, no
amendment shall be made which by law requires the further approval of
shareholders without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties.
8.6 Governing Law; Consent to Jurisdiction.
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(a) 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.
(b) Each of the parties hereto (1) (A) consents to submit itself to
the personal jurisdiction of any Federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the Transactions and (B) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave
from any such court, and (2) (A) agrees that any action under this Agreement may
also be brought in any Federal or state court located in the City of New York,
Borough of Manhattan and (B) agrees that it will not by motion or other action
contest the bringing of any such action in the above mentioned courts rather
than in any other venue or forum.
8.7 Counterparts. This Agreement may be executed by the parties in
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separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies of this
Agreement each signed by less than all, but together signed by all of the
parties hereto. This Agreement shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other
parties.
8.8 Headings. Headings of the Articles and Sections of this
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Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
8.9 Interpretation. When a reference is made in this Agreement to an
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Article, or Section, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The table of contents to this Agreement
is 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
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"hereof," "herein" and "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. All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant thereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to a person are also to its permitted successors and
assigns. Each of the parties has participated in the drafting and negotiation of
this Agreement. If an ambiguity or question of intent or interpretation arises,
this Agreement must be construed as if it is drafted by all the parties and no
presumption or burden of proof will arise favoring or disfavoring any party by
virtue of authorship of any of the provisions of this Agreement.
8.10 Waivers. Except as provided in this Agreement, no action taken
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pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, will be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder will not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
8.11 Incorporation of Company Disclosure Letter. The Company
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Disclosure Letter referred to in this Agreement is hereby incorporated in this
Agreement and made a part of this Agreement for all purposes as if fully set
forth in this Agreement.
8.12 Severability. Any term or provision of this Agreement which is
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invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent (and only to the extent) of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in
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order that the Transactions are consummated as originally contemplated to the
greatest extent possible.
8.13 Enforcement of Agreement. The parties hereto agree that
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irreparable damage would occur if any of the provisions of this Agreement was
not performed in accordance with its specific terms or as otherwise breached and
that money damages would not be an adequate remedy for any breach of this
Agreement. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court referred to
in Section 8.6(b), this being in addition to any other remedy to which they are
entitled at law or in equity. In any such action for specific performance, each
of the parties will waive (a) the defense of adequacy of a remedy at law and (b)
any requirement for the securing and posting of any bond.
8.14 Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT WAIVES, TO
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THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT.
8.15 Company Disclosure Letter. Except where reference is made to the
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Company Disclosure Letter in Article V, any matter disclosed in a section of the
Company Disclosure Letter shall be treated as if it were disclosed in all
applicable locations throughout such disclosure letter to the extent that, based
upon a reasonable review of such disclosure letter by someone familiar with this
Agreement, its applicability would be readily apparent. No disclosure in the
Company Disclosure Letter shall be deemed to be an admission or representation
as to the materiality of the item so disclosed.
8.16 Execution. This Agreement may be executed by facsimile signatures
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by any party and such signature shall be deemed binding for all purposes hereof,
without delivery of an original signature being thereafter required.
8.17 Personal Liability. Neither this Agreement nor any other
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document delivered in connection with this Agreement shall create or be deemed
to create or permit any personal liability or obligation on the part of any
officer or director of the Company or any Subsidiary of the Company.
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8.18 Date for any Action. In the event that any date on which any
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action is required to be taken hereunder by any of the parties hereto is not a
business day, such action shall be required to be taken on the next succeeding
day which is a business day.
8.19 Obligation of Parent and the Company. Whenever this Agreement
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requires Purchaser or another Subsidiary of Parent to take any action, such
requirement shall be deemed to include an undertaking on the part of Parent to
cause Purchaser or such Subsidiary to take such action and a guarantee of the
performance thereof. Whenever this Agreement requires the Surviving Corporation
to take any action, from and after the Offer Completion Date, such requirement
shall be deemed to include an undertaking on the part of Parent to cause the
Surviving Corporation to take such action and a guarantee of the performance
thereof. Whenever this Agreement requires a Subsidiary of the Company to take
any action, such requirement shall be deemed to include an undertaking on the
part of the Company to cause such Subsidiary to take such action and a guarantee
of the performance thereof.
8.20 Certain Definitions. As used in this Agreement:
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(a) The term "affiliate," as applied to any person, shall mean any
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other person directly or indirectly controlling, controlled by, or under common
control with, that person; for purposes of this definition, "control"
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(including, with correlative meanings, the terms "controlling," "controlled
by," "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise.
(b) A person will be deemed to "beneficially" own securities if such
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person would be the beneficial owner of such securities under Rule 13d-3 under
the Exchange Act, including securities which such person has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time).
(c) The term "business day" means any day on which commercial banks
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are open for business in New York, New York other than a Saturday, a Sunday or a
day observed as a holiday in New York, New York under the laws of the State of
New York or the federal laws of the United States.
(d) The term "knowledge" or any similar formulation of "knowledge"
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shall mean, with respect to the Company, the actual knowledge of the Company's
executive officers.
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(e) The term "person" shall include individuals, corporations,
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partnerships, trusts, limited liability companies, associations, unincorporated
organizations, joint ventures, other entities, groups (which term shall include
a "group" as such term is defined in Section 13(d)(3) of the Exchange Act),
labor unions or Governmental Entity.
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IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year first
written above.
NOVARTIS AG
By: ________________________________
Name:
Title:
By: ________________________________
Name:
Title:
WJ ACQUISITION CORP.
By: ________________________________
Name:
Title:
▇▇▇▇▇▇ ▇▇▇▇▇▇ VISIONCARE, INC.
By: ________________________________
Name:
Title:
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ANNEX A
CONDITIONS TO THE OFFER
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Capitalized terms used but not defined herein shall have the meanings
set forth in the Agreement and Plan of Merger (the "Agreement") of which this
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Annex A is a part. Notwithstanding any other provision of the Offer, Purchaser
shall not be required 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 (relating to the obligation of Purchaser to pay for or return
tendered shares of Company Common Stock promptly after termination or withdrawal
of the Offer), pay for, and (subject to any such rules or regulations) may
delay the acceptance for payment of or the payment for any tendered shares of
Company Common Stock and (except as provided in the Agreement) amend or
terminate the Offer if (i) the Minimum Condition has not been satisfied or (ii)
at any time on or after the date of this Agreement and before the Expiration
Date, any of the following conditions exists:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a Governmental Entity of competent jurisdiction or a law,
rule or regulation shall have been promulgated, or enacted by a Governmental
Entity of competent jurisdiction which in any such case (i) restrains or
prohibits the making or consummation of the Offer or the consummation of the
Merger, or (ii) prohibits or restricts the ownership by Parent (or any of its
affiliates or Subsidiaries) of any material portion of the Company's business or
assets or which would substantially deprive Parent and/or its affiliates or
Subsidiaries of the benefit of ownership of the Company's business or assets, or
(iii) imposes material limitations on the ability of Purchaser or Parent
effectively to acquire the shares of Company Common Stock; or
(b) any applicable waiting period under the Antitrust Laws shall not
have expired or been terminated; or
(c) this Agreement shall have been terminated by the Company or
Parent in accordance with its terms; or
(d) Parent and the Company shall have agreed in writing that
Purchaser shall amend the Offer to terminate the Offer or postpone the payment
for shares of Company Common Stock pursuant thereto; or
(e) the representations and warranties of the Company set forth in
the Agreement shall not have been true and accurate as of the date made (except
for those representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time which need
only be true and accurate as of such
Annex A-1
date or with respect to such period) (in each case without for this purpose
giving effect to qualifications or limitations as to materiality or the absence
of a Material Adverse Effect on the Company contained in such representations
and warranties), except for such failures to be true and correct as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company, or the Company shall have breached or failed to
perform or comply in any material respect with any material obligations,
agreement or covenant required by the Agreement to be performed or complied with
by it; provided, however, that such breach or failure to perform is incapable of
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being cured or has not been cured prior to the Initial Expiration Date (or such
later date upon with the Offer shall expire); or
(f) the Board shall have modified or amended its recommendation of
the Offer in any manner adverse to Parent or shall have withdrawn its
recommendation of the Offer, or shall have recommended acceptance of any
Acquisition Proposal or shall have resolved to do any of the foregoing; which in
the reasonable judgment of Parent or the Purchaser, in any such case, and
regardless of the circumstances giving rise to such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment
or payments.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be asserted by Parent and Purchaser regardless of the
circumstances giving rise to any such condition, and, except for the Minimum
Condition and otherwise subject to the terms of this Agreement, may be waived by
Parent and Purchaser, in whole or in part, at any time and from time to time, in
the sole discretion of Parent and Purchaser.
The determination as to whether any condition has been satisfied shall
be deemed a continuing right which may be asserted at any time and from time to
time. Notwithstanding the fact that the Parent and Purchaser reserve the right
to assert the failure of a condition following acceptance for payment but prior
to payment in order to delay payment or cancel their obligation to pay for
properly tendered shares of Company Common Stock, the Parent and Purchaser will
either promptly pay for such Company Common Stock or promptly return such
Company Common Stock.
Should the Offer be terminated pursuant to the foregoing provisions,
all tendered shares of Company Common Stock not theretofore accepted for payment
pursuant thereto shall forthwith be returned to the tendering shareholders.
Annex A-2